chairman’s address at the annual general meeting of …

CHAIRMAN’S ADDRESS AT THE ANNUAL GENERAL MEETING OF

BESTON GLOBAL FOOD COMPANY LIMITED

Held at Hilton Adelaide, Ballroom C,

Level 1, 233 Victoria Square, Adelaide, South Australia on

Friday 23 November 2018 commencing at 10.30am (Adelaide time/ACDT)

INTRODUCTION

Good morning Ladies and Gentlemen.

On behalf of the Board, I would like to welcome you to Beston

Global Food Company’s Annual General Meeting.

I am Roger Sexton, the Executive Chairman of Beston Global

Food Company.

I ask that you ensure that your mobile telephones are on silent

mode or switched off.

AGENDA

At today’s meeting, we have a number of formalities to deal

with inclusive of the consideration of the Group’s 2018 Annual

Report, the adoption of the Remuneration Report, the re-

election of two Directors, and the renewal of the proportional

takeover clause.

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WELCOME

With me, sitting at the front of the room, are your Directors:

Catherine Cooper

Petrina Coventry

Stephen Gerlach

Jim Kouts

Ian McPhee, and

Company Secretary, Richard Willson

I am also pleased to welcome Brad Pollock representing our

auditors Ernst & Young, our legal counsel Andrew Corletto from

Minter Ellison, and Link Market Services, who will assist as

required in the counting of votes in respect of all resolutions to

be put to the meeting.

I am also pleased to welcome our many guests from interstate

and overseas. These include:

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APOLOGIES

We have received apologies from:

Mr Dequan Liu

Mr Benjamin Ding

Are there any other apologies?

We will now proceed with presentations on our Annual Report. I

would be grateful if you could hold any questions that you

might have on these presentations, or on the Annual Report

itself, until the end of the presentations.

CHAIRMAN’S REPORT

Last year at this AGM, I explained the work which we had done

to build out our Dairy Division and set up the Company with a

new level of operations to achieve sustained earnings and

capital growth. As we have detailed in the Annual Report, that

work has largely been completed and the Company is now

putting these investments to work.

While I wish to spend most of the time in this Report talking

about where the Company is going in the future, I would like to

spend a few moments reflecting on where we have come from

over the last three years.

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What did we set out to Achieve? (Slide 1)

What we set out to achieve, at the time of our listing in late

2015, was four main objectives.

1. To take healthy eating via the best of Australia’s food and

beverages to the world’s growing consumer markets.

2. To acquire undervalued assets and build out the assets to

realise their incoming generating potential and capital

growth for our investors.

3. To build a reputation for quality, integrity and trust with

all the products sold by BFC.

4. To build sustainable brands which have equity value in

their own right.

In a nutshell, we wanted to become recognised by both

wholesale and retail customers, in all the markets we supply, as

a company that can enrich lives every day by providing healthy

eating solutions with premium quality, nutritious food and

beverage products.

We have achieved all of these objectives and built a company

that we believe our shareholders can be proud of.

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Business Model (Slide 2)

The business model that we put together to achieve these

objectives was a three-component model whereby we control

the raw materials that go into our foods, control how those

materials are processed into healthy, premium quality products

and have control over how and where these products are

offered to consumers for purchase.

The strategy for implementing the first stage of growth under

this business plan (i.e. the first three years) was straight

forward.

The Business Plan & Growth Strategy 2015-2025

(Slide 3)

Essentially, the plan was to fix the assets we had acquired and

then build out of our Dairy Division while our financial

performance was underpinned by the sales commitments made

by our IPO cornerstone. We estimated in our original financial

forecasts that the sales volumes and parameters written into

these commitments would have delivered net profits of some

$25 million in these first three years if honoured.

As we have explained at previous Annual General Meetings and

other communications to shareholders, the non-performance of

our cornerstone investor against these sales commitments was

a result of reasons internal to that company. There is no doubt

that this non-performance had a significant negative effect on

BFC, and our shareholders.

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Amongst other things, we had to embark on the dairy build-out

program without the benefits of the earnings “cover” which was

to be provided by these sales commitments.

I do not intend to dwell on this matter today or to reiterate

what we have stated previously in relation to the matter. It is

important nonetheless to reflect on the matter in order to

explain why we changed direction from a predominantly

international sales focus to a predominantly domestic sales

focus.

It is often said that every dark cloud has a silver lining.

The silver lining in this case was that the non-delivery of

committed sales into China caused us to accelerate our efforts

to build our brands in our home market.

Three years ago, the Company had no presence whatsoever in

the Australian retail market . . . we had no brands, no domestic

consumer awareness and no retail sales.

As of today, we have our award-winning brands selling in 930

Woolworth stores and over 400 Metcash stores (IGA, Foodland,

etc.). We have recently launched products into 50 Coles stores

across the country and into 140 “On the Run” stores in South

Australia. Our total sales have doubled each year over the last

two years and our sales mix has moved progressively from

predominantly commodity trading channels at the outset to

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Retail, Quick Service Restaurants, Food Manufacturing and

Distribution and with a wider mix of products than when we

started.

