For personal use only

Transcription

1 TPI Enterprises Ltd Annual General Meeting 31 May 2016

2 Disclaimer Summary information The following disclaimer applies to this document and any information provided regarding the information contained in this document (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 Portuguese 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 background 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. Forward 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, and 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 ]

3 Welcome Attendance Cards Yellow Voting Shareholders Blue Non-Voting Shareholders Red For Visitors [ 3 ]

4 Introductions TPI Representatives & Auditors TPI Representatives 1. Mr. Peter Robinson, Chairman 2. Mr. Todd Barlow, Non Exec. Director 3. Mr. Jarrod Ritchie, CEO and Managing Director 4. Mr. Roger McPherson, CFO and Company Secretary TPI Auditor 1. Mr. Tony Nimac - KPMG [ 4 ]

5 Notice of Meeting Items Item 1 Receipt and Consideration of Financial Statements and Reports for the year ended 31 December Item 2 Resolution 1 Adoption of Remuneration Report for the year ended 31 December Item 3 Resolution 2 Re-election of Mr. Peter Robinson as a Non-Executive Director. [ 5 ]

6 Financial Report to 31 December 2015 Presentations 1. Chairman's Address 2. CEO and Managing Director s Presentation [ 6 ]

7 TPI Enterprises Ltd Chairman s Address 31 May 2016

8 TPI Enterprises Ltd CEO and Managing Director s Presentation 31 May 2016

9 Investment proposition TPI offers one of the few opportunities globally to invest directly in the licit narcotics sector 1. Growing industry 2. Manufacturing advantage 3. Highly regulated / significant barriers to entry 4. Established business, experienced Management team 5. Diversity of supply [ 9 ]

10 Market Dynamics A growth industry

11 Narcotic value chain Historical Industry [ 11 ]

12 Narcotic value chain Current Industry [ 12 ]

13 Regional Consumption of Opioid Analgesics ( ) Upside demand in developing countries 100-1,000x S-DDD North America Western & Central Europe Oceania Source: INCB Report on the Availability of Internationally Controlled Drugs 2010 Source: NCB Report on the Availability of Internationally Controlled Drugs 2015 [ 13 ]

14 Discrepancy in Global Availability Availability of Opioids ( ) There are more people living inside this circle than out of it Source: INCB Report on the Availability of Internationally Controlled Drugs 2015 [ 14 ]

15 Levels of Palliative Care Major population centres have significant deficiencies An important aspect of the availability of opioidanalgesics is the capacity of health systems to prescribe and dispense such substances through appropriate palliative care services Source: INCB Report on the Availability of Internationally Controlled Drugs 2015 [ 15 ]

16 Factors Preventing Supply INCB survey on impediments to availability Percentage (%) Source: INCB Report on the Availability of Internationally Controlled Drugs 2015 [ 16 ]

17 Factors Preventing Supply Onerous regulations and fear of addiction easing Source: INCB Report on the Availability of Internationally Controlled Drugs 2015 [ 17 ]

18 Recent Media the biggest misconception internationally regarding opioids is the need for tighter control Source: Source: [ 18 ]

19 INCB confirms there is insufficient access Ongoing need for pain relief in developing countries Source: INCB Report on the Availability of Internationally Controlled Drugs 2015 [ 19 ]

20 Manufacturing facilities Our main competitive advantage

21 TPI s Key IP Industrial Advantage c.30% FTE, c.20% capital cost, no toxic solvents TPI Technology 1. $20 million Capital Investment (100 tonne facility). 2. 1/3 of the FTE of competitors with similar capacity Ha site. 4. Modular expansion capability. 5. No toxic solvents or wastewater treatment. 6. Licenced by VIC Government, June 2 nd Licenced by Fed Government, September 9 th Competitors Technology 1. $ million Capital Investment (100 tonne facility) Ha site. 3. Toxic solvents. 4. Wastewater treatment required. 5. Old technology year construction and approval timeline. [ 21 ]

22 Competitors Technology Significant capital costs based on use of toxic solvents Tasmanian Alkaloids (Westbury, Tasmania) SunPharma (Port Fairy, Victoria) [ 22 ]

