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1 3 rd Quarter & 9-Month 2012 Financial Results (unaudited) 8 November

2 Important note on forward-looking statements The presentation herein may contain forward looking statements by the management of Petra Foods Limited ( Petra ) that pertain to expectations for financial performance of future periods vs past periods. Forward-looking statements involve certain risks and uncertainties because they relate to future events. Actual results may vary materially from those targeted, expected or projected due to several factors. Such factors are, among others, general economic conditions, foreign exchange rate fluctuations, competitive product and pricing pressures as well as changes in tax regimes and regulatory developments. Such statements are not and should not be construed as management s representation on the future performance of Petra. Therefore, the actual performance of Petra may differ significantly from expressions provided herein. 2

3 Scope of Briefing Page No Consistently delivered growth over the years 4 9-Month 2012 Highlights - Record Performance for Branded Consumer 5 Key Highlights of 9-Month 2012 Results 6 Outlook 7 Appendices Platform of Growth through Two Quality Earnings Streams 9 Strict Hedging minimizes impact to EBITDA yield 10 Financial Highlights 11 Branded Consumer Division 20 Cocoa Ingredients Division 25 3

4 Consistently delivered growth over the years Our strategy of operating in two of the key areas of the cocoa/chocolate value chain provides a robust business model enabling the Group to consistently deliver growth over the years The Group s EBITDA growth achieved has been driven by either the Cocoa Ingredients or Branded Consumer, or both This diversification within the value chain provides both financial synergy and also a hedge against times of adverse market conditions in one of the divisions (US$ Million) EBITDA by Divisions % % 16.2% % 59.3 * % % 38.5% 39.2% 15.2% 18.5% 7.5% 24.2% 93.5% 22.8% 29.1% Note: Cocoa Ingredients in 2008 and 2009 includes the pre-operating loss of Europe Note: * Before adjustments pertaining to the Hedge Re-designation charge, the Forex losses and the Fair Value Accounting Charge. 4

5 9-Month 2012 Highlights - Record Performance for Branded Consumer Despite industry headwinds for Cocoa Ingredients, the Group s solid performance (9-Month Net Profit of US$43 million) was driven by an exceptional performance ( 39% EBITDA growth) from Branded Consumer Strong Own Brands revenue growth of 17.2% Y-o-Y and expansion in gross profit margin by 2.2% point to 32.9% continued to drive Branded Consumer s growth Buoyant consumption in Indonesia and the Philippines; successful new product launches(50 in total in the last 12 months) and aggressive marketing initiatives 5

6 Key Highlights of 9-Month 2012 Results (In US$ Million) 9M M 2011 YoY change Revenue 1,140 1,296 12% Branded Consumer Revenue % Cocoa Ingredients Sales Volume (mt) 187, ,694 6% EBITDA % Branded Consumer Gross Profit Margin 32.9% 30.7% 2.2% pt Cocoa Ingredients EBITDA/mt US$159/mt US$257/mt 38% Net Profit % ROE 18.5% * 20.5% ** 2.0% pt Note: * Computed based on annualized 9M 2012 figures. ** Related to Full Year 2011 audited figures. Lower Cocoa Ingredients sales volume - We strategically reduced sales to the traditionally lower margined segment and less strategic markets 6

7 Outlook Despite uncertainties in the global environment, with our robust business model, we are well prepared to face the challenges ahead Branded Consumer is expected to achieve another year of record performance with our dominant Brands, product innovations and enhanced distribution driving growth, supported by the vibrant and growing consumption in our regional markets Further extend market reach of our products through our brand building initiatives to drive our core portfolio of brands and through new product offerings to our consumers, including extending into new product categories For Cocoa Ingredients, with the current industry headwinds, its financial performance in 2012 will be significantly lower than These headwinds are expected to continue into To mitigate these headwinds, we will continue to focus on: (1) Driving demand for higher margined customized ingredients while strategically reducing throughput and sales:(a) of generic(lower margin) products; and(b) to less strategic markets; (2) Improve cost efficiencies through direct bean sourcing; and (3) Limit capital expenditure to only the most critical and immediately income generating 7