When we embarked upon the journey to build the Beston

Global Food Company back in 2012, we had the vision of

creating something distinctive . . . a food company which

produced only healthy, safe and nutritious products which were

free from all the artificial additives like colourings,

preservatives, accelerants and fillers typically used by the large

global food companies.

As many of you would know, this is not the first time that

Stephen Gerlach and I have built a business from the ground

up. We have done so many times before, and always very

successfully such as with the Beston Wine Industry Trust (now

owned by Li Kai Shing) and Discovery Holiday Parks, the largest

owner operator of caravan parks in Australia.

That said, it is fair to say that it has taken longer to get the

building blocks in place for the Beston Global Food Company

than what we expected at the outset.

Headwinds on the journey… (Slide 4)

There is no doubt that we have had a lot thrown at us during

our journey . . . including from having a major competitor buy

the Mozzarella plant at Jervois when we were bidding for the

UDP dairy assets and subsequently cut them up for scrap . . .

from having our cornerstone investor back-track on its pre IPO

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sale commitments . . . from having our dedicated natural gas

line cut off at one point by the energy provider because of

supply constraints . . . from dealing with the massive fire at

Thomas Foods, our neighbour at Murray Bridge, which almost

trebled our insurance premiums and took some $1.8 million

straight off our bottom line . . . through to, most recently,

dealing with a six month delay in receiving delivery of our new

state-of-the-art Mozzarella plant from Italy.

We have nevertheless held the course, both because of our

fervent belief in the end goals that we set out to achieve . . .

and because of the commitment to our shareholders who have

stayed with us despite the lack of returns since our first

dividend payment in 2016.

As stated in our Annual Report, like most businesses from time

to time, and especially these in start-up mode, we have got

some things “wrong”. That said, we have also done many

things “right” and in a relatively short space of time.

We have achieved most of what we set out to achieve over the

last three years in terms of creating a portfolio of healthy

nutritious food products. Amongst other achievements, we

have:

What have we achieved: last three years? (Slide 5)

• Built 8 new brands and developed over 50 different

product offerings

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• Won 70 medals in 3 years for quality and product

excellence

• Taken products which previously didn’t exist into the

major supermarket chains across Australia, including

Metcash, Woolworths, Aldi and Coles

• Built a traceability and anti-counterfeiting technology with

11 International Patents

What have we achieved: last twelve months? (Slide 6)

Over the last twelve months we have:

• Acquired and installed a state-of-the-art Mozzarella plant

at Jervois

• Restored the hard cheese, cream and butter plants at

Murray Bridge and Jervois

• Increased our milk in-take by more than 25% over the

prior financial year to 120 million litres

• Increased the productivity on our BFC owned farms with

an increase in herd numbers to around 3,000 dairy cows

• Won a significant contract with a major Australian retailer

for 30% of our Mozzarella production

• Launched a new adult snacking range of products, “Fancy

Bites”, into over 900 Woolworths stores nationally

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• Moved to 100% control of Scorpio Meats and rationalised

ready-to-eat meat production into one factory at

Shepparton, Victoria (under the new brand of “Australian

Provincial Foods”)

• Doubled sales revenues to $48 million (92% of which is

dairy revenue).

During this time, we have expended considerable time and

resources in marketing our products to get them known

amongst both wholesale and retail customers.

Key sales channels in Australia (Slide 7)

The key focus of the company, now that we have completed the

build out of the Dairy Division and implemented the marketing

strategies, is on achieving sales at acceptable margins.

To do this we have substantially expanded and strengthened

our sales team over the past six months. Our sales team has

increased from 4 people to 14 people with staff on the ground

in Melbourne (to service the Victorian and NSW markets)

Brisbane (to service Queensland and the Food Service sector)

as well as in Adelaide.

Hard Cheese producing high value Parmesan & Gruyere

(Slide 8)

The build-up of our sales team has coincided with the

expansion of our product range . . . with the bringing on-

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stream of our new hard cheese products, Gruyere and

Parmesan . . . in addition to our new Mozzarella cheese and an

increase in associated by-products (cream, butter and sweet

whey powder).

Once we had commercial quantities of Mozzarella, of consistent

quality, available for sale, in the fourth quarter of the 2017-18

financial year, we implemented a campaign to take our

“Edwards Crossing” branded Mozzarella to the market.

The resultant sales have taken a lot more time to put in place

that we expected.

In the food service and food manufacturing area, many of the

large users of Mozzarella have fixed contracts (based on

volume and time periods). We have had to demonstrate the

superior quality of our Mozzarella product and then wait until

these contracts have expired to shift them across to our

product.

