AGM 2021 Address and Presentation

For personal use only

11 November 2021

Manager, Company Announcements

Australian Securities Exchange

20 Bridge Street

Sydney NSW 2000

Breville Group Limited - 2021 Annual General Meeting Presentation

Please find attached the Chairman's Address to Shareholders and the CEO's Review of Operations to be delivered at the Annual General Meeting of Breville Group Limited at 10:00am AEDT today.

Authorised for release by the Company Secretary.

Craig Robinson

Company Secretary

Telephone: [phone]

For personal use only

11 November 2021

Chairman's Address at 2021 AGM

Slide 3

As I try and assess the Financial Year 2021, I believe that it has been an outstanding year for the Group against a backdrop that none of us could have anticipated.

During FY2021, the Group continued to successfully execute its acceleration strategy, delivering strong top-line growth and double-digit EBIT growth, whilst tactically navigating the unpredictable trading environment caused by the global pandemic impacting our consumers, our customers, our supply chain and our Breville | Sage team.

Our CEO, Jim Clayton, and his global team successfully faced these challenges whilst continuing to invest in our long-term growth drivers of NPD and marketing and continuing our geographic roll out - adding France, Portugal, Italy and Mexico to the territories in which we have direct operations.

Slide 4

In terms of key numbers, the Group delivered record sales of nearly $1.2bn, a 24.7% increase over prior year, with revenue in the core Global Product segment increasing by 37% in constant currency.

Group EBIT for the year of $136.4m, represented a 39.6% increase on the prior year after funding increased investment into R&D, marketing and our IT platform and capability.

Net profit after tax increased by 42.3% to $91.0m whilst Earnings per share increased by 34.8% to 65.8 cents per share.

The Board approved a full year dividend of 26.5 cents, in line with the previously announced decision to reduce the target payout ratio to 40% to enhance the internal funding of numerous growth opportunities on a sustainable basis.

Net cash at 30 June 2021 was $129.9m, largely in line with the prior year.

As I said the Group had a very successful FY2021.

Slide 5

I would now like to take the opportunity to express our gratitude to Jim Clayton and his exceptional Breville | Sage team across the globe who have once again shown nimbleness and resilience in delivering these results.

I would also like to express my appreciation to my fellow Board colleagues and our shareholders, customers and suppliers for their continued support in these unprecedented times.

As for myself, after 17 years on the Board, I have decided to not seek re-election today.

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I am extremely proud of the team at Breville. They have built a truly international company, recognised amongst our peers as one of the leading SDA brands in the world. The executive team that Jim leads (across the globe) is world class, and I am sure that their passion and unity will deliver continued growth and success as Breville cements its foothold on the world stage.

I have thoroughly enjoyed my journey with Breville, and, as I pass on the baton, I am confident that the company is well placed for continued success. Tim Antonie has been a Director since 2013, and I am very confident that he will guide the Group from strength to strength.

Finally, I thank you all for your attendance at today's AGM.

Prior to moving to the business of this meeting, I will now handover to our CEO, Jim Clayton to present his Review of Operations.

END CHAIRMAN'S ADDRESS

CEO's Review of Operations at 2021 AGM

Thank you, Steve. I'd like to welcome everyone to Breville's AGM. Thank you for taking the time to join us.

Slide 7

Today I am going to walk you through our FY21 Year End Results; give you a short update on the 1H FY22; re-lay the foundation for our migration to solution offerings; show you a video clip for the new Joule Oven Air Fryer Pro; and end with some concluding remarks.

Slide 8

Given we reported these numbers in August, I will focus on the highlights. FY21 was a dynamic and challenging year as we, like so many other companies, wrestled with the second and third order effects of the global pandemic. Throughout the year we chased a resilient demand line, enabling us to report $1,187.7m in revenue, a 24.7% increase on the prior year. Crossing the $1bn mark has been a goal of ours for quite some time, so it was good to finally reach it.

The strong demand flowed through to a strong gross margin of 34.8%, resulting in an EBIT of $136.4m, a 24.1% increase over the prior year on a normalised basis.

Slide 9

Breaking down the revenue across the two segments, the Global Product segment grew 37.0% in constant currency, and the Distribution segment grew at 8.4%.

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Slide 10

All three theatres delivered solid growth numbers in the Global Product segment: the Americas grew 27.6% in constant currency; EMEA grew 58.4%; and APAC grew 37.4%. This growth is a reflection of the "global" nature of the pandemic effects as well as the flexibility and adaptability of our supply chain processes.

Slide 11

The EBIT bridge between FY20 and FY21 shows we generated an incremental $93.1m of Gross Profit, driven by both sales growth and margin improvement. Of this, we invested $49m in the growth drivers of the business; spent an incremental $17.6m on other functions; and dropped an incremental $26.5m to the EBIT line.

During our year-end reporting, we stated that we pulled investment projects forward into FY21. I'll have more detail to share on this topic in February when we report our 1H for FY22.

Slide 12

The balance sheet tells the story of FY21. Net Working Capital is basically flat across FY20 and FY21, despite the business growing 24.1%. Inventory is lower than it should be because of a demand line well above our original plan for the year. Receivables is lower than it should be, driven by the shutting down of the Yantian port in the back half of the year, which prevented us from moving products into the Theatres and selling them on to our customers. Taken together, this left us with slightly more cash in FY21 than we had in FY20.

To state the obvious, this is not an equilibrium balance sheet. This is the balance sheet of a company chasing demand. Supply chain permitting, we hope to remedy some or all of this by the end of FY22.

Slide 13

A quick update from the front lines on our experience thus far in the 1H of FY22.

Slide 14

Demand from our consumers and customers continues to be solid.

On the supply side of the equation, our forward planning process has helped us avoid the lion's share of parts and manufacturing-related shortfalls experienced by so many others.

For us, the challenges have been primarily logistics-related across the supply chain. Logistic steps that used to take 1 week can now take up to 4-6 weeks. In all countries except the US, our in-country inventory positions are enabling us to absorb most of these delays and continue to flow with our retail partners. In the US, because of the LA port delays, we are running more of a real-time offense across

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some SKUs. When the containers are delivered to our warehouse, they are unloaded and immediately shipped out to retailers.

Forward planning coupled with hard work and agility has kept us "on plan" year to date. The team's focus for the rest of the half will be moving product through the system to our retail partners to meet end-consumer demand.

A solid demand line with a dynamic supply chain has caused us to move our planned inventory rebuild to the 2H FY22 with the goal of calming down the supply chain and preparing for the peak season of FY23.

While it may differ at the detail level, at the aggregate, the 1H FY22 is unfolding in line with our expectations.

Slide 15

Now on to the solution discussion.

Slide 16

As Breville matures into a global company, we are increasing the sophistication of our offense, getting closer to the customer with each step.

This slide shows our migration up the customer value curve, and we are now learning how to execute a solution offense.

Slide 17

In FY19, we acquired ChefSteps. The core thesis behind the transaction was the Joule Oven Air Fryer Pro. The Breville team innovates through hardware, with the goal of helping our customers achieve greater success in the kitchen. ChefSteps had the same objective, but they used content as their tool. In truth, both were right, but the real magic for customers comes when you put them together. This is where our Solutions Platform enters the stage.

As I hope you will see in the video clip, by seamlessly weaving hardware innovation, content, service and software, we are able to help our customers achieve outcomes in the kitchen they didn't think they were capable of; thus, enabling them to "Master Every Moment".

Slide 18

With that setup, let's cut over to the video clip.