Nuchev : AGM - Chair Address and CEO Presentation

NUCHEV LIMITED (ACN 163 225 090)

LEVEL 10, 420 ST KILDA ROAD MELB 3004

WWW.NUCHEV.COM.AU

ASX CODE: NUC

18 November 2021
ASX Market Release
only	Annual General Meeting
use	Chair's Address and CEO Presentation
Nuchev Limited is pleased to release the following Chair's Address and CEO Presentation which will be
delivered to Shareholders at the Company's Annual General Meeting to be held today.
personal
Ben Dingle
CEO and Executive Director
Nuchev Limited
For

This announcement has been approved for release by the Board of Directors.

For further information please contact:

Chantelle Pritchard

Company Secretary

[e-mail]

About Nuchev Limited

Nuchev is an Australian based, globally oriented food business with a dedicated focus on developing, marketing and selling a range of premium Australian made goat nutritional products. Nuchev's primary products include its Oli6® branded goat infant formula and nutritional range, which are sold across multiple sales channels in Australia, China and the Hong Kong Special Administrative Region. Oli6® products are formulated with the benefits of goat, supported by ongoing scientific research. Nuchev operates a capital-light business model, leveraging leading raw goat ingredient suppliers and Australian- based manufacturers in an established, secure and scalable supply chain to deliver high quality products under a premium, trusted brand.

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CHAIRMAN'S ADDRESS

18 Nov 2021

Intro

I am pleased to present the financial report for FY21, our first full year operating as a public company since listing on the Australia Securities Exchange in December 2019.

It has certainly been a year like no other, as the world and many industries continued to be deeply challenged and impacted by the ongoing effects of the global COVID-19 pandemic.

During this period of disruption and uncertainty, the Nuchev team demonstrated outstanding agility and resilience, executing a refreshed business strategy to adapt to very fluid market and sales channel challenges. The strategy focused on prioritising those sales platforms presenting the greatest opportunity for future growth in order to maintain momentum behind the company's flagship Oli6® brand - a brand built from superior nutritional credentials, led by science.

FY21 Financial Wrap up

In FY21, the business reported a decline in revenue of 39% to $10.9 million and volume decline of 35% to 370.2 MT. This reflects industry-wide challenges during the year, including the significant impacts from the contraction of the Daigou and export pharmacy channels due to restrictions in international travel, the absence of international students, an imbalance of demand from COVID-related pantry stocking, extended lockdowns in Victoria, and restrictions on domestic and international team travel.

However, in spite of these significant challenges, Nuchev gained strong momentum across other key priority sales channels including the Australian supermarket channel and the cross border e-commerce (CBEC) platforms accessing the China market, in particular TMall and JD where consumer demand for the brand remains strong.

In the first quarter of the year, Nuchev successfully completed a $15.2M capital raising, with proceeds used to invest in key distribution channels, sales, marketing and brand positioning, as well as to fund working capital requirements. The company benefited from inherent operating leverage in its flexible business model.

The company maintains a robust and flexible balance sheet, reporting $14.5 million cash on hand with no debt at 30 June 2021.

Performance in markets

Pleasingly, solid momentum was achieved particularly across the Australian supermarket channel in FY21 with investment in key sales platforms to drive distribution and leverage growth in the goat infant formula category.

As the global goat infant formula category continues to grow rapidly, the Cross-BorderE-Commerce (CBEC) channel remained a critical platform accessing consumers in China. The total goat infant formula category increased penetration in this channel, growing ahead of cow infant formula.

Partnership with distributors

During this period the company also secured a strategic partnership with top tier distributor Blue Ocean to manage sales and distribution of Oli6® across a number of key platforms in China. The partnership signified an upgrade to Nuchev's distribution arrangements, and the Nuchev team has been working closely with Blue Ocean to drive distribution and sales through online channels, as well as implementing responsible inventory management to ensure inventory is balanced with consumer pull-through.

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Brand: Elevating the Oli6® brand through focused marketing and innovation

Through a refreshed brand strategy driven by consumer research, the company focused on building further momentum behind the Oli6® brand, investing in marketing campaigns featuring celebrity mums, key opinion leaders, and key opinion customers to leverage key promotional periods including Chinese New Year, Double 11 Singles Day, the 618 mid-year promotion and Mother's Day. As the experts in goat milk-based nutrition, Oli6® positioning was re-focused to more strongly leverage the brand's unique nutritional credentials backed by science to a highly involved audience of Mums seeking the very best for their children.

Flexible Capital Light Business Model

A critical advantage and enabler to Nuchev's performance is the company's capital-light business model, and a secure and scalable supply chain, where the team works with premium raw goat ingredient suppliers and Australian-based manufacturers to deliver goat infant formula to a consistently high quality.

The advantages of the company's capital light business model, along with a disciplined approach to managing cash has enabled the business to rapidly respond to the fast-changing market environment and continue to invest in the high growth global goat infant formula and goat milk-based nutrition category.

Our flexible business model enabled Nuchev to progress our plans for market diversification - in addition to Australia, New Zealand and China, Oli6® achieved sales listing in Vietnam. Further international markets have been explored, and this focus remains in FY22, however travel restrictions have impeded the speed with which the team can enter additional new markets. The company remains focused on pursuing options to achieve registration with the State Administration of Markets Regulation (SAMR) to sell Chinese specification Oli6® product in the offline environment in China, however we acknowledge this is unlikely to be achieved via an Australian manufacturer.

Our commitment to safety and quality was evident throughout the supply chain, with ongoing partnerships with world-class manufacturing suppliers. This focus remained core to the company's strategy and philosophy.

Board and Management Team

The team bolstered its capability at Board and executive management level during the year. In September, the Board welcomed Owens Chan as non-executive director, bringing more than three decades of commercial experience, predominantly with Mead Johnson in China, as well as across Asia markets. David Whyte stepped down as non-executive director in September, having been ADM's appointee, a valued Board member and an important partner in Nuchev's journey to becoming a public company.

In March, Lisa Saunders was appointed to the role of Chief Marketing Officer, bringing more than 20 years domestic and international FMCG marketing experience. Chantelle Pritchard expanded her responsibilities to Chief Operations Officer, in addition to her responsibilities as Chief Financial Officer and Company Secretary, allowing Chief Executive Officer Ben Dingle to focus on strategy and driving and growing the business.

Conclusion

We would like to extend our deep gratitude to the team at Nuchev and our partners in demonstrating such strong resilience, collaboration and support for each other during an unpredictable and challenging year.

Thank-you for your ongoing support.

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Nuchev Limited
Annual General Meeting Presentation
18 November 2021	1

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