In the retail area, we have had to spend monies with marketing

campaigns to promote brand awareness amongst consumers,

which again takes time. Pleasingly, we have found that retail

customers are “sticky” in that once they have discovered the

premium quality of our brands, they tend to stay with us and

become repeat buyers.

Notwithstanding the time delays, and expenditures on

marketing, we have received considerable traction in

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penetrating these markets, as can be seen from our revenue

results.

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Framework for execution of sales targets in place

(Slide 9)

Going forward, our market focus and strategy, is three-fold.

Firstly, to continue to expand sales revenues in the food

service, food manufacturing and quick service restaurants

(QSR) sectors away from the bulk trading channels where much

of our revenue was earned initially.

Secondly, and importantly, to substantially increase our share

of revenue gained from the Retail segments of the market.

Thirdly, to continue to grow our international sales.

Markets and Customers (Slide 10)

In this last financial year, 2017-18, the Wholesale markets

(food service, food distribution and QSR) accounted for 59% of

our sales, Food Manufacturing accounted for 33% and Retail

accounted for 8%.

In this current year, 2018-19, our plan is to continue to

increase revenues overall but shift more of our sales into the

higher margin earning Retail segment.

To explain the plans we have put in place to achieve this shift,

and outline the changes which we have made to our sales team

(and strategy), I would now like to introduce our General

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Manager, Sales and Marketing, Mr David Wilson and our

General Manager, Marketing, Ms Maryanne Noon to the podium.

After the presentation by David and Maryanne, our Chief

Financial Officer Darren Flew will speak to our Financial Results.

(SALES AND MARKETING 2018 AGM PRESENTATION)

Sales & Marketing (Slide 11)

Firstly, I wish to quote from the 2017/18 FY Annual Report

under the section – The Path Forward…

“Sales are expected to approx. double again in this FY19

financial year on the back of the increased milk supply and the

start-up of the Mozzarella plant.”

I would like to point out that in January to May this year we

averaged 2.3M per month in sales, however the average

between then and now has tripled. The focus is not only on

doubling or tripling our sales- it is about delivering sales growth

with healthy margins.

How have we prepared for this to meet our Annual Report sales

vision?

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Sales focus & team (Slide 12)

We have really put our sales operation under much scrutiny

and have identified our gaps, and by filling these will ensure

that we have the best opportunity to deliver or even exceed our

targets. I would like to introduce some recent appointments

and highlight some of these strategies that we have put in

place or going to put into place in the near future:

• In August we appointed an Account Manager focusing on

VIC and NSW: Mr Paul Glenister.

• Paul comes to us with a wide breadth of experience in the

Food Service and Retail sectors. We have identified that

VIC is a State that has the highest demand for Mozzarella

in Australia, so it made good sense to have a senior

account manager located in this State. Paul will also be

servicing NSW, until such time as we appoint a dedicated

Account Manager for NSW.

• Part of this restructure was also the appointment of Rob Di

Pietro – Rob also comes to Beston with a wealth of

experience predominately within the distributor network.

We are already experiencing very positive outcomes from

his appointment.

• We have also focused on the back-of-house operations i.e.

demand planning, sales analysis and sales and customer

support and have been able to develop existing Beston

staff into these roles. This work has provided us with

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much needed critical management information that assists

our decision making.

• Lastly, I would like to introduce Paul Richardson who has

joined the team last week and comes to Beston with 18

years’ experience in FMCG retail as a National Retail

Manager. This is an area that will be a significant focus

going forward and an area that we believe will be our

greatest opportunity.

What I mean about Retail being “our greatest opportunity” is

that it will give us the greatest margins. We need to be

shifting the Beston product sales focus more into retail as this

will give us the greatest margins. Re-iterating what the

Chairman mentioned in his address that FS, FM and QSR

accounted for approx. 95% of our sales in the last 18FY with

only 5% of sales being generated from Retail.

My background is not dissimilar to Paul Richardson who I just

introduced, when I joined Beston in May this year I brought

with me over 30 years’ experience in the FMCG retail.

Retail Focus (Slide 13)

Since I commenced at that time we have successfully launched

4 products into major retailers including Woolworths, Coles and

the Independent network i.e. IGAs, Drakes, Romeo’s and also

Aldi and Costco in Australia – these being Fancy Bites, Edwards

Crossing 200 gram range, Edwards Crossing Vintage 150 gram

and a 3 Cheese Entertainment Board that have just become

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available leading up to Christmas 2018 and Easter 2019

(Scorpio now Provincial Foods, as the Chairman mentioned,

have been stocked in Aldi and Costco for a couple of years).

Another exciting recent initiative is a launch of our retail range

in the 140 Award winning OTR convenience/BP stores in SA

(OTR are looking to expand their SA operation nationally).

Also, worth mentioning are our key partnerships- with a major

retailer where we supply 180MT per month for their private

label along with GYG and McCains.

