Maggie Beer Holdings Limited (MBH) Earnings Call Transcript & Summary

Great pleasure to have Reg Weine, the Chairman of Maggie Beer; and Chantale Millard, the newly appointed and created Managing Director of Maggie Beer Holdings to talk about the results, which were released to the ASX this morning. The results, I think, speak for themselves, a splendid set of numbers by anybody's standards. So for the long suffering, you can see the light on the hill. For those who aren't shareholders, you probably should become one. And for the rest of you, well, I suppose we don't really care. So on that basis, Reg, Chantale, I'll hand over to you two.

Thank you, Hugh, and good morning, ladies and gentlemen. On behalf of the Board, it is my pleasure to welcome [Audio Gap] My name is Reg Weine. I'm the Chairman of the Board. Joining me on the call today is Chantale Millard. [Technical Difficulty] as is Sophie Karzis, our Company Secretary. Shortly, our CEO, Chantale will present our full year results. And at the end of Chantale's session, there will be a short Q&A session with all of you as shareholders. And before we turn to the full year presentation, I would like to just say a few brief words. Let me start by just touching on COVID. During this ongoing and evolving COVID-19 crisis, employee safety and wellbeing remains our absolute priority and concern. However, I'm pleased to say that all of our operations in all states continue to operate under the COVID state plans and restrictions that the group has put in place. And I would at this point, like to just acknowledge the work that our management team has done. COVID obviously created an incredible level of complexity operationally, and I think our team has done an outstanding job. Despite these unprecedented challenges facing the Australian economy and Australian businesses alike due to COVID, Maggie Beer Holdings has not only survived, but it has thrived. The FY '21 financial year has been a pivotal year for Maggie Beer Holdings for a couple of reasons. Firstly and importantly, the group achieved its first positive net profit after tax result for many years and its first as a listed food and beverage business. I think this result really reflects the underlying strength of our premium brands, our diversified business model, very tight cost control and a focus on continuous improvement and innovation. Secondly, in March 2021, we announced the acquisition of the category-leading premium hamper e-commerce business Hampers & Gifts Australia. As investors, I want you to know we haven't just purchased a hamper company, we have acquired an established, scalable, digital and e-commerce platform, and we think we've bought particularly well. HGA is a high-growth, high-margin e-commerce business, achieving unaudited net sales growth of 98% last year to $36 million, and delivering an unaudited full year EBITDA of $9.4 million. Having only completed the acquisition in May 2021, we have already integrated the business and commenced generating synergies, which Chantale will talk to in a little bit more detail. Consistent with our growth strategy, the successful HGA acquisition has created a large-scale premium branded direct-to-consumer business that leverages and strengthens our core MBP business. This highly complementary acquisition has significantly increased our digital marketing and direct-to-consumer logistics capability as well as enhancing our new product development process. Most importantly, it has accelerated our customer penetration and reach with combined HGA and Maggie Beer products e-commerce sales in FY '22 forecast to represent more than 40% of our group net sales, which we expect will be approximately $100 million. Maggie Beer Holdings has a very strong balance sheet, thanks to a lot of our investors on the call today. It is now profitable and it is cash flow positive. With the recent addition of the HGA business, our best-in-class e-commerce capability, our power brands and a strong pipeline of innovative new products, Maggie Beer Holdings remains uniquely positioned to sustain growth in both revenue and earnings. On that note, I'll now hand over to our CEO and Managing Director, Chantale Millard to deliver the FY '21 results presentation.