23 Competitors Technology Approximately $1 million dollars of Ethanol and Toluene lost to atmosphere per annum. 1. Total Emissions : Over 1,000 Tonnes a) 840,000Kg Ethanol b) 190,000Kg Toluene 42 x [ 23 ]

24 EBITDA AUD (millions) Illustrative Comparison of TPI s and Competitors EBITDA TPI s NRM business breakeven at approx. 30 tonne per annum, lower with API s $50 $40 $30 $20 $10 $- -$10 -$ Tonnes TPI NRM EBITDA Competitors NRM EBITDA TPI NRM & API EBITDA [ 24 ]

25 Securing Raw Material Supply Straw in the Shed from 2015/16 Harvest [ 25 ]

26 Victorian Processing Facility Significant area to expand [ 26 ]

27 Victorian Processing Facility Cleanroom capacity of up to 300 Tonne [ 27 ]

28 Manufacturing Process Improvements Strengthening TPE s significant competitive manufacturing advantage Key Facts 1. Increased recovery from waste streams. 2. Ability to isolate other natural alkaloids at lower levels. 3. Investment payback of 6 months. 4. Efficiency improvement. 5. Started commissioning on 30 May [ 28 ]

29 Tasmanian Operations Straw Storage Site Description 1. 2 FTE. 2. Original manufacturing facility before being relocated to Victoria. 3. Site used for Straw storage. 4. Enables TPI to continuing growing in Tasmania. Asset utilisation 1. Continue to investigate alternate uses for the site. 2. Possible sale of some of the disused assets being explored. [ 29 ]

30 European Expansion API capability Site Description 1. Pharmaceutical grade production facility. 2. Site will initially be used for: a) De-seeding of straw b) Straw storage. 3. Enables TPI to implement API manufacturing. API Manufacturing 1. Plan for 100 tonne Codeine Phosphate API capacity. 2. Pilot plant will be constructed in Expect first sales to government tender sales in 2018 with CEP registered sales in High calibre experienced staff already sourced to setup and run this facility. [ 30 ]

31 Experienced Board and Senior Management Team Over 100 years of cumulative narcotic industry experience Experienced Board and Senior Management Team TPI Board TBC (Non-Exec Director) Peter Robinson (Non-Exec Chairman) Jarrod Ritchie Founder/CEO/MD Todd Barlow (Non-Exec Director) Simon Moore (Non-Exec Director)* Chairman of 2 Listed Companies, 30 years corp exp. CEO of WHSP Ex CEO of PCP Managing Director of Carlyle Group (AUS) * Effective 1 st June 2016 TPI Executive team Richard Scullion Sales/Comm Director Chris Murray R&D Director Craig Sweenie Site Manager Portugal Nick Taylor Site Manager Victoria Roger M c Pherson Chief Financial Officer David Chamberlin Agricultural Director Lucy Waddell Quality/Reg Manager 20 years narcotic exp Sales and Commercial 15 years narcotic exp R&D API s and NRM s 20 years narcotic exp manufacturing API s 5 years exp narcotic manufacturing 17 years exp Pharmaceuticals 30 years exp in Agriculture 15 years narcotic exp 7 years at GSK [ 31 ]

32 Recent Industry Developments Consolidation and transactions

33 Recent Industry Changes Signs of consolidation within the industry [ 33 ]

34 Agricultural Overview Tasmania

35 Tasmanian Agriculture Update Opportunities for a strong harvest in Significant reduction in competitor contracted area 2. 10% price increase to grow with TPI 3. Deal completed with Roberts for external agronomy 4. Increased field officers from 2 to 4 5. PACB approval received for increased area 6. Expecting significant increase in area [ 35 ]

36 Raw Material Supply Tasmanian monopoly has held industry and TPI back [ 36 ]

37 Past Tasmanian Media Industry undergoing significant change Source Source: [ 37 ]

38 Opportunity for TPI to pick up area in Tasmania Over 60% reduction in Area from 4 year ago industry high Source: -in-half/news-story/cbf6f8697d728cbd2a6ffadf [ 38 ]

39 Area harvested in Australia since 1996 History repeats Source: INCB Report s Source: TPI Enterprises Ltd receives commercial licence [ 39 ]

40 Millions Importance of Poppies in Tasmania Highest total revenue contributor of crops in Tasmania (DPIWE) $80 $70 $60 $50 $40 $30 $20 $10 $- [ 40 ]