The key strategy to penetrate Retail further is to grow our

existing relationships in MSO’s and the national key retailers.

While our focus will primarily be on Retail, especially now that

we have a dedicated team member with a strong retail

background, we will also continue to grow our Food Service

area. Another new area that we are going to focus on and

where we see potential is the manufacturing sector, for

example; as what we are currently doing with McCains.

International (Slide 14)

Part of the Sales and Marketing restructure has also been the

appointment of a GM International Business and Logistics being

Jen Christensen. Jen brings with her a wealth of experience

and education in International markets and logistics along with

her excitement and enthusiasm. Jen will be continuing to build

our current ASEAN markets with the focus on appointing new

Distributors in potential markets moving forward, including

Korea, Philippines, Japan and the USA.

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I will now pass to Maryanne our GM Marketing who will give

you an overview on how marketing supports our sales vision.

MARKETING

David has just given a great summary of how he has

restructured the Sales area of BFC and to a lesser extent how

we have been restructuring the marketing side of the Company.

I commenced with the Company in July this year and since that

time I have brought a number of marketing functions in-house.

Branding (Slide 15)

Over the past few months we have also put our brand

architecture under the microscope. Going forward, our Beston

Global Food Company Corporate Logo will take more of a

presence on our products and actually in all our marketing

across the board. For example, we have now embedded the

word ‘Beston’ into our ‘Edwards Crossing’ and ‘Mables’ logos

which goes on all our cheese packaging. In the process we are

also looking at how we best position all of our Awards on our

products.

Awards (Slide 16)

As the Chairman mentioned in his address, we have won a

grand total of 70 Champion, Gold, Silver and Bronze high

profile, highly respected and enviable industry Awards over the

past 3 years, including being named the Best Cheddar in

Australia in 2017 and the Best Colby Cheese in Australia in

2018 by the industry body the DIAA. More recently we have

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received an Emerging Exporter Award from Business SA 2018

Export Awards.

Presenting our products (Slides 17&18)

Now, to fit all these awards onto our products, we would either

have to produce enormous chunks of cheese (which would take

up most of the retail shelves) or else be clever in how we

design our packaging and present our products. We have

decided to be clever, as you will see from the examples of this

around the room after the AGM.

Our Marketing focus since the beginning of this financial year

includes the following areas;

• Digital Marketing (Slides 19,20)

It is worth noting that since we brought Social Media in-

house in August our Facebook followers for our main 3

accounts has increased as follows;

Edwards Crossing from 3,402 to 3,604 followers (an

increase of 6.3%), BGFC from 86 to 325 (an increase of

278%) with our Mables from 27 to 1,719 representing an

increase of 6266.67%)

• Website upgrade

We are in the process of upgrading our website after

receiving a financial grant to assist in this critical process-

and will be completed by the end of this calendar year.

The website design will be centred around driving leads

and sales.

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• Partnership with South Aussie with Cosi (Slide 21)

Cosi has delivered 6 posts reaching a staggering 324,122

people and engaged with 22,134 people.

• Jervois Factory Opening/Mural (Slide 22)

The Hon Steven Marshall MP, the Premier of South

Australia conducted the official opening of our Jervois

Factory referred to as the ‘Home of Mozzarella’ on 10

October which received exposure on all mainstream

channels. The Premier and the Mayor of the Rural City of

Murray Bridge Council Brenton Lewis unveiled a Mural

depicting the history of the factory and surrounding area.

• Farmer’s Tribute Cheese (Slide 23)

Whilst still in the development stages, we are partnering

with OTR who will stock our Vintage Cheddar Cheese in

140 stores, with proceeds going to South Australian Dairy

Farmers.

• Specific Events and Conferences (Slide 24)

Driving brand awareness and sales (i.e. Fine Foods 2018

under the Food SA contingent, China Expo and Thailand

Food Expo, Farmers Day)- we participate strategically in

applicable conferences and events held throughout the

year to drive awareness and sales.

There is much evidence that our marketing efforts, especially

over the last few months, have built consumer awareness and

translated into increased sales in the retail space.

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Thank you. I will now hand over to our CFO, Darren Flew.

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FINANCIAL PERFORMANCE

The statutory financial results for the company, as prepared

under Australian Accounting Standard Board (AASB)

requirements, were certainly disappointing in relation to the

bottom line outcome.

Sales revenues doubled to $47.9 million, compared with $23.8

million in the previous year.

However, net profit after tax was a loss of $12.6 million.

The earnings results were impacted substantially by the

Mozzarella plant being six months later than planned due to

unexpected delays from the equipment manufacturer. This

delay meant that approximately two-thirds of the planned sales

of Mozzarella and derivative products in the second half of FY18

did not occur. Sales would have been significantly higher again

had the original schedule for delivering and installing the plant

been met.

The financial impacts of the delayed commencement of

Mozzarella production on the FY18 result were quite pervasive.