Thanks, Reg, and good morning, everyone. Thank you for joining this presentation of the 2021 full year results and overview of the future direction of the Maggie Beer Holdings Group. It really has been a privilege to lead the MBH group through FY '21, knew that have seen as well and truly shift from fixed mode to greater mode and successfully build the foundation to sustained future growth. The past 12 months had its challenges with the global COVID-19 pandemic continuing to cause disruption and lockdowns impacting all 4 businesses to varying degrees. However, all our businesses were resilient and most importantly, all our people were safe and well. FY '21 was also a year of opportunity, increasing numbers of consumers who want to buy Australian premium brands using local ingredients. And in addition, the shift of consumers to online shopping for hamper gifting continues with our e-commerce businesses further growing of the increased COVID-19 base set last year. Slide 3 is a brief summary of the achievements of FY '21 and the pathways set for future growth. We saw strong growth with FY '21 net sales and EBITDA. Hampers & Gifts Australia was successfully acquired on the 21st of May. And HGA has been fully integrated into MBH. It continues to grow strongly and is already using Maggie Beer products across its hamper range. On a pro forma basis, incorporating the full year of HGA, the combined results of MBH and HGA in FY '21 would have been $86.7 million net sales and $12 million trading EBITDA. And all businesses in the group recorded revenue growth. Now moving on to Slide 4 to look at the key metrics for the group. The group performed strongly over the past 12 months, achieving net sales of $52.9 million, which was up 18.8% on FY '20. We achieved a $3.1 million trading EBITDA, which was up 177% on FY '20. And as Reg said, it achieved a net profit after tax of $1.9 million at $16.7 million turnaround from FY '20 net loss after tax of $14.8 million. We had a strong balance sheet with $13.5 million in cash and $3 million in undrawn debt facilities, which really puts us in good stead and fund our future growth. So looking at Slide 5. Maggie Beer products continue to be the driver of growth, with 23% growth in net sales, including 103% growth in its e-commerce business. Paris Creek Farms and St David Dairy performed solidly with 3.5% and 9.9% net sales growth, respectively. And this was against continued lockdown in Victoria to St David Dairy and some disruption food service for St David Dairy and for Paris Creek Farms. Hampers & Gifts Australia's unaudited accounts showed fantastic growth in net sales of 98% in FY '21. Looking at Slide 6. A little bit about the HGA transaction. So we've improved investor confidence. The group completed the purchase of the highly complementary premium e-commerce business Hampers & Gifts Australia or HGA on the 21st of May. This exciting addition fast track's Maggie Beer Holdings key strategic goals of growing its direct-to-consumer and e-commerce business and diversifying revenue beyond the retail and food service sectors. HGA's impressive addition with high gross margins, strong cash generation and excellent EBITDA contribution. Recently the integration of HGA into the group is now complete with the MBP e-commerce business relocated to Sydney, which includes all of the dispatching customer service and HGA taking over the management of MBP's digital marketing from the 1st of July. HGA has also successfully implemented a new ERP system, which is the same ERP system that's in Maggie Beer products and Paris Creek Farms, which is going to give us greater insight into operations and allow group synergies. HGA will include over 10 MBP's products in its hamper range over Christmas and also in everyday core range. It's recently revamped about 43 of its everyday core range hampers to include the MBP products. And HGA already assisted in creating 16 new hampers for MBP. And across all of these hampers, there will be exclusive new products that are being developed by the 2 businesses together since completion. The cultural alignment of HGA with a group is excellent and has really been the key to its success of the speedy integration. It really does feel like they've been part of the group for much longer than they have been. So as you can see, we've been very busy since completion. We've seen some great initiatives already giving results. HGA inhouse digital marketing expertise, e-commerce logistics and customer value proposition combined with Maggie Beer products, operational expertise and premium programs will provide the platform to the ongoing growth of our e-commerce businesses. I'll now hand you over to Eddie Woods, the group CFO who will take you through the FY '21 financial results in more detail.

