Full Year 2026 Bubs Australia Ltd Earnings Call

August 27, 2026

Speaker #1: Thank you very much, and welcome, everybody, to the BUBS FY26 results presentation. My name's Joe Coote; I'm joined here this morning by Chris Rowe, our CFO, and we will take you through our results.

Speaker #1: If we could tab, please. We could tab again, please. So, BUBS acknowledges the traditional custodians of the lands on which we operate. We pay our respects to elders past, present, and emerging.

Speaker #1: Tab, please. So, as I mentioned, my name's Joe Coote; I'm the CEO at BUBS. I've been in the role for 11 of the 12 months of the FY26 financial year, so it gives me pleasure to be here today to present our results.

Speaker #1: I am joined by our newly appointed CFO, Chris Rowe. Chris Rowe joins the business with extensive experience, across the markets that we operate in, particularly most recently in the U.S.

Speaker #1: He has many years' experience in dairy, and particularly in the infant formula subsector. So he's made a very strong start; it's been a very busy few months for Chris, as we've been working on closing FY26.

Speaker #1: So great to have Chris on the team, and you'll hear from him in a moment. In terms of the agenda today, I'll start with a summary of the results.

Speaker #1: I'll then hand over to Chris; he'll take us through the financial overview, Chris will then hand back to me, and I'll go through some regional performance summaries, a bit of an update on our strategy, outlook for the future, and then we will take Q&A to round things out.

Speaker #1: So thank you, if we could tab, please. I really wanted to start with our purpose this morning. It's a very simple purpose; everybody can read it.

Speaker #1: But what I wanted to reflect on is it's something that really resonates deeply with our consumers, particularly our moms. Our moms put trust in our brand to, in some cases, provide sole source of nutrition for their new infants.

Speaker #1: So it's a very critical time for those moms, and we at BUBS do a great job of that. So this purpose drives our team; it rallies us each day to do what we need to do to work with our farmers and get product right through onto shelf.

Speaker #1: So when moms need that product for their babies, they have it. It's understood and appreciated by our retail partners. Not just in Australia, but around the world.

Speaker #1: Particularly our U.S. retailers understand this, and they are very passionate about supporting us in delivering this purpose. It's also respected by the regulators, particularly in the last period as we've been engaging with the FDA.

Speaker #1: It's something that they often reflect on. But I think for this audience this morning, in terms of our FY26 result, it is of particular relevance.

Speaker #1: As we look at the year, a lot of the numbers that we've presented come back to this purpose. And I'll draw two references. Firstly, our revenue.

Speaker #1: Delivering this purpose has allowed us to grow a business from Australia that now has delivered 112 million dollars of revenue. We have businesses outside of Australia in the U.S.

Speaker #1: more than 3 times as big as the business in Australia. And then finally, with FY26, it has been a year where there's been some external headwinds, and so as we've looked at how we've spent our money, we've been very careful to go back to purpose, to think about our consumers, and ensure that in the first half we maintained our presence on shelf.

Speaker #1: So we did incur some additional costs to service those customers and ensure we were there for those moms. And then in the second half, additionally, across our industry globally, there's been a regulatory reset.

Speaker #1: So again, we did invest additional money to live this purpose, and we believe it serves us moving forward, it grows brand equity, because people trust our brand.

Speaker #1: So if we could tab. Okay, if we get into the numbers now, and everyone's waiting for the numbers, so if we start on the top left there, as I mentioned, very proud to confirm that we've delivered just shy of 112 million dollars of revenue.

Joe Coote: Deeply with our consumers, particularly our moms. Our moms put trust in our brand to, in some cases, provide sole source of nutrition for their new infants. It is a very critical time for those moms, and we at Bubs do a great job of that. This purpose drives our team. It rallies us each day to do what we need to do to work with our farmers and get product right through onto shelf, so when moms need that product for their babies, they have it. It is understood and appreciated by our retail partners, not just in Australia, but around the world. Particularly our U.S. retailers understand this, and they are very passionate about supporting us in delivering this purpose. It is also respected by the regulators, particularly in the last period as we have been engaging with the FDA. It is something that they often reflect on.

Joe Coote: Deeply with our consumers, particularly our moms. Our moms put trust in our brand to, in some cases, provide sole source of nutrition for their new infants. It is a very critical time for those moms, and we at Bubs do a great job of that. This purpose drives our team. It rallies us each day to do what we need to do to work with our farmers and get product right through onto shelf, so when moms need that product for their babies, they have it. It is understood and appreciated by our retail partners, not just in Australia, but around the world. Particularly our US retailers understand this, and they are very passionate about supporting us in delivering this purpose. It is also respected by the regulators, particularly in the last period as we have been engaging with the FDA. It is something that they often reflect on.

Speaker #1: Consumers, particularly our moms—our moms put trust in our brand to, in some cases, provide the sole source of nutrition for their new infants. So it's a very critical time for those moms, and we at Bubs do a great job of that.

Speaker #1: That's up 9% across the group, but very pleasingly, up 24% in the U.S. I'm just going to move around and move across to the right.

Speaker #1: So this purpose drives our team; it rallies us each day to do what we need to do to work with our farmers and get product right through onto shelves, so when moms need that product for their babies, they have it.

Speaker #1: As I mentioned, and I'll talk more in a moment, about some of the reasons we had to put some additional money into our COGS.