Milk supply during the delay period was largely diverted into

the production of cheddar and other hard cheeses. These

products typically require between 3 and 9 months maturation

in storage before becoming saleable. This had four significant

impacts on the expected FY18 results:

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Impact of delay in Mozzarella (Slide 25)

• Firstly, there was reduced volume of product available for

sale as the increased cheddar stocks matured;

• Secondly, the high value by-products of Mozzarella

production, that is cream and whey, were not produced

during the six-month delay period;

• Thirdly, the prices received for cheddar when subsequently

sold into the wholesale markets tend to be influenced by

international commodity prices, which fell away in the

second half of the year at the time when our cheddar had

matured ready for sale; and

• Fourthly, lower overall production volumes limited the

recovery of indirect factory costs which were subsequently

expensed.

In addition to the impacts of the delayed Mozzarella plant start-

up, the results were also impacted by:

• Insurance premiums increasing by approximately 1.8

million (i.e. an increase of 250% over the previous year)

as a result of the devastating fire at the Thomas Foods

factory at Murray Bridge, which sits adjacent to our

factory.

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• Write downs of the inventory and receivables in Thailand

and China, which were partly attributable to exchange rate

adjustments.

A detailed explanation of the reasons for these financial results

is contained in the printed Annual Report and in particular on

pages 99 to 111.

I will be pleased to answer any questions on the financial

results when we move into the General Business section of the

meeting and will now hand back to the Chairman.

I would like to make several additional points on the financial

results to those made by our CFO:

1. Insurance Premiums

Firstly, in relation to our insurance premiums.

As you would appreciate, the dramatic increase in

insurance premiums has had a serious negative impact

on our financial results for FY18.

At the Board’s direction, a comprehensive review was

undertaken of our insurance cover and risks as part of

our insurance renewal program. Savings were achieved

by the restructuring of our underwriting panel.

The lead insurer for our new policy, to apply from as from

this month, is Berkshire Hathaway (replacing QBE) which

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is a good outcome and will result in annual savings of just

over $700,000.

2. BPAM Management Agreement

Secondly, the financial results for 2017-18 were not

adversely impacted by the arrangements in place for the

Company with its Investment Manager, Beston Pacific

Asset Management (BPAM). Indeed, as we have

explained previously, the fee paid to BPAM is less than

the actual costs incurred by BPAM, which the fee was

intended to cover. This fee, which pays for the Executive

Management team, has not changed for two years,

despite cost of living increases paid to these Managers

and other costs which have been absorbed by BPAM and

not passed through to the Beston Global Food Company.

If this arrangement had not been in place for the past

three years, the costs incurred in managing BFC would

actually be significantly higher. The arrangement was put

in place at the outset to protect the interests of

shareholders on the one hand, while providing an

incentive for BPAM on the other. Given that it has

contained the operating costs of BFC, it has achieved the

objective of serving the interest of shareholders over this

time.

BPAM has made it known that at some point, it would

accept the collapsing of this arrangement. However, that

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point will be when it is in the best financial interest of the

BFC shareholders to do so.

3. Snapshot of Investee Companies (Slide 26)

Thirdly, a significant part of the bottom line result can be

attributed to the poor performance of our Investee

Companies Ferguson Australia and Neptune Bio

Innovations in which we hold minority interests. The

investments which BFC has made in these companies

followed on from comprehensive financial and due

diligence reports prepared by independent professional

experts, primarily the major Australian account firms.

BFC relied on these independent reports when making its

investments, and were supported by historical

performance information.

For various reasons, these investments have not

performed as expected or was forecasted, and they have

therefore not paid dividends to BFC. Both Ferguson and

NBI have set in train initiatives to either sell the business,

(in the case of Ferguson Australia), sell securities in the

business to raise additional funds for growth (in the case

of NBI) or to consider other options to be put forward by

interested parties.

The reasons for the decisions by the two investee

companies to embark on these initiatives vary in each

case. BFC has advised the companies that it will not

stand in the way of these initiatives, but that it expects to

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realise at least the book value of its assets should we

decide to exit our investments via the processes now

underway.

Should we decide to exit, we will look to put in place

supply agreements to ensure continued access to the

products of these companies.

4. China

The final point I would like to make in relation to the

financials is on China.

As I touched on earlier, China has turned out to represent

a much smaller proportion of our revenues than originally

envisaged. To date, our China Division has not

contributed any profit to the Company, but rather, has

cost us a lot of money.

That said, we continue to see China as a key part of our

market development strategy.

We see China and Asia, more broadly, as an important

and rapidly growing market for our products. China is

now one of the largest markets in the world for imported

food and beverages and is growing every year.

According to a recent Rabobank Report (Michael Harvey,

“Asia’s Fast Moving Cheese Markets”, Rabobank,

September 2018) global cheese exports to China

exceeded 100,000 tonnes in 2017 and recorded annual

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growth of more than 20% between 2012 and 2017. While

the per capita consumption is low, in comparison with

consumption of dairy products in Western Countries,

there is plenty of headroom for growth.