8 Appendices 8

9 Platform of Growth through Two Quality Earnings Streams Quality Earnings Cocoa Ingredients Strong earnings fundamentals driven by: (a) Well established customer base (b) Compelling outsourcing trend Branded Consumer Dominant market share and strong brand equity Extensive distribution network (c) Scalability of growth model Well positioned to capture regional chocolate consumption growth Business Model that Mitigates Risk Product customization and partnerships with customers builds barriers to entry The key for the Cocoa Ingredients Division is to focus on adding value and building partnerships with our customers Strict adherence to risk management practices mitigates exposure to cocoa bean price fluctuations Strong Management Team Diverse team with international F&B and MNC experience Proven track record in executing growth strategy 9

10 Strict Hedging minimizes impact to EBITDA yield Cocoa Bean Price (US$/Metric Tonne) Policy of strict hedging of cocoa bean prices minimises impact to EBITDA yield from volatility in bean prices EBITDA Yield (US$/Metric Tonne) 3,500 3,312 3,140 3,052 3,151 3,000 2,500 2,744 2,669 2,700 2,841 2,969 2,894 2,952 2,608 2,516 2,219 2, , , ,500 FY 08 1Q 09 2Q 09 3Q 09 4Q 09 FY 09 1Q 10 2Q 10 3Q 10 4Q 10 FY 10 1Q 11 2Q 11 3Q 11 4Q 11 FY 11 1Q 12 2Q 12 3Q 12 Cocoa Bean Price EBITDA/MT of Sales Volume (6-mth average) EBITDA/MT of Sales Volume (calculated using full year data) 10

11 Financial Highlights 11

12 Balance Sheet & Cash Flow Analysis 12

13 Financial Strategy In light of the uncertainties in the global financial environment, the Group has taken measures (as part of its on-going programme) to manage liquidity and credit financing risks by: (1) Reducing reliance on short term borrowing to 46% of Group borrowings (from end-2011) Raised additional term loans, MTNs & long term trade finance amounting to US$203 million to extend tenor of borrowings (2) Building financial flexibility by further raising Financial Headroom for growth and contingencies Raised committed facilities to > US$1.1 billion with headroom of US$462 million(59% utilization) Group s effective interest rate maintained <5% p.a. as we locked in interest cost through higher proportion of long term funding 13

14 Effect of Direct Sourcing Initiatives Over the last 2 years in conjunction with our SEEDS programme, our direct sourcing initiatives in key origin countries has enabled us to: Further strengthen our global supply chain Achieve cost savings through increase in production yields from higher quality beans Minimize supply risks These initiatives have reduced our reliance on international traders. From a financial perspective: We carry a higher level of cocoa beans inventory in our Balance Sheet instead of off balance sheet forward contracts These purchases do not increase our overall cost as they are offset by reduced forward contracts However,effectivecostofcarryremainsthesameasthecostofcarryispassedthroughtothecustomer These physical inventories are not subject to price risks as they are effectively hedged As a Group, we have pre-arranged adequate trade finance facilities for these initiatives 14

15 Balance Sheet Analysis (Figures are at period end) (US$ Million) 30 Sept Dec 2011 Highlights Cash and Cash Equivalents Trade Receivables Inventories Other Assets Fixed Assets, Intangible Assets& Investments Total Assets 1, ,047.2 Trade Payables Other Liabilities Higher level of inventories arising from direct sourcing initiatives to improve cost effectiveness. Includes Capex of US$44 million for business expansion. Increase in line with enlarged Group capacity. Due to different payment cycle pertaining to origin bean sourcing. Total Borrowings Working Capital Facilities/Trade Finance Medium Term Note(MTN) Term Loan Includes trade finance of US$99.3m with >1 year tenor. To extend tenor of working capital facilities. To fund Capex spending. Total Equity Key Ratios NetDebt/Equity 1.99x 1.69x Adjusted Net Debt/Equity(excl Trade Finance& MTN) 0.61 x 0.48 x Current Ratio Inventory Days Receivable Days Payable Days Reflects funding for inventories level arising from direct sourcing initiatives. Due to the use of longer tenor trade finance to fund the higher inventories. Due to sourcing activities in key origin countries to minimize supply risk, achieve cost savings and ensure supply of higher quality beans. Strong financial position with adequate headroom 15