Thank you, Chantale. And good morning, everyone. Moving on to Slide 8. As Chantale mentioned, Maggie Beer Holdings premium brands proved their resilience and trade during tough trading conditions by delivering continued growth, revenue and EBITDA, a positive net profit after tax and positive operating cash flow financial year '21. At the group level, net sales grew by 18.8% to $52.9 million led mainly by Maggie Beer products. Gross profit margin percentage was slightly lower than last year at 46.8%. This was mainly due to greater sales of third-party produced products, increased sales to major supermarkets, requiring a higher trade and commercial spend. However, overall gross margin was $3.6 million or 17% better than last year. Maggie Beer Holdings cost for doing business reduced by $1.6 million or 8% compared to financial year '20, although sales increased by 18.8% this year, which demonstrates the group's continued focus on reducing costs and improving operating leverage. As a percentage of net sales, Maggie Beer Holdings expenses improved by 4 points from 45% of net sales in financial year '20 to 41% of net sales this year. This was achieved by sustainable cost tight initiatives and synergies within the group. Group trading EBITDA was $3.1 million or 6% of net sales, a $2 million or 177% improvement on last year. The statutory EBITDA of $1.3 million, which included the deduction of $1.6 million of noncash employee share options and HGA acquisition costs was $0.5 million better than last year. After depreciation and amortization of $3.3 million and a tax benefit of $4.3 million, net profit after tax was a profit of $1.9 million compared to $14.9 million loss last year, that included an impairment expense for Paris Creek Farms of $12.1 million. Moving on to Slide 9. Our balance sheet remains with $13.5 million of cash on hand and another $3 million of undrawn invoice finance facilities. The increase in inventory at 16.1% of total sales reflects the acquisition of HGA with an additional $4.2 million in inventory and only 6 weeks of HGA sales included. Inventory as a percentage of annualized sales was normalized in financial '22 with full 12 months of HGA sales. Overall, working capital for the company's is circa 18% of sales, an increase of 8 points compared to financial year '20. Again, this was due to the increase in inventory on acquisition of HGA. Once again, just to stabilize [indiscernible] as the group has a full 12 months of net sales finance spread. On a pro forma basis, including HGA's full year sales, working capital is circa [ 18% ], and inventory as a percentage of combined sales is 9.8%. Financial liabilities have increased by $11.6 million, which incorporates the expected value of the earnout payable for the HGA transaction offset by $1.3 million loan repayment to the Beer Family Trust, which is now fully repaid and a decrease in lease liability of $0.6 million. The increase in group net assets gain is mainly due to the acquisition of HGA. Moving on to Slide 10. Driven by strong sales and our lower cost base, the group achieved a $1.5 million positive operating cash flow in financial year '21. This is a $1.7 million improvement on financial year '20. Operating cash flow in quarter 4 was impacted by the acquisition costs and working capital for HGA and full year prepayment of insurance recently. Normalizing operating cash flow is $5 million better than quarter 4 and financial year '20. I'll now hand over Back to Chantale to provide an overview of each of our brands and outlook for the group. Thank you.