Much of the growth in cheese demand in China as across

the whole of the Asian region in fact, is coming from the

rising popularity of pizza, which is increasing the demand

for Mozzarella. The growing appetite for pizza is being led

by the rise of relatively affluent young consumers, their

desire for convenience and their propensity to follow

western food trends.

A related trend is the increasing concern in China, as well

as in the other big 5 countries in Asia, is food safety. A

2016 study by the Financial Times found that food safety

had become the No 1 concern amongst Chinese nationals

(i.e. ahead of concerns about economic security or

terrorism).

Western foods, and in particular those from Australia, are

generally thought of as being of premium quality – that

is, of higher quality, safer, healthier and more

trustworthy than Chinese produced foods. Middle class

consumers in China value authenticity and products

which they consider to be healthier.

This is the “sweet spot” where BFC has sought to make

its mark in China over the past three years. We have

developed relationships with distributors and end

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customers and have worked hard to establish the

credentials of BFC as a reliable supplier of premium,

healthy, consistent quality dairy products.

Building brand recognition in the highly competitive

market of China is not easy. There are no quick wins. Yet,

the rewards from exercising patience and tenacity can be

considerable.

In the case of Kentucky Fried Chicken for example, it

took 10 years from the time of establishment in 1987, to

grow to 100 KFC outlets. In the last 10 years, from 1997,

KFC has grown to 5,000 outlets in 1,100 cities. China is

now the largest market in the world for Kentucky Fried

Chicken.

Just in case you are starting to get concerned that you

might have to wait 20 years like KFC for us to get results

in China, I can assure you that this is not the case.

To be sure, we have invested significantly in the China

market over the last three years, but this investment is

now paying dividends.

I am pleased to announce today that we have completed

negotiations for a Supply Contract with one of the largest

importers of cheese products into China. The contract

covers Mozzarella and our other cheese products and

provides for minimum purchases of 1000 tonnes per

annum, starting immediately.

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Initial purchase orders have been placed for two

containers of mozzarella, which are in the process of

being shipped, and we are anticipating follow up orders of

1 to 2 containers of mozzarella every two weeks once

these containers arrive in China. A Purchase Order has

also been placed for 10 containers of Cheddar Cheese, for

delivery in February 2019.

This contract will contribute more than $5 million in

annual revenues to the Company, at acceptable margins,

and is a significant step forward for the company in

building our sales base in China.

It is the result of two years of discussions and

negotiations, including in-market product testing, and

highlights how-long it can take to secure large sales

contracts in China. Notwithstanding our ability to match

the prices offered by other Cheese Makers from Australia

and New Zealand, key distributors in China often have

long term relationships with their suppliers and are

reluctant to break those relationships unless for good

reasons, such as superior quality or consistency of

supply. And, even when they make the decision to

change supply, the process of switching over typically

takes time and a dedicated effort by all involved (exactly

the same as applies in Australia).

31

GENERAL BUSINESS (Slide 27)

I will now deal with the formalities which bring us together

today.

The purpose of today’s meeting is to deal with the formal

business as set out in the Notice of Meeting.

The Company Secretary has advised me that a quorum is

present and that 170 proxies representing 105,854,353 Shares

or 23.88% of the shares on issue have been received. The

proxy votes received for each resolution will be displayed on

the screen.

I wish to ask that you state your name for the record when you

address the meeting or move or second a resolution.

You have all received the Notice of Meeting detailing the

business to be dealt with today. If there are no objections and,

in an effort to expedite proceedings, I ask that the Notice of

Meeting be taken as read. Thank you.

As each item of business is considered, I will invite comments

from the floor. After any discussion, I will be asking for a show

of hands to vote on the item. If I consider that the show of

hands does not reflect the views of the shareholders entitled to

vote, I will ask for a poll on the resolution. So as not to hold up

the rest of the meeting, we will conduct the poll at the

conclusion of all other business of the meeting.

32

If you wish to raise a question, please raise the coloured card

that you were issued with when you registered today. In the

interest of giving all shareholders an opportunity to ask

questions if you wish, I ask that any questions be kept to no

more than 2 or 3 parts.

FINANCIAL STATEMENTS & REPORTS

The first item of business is to receive and consider the

Company’s financial statements and independent audit report

for the year ended 30 June 2018.

The Annual Report containing these reports was distributed to

shareholders and announced to the ASX on 22 October, I hope

everyone has found time to read it. As you know a large part

of the document is mandated by Law and by Accounting

Standards. However, we do try to ensure it is useful as well as

compliant.

For now, I am happy to take questions on the Financial

Statements and Reports.

