FAN MILK West AfricaR&I PIPELINE–2019

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Timeline:

March 11th -> First Case in Ghana

March 15th -> All public gatherings banned and schools closed

March 22nd -> All international borders closed

March 23rd -> Disinfection of all 137 markets in the Greater Accra region announced

March 29th -> Lockdown of Greater Accra and Kumasi (announced on the 27th)

April 4th -> 198 markets in the Eastern Region of Ghana were disinfected

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Protect our People• Procedures across all of our locations• Educating on preventative measures

Protect our Stakeholders• Working with our Agents and Vendors• Communicating with our customers• Supporting the community

Protect our Business• Business Continuity Planning• Financial Planning

Protect our People• All non-operational personnel work from home• Front line staff protected using PPE and social

distancing

Protect our Stakeholders• Strictly enforce hygiene practices with Agents• Access to hand sanitizers and directives• Donations of Hand sanitisers and FanMilk

produce to hospitals and food banks

Protect our Business• Enact all BCPs across the functions• Secure financing options to maintain liquidity

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Impact on Business Model:

With schools closed and significant reduction in purchasing on the go, 77% of our normal channels are impacted. Rapid indoor expansion is the key to us being able to serve our consumer.

Consumer ChannelInvoiced

Focus Areas:

1. Direct Indoor

2. Indirect Indoor

3. Direct to Consumer

4. Wholesalers

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• Manufactured FanMilk branded hand sanitizers to be used in housed but donated to vendors and agents

• We are focusing on the Front Liners –Health care professionals

• Donation of products for HCP in Ghana, Nigeria and CIV on going

• WIP with university students – we have an existing MOU on testing of products – exploring opportunities of intervention on COVID 19

Financial Support – Margin +3%

Education – all sites, all countries – systematic sharing of FanMilk material

• Educating on preventative measures• Emails and WhatsApp groups & prints• Cleaning protocols and alcohol

addition shared

Practices, protocols, equipment – all sites, all countries

• Hygiene Stations (Running water & soap) deployed and enforced with all agents

• Hands sanitizers deployed to Agents • Social distancing advised and checked

during visits

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AGENDA:

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Agile & high performing organization

Purposeful Brands and relevant products

Competitive RTM & Sales Organization

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Ghana’s GDP Growth is forecasted to slow into 2020

International Monetary Fund, World Economic Outlook October 2019.

The GHS/EUR Rate has devalued over the year:

+12%

There are increasing external pressures that will impact our market:

But Inflation currently continues to be at target of +/-8%:

Use of Plastics Q4 ElectionsCOVID19

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CHALLENGESWINS

FanYogo drives the growth

through activation and NPD

Packaging re-vamp and

Improved distribution

Flavour Animations at +18% vs LY

Operations Efficiency Saving through

negotiations

Retention of vendors -

increased competition in

the labour market

Price Increase impact in

Q4

FX Impact One-off impacts

Total ice cream at +16% vs LY

Material losses ↓ by 40%

Utilities efficiency ↑ by 12%

Introduce Vendor incentive scheme in Q1 2020

YTD Q3 at +16% vs Q4 at -11%

+12% vs LY GRA charge on WHTHouse sale difference

Giving a benefit of +13%

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Driver Actions Remedial Actions

To maintain parity in profit:

RSP +20% on sachet SKUsResults in

-600 BPSOn Operating Profit

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• Revenue growth driven by strong performance of FanYogo brand, aided by innovation and media strategy.

• Gross Profit – despite inflation and FX devaluation, benefit from volume and productivity projects.

• Gross Profit margin increases by 190bps vs LY.

• Operating Profit increased vs LY by 130%. Main contributor is the fall through from Gross Profit.

• Operating Profit margin increases by 453bps vs LY (+597bps excl Asset sales)

• Finance Inc/Exp Increases vs last year through investment of capital

GH¢'000 2019 2018 % Var Abs Var

Revenue 424,486 389,507 9% 34,979

Cost of Sales (254,210) (240,731) 6% (13,479)

Gross Profit 170,276 148,776 14% 21,500

Sales and Distribution Costs (91,309) (76,366) 20% (14,943)

Administrative Expenses (52,456) (74,520) -30% 22,064

Other Income 10,039 18,001 -44% (7,962)

Operating Profit 36,550 15,891 130% 20,659

Finance Income 4,949 1,314 277% 3,635

Finance Cost (2,765) (1,134) 144% (1,631)

Net Profit before tax 38,734 16,071 141% 22,663

Taxation (13,718) (3,172) 332% (10,546)

Net Profit after tax 25,016 12,899 94% 12,117

Other Comprehensive Income - - 0% 0

Total Comprehensive Income 25,016 12,899 94% 12,117

Number of Shares outstanding 116,207,288 116,207,288 0% 0

Earnings per Share 0.22 0.11 94% 0.10

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Volume growth : 6.5%

CANN growth : 9.0%

COGS inflation : 8.6%

COGS productivity : 10.0%

148.8

170.3

1.9 5.1 0.5 11.6 29.8 21.5-25.6 -1.7

LY Volume FC abs Mix Price Top Line Market/Inflation

Productivity Others CO Actual

2019 Gross Profit Variance vs LY

Volume and revenue growth result in both volume and fixed cost absorbtionbenefit, with a positive mix generated by sales on our flavour animations and value added products.

Q4 price increase results in a Price benefit, though this erodes the benefit we achieved from volume earlier in the year

Market inflation at +8.6% is completely offset by productivity initiatives. These are predominantly in the Material and Industrial lines. In Material we benefit from price negotiations, and in Industrial we deliver savings on Utility, losses and labour efficiency.

Other is the result of additional depreciation

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Fixed Asset investment continues as we invest in sachet line capacity, CIP and refreshing the sales logistics fleet. Total cash out decreased by sale of property for 8.1m GHS

Working Capital is increased by investment in forward purchase of SMP to maintain price through 2020. Inventory at -46m.

Overall total cash reserves decline by 6.9m GHS to 39m GHS

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Water Stewardship (water intensity m³/kT)

Work In a Safe Environment (WISE):Pickit Partnership:

26 years of Partnership on School Sanitation Campaign:

• In 2019 the sorting centre recovered and sold 60 T of Plastic, generating 50,000 GHS

• Awareness Campaign reached +10,000 residents, school children and members of Tema Newtown.

• PVC packaging to be phased out of FanMilk production so all packaging of our products are 100% recyclable

• In 2019 we exceeded our target of reducing lost time accidents to 4, recording only 1.

• On March 23rd 2020 we celebrated 365 days with no accidents

• The goal of this project was to work with GNASBA planting trees in schools, as well as running education and awareness campaigns around proper sanitation

• In the last 26 years over 10,000 Fan Milk branded bins have been distributed across schools nationwide

• 2019, we donated 100 bins worth GHS10,000 to over 25 public schools in Kumasi.

2019 Future

Target:

2.8m³Benchmark:

3.0m³

FanMilk

2.76m³

To achieve 100% compliance with Danone’s Clean Water Initiative, start construction of a wastewater treatment plan

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