2017 Annual General Meeting Friday, 27 October 2017
Emergency evacuation assembly areas Page 2
John Spark Chairman
Agenda 1. Formal Items of Business & Resolutions (in the Notice of Meeting) 2. CEO Presentation 3. Chairman Presentation 4. Supplier Director Presentation 5. Questions 6. Close of Meeting Page 4
Conduct of Meeting
How to vote and ask questions Yellow card Orange card Blue card Vote and ask questions Ask questions only Ask questions only To ask a question, please make your way to the closest microphone with your admission card where an attendant will introduce you. Page 6
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Items of Business
Item 1 Financial statements and reports ‘To receive the financial statements of Murray Goulburn for the year ended 30 June 2017, together with the Directors’ Report and the Auditor’s Report’ Page 13
Questions on Item 1
Election of Directors
Farewell Natalie Akers Mike Ihlein Ken Jones Graham Munzel Page 16
Item 2(a) Election of Director – Ian Goodin
Questions on Item 2(a)
Resolution 2(a) Election of Director – Ian Goodin To pass as an ordinary resolution: ‘That Ian Goodin be elected as a Director of Murray Goulburn’ Page 19
Resolution 2(a) Proxy votes as at 25 October 2017 Number of votes % of total votes For 12,363,572 81.04% 2,320,194 15.21% Open – Chairman 93,292 0.61% Open – Other Against 479,620 3.14% Open votes held by the Chairman will be voted in favour of the resolution Page 20
Item 2(b) Election of Director – Brock Williams
Questions on Item 2(b)
Resolution 2(b) Election of Director – Brock Williams To pass as an ordinary resolution: ‘That Brock Williams be elected as a Director of Murray Goulburn’ Page 23
Resolution 2(b) Proxy votes as at 25 October 2017 Number of votes % of total votes For 12,188,108 79.89% 2,379,792 15.60% Open – Chairman 93,292 0.61% Open – Other Against 595,486 3.90% Open votes held by the Chairman will be voted in favour of the resolution Page 24
Item 3(a) Election of Special Director – John Spark
Harper Kilpatrick Supplier Director Member of Finance, Risk and Audit Committee and Supplier Relations Committee Page 26
Questions on Item 3(a)
Resolution 3(a) Election of Special Director – John Spark To pass as an ordinary resolution: ‘That John Spark be elected as a Special Director of Murray Goulburn’ Page 29
Resolution 3(a) Proxy votes as at 25 October 2017 Number of votes % of total votes For 12,453,127 80.81% 2,100,443 13.63% Open – Chairman 93,292 0.61% Open – Other Against 763,339 4.95% Open votes held by the Chairman will be voted in favour of the resolution Page 30
Item 3(b) Election of Special Director – Mark Clark
Questions on Item 3(b)
Resolution 3(b) Election of Special Director – Mark Clark To pass as an ordinary resolution: ‘That Mark Clark be elected as a Special Director of Murray Goulburn’ Page 33
Resolution 3(b) Proxy votes as at 25 October 2017 Number of votes % of total votes For 11,569,400 76.10% 2,528,301 16.63% Open – Chairman 93,292 0.61% Open – Other Against 1,011,955 6.66% Open votes held by the Chairman will be voted in favour of the resolution Page 34
Strategic review
Ari Mervis Chief Executive Officer
Challenges facing Murray Goulburn Key issues Significant reduction in milk intake ~(45%) 4.0 Uncompetitive MG FMP 1 3.5 3.0 2.7 Milk Supply Support Package Milk intake (bn L) 2 1.93 2.0 Footprint and cost rationalisation 3 requirement 1.0 Supplier trust 4 0.0 FY16A FY17A FY18 Forecast (27 Oct) Continuing decline in milk supply has decreased competitiveness of Murray Goulburn Page 37
Business initiatives Outcomes Actions Removal of MSSP $183m asset de-recognition 1 Plant rationalisation 360 positions removed 2 Cost out initiatives $100m anticipated total benefit 3 Strategic review Whole of business review 4 Page 38
Overview of the Strategic Review Strategic review Commercial Business Structural review improvement program review Improve earnings through: • Addressing cost base to • Corporate structure support commercial strategy • Margin delivery • Capital structure • Align structure to business • Reducing cost-to-serve • Access to capital objectives • Future growth options • Unit Trust • Profit sharing mechanism Confidential unsolicited Annualised benefits of $117m identified inbound interest Page 39