16 Cash Flow Applications (US$ Million) 30 Sept 2012 EBITDA 97.1 Less: Footnote Changes in Operating Cash Flow (Increase) in Working Capital(Net of Trade Finance& MTN) (40.3) Tax Expense paid (15.5) Interest Expense paid (21.5) Operating Cash Flow 19.8 Financing activities Proceeds from Term Loan- Net of Repayments 38.1 Proceeds from Working Capital 7.8 Dividend Payment (25.8) 20.1 Investing activities Capital Expenditure(Net of Proceeds) (39.6) Investment in PACTS (0.1) Net Cash Movement 0.2 Borrowings at 30 Sept Total Credit Facilities(committed) 1,114.3 Headroom Utilization 58.6% NB: In addition, we have untapped MTN umbrella facilities of US$80 million. Ample headroom and financial flexibility Strategy is to build financial headroom and flexibility 16

17 Breakdown of Group s September 2012 Debt Breakdown of Debt Repayment Schedule of Term Loans & MTN Term Loan & MTN US$254.4m (39.0%) Working Capital US$298.8m (45.8%) Trade Finance >1 Yr Tenor US$99.3m (15.2%) (US$ Million) US$55.1m US$58.0m US$57.5m US$40.4m US$36.1m US$7.3m The working capital and trade finance facilities are revolving facilities to fund highly liquid assets (cocoa bean inventory) for committed sales contracts. Raised additional US$50.4 million trade finance of longer tenor in 9M 2012 To match the Group s financing and investing needs, we issued two MTNs totaling US$88 million (S$110 million) and secured term loans of US$64.9 million during 9M Floating & Fixed Rate Components of Loan Breakdown of Loans in Respective Currencies Floating Rate 46% Fixed Rate 54% Effective interest rate for 9M 2012 < 5.0% pa Lock-in fixed interest rate on opportunistic basis Others 2.9% USD 66.6% Euro 27.6% PHP 2.2% IDR 0.7% The currency profile of the Group s debt matches the revenue profile The objective of this financing strategy is to mitigate foreign currency debt exposure risk 17

18 Group Financial Highlights - At a glance In US$ Million 3Q Q 2011 YoY Change 9M M 2011 YoY Change Sales Cocoa Ingredients Branded Consumer (16.5%) (25.8%) 12.3% 1, , (12.0%) (20.1%) 12.2% EBITDA Cocoa Ingredients Branded Consumer (7.4%) (57.8%) 44.9% % (29.1%) 39.2% Finance Cost (7.9) (7.0) 13.9% (21.6) (21.0) 2.8% Profit Before Tax (19.9%) % Profit After Tax & MI (24.5%) % Capex (45.2%) % Figures may not add due to rounding. 18

19 Group 9-Month Financial Highlights (cont d) 9M M 2011 Change (%) EPS 6.98 US cents 6.90 US cents 1.1% As at 31 Dec September 2012 Audited Figures Net Debt/Equity 1.99 x 1.69 x Adjusted Net Debt/Equity (excluding Trade Finance and MTN) 0.61 x 0.48 x 19

20 Branded Consumer Division 20

21 Branded Consumer - Record 9M Performance Strong performance across all businesses - Revenue of US$362.3 million ( 12.2%Y-o-Y)andEBITDAofUS$61.7million( 39.2%Y-o-Y) Strong Own Brands Performance Sales US$219.4 million ( 17.2% Y-o-Y) ( 24.2% in Local Currency) Vibrant consumption in our regional markets; strong regional economies; rising income and fast growing middle income class Widening reach of Own Brands through: (1) Further extending market reach through brand building initiatives (2) Successful new product offerings to our consumer, including extending into new product categories Inthelast12months,welaunched50newproducts In tandem with our Brand development, we further broadened our distribution network to continue driving growth 21

