2018 HALF YEAR RESULTS 30 AUGUST 2018 Jarrod Ritchie Managing Director Brendan Middleton Chief Financial Officer
TPIENTERPRISES.COM DISCLAIMER Summary information The following disclaimer applies to this document and any information provided regarding the information contained in this docum ent (the “Information”). The Information has been prepared by TPI Enterprises Ltd and relates to the TPI Group (including, without limitation, Purplebay Pty Ltd and TPI’s Norway and Portugal subsidiaries or any new entity subsequently incorporated following the date on which this Information is provided) (collectively “TPI”). The Information in this presentation is of general backgro und and does not purport to be complete. You are advised to read this disclaimer carefully before reading or making any other use of this document or any information contained in this document. In accepting this document, you agree to be bound by the following terms and conditions including any modifications to them. Not financial or product advice This presentation is for information purposes only and is not financial product or investment advice or a recommendation to acquire securities in TPI without taking into account the objectives, financial situation or needs of individuals. You are solely responsible for forming your own opinions and conclusions on such matters and the market and for making your own independent assessment of the Information. TPI is not licensed to provide financial product advice. Financial data All dollar values are in Australian dollars (A$) unless stated otherwise. Past performance Past performance information given in this presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance. Future performance The presentation includes forward-looking statements regarding future events and the future financial performance of TPI. Forwa rd looking words such as “expect”, “should”, “could”, “may”, “predict”, “plan”, “will”, “believe”, “forecast”, “estimate”, “target” or other similar expressions are intended to identify forward-looking statements. Any forward looking statements included in this document involve subjective judgment and analysis and are subject to significant uncertainties, risks and contingencies, many of which are outside the control of, and are unknown to, TPI and its officers, employees, agents or associates. In particular, factors such as variable climatic conditions and regulatory decisions and processes may affect the future operating and financial performance of TPI. This may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. The Information also assumes the success of TPI’s business strategies. The success of the strategies is subject to uncertainties and contingencies beyond control, an d no assurance can be given that the anticipated benefits from the strategies will be realised in the periods for which forecasts have been prepared or otherwise. Given these uncertainties, you are cautioned to not place undue reliance on any such forward looking statements. TPI is providing this information as of the date of this presentation and does not assume any obligation to update any forward-looking statements contained in this document as a result of new information, future events or developments or otherwise. 2 TPI Enterprises 2018 Half Year Result
TPIENTERPRISES.COM AGENDA Company Overview 4 Strategic Pathway to Long Term Growth 8 Results Overview 9 NRM, API and CMO: Then and Now 14 Additional Initiatives 18 Financial Results 19 Market and Strategy Update 24 Outlook 30 3 TPI Enterprises | 2018 Half Year Result
TPIENTERPRISES.COM COMPANY OVERVIEW TPI ENTERPRISES AT A GLANCE SHAREHOLDERS Washington • Fully integrated opiate manufacturer from poppy cultivation to tablet production. Soul Pattinson, 20.0% • Lowest cost narcotic raw material (“NRM”) and active pharmaceutical ingredient (“API”) production capability with novel water-based extraction technology. • Rapidly growing global supplier of pain relief, cough and anti-addiction active Thorney Other External Investments, pharmaceutical ingredients. Investors, 12.2% 58.4% • Significant contract manufacturer of finished dosage formulation (“FDF”) tablets via Wentworth Williamson, contract manufacturing organisation supply agreements (“CMO”). 