John Spark Chairman
Overview of Agreement with Saputo – Transaction overview • The sale to Saputo of all MG’s operating assets and operating liabilities for total value of $1,310 million (a) Transaction overview • Transaction includes MG milk supply commitments by MG for Active MG Suppliers (b) totalling approximately $114 million (a) Subject to completion adjustments including for movements in the working capital in the business (b) An Active MG Supplier is a supplier who is supplying milk to MG as at the date of MG’s 2017 annual general meeting, as at the completion of the Transaction and, if required, as at 15 August 2018 Page 41
Overview of Agreement with Saputo – Milk Supply Commitment • Step up of $0.40 per kg MS to $5.60 per kg MS for milk supplied from 1 November 2017 and, on completion of the Transaction, MG’s milk for milk supplied from 1 July to 31 October 2017 supply commitment • Additional $0.40 per kg MS loyalty payment for FY18 to Active MG suppliers on transaction completion • Active MG suppliers will also benefit from commitments from Saputo ensuring milk collection and market pricing into the Saputo’s milk future supply commitment • Saputo will also establish a Supplier Relations and Pricing Policy Committee Page 42
Overview of Agreement with Saputo – Transaction Value • Estimated net value per share / unit of $1.10 – 1.15 (a) o Represents 76 – 84% premium to the last uninterrupted Transaction price (b) value to shareholders • Estimated initial distribution of the net Transaction proceeds of and approximately $0.75 to be paid shortly after completion unitholders • Further cash distributions expected upon conclusion of the regulatory actions and class action, or earlier if appropriate (a) After working capital adjustment other costs, including the repayment of MG’s bank debt and USPP Note program (including make whole fees) at completion of the Transaction, transaction costs, outstanding tax or other liabilities and the expected costs of continuing to operate MG while the regulatory actions and class action continue. This does not include the payment of any amount which may ultimately arise as a result of the regulatory actions or class action, which would reduce proceeds available for distribution to shareholders and unitholders Page 43 (b) Closing price as of 21 August 2017
Overview of Agreement with Saputo – Other items • MG to retain all assets and liabilities associated with the MG Unit Trust and any liabilities in relation to the current ACCC proceedings, ASIC investigation and unitholder class action (and any similar such actions) • After conclusion of these matters, it is expected that MG will be Other wound up • Transaction is subject to approval by an ordinary resolution of MG’s voting shareholders, ACCC and FIRB approvals and other customary conditions Page 44
The Board assessed external proposals using the following criteria 3 1 2 4 Value of FMP Supplier Certainty and proposition impact representation speed • What value is • How does the • How much control • What is the timing proposed to share / proposal assist in the and representation and execution risk of unit holders under ability to pay will Suppliers have the proposal? the proposition? Suppliers a post transaction? • Can a proposal be competitive FMP over executed on a the long term? timetable that will support MG now? Page 45
Board recommendation • The Directors of MG unanimously recommend that shareholders vote in favour of the Transaction with Saputo • Each Director intends to vote their MG shares in favour of the Transaction, in the absence of a superior proposal and subject to an Independent Expert concluding that the Transaction is in the best interests of MG shareholders • No action required by shareholders at this time Page 46
Craig Dwyer Supplier Director
Conclusion
Next steps and timetable 27 October Announcement of Transaction 2017 ACCC and FIRB Supplier roadshows with Saputo 8 November regulatory approval process Notice of Meeting and Explanatory Early 2018 Memorandum issued Extraordinary Shareholders Meeting Early 2018 to vote on Transaction If approved and conditions met, First half 2018 Transaction completion Page 49
Questions
Meeting Close
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