Our CFO, Darren Flew, will be pleased to answer any questions

on the financial reports of the Company. Shareholders are also

welcome to ask questions of the Company’s Auditor, Mr Brad

Pollock, who is present today. Are there any questions or

comments on the financial reports?

We will now move to the Resolutions to be considered at this

meeting.

34

RESOLUTIONS

Resolution 1 – Adoption of the Remuneration Report for the year ended 30 June 2018

To consider, and if thought fit, pass the following resolution as

an ordinary resolution:

(Slide 28)

“That, for the purpose of Section 250R(2) of the Corporations

Act, the Company adopt the Remuneration Report for the

period ended 30 June 2018 as set out in the Directors’ Report

in the 2018 Annual Report.”

I now formally move the motion that Resolution 1 be put to the

meeting in the form set out in the Notice of Meeting.

Is there a seconder to the motion?

Thank you Mr/s ______________.

Is there any discussion on this resolution?

I now formally put the resolution to the meeting.

Those in favour? Those against?

I declare the motion carried/not carried.

35

Resolution 2 — Re-election of Ms Catherine Cooper as a Director



(Slide 29)

“That Ms Catherine Cooper, having retired by rotation in

accordance with clause 59 of the Company’s Constitution and

being eligible and having offered herself for re-election, is re-

elected as a Director of the Company.”




Thank you Mr/s ______________.





Thank you, and congratulations Cathy.

As the following resolution deals with my re-election as a

Director, I will ask Stephen Gerlach to take the chair for this

resolution,

36

Stephen Gerlach

Resolution 3 — Re-election of Dr Roger Sexton as a Director



(Slide 30)

“That Dr Roger Sexton, having retired by rotation in accordance

with clause 59 of the Company’s Constitution and being eligible

and having offered himself for re-election, is re-elected as a

Director of the Company.”




Thank you Mr/s ______________.





Thank you, and congratulations Roger.

I will now hand the chair back to Roger for the remainder of the

meeting.

37

Resolution 4 — Renewal of Provisional Takeover Clause



(Slide 31)

“That the proportional takeover provisions under clause 25 of

the Company's Constitution be renewed for a period of three

years commencing on the day this Resolution is passed.”




Thank you Mr/s ______________.





Ladies and Gentlemen, that concludes the business section of

this Annual General Meeting.

38

The path forward (Slide 32)

Earlier in this presentation, I made the statement that we

believe we have built a company that our shareholders can be

proud of. Over the past three years, we have taken two

substantial dairy factories out of receivership, rebuilt the

assets, restored the export accreditation and brought them

back into commercial production. We have also successfully

installed a state-of-the-art Mozzarella plant at a cost of $26.5

million.

We have taken the view that the long-term interests of our

shareholders would be best served by investing judiciously to

increase the productive capacity of our dairy assets as quickly

as possible, and by focussing on the quality of our production

processes in order to build a market presence and brand

reputation.

Pleasingly, this strategy has proven to be the correct course of

action and is now in the process of producing positive

outcomes.

As we have stated previously, the Dairy Division will be front

and centre of our plans to grow revenues and profits in the

short term.

We have a lot of productive capacity at our dairy factories

which will enable us to drive profitability as sales increase.

39

Asset utilisation (Slide 33)

Currently our Cheddar and Mozzarella production assets are

only operating at around 30 to 35% of capacity. The cream

cheese and specialty hard cheese assets have a current

utilisation of around 20 to 25% and hence have a lot of

capacity for increase output. Our Lactoferrin plant has only

recently been switched on and also has a lot of capacity to

meet the significant global demand for this product. Having this

capacity obviously means that we can take on more sales and,

in the process, achieve production cost efficiencies and

improved profitability.

And, as you heard earlier, we have a well-resourced sales team

in place which is actively working to fill our order book at

healthy margins.

We still have a long way to go on the journey to realise our

longer-term objective of building BFC into a robust and strongly

performing Australian based food company. But significant

progress has been made on this journey, in a number of areas,

as summarised on pages 20 to 25 of the Annual Report.

One of the points listed in that summary in the Annual Report is

the Dairy Fractionation Plant which is located adjacent to our

Jervois Dairy Factory and which we separately acquired in

2015. The significance of this plant to the future profitability of

BFC should not be underestimated.

40

The significance of Mozzarella & Lactoferrin

(Slides 34 & 35)

With the Mozzarella plant coming into production in Q4 of the

last financial year, we now have the capacity to produce more

products, including dairy nutraceuticals, particularly Lactoferrin.

Lactoferrin commands a relatively high price in the market

place (around $1,500 to $2,000 per Kilogram), versus the low

cost feedstock of whey liquid, which is a by-product of cheese

making. While whey liquid is also produced from our

manufacture of hard cheese at Murray Bridge (which is then

transported to Jervois), the new Mozzarella plant produces

much higher volumes of liquid whey, and hence the capacity to

produce more Lactoferrin.