5.0% Board & • Founded in 2004 and headquartered in Victoria, Australia with production facilities in Management, 4.5% Victoria, Australia and Kragerø, Norway. CAPITAL STRUCTURE DIRECTORS & SENIOR MANAGEMENT Share Price (29 August 2018) $ 1.41 Simon Moore Independent Non-Executive Chairman Fully Paid Ordinary Shares m 81.1 Jarrod Ritchie Managing Director Share Appreciation Rights m 1.3 Stuart Black Independent Non-Executive Director Market Capitalisation $m 114.7 Todd Barlow Non-Executive Director Net debt (30 June 2018) $m 11.8 Jaime Pinto Company Secretary Brendan Middleton Chief Financial Officer 4 TPI Enterprises 2018 Half Year Result
TPI ENTERPRISES IS A FULLY TPIENTERPRISES.COM INTEGRATED NARCOTIC SUPPLIER Synthetic and semi-synthetic Contract manufacturing of tablets Natural narcotics narcotic derivatives (CMO) Narcotic Raw Material (NRM) Active Pharmaceutical Ingredient (API) Raw Material Sourcing Finished Dosage Form (FDF) Morphine Sulphate MS Contin Morphine Codeine Phosphate Panadeine Codeine Pholcodine (Cough treatment) Panadeine Forte Oxycodone HCI Oxycontin Endone Thebaine Hydrocodone Vicadin Tylenol Buprenorphine Paracetamol Ibuprofen Naloxone Suboxone Revia Oripavine Naltrexone Subutex Narcan Buprenorphine HCI 5 TPI Enterprises 2018 Half Year Result
TPIENTERPRISES.COM GLOBAL SUPPLY CHAIN AND SALES NRM (Narcotic Raw FDF (finished dosage Raw Material Supply Chain Material) sales formulation) sales Contract manufacturing of FDF Sales of NRM to (tableted medications) from API, Melbourne, Australia external customers Kragerø, Norway Northern Hemisphere Straw sold to external customers NRM Manufacturing API/FDF Manufacturing (Hungary and others) -Contract growers -Straw provided by historical Contract manufacturing of non-opiate 1 based FDF, sold to competitors for toll processing external customers Internal sales of NRM to API manufacturing in Norway Southern Hemisphere Straw (Australia: NSW/VIC/TAS) -Contract growers API (Active Pharmaceutical Sales of poppy seed for Ingredient) sales culinary purposes Sales of API to external customers 1. Medications not derived from NRM. 6 TPI Enterprises 2018 Half Year Result
TPIENTERPRISES.COM THE OPPORTUNITY Significant Manufacturing Cost Advantage = Market Penetration Opportunity in Sizable Addressable Market Total number of NRM extraction licences available globally 6 Number of fully vertically integrated (poppy straw to FDF) manufacturers 3 Lowest cost producer of NRM TPI Enterprises NRM is often c.70-80% of the input cost of Key competitive advantage API/FDF, creating a lowest cost producer opportunity in NRM, API and FDF Total NRM sales volume target (2018 estimate) 52 tonnes 2021 total NRM annual production target 200 tonnes Addressable NRM market 785 tonnes 7 TPI Enterprises 2018 Half Year Result
TPIENTERPRISES.COM STRATEGIC PATHWAY TO DELIVER MEANINGFUL SHAREHOLDER RETURNS Market share growth: become the leading global supplier LONG TERM GROWTH of Codeine Phosphate (CPO) API ACCELERATE REVENUE TARGETING 200T OF ANNUAL NRM PRODUCTION BY 2021 GROWTH Diversify revenue: grow sales of existing API products in addition to CPO. Add API products to the portfolio Expanded sales channels (Morphine Sulphate, Di-Hydrocodeine Tartrate, and offerings to exploit Diamorphine and Naloxone) lowest cost NRM producer status Explore FDF dossier purchase (~A$1 million) to capture additional downstream margin SECURE STRAW SUPPLY AND Significant API customer MARKET ACCESS base growth Expand manufacturing capacity to meet sales growth Drove legalisation of CMO Division turnaround Realise cost benefits of increased scale NSW/VIC poppy cultivation NRM volume growth as Further manufacturing process cost reduction initiatives Secured secondary straw increased volumes drive ESTABLISH SUSTAINABLE supply from Europe down costs MANUFACTURING FOOTPRINT Acquired Vistin Opiates 1 Targeting 52 tonnes of NRM sold in 2018 Relocated factory to Developed tolling Melbourne opportunity with prior industry competitors Invested in capacity for long term growth Listed on ASX:TPE 2016 2017 2018 2019 2020 1. Now TPI Norway 8 TPI Enterprises 2018 Half Year Result
GROUP RESULTS JARROD RITCHIE MANAGING DIRECTOR
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