41 How poppies compare to competing crops in Tasmania Highest % Gross Margin of crops in Tasmania (DPIWE) 60% 50% 40% 30% 20% 10% 0% [ 41 ]

42 Agricultural Season Despite below average rainfall in Victoria (23%) and Tasmania (20%) both states achieved a 30% increase in kg/ha Source: Source: & [ 42 ]

43 Agricultural Overview Mainland

44 Mainland Agriculture Update Continuing to expand area and improve yield 1. Applying for NT growing 2. Sowing largest single paddock in Australian history (400ha) 3. Increased price by 15% which is still 20% lower than Tasmania 4. Increased field officers to 6 with appointment of Agricultural Director 5. First mover advantage in VIC and NT, SA and NSW expected in New varieties being tested in collaboration with University [ 44 ]

45 Best Results in Victoria Validated Victorian growing and relocation Sowed: 5 th May Rainfall: 167mm Total irrigation: 137mm Harvested: 1 st December Approx. Gross $/Ha: $1,900 Sowed: 13 th May Rainfall: 143mm Total irrigation: 149mm Harvested: 7 th December Approx. Gross $/Ha: $2,400 Sowed: 28 th August Rainfall: 115mm Total irrigation: 130mm Harvested: 27 th January Approx. Gross $/Ha: $3,700 Sowed: 17 th August Rainfall: 109mm Total irrigation: 145mm Harvested: 21 st January Approx. Gross $/Ha: $4,300 Sowed: 6 th August Rainfall: 223mm Total irrigation: 75mm Harvested: 13 th January Approx. Gross $/Ha: $1,750 [ 45 ]

46 Why Grow Poppies? As water increases in cost, poppies become more profitable Gross margin base case) p/ha Gross margin base case) p/ml 1, , Barley Canola Wheat Rice Maize Poppies 0 Barley Canola Wheat Rice Maize Poppies Gross margin spot price) p/ha 1, (200) (400) Barley Canola Wheat Rice Maize Poppies Gross margin spot price) p/ml (50) (100) Barley Canola Wheat Rice Maize Poppies Source: Wilson HTM equities research, TPI Enterprises Ltd (TPE), 14 th August Poppy crops with yield of 1.5tn/ha, assay of 2.2% and average input costs of $1,500 per/ha Base price = $100/ML and Spot price = $200/ML [ 46 ]

47 Investing in Technology - Drones Greater farmer information and better communication Very Healthy Healthy Plants Poor Health Under Stress Severely Stressed [ 47 ]

48 NT Capability Confirmed Further optimisation required for commercial viability Key Facts 1. Crop Emergence a) Occurred 16 days after sowing with an average of 50 plants/m 2. b) With earlier sowing it is expected to achieve greater plants/m 2. c) Water required is mm per day 2. Reduced security in-line with other states applied for 3. Full time agronomist on site for 100 Ha. 4. Sowing no later than June 10 th 2016 a) Subject to approval 5. Very fast growing cycle [ 48 ]

49 Agriculture Summary Improving on agricultural capability to supply 100 tonne output by Victoria has a good start with good rains occurring. 2. Tasmanian interest strong with good rains occurring. 3. South Australian regulations made public, NSW expected soon. 4. Importation approvals on track. 5. Significant Ag investment ongoing with drones, water meters, staffing, training. [ 49 ]

50 TPI Update ASX Announcement - 23 rd May 2016

51 EDQM increase in quality requirements Successful approval of TPI by customers in accordance with ICH Q7 GMP Recent Changes 1. Codeine Phosphate manufacture requires GMP supply of morphine. 2. Customers confirm TPI as being GMP compliant after successful audit. 3. Resupply will commence in June [ 51 ]

52 Industrial Hemp Enables TPI to begin initial plant Next Steps 1. Cultivate the plants under ideal conditions. 2. Analysis of Cannabinoids present. 3. Focus on strains that have high levels of CBD and low THC for extraction. Why participate in market 1. TPI has the requisite capability. a) Plant growing b) Regulatory experience c) Extraction experience d) Pharmaceutical substance 2. Should medicinal market become financially viable TPI is well placed to participate. [ 52 ]