Thanks, Eddie. So moving on to Slide 11. This slide highlights the positive consumer trends that we are seeing in the marketplace, which are benefiting the group. And we believe that they'll continue to benefit the group going forward. Consumers are increasingly demanding Australian products that are made from 100% natural ingredients and ethically sourced and sustainably produced. Healthy and convenient choices make their lifestyle easier and better. Consumers continue to cook more at home using premium products that make their cooking easier whilst not skimping on quality or flavor. The success of the Maggie Beer products natural cooking stocks and the launch of the 100% natural bone broth and finishing sauces this week in August and highlights this trend. Another important trend is the increasing use of e-commerce with COVID-19 setting a new baseline for increment sales in many businesses, and this is what we are seeing in Maggie Beer products and HGA. As part of the e-commerce shopping experience, people are expecting a higher level of personalization. They want the same day or express post delivery, and they want great customer service. MBP's e-commerce grew by 103% in FY '21 versus FY '20, and this growth has continued to July '21, up 90% on July 2020. HGA sales were up by 98% in FY '21, and this growth has continued, in July '21, up 36% on July '20, and we're seeing that trend continuing for August also. So these are fantastic results and a fantastic way to start the FY '22 year. So looking at Slide 12. Maggie Beer Holdings now has a clear path to sustain growth, which will be achieved through the following key strategies. We're going to have further penetration into the Australian and international markets, e-commerce, direct-to-consumer and retail channels. We'll be continuing to create innovative new products with grocery, retail, e-commerce and direct-to-consumer channels. And we'll continue to increase our strategic marketing of our core brands to increase brand awareness and growth and continue to refine and optimize our operational businesses to ensure that we continue to have strong growth margins. Now we will have a closer look at some of the business units. There's a lot of information in the investor deck. So I'll talk to some of the key highlights, and I'm happy to take any questions at the end if you'd like, we're going to anything in a bit more detail. So Slide 14 is a quick snapshot of some of the new key Maggie Beer products that are going to be launched this year. As I just mentioned, we're launching the new beef and vegetable -- beef and chicken bone broth, and the 4 finishing sauces in August nationally this week and also launching new quince paste and pate in September nationally and also to some independent supermarkets as well. So we're really excited that they are the new additions to our everyday cooking convenience range that we're seeing a lot of growth in. So Slide 15. Of the back of strong growth in H1 FY '21, MBP net sales were up 23% to $25.6 million over the course of FY '21 due to the launch of new products together with strong growth in core lines of cheese, fruit paste, pate and cooking stocks. With the continued focus on growing our e-commerce business, Maggie Beer products e-commerce sales grew 103% in FY '21. And its trading EBITDA was up 23% to $3.9 million. While gross margin spending decreased, as Eddie mentioned, by 2.3% in FY '21 versus FY '20, this is due to the higher production of products by third-party manufacturers. But it's worth pointing out that these products still contribute really strongly to the bottom line. They're a lot less costly to manage. And -- but it does mean that we're able to scale up new products much more quickly without having to invest a lot of capital. So this is a key part of our strategy to get new products to market quickly and is less risk to the business. Slide 16. This slide is a further breakdown of Maggie Beer products, pleasing trading results for the year with the highlight of the growth in e-commerce business together with 90% growth in July '21, highlighting the upside to be realized in our online business. Now under the expert control of HGA, the digital marketing for MBP has really stepping up a notch. Improvements are being made in a number of areas. There's going to be better personalization for consumers with the implementation of a customer data management platform. This will allow personalization of MBP's digital marketing by showing customers products that they want when they want and by the channel that they want to converse on. We're also working on the optimization of the Maggie Beer website, optimizing sales pathways, customer journey, enhancing category and product pages for conversion and expanding our HGA conditioning through the addition of defined shopping categories. We're also looking to our corporate offers. We've enhanced bulk order form for corporates to make the sales process much more streamlined and also increasing the awareness to corporates and deeper corporate marketing. We have increased traffic to the site via organic and paid channels by expanding and optimizing the current position to bring more traffic to the site with higher buyer intent. And then we want to then obviously convert those to sales for the use of all of these above mentioned activities. So there's a lot of exciting digital initiatives that are already starting to show benefits in July and August. I think the key thing for me is that the marketing team is so excited of having Maggie Beer brand under their watch as well, and so it's great to see their new enthusiasm. Moving to Slide 18. The love for the Maggie Beer products continues. Our Cooking with Maggie series now has over 6.7 million views. The Maggie Beer Food Club has over 65,000 members, which is almost 10,000 member increase from last year. And the website already has over 2 million visits per annum. Consumers habit have changed with more and more people shopping online. And together with our large social media following, we had a largely engaged community that is still largely untapped. As outlined on Slide 19, FY '22, we're going to be increasing our marketing spend for MBP, which includes an extensive launch plans for our new products in retail, as well as continued media spend for core retail ranging. We'll also see build on the 3 months video on beyond trial that we feed at the end of the calendar year FY '20. With an all year around media plan across video on demand and some free-to-air TV in key south states. We'll be focusing on generating mass awareness, promoting popular ranges and giving support to new product launches. We'll also be doing selective influencer marketing throughout Australia and using extensive digital marketing initiatives with the HGA team for increased engagement across key channels such as Facebook and Google. Moving to Slide 20. As I said earlier, consumer attitudes and purchase behaviors have shifted to a buy local and aspirational focus. Consumers are seeking products that are better for their bodies, local communities and our planet. Meeting these trends head on, Maggie Beer product is investing in a range of -- a range-wide packaging renovation to educate consumers on the great things that we already do, calling out Australian owned and made, key Australian and natural ingredients. As part of our media plan, we also want to create a social media series featuring Maggie Beer herself, which will dive into the story behind the products, the locally sourced ingredients, why the products are made and also our connection to the local Barossa community. Now moving on to the newest member of the group, Hampers & Gifts Australia. HGA have been hard at work creating more big brands with their hampers range with the launch of 6 new Father's Day hampers. One of which you can see on Slide 23. And the upcoming launch of 20 new hampers in Christmas, which include over 10 Maggie Beer products in its Christmas Hamper range as well as across the everyday hamper range. As I mentioned before, they've upgraded 43 of their everyday hampers, which now include selected Maggie Beer products and also those new exclusive new products that we've developed between the 2 businesses and completion. They've also created 13 new baby hampers and refreshed 3 baby hampers -- further baby hampers, that's a category that they're seeing a lot of growth of as well. So again, everyone has been very busy. Looking at Slide 23. The purchase of HGA on May 21, as I said, it's a highly complemented premium e-commerce business. It fast track's Maggie Beer Holdings key strategic goal of growing our direct-to-consumer and e-commerce business, and diversifying revenue beyond the retail grocery sector. It includes 2 business units, The Hamper Emporium and Gifts Australia. On a full year basis, HGA achieved net sales of $36 million, which was 98% up on FY '20 and an impressive EBITDA of $9.4 million, which was a 115% increase on FY '20 and is equivalent to 26.1% of net sales. So it's really impressive. The improving EBITDA shows the operating leverage that the business is gaining as they grow bigger and scale up. And pleasingly, Q4 FY '21 was 26% up on Q4 FY '20, and July '21 net sales continue to grow, increasing by 36% over July '20. And this highlights the upside still in the business even over the prior COVID-19 closing periods. As outlined on Slide 24, the key growth drivers for Hamper Emporium were