Speaker #1: Very disciplined execution of some challenges. But the net of that meant that our gross margin was 39.8 in the year. That then pretty much dropped through to the bottom line.

Speaker #1: It's understood and appreciated by our retail partners, not just in Australia, but around the world. Particularly, our U.S. retailers understand this, and they are very passionate about supporting us in delivering this purpose.

Speaker #1: So our reported EBITDA is minus 1.8, which is within the guided range. But pleasingly, if you move across to the bottom left, that calculates to an underlying EBITDA of 5.3, which does show very encouraging growth year over year.

Speaker #1: It's also respected by the regulators, particularly in the last period as we've been engaging with the FDA. It's something that they often reflect on.

Speaker #1: But I think, for this audience this morning, in terms of our FY26 result, it is of particular relevance. As we look at the year, a lot of the numbers that we've presented come back to this purpose.

Joe Coote: I think for this audience this morning, in terms of our FY26 result, it is of particular relevance. As we look at the year, a lot of the numbers that we have presented come back to this purpose, and I will draw two references. Firstly, our revenue. Delivering this purpose has allowed us to grow a business from Australia that now has delivered AUD 112 million of revenue. We have businesses outside of Australia in the U.S. more than three times as big as the business in Australia. Finally, with FY26, it has been a year where there has been some external headwinds, and as we have looked at how we have spent our money, we have been very careful to go back to purpose, to think about our consumers and ensure that in the H1, we maintained our presence on shelf.

Joe Coote: I think for this audience this morning, in terms of our FY26 result, it is of particular relevance. As we look at the year, a lot of the numbers that we have presented come back to this purpose, and I will draw two references. Firstly, our revenue. Delivering this purpose has allowed us to grow a business from Australia that now has delivered AUD 112 million of revenue. We have businesses outside of Australia in the US more than three times as big as the business in Australia. Finally, with FY26, it has been a year where there has been some external headwinds, and as we have looked at how we have spent our money, we have been very careful to go back to purpose, to think about our consumers and ensure that in the H1, we maintained our presence on shelf.

Speaker #1: And while we acknowledge and recognize the minus 1.8, it is significant that we do see that underlying strength in the business. So if we move across just to the bullets, there's really two areas where we've needed to deploy very disciplined execution.

Speaker #1: And I'll draw two references. Firstly, our revenue—delivering this purpose has allowed us to grow a business from Australia that now has delivered $112 million of revenue.

Speaker #1: The first one is around external disruptions. So we've had a lot of volatility in the U.S. with tariffs. It's been widely publicized, and most things you hear in the media are true.

Speaker #1: We have businesses outside of Australia—in the U.S. more than three times as big as the business in Australia. And then finally, with FY26, it has been a year where there's been some external headwinds, and so as we've looked at how we've spent our money, we've been very careful to go back to purpose, to think about our consumers, and ensure that in the first half we maintained our presence on shelf.

Speaker #1: So we've spent 3.6 million dollars on those tariffs in FY26. Secondarily, we've navigated a regulatory reset. Now, this has been a global reset. And that started on the 5th of January.

Speaker #1: I can remember the day, and so we have been working with the regulators with our customers to ensure that we stay on shelf for our moms, for our consumers, and for our babies.

Speaker #1: So, we did incur some additional costs to service those customers and ensure we were there for those moms. And then, in the second half, additionally, across our industry globally, there's been a regulatory reset.

Joe Coote: We did incur some additional costs to service those customers and ensure we were there for those moms. In the H2, additionally, across our industry globally, there has been a regulatory reset. Again, we did invest additional money to live this purpose, and we believe it serves us moving forward. It grows brand equity because people trust our brand. If we could tab. Okay, if we get into the numbers now. I know everyone is waiting for the numbers. If we start on the top left there, as I mentioned, very proud to confirm that we have delivered just shy of AUD 112 million of revenue. That is up 9% across the group, but very pleasingly, up 24% in the U.S. I am just going to move around and move across to the right.

Joe Coote: We did incur some additional costs to service those customers and ensure we were there for those moms. In the H2, additionally, across our industry globally, there has been a regulatory reset. Again, we did invest additional money to live this purpose, and we believe it serves us moving forward. It grows brand equity because people trust our brand. If we could tab. Okay, if we get into the numbers now. I know everyone is waiting for the numbers. If we start on the top left there, as I mentioned, very proud to confirm that we have delivered just shy of AUD 112 million of revenue. That is up 9% across the group, but very pleasingly, up 24% in the US I am just going to move around and move across to the right.

Speaker #1: And in the second half, that's cost us just under 4 million dollars. In terms of building for growth, we started FY25 with a very low inventory level of just over 20 million.

Speaker #1: So again, we did invest with purpose, and we believe it serves us moving forward. It grows brand equity because people trust our brand. So if we could tab.

Speaker #1: Now, with an aspiration to sell 120 million dollars of sales, and a 4 to 6 month lead time in our supply chain, we really understood very quickly that we needed to restock our supply chain.

Speaker #1: Okay, if we get into the numbers now, and everyone's waiting for the numbers, so if we start on the top left there, as I mentioned, very proud to confirm that we've delivered just shy of $112 million of revenue.

Speaker #1: We prioritized the U.S., it's our key growth market, it's our highest margin market. So as Chris will talk about shortly, we exit the year at 36.3 million of inventory.

Speaker #1: That's up 9% across the group, but, very pleasingly, up