53 Importation of Straw from Turkey, Hungary & Portugal BICON listing Key Facts 1. TPI has applied to import poppy straw from Turkey, Hungary & Portugal 2. TPI received its licence to import the straw from the federal government on 22 nd October TPI is awaiting the issuance of Final Biosecurity Import Conditions, from Biosecurity in Canberra. 4. Public consultation closed on 30 th of April Once approved, TPI will then only need to reapply for import permits from the Dept. Health for future shipments of poppy straw. [ 53 ]

54 Financials at 31 Dec 2015 Roger McPherson

55 TPI 2015 Full Year Results 2015 was a transformational year for TPI Key Points Total revenue of $3.7 million for Seed and NRM (884kg) sales of $2.1 million a) Production in Victoria commenced in November 2015 b) Seed sales from 2014/15 Tasmanian harvest only. 2. Grant monies of $1 million. Total loss of $25.9 million 1. Underlying operational loss of $14.5 million. 2. Non-recurring costs of $11.4 million including a) Impairment of assets at Cressy facility of $6.9 million b) Trial crops in Portugal and the Northern Territory $2.2 million c) Relocation expenses of $1.6 million d) Listing expenses of $0.4 million. Consolidated Consolidated $ $ Revenue Sale of goods 2,064,578 7,567,242 Other income 1,614, ,153 3,679,063 8,390,395 Expenses Production expenses (1,145,547) (5,169,892) Changes in inventory of finished goods (437,450) (449,035) Impairment of inventory to net realisable value (951,048) (4,742,482) Impairment of other assets (7,127,013) (3,153,714) Agricultural area trialling costs (2,237,456) - Employee benefits expenses (5,492,256) (2,918,081) Depreciation and amortisation expense (3,556,296) (1,998,551) Legal and listing expenses (1,029,163) (429,663) Travel expenses (1,239,859) (741,418) Relocation expenses (1,662,256) (869,841) Occupancy expenses (1,709,844) (671,992) Other expenses (2,211,451) (965,395) (28,799,639) (22,110,064) Loss from operating activities (25,120,576) (13,719,669) Finance income 415, ,441 Finance expenses (1,194,344) (1,092,325) Net finance expenses (779,262) (804,884) Loss before tax (25,899,838) (14,524,553) [ 55 ]

56 Summary TPI offers one of the few opportunities globally to invest directly in the licit narcotics sector 1. Growing industry 2. Manufacturing advantage 3. Highly regulated / significant barriers to entry 4. Established business, experienced Management team 5. Diversity of supply [ 56 ]

57 TPI Enterprises Ltd Ordinary Business 31 May 2016

58 Business of Meeting Attendance Cards Yellow Voting Shareholders Blue Non-Voting Shareholders Red For Visitors [ 58 ]

59 1. Receipt and Consideration of Financial Statements and Reports To receive and consider the Financial Statements of the Company and its controlled entities for the year ended 31 December 2015, together with the Directors' Report (other than Remuneration Report) and the Independent Audit Report as set out in the Annual Report [ 59 ]

60 2. Resolution 1 - Adoption of Remuneration Report To consider, and if thought fit, to pass the following resolution as an ordinary resolution*: "To adopt the Remuneration Report for the year ended 31 December 2015 as set out in the Annual Report 2015". *Please note that Section 250R(3) of the Corporations Act 2001 (Cth) provides that the vote on this resolution is advisory only and does not bind the Directors or the Company. [ 60 ]

61 Remuneration Report Proxies Received Proxies Received For: 23,207,270 Against: 48,601 Open usable: 39,417 Abstain: 0 Exclusions: 5,415,356 [ 61 ]

62 3. Resolution 2 - Re-election of Director Peter Robinson To consider, and if thought fit, to pass the following resolution as an ordinary resolution*: "That pursuant to clause 23.10(a) of the Company s Constitution, the members of the Company approve the re-appointment of Mr. Peter Robinson as a Director of the Company who, pursuant to clause 23.10(b) is retiring by rotation and being eligible, offers himself for re-election." [ 62 ]

63 Re-election of Peter Robinson Proxies Received Proxies Received For: 26,399,195 Against: 20,383 Open usable: 35,617 Abstain: 33,000 Exclusions: 2,222,449 [ 63 ]

64 Thank You For Attending Annual General Meeting 31 May 2016