increase in website visits by about 105% to 2.4 million, a 99% increase in customers to 113,000, a 113% increase in repeat customers to 34,000 and a 2.1% increase in its Net Promoter Score to 78.5. And I just want to point out that, that net promoter score is a world-class Net Promoter Score. They generally an average of 50 is considered good. So we're getting 78.5 is quite amazing. And another metric on this slide with the decrease in the customer acquisition cost for new customers, which decreased by 18.3% in FY '21. Slide 25 shows the key growth driver for Gifts Australia, an increase in its website visits by 54% to 2.5 million, a 49% increase in customers to 49,000, a 48% increase in repeat customers to 9,000, and an increase in Net Promoter Score to 78.9, again, a world-class result. And the customer acquisition costs for Gifts Australia improved by 4.65% FY '21 as well. So exceptional results for both businesses of HGA with lots of upsides still to come. Turning to Slide 26. HGA is on a similar journey to MBP products, although a lot more advanced in terms of its digital marketing strategy. In FY '22, HGA has already implemented a new customer data platform that will allow to have better personalization for its customers, to increase customers, repeat customers and reduce the cost of acquisition of new customers. They are also implementing other personalization tools [indiscernible]. It also launched a new corporate ordering platform by our web-based app that will simplify and optimize the corporate checkout experience, and will help them be able to process and quickly deliver demands in core orders that they're seeing. They're implementing better delivery options for customers, which would give new marketing touch points as well. And they've got a lot of other technology to increase their range in the business, which is really just going to streamline what they're doing so that they can upscale and operationally they can cope with that growth, which is fantastic. So moving on to Paris Creek Farms. Slide 28 shows the new Paris Creek Farms range, which personally, I believe, is the best yogurt that Paris Creek has produced yet. This was launched in Woolworths in South Australia, together with some Woolworths premium stores in New South Wales and also nationally in independent stores. And the yogurt range it came out at the end of June, and we're already seeing it start to gain some really good traction. On Slide 29, Paris Creek Farms is progressing well. We continue to review the future strategy of the Paris Creek Farms with an ongoing focus on returning the business to profitability and also a focus on increasing value with the reset cost base and a launch for Paris Creek range in Q4 FY '21. FY '21 saw net sales grow by 3.5% and the business reduced its trading EBITDA loss to just $0.28 million. In Q4 FY '21, Paris Creek Farms conducted a reset of its private label business by not electing to do some unprofitable white milk business. We still have an impact on its net sales in that quarter and its overhead factory recoveries. However, as a business -- as the business focus has been growing its branded products, it will be better positioned in the medium term. Gross margin was up 8.9% to $7.6 million, with gross margin percent improving by 3.7 points to 47%. As a result, the business continues to refine its cost base and selling a more profitable mix of products. Slide 30 gives further breakdown of the PCF products. And as mentioned, further refinements of its cost base and improving sales and product mix are expected to underpin better gross margins and a return to a positive trading EBITDA. Slide 31 shows the marketing initiative. So into FY '21, we continue to increase our marketing for PCF. And with FY '21 radio campaign performing well, we'll increase this activity in FY '22 with a focus on our key selling points of sustainability, organic/chemical free, local and environmental farming practices. We're also launching engaging consumer competition to increase our connection with community and generate brand loyalty together with continuing our influencer marketing activity in-store media to engage consumers and strengthen retail relationships as well as pushing our digital media plans, which we are now through social media out in Victoria and New South Wales and so. Moving to St David Dairy, Page 33. So the new top cheese brands that launched in March 21 by St David Dairy, which is made by Paris Creek Farms and packaging looks fantastic on this range, and it's had a really good take-up and is selling really well in Victoria. Looking at Slide 34. St David Dairy's net sales increased by 10% year-on-year despite continued lockdown in Victoria due to COVID-19. The business continues to pivot further into retail with approximately 25% of its revenue now from retail grocery sector. The business has also signed on 2 new distributors to service the Mornington Peninsula/Gippsland and Ballarat/Bellarine Peninsula region. And these are growing well. Consumer loyalty to expand the launch of new soft cheese range in the business' ability to pivot into new markets and seeing it continue to remain profitable and cash flow positive as well as maintain sales growth and a strong EBITDA in FY '21. The gross margin percentage was impacted in FY '21 by the loss on sale of excess raw milk. Excluding this loss on sales, the gross margin could have been 51.3%. With new supply arrangements in place, FY '22, we'll not see this loss being incurred on any excess milk that we had. Slide 35 gives a further breakdown of St David Dairy. One real pleasing thing was in March 2021 when the business came out of lockdown. The business received record weekly sales. And we've seen sales rebound after each lockdown, which just shows the strength of the brand, the loyalty of the brand. It's also been impacted by prolonged lockdown in Sydney's with some [indiscernible] customers being the Sydney-based distributor, but we expect this to return to growth once restrictions ease. The business' ability to adapt the ever-changing COVID-19 environment, brand strengthen and customer loyalty ensures St David Dairy continue to grow and be profitable and cash flow positive in FY '21. So just skipping over to Slide 36 on to Slide 37. Just to read an update, I guess, on COVID-19. The group performed well in FY '21 despite the COVID-19 pandemic. As the group strongly encouraged the staff to get vaccinated as soon as they can, Maggie Beer Holdings provides time off for staff to do this. And we understand there may be some sick leaves required for reactions to vaccine. And all Maggie Beer Holdings directors are either fully or partially vaccinated. And as a group, we feel it's really important for everyone to get vaccinated as soon as they can to sort of see the way forward out of the lockdowns where we're at the moment. It did cause disruptions to businesses but all our people kept safe and well. And as a food and beverage and e-commerce group of businesses can continue trading during the lockdown scenarios as they're planning out at the moment. And just adding on that, we have very strict business down segregation measures in place during the lockdowns to try and protect the businesses as much as possible as well as backup staff to work from home, were coming in start the business up if we had to do a changeover of staff. So we're quite strict about those measures. Looking at Slide 38. The future is bright. Maggie Beer Holdings is a clear path to sustained earnings and revenue growth, with all premium brands remain on trend and continue to resonate with Australian international consumers. Following the purchase of HGA, Maggie Beer Holdings has a large e-commerce business that will accelerate growth while leveraging its manufacturing operations. The group has ambitious growth plans with a clear strategy to achieve sustained double-digit growth in net sales and earnings with four key initiatives: growing our commerce businesses with the combined firepower of Hampers & Gifts Australia and Maggie Beer products; increasing our ranging in Australian and export markets for its core Maggie Beer product range; new product development and product launches; upweighted investment in marketing and advertising to increase brand awareness and improve conversion and build loyalty. We have a strong balance sheet with $13.5 million in cash and $3 million in undrawn debt facilities. So we're well funded for our future growth. Maggie Beer Holdings premium brands resonate strongly with Australian consumers who reward us more than ever and are looking to buy locally stored high-quality products. FY '22, we see Maggie Beer Holdings continue to grow its retail businesses with new product launches and investments in marketing whilst also accelerating growth of its e-commerce businesses. The opportunities are many with the group transformed and a very clear path to sustained growth. We're really excited about the future of the group as we push towards revenue of $100 million over the next 12 months and look forward to rewarding our shareholders by providing continued innovation to our customers and support for our local suppliers and the communities in which we operate. We really want to thank our shareholders for their continued belief and support in the group and a huge thank you to all of MBH team for their hard work and dedication to achieve this great results. Thank you. Hand over back to Reg now.

Catherine, what I'd like to do now is just open up for a quick Q&A. Perhaps if we could get shareholders to state their name first and then their questions.

[Operator Instructions]

[indiscernible] Robertson. I got to ask the obvious question. So we sit with a franking account, which you can see in the annual report. And moving to quite dramatically increased profits. When would you have thought the shareholders might expect a dividend, Chantale?

Look, we've got some significant working capital coming up this year and an earnout payable FY '23. So look, I think realistically, we will review it every 12 months. But I think as we're investing back in the business, we've probably got a couple of years to go. What do you think, Reg?

Yes. No, I agree. I think we do as a Board regularly review our capital management plans, including dividends. There's no current plan to pay dividend, obviously. But as you said, we've got the benefit of those franking credits in our back pocket, which we'll have going forward. So I think Chantale's right. Right now, we're very focused on ensuring we have sufficient working capital to fund. With a fairly explosive growth anticipated over the next -- particularly the next few months where we have that sort of peak working capital requirement around our Christmas November, December trading period, particularly in HGA. So I think that's the answer for today.

Peter [indiscernible] Congratulations, and thank you for a great result. Just in terms of SKU and ranging and seasonality and perhaps a bit of a bit of a moving to children's product because the children's market is massively underserved as we all know. But could you just deal with Page 12, which I think you sort of ran through very quickly, to some channels to market, increasing the representation of the product within the major supermarkets and that seasonality element as well, please?