In the Annual Report, we noted that we anticipated being able

to “switch on” the Dairy Fractionation Plant towards the end of

this calendar year.

I am pleased to report that we have now turned on the plant

and are producing Lactoferrin in liquid form.

Previously, under the former ownership of the Dairy

Fractionation Plant, this liquid Lactoferrin was shipped to

Melbourne where it was freeze dried and then milled to turn it

into powder for sale (primarily to infant formula manufacturers

and pharmaceutical companies).

Pleasingly, we have been able to source our own freeze-drying

plant from overseas which will be installed in late January 2019

41

and enable us to save considerable costs in the production of

the end product.

The global demand for Lactoferrin has increased significantly in

recent months due to a change in regulations in China which

mandate that Lactoferrin be included in all infant formula sold

in China and that it be at a certain level of purity. This demand

is expected to further increase over the next 5 years as shown

in the slide on the screen.

With the capacities which we have in the production of

Lactoferrin, along with Whey Powder, we now have the

opportunity to earn revenues and high margins from a focus on

dairy-based health nutraceuticals. This area of the business,

which uses largely the by-products from our cheese

manufacturing, will be pushed strongly over the next twelve

months to exploit the opportunities which exist in the global

market place for dairy nutraceuticals.

Closing Remarks and Thank-you (Slide 36)

Ladies and Gentlemen and Shareholders,

On behalf of the Board, I thank you for your attendance today

and your continued support for our great Company.

Before closing the meeting, I would like to update you very

briefly on the status of our search for a new CEO.

42

As you would all be well aware, our CEO since listing has been

Sean Ebert who has done a great job in taking the Company

through the first stage of our Growth Strategy.

Sean stepped down from the CEO role on 31 October after

advising the Board that he felt that he may not have the

appropriate skill set to take the Company through its next

phase of growth . . . which is very much around enhanced retail

sales, margins and brand penetration. I stepped up to become

Executive Chairman from 1 November and will remain in this

role until we fill the position of CEO.

The Board has conducted an extensive Executive Search

process for the position and has completed interviewing the last

of the short-listed candidates this week.

I must say that we had an extraordinarily talented and

experienced set of executives to choose from. All of those on

the short-list have worked, or are working for global companies

at the C-Suite level. It was a truly awesome list of applicants

that we had to choose from . . . which has made it very difficult

. . . but the process has also been an extremely strong vote of

confidence in BFC that so many high performing globally

operating executives would line up to work for our company

here in Adelaide.

I am pleased to advise that we have now selected our new CEO

and have extended an offer to the successful person.

43

Once the relevant employment contracts have been signed,

which we expect to occur in the next week or so, we will make

an announcement to shareholders.

I am sure you will all be pleased with the decision. The new

CEO comes with a wealth of experience from working in

international companies in the food industry.

I now close the meeting and invite you to join with the Board

and Management to enjoy some of the great foods produced by

our Beston Global Food Company – and in particular to sample

our new Mozzarella Cheese which will be served on Pizzas

produced by the very talented Chefs here at the Hilton Hotel.

Slide 37 (as per slide 16) – AWARD SLIDE SHOW

44

IF A RESOLUTION IS NOT CARRIED/RESULT IS UNCLEAR

Resolution number X was unclear/lost on a show of hands and I

now demand a poll.

POLL SCRIPT

We will now conduct the poll on the Resolution number X

I appoint the representative of Link Market Services be

Returning Officer and to conduct the poll. The representative

has power to co-opt as his agents, members of his staff and

staff of the company.

[Link or Chairman to continue]

Firstly, if there is any person present who believes they are

entitled to vote but has not registered to vote, would you

please raise your hand for assistance.

The persons entitled to vote on this poll are all shareholders,

representatives and attorneys of shareholders, and

proxyholders who hold admission cards.

On the reverse of your admission card is your voting paper and

instructions.

I will now go through the procedures for filling in the voting

papers.

45

In respect of any open votes a proxyholder may be entitled to

cast, you need to mark a box beside the resolution to indicate

how you wish to cast your open votes.

Proxyholders and Shareholders need to mark a box beside the

resolution to indicate how you wish to cast your votes.

Please ensure you print your name where indicated and sign

the voting paper. When you have finished filling in your voting

paper, please lodge it in a ballot box, which will be circulated,

to ensure your votes are counted.

If you require any assistance, please raise your hand (pause

whilst voting papers are completed)

Would you please indicate by raising your hand if you require

more time to complete and lodge your voting paper. (Read out

again if necessary)

(When no-one has indicated they require more time to

complete their voting papers, Chair to close the poll.)

Have all votes been cast? [PAUSE] I now declare the poll closed

and formally charge the Returning Officer to count the votes.

After the votes have been counted, the results of the poll will

be released to the ASX and will be displayed on the company’s

website.

Go to “Closing Remarks”.

chairman’s address at the annual general meeting of …

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