22 Branded Consumer -Record 9M Performance (cont d) Gross Profit Margin expansion 2.2% point to 32.9% This reflected: Higher proportion of Premium Products in sales mix Proactive programme implemented to minimise rising input cost Pricing adjustments in August 2011 for Own Brands; and forward cover established for main raw material requirements 22

23 Branded Consumer - Financial Results (in US$ Million) 3Q Q 2011 YoY change 9M M 2011 YoY change Revenue % % - Indonesia % % - Regional Markets % % * Gross Profit Margin 35.2% 31.8% + 3.4% pt 32.9% 30.7% + 2.2% pt EBITDA % % Figures may not add due to rounding. * If prior year comparables were adjusted for the effect of the rationalisation of Agency Brands in May 2011, the revenue growth of the Regional markets would have been 24% in 9M

24 Branded Consumer - Financial Highlights Revenue - Own Brands vs Agency Brands Geographic Revenue Breakdown FY M 2012 FY M 2012 Own Brands 79.5% Agency Brands 20.5% Own Brands 60.6% Agency Brands 39.4% Indonesia 93.0% Sing/Mal 7.0% Indonesia 75.4% Singapore 5.7% Malaysia 11.7% Philippines 7.2% In addition to driving strong Own Brands sales, we have built a successful Agency Brands distribution business Successfully developed the regional business complementing strong growth in Indonesia Gross Profit Margin Trends Operating Profit Performance (in US$ Million) FY Q 11 2Q 11 3Q 11 4Q 11 FY Q 12 2Q 12 3Q 12 The higher 2012 margin reflected the benefits of a pricing adjustment for Own Brands in August 2011 and the discontinuation of less profitable Agency Brands The strong operating profit generated is driven primarily by strong performance of Own Brands and successful new product launches 24

25 Cocoa Ingredients Division 25

26 Cocoa Ingredients - Financial Results (in US$ Million) 3Q Q 2011 YoY Change 9M M 2011 YoY Change Revenue % % EBITDA EBITDA/MT (6-month moving average) in US$ % % % % Sales Volume (MT) 60,990 66, % 187, , % Key Comments The lower Y-o-Y performance of our Cocoa Ingredients Division is due to the significant industry headwinds in the form of margin compression, especially in the generic segment as a result of excess capacity/supply situation at a time of weaker chocolate consumption globally 26

27 Strategy to mitigate these industry headwinds To mitigate the negative impact of these industry headwinds, we have focused on: (1) Driving demand for higher margined customized ingredients; (2) Strategically reducing production throughput and sales to the price sensitive segment and less strategic market(eg. Eastern Europe); (3) Improving cost efficiencies, especially through direct bean sourcing; and (4) Limiting capital expenditure to only the most critical and immediately income generating 27

28 Cocoa Ingredients - Financial Highlights (Metric tonnes) Sales Volume 280, , ,053 80,000 68,329 65,135 66,230 65,359 68,196 60,000 58,744 60,990 40,000 20,000 0 FY Q 11 2Q 11 3Q 11 4Q 11 FY Q 12 2Q 12 3Q 12 In 3Q 2012, demand from our core customers remained strong although we have strategically reduced sales to the price sensitive segment and less strategic markets (eg. Eastern Europe) (US$/mt) EBITDA/mt of Sales Volume (6-month moving average) Q 2012 EBITDA/mt lower by 38% Y-o-Y as a result of industry wide pricing pressure FY Q 11 2Q 11 3Q 11 4Q 11 FY Q 12 2Q 12 3Q 12 (NB: EBITDA/mt for FY10 and FY11 are calculated using full year data) 28

29 Thank You 29