No problem. So the seasonality is different across the group. Now I'll just [indiscernible] Paris Creek Farms and St David Dairy, a fairly stable throughout the year. So the Maggie Beer products business, it used to be a lot more seasonal than it is at the moment. Since we've introduced a new cooking range of cooking stock soups and the finishing sauces and bone broth that will really help even out those vegetarians]. So previously for October, December, it was just sort of a much bigger part of our revenue. It will still be the most seasonal part of our business through the entertainment season, but it will be a lot flatter going forward. The HGA business is the -- probably -- it's still the most seasonal out of all of them with that September to December period, probably equaling about 70% of their revenue. So that is one of the things that, that business is doing. So they've had a lot of success with their baby hampers and also doing other hampers for things such as real estate when people buy properties. So they are really trying to tap into those other occasions that are Mother's Day, Christmas, Eastern and Father's Day to balance that out. But just on that, I think they've put a lot of work into Father's Day and Mother's Day and to sort of try and even that out as well. And we're having -- and we're really seeing the growth in August already with the Father's Day hampers as their range. So that is something that the business is working really hard on to try and capture those other gifting everyday [ giftication ] for birthdays. And just really quickly, I think that's what the customer data platform is going to be really key for because that will have everything in there personalized for everyone, whether they bought a gift to someone the previous year. It will pop up a reminder. It will say, would you like to do this again? It will know their birthday. It will be a much more personalized service to make it easier for everyday's job. So I think we're going to see that have a real tap over the next 12 months as well. Did that answer that point, Peter?

Yes. And the children's ranging?

Yes, the children's ranging in the baby hampers. Yes. So that's something that I had for a little while, and they've seen very good success in that. So they're broadening that out now to include things like kids toys, kid books, and craving -- yes, so the new hampers that they've craving will add to that range, and that's something that we will then do another round of next year. So they're doing specific digital marketing around that to target those customers. And as you said, that leads to just a huge market. And so they're really trying to tap into that further.

Great. Can I jump in? It's Nick Maclean from Surrey Asset Management. Just three questions. Firstly, where are you, as yourself as the vast spending, the most of your time in the business sort of day-to-day? And then secondly, I know you've got a lot of cash, where the gaps you'd like to fill in the business, so where the holes that you like to like to fill? And then finally, a long-term question, where do you think the company will be in 5 years?

So personally, at the moment, my times in the last 2 weeks been doing annual reports. But don't ask outside of that. It's -- yes, they working during July. There was quite a bit of time spent on the integration of HGA into the group. But that was time that was very well spent because it has just gone really smooth. We've been able to achieve a lot of stuff since the completion on the 21st of May. But outside of that, I spend time across all of the businesses and in varying degrees depending on what's going on at that particular time. So -- but I try to spend a lot of time, I guess, on the higher wealth-generating assets, which has Maggie Beer products from HGA and I guess that's my process at the moment with a new product launching, the new hampers that we're getting up and getting -- and really focusing on the group hitting its numbers coming up to Christmas. In terms of gaps, we did factor into the budget this year. As a group now, we will be over 200 employees. So there were a couple of gaps that we had, particularly around having someone to manage sort of people, culture and performance.

Sorry to interrupt. When I say gaps in business, I mean the actual business model, like assets you want to acquire to integrate?

No problem. Yes. No, that's fine. Look, at the moment, we -- in terms of gaps, we're pretty happy where we're sitting at the moment, but that will be the future. There are things that potentially could be really attractive in future, things that we could just purchase and vertically integrate through the retail model of Maggie Beer as well as through the e-commerce business of Hampers & Gifts and Maggie Beer as well. So I think its future assets that could do that, could be attractive to us. But at the moment, we're really focusing on growing the assets that we've got.

Excellent. And then yes, the last question. Where do you think you'd like the business to be in 5 years when you leave or if you leave?

That's a very deep question. Look, we've got a lot of growth yet to come and a lot of big plans to play out. So yes, I'm not going to -- I'm not sort of give a revenue growth, I think that -- I'd like the e-commerce business to be substantially bigger. I think I'd love for us to be in that full cheese and [ lunch ] will have a space with a large distribution of hampers for that as well as sort of broadening into the international markets for the e-commerce with gifting. I think there's a lot of room for us to do supplying that space as well. On the retail side, I think that there's room for the Maggie Beer products to grow, especially across the other retail network and [ so ]. We've got a lot of innovation and space that we can fill there. So I know I'm not answering your question directly.

Sorry, you are. So operating revenue...

That's right. We've got a lot of things that we still want to achieve. And in 5 years' time, we [indiscernible] been ready to someone else come with some new ideas, I don't know.

[indiscernible] for Bridges. Fantastic results and well done. Look, I just question the Paris Creek and St David Dairy contribution. I kind of wonder what -- how much time is being spent on that? And where do you see those as we move into the future?

Yes. Look, Paris Creek Farms, with St David Dairy is -- we still think that there's a lot of value to unlock in that business. We saw when it came out of lockdown that the sales has rebound so quickly. So we've still got plans on what we can do with that business. We just need to clean air to be able to sort of let them play out. So it sort of washes it face, it still makes -- it still contributes to EBITDA and cash flow. And so we've still got David. We've still got some plans we want to play out with the St David Dairy. Paris Creek Farms, we've done a lot of the work there resetting the cost base. It really is a volume gain now. As we've mentioned, we did strategic review of that asset. And part of that included launching a new greek yogurt range. It seems we can get take up of that nationally. As a dairy business, a large dairy business, it does still take up quite a bit of time. And that's one of the things that we're considering as well over the next 3 months in terms of that time, whether that's fit itself elsewhere. And the main goal is returning it back to profitability, but ultimately, what is the best way to increase shareholder value. So Reg and I are working through all of that at the moment. But I guess as a group, it's sort of sort of Maggie Beer products and HGA, which is very well aligned and now just storming ahead, and it does need some work and the PCF and St David Dairy assets.

Ashwin Patel. Just a couple of questions. Just firstly, just on Maggie Beer, just to talk -- can you elaborate on that third-party business you're getting and that lower growth. I can see that the EBIT margin, a little surprised maybe it's not coming through in terms of higher profitability in the Maggie Beer or is that still to come with some of these third-party products that you've taken on? And maybe could you give us an idea what sort of products they are that you have you taken on if you can?

Yes, sure. So we saw a couple of things happening in FY '21. So we sort of -- our cheese category with the highest selling category, and that's had about 50% growth. So that we have 4 different businesses that make cheese for us now with our 9 cheese food. So that's now a biggest manufacturing. But that we've also got our cooking stocks and our bone broth and our finishing sauces that are made by third-party. So they are the key ones. We've got some other smaller ones that get made as well. And so they do attract a lower gross margin. But as I mentioned, they are less costly to handle. So we do see a lot of that drop through to the bottom line. So we saw a slight growth in this sort of EBITDA percentage up above that 15%, which is pretty strong for a food business. And as we -- and I think that the beauty about the third-party product is that as we grow, so we're presenting our stocks and finishing sauces and bone broth to [ calls ], that's something -- if they get picked up, we can easily scale that up. And we don't have the corresponding capital investment in the background if we were doing in ourselves. So yes, the third-party product, it is a key part of our strategy and will allow us to be able to add more products on without really adding a lot of headcount into the business to manage that.

Okay. And just on COVID sort of update. Obviously, no Sydney back in there. How are you reading sort of -- I think historically or going back there was higher consumption cheese? And obviously, you got the hamper business, there might be some benefits. But is there some negatives in terms of the shutdowns at the moment? Or how you're reading the consumer mode in both of those states?

Yes. Yes, you're right. And you have sort of gone back into sort of part of last year for the retail side, and we are -- even though we were growing e-commerce businesses, we're definitely in the last couple of weeks seen a pickup in that and it has shot up further. And it really is the sort of the St David Dairy, the businesses have got that food service exposure. So if you look at the Paris Creek that St David Dairy, I'd say as restaurants close, they just receive that automatic sort of butter and bulk those sorts of products that go into that. But it does -- because I had pivoted into retail as well as [indiscernible] and takeaway coffee and those sorts of things, we're still able to operate very effectively and profitably under that model. So it is sort of replicating what we've seen in previous years. And consumer sentiment, I think the week of July it was very good for maybe retail and all this is continuing on. So we haven't seen that demand for premium brands drop off here. So yes, it would be really interesting. We're obviously cautious what's going to happen over the next 6 months. At the moment, there's not a full blown job keeper scheme. Yes, as everyone, I think everyone is still a bit cautious and a little bit sort of wary of what the next 6 months holds. Yes, it's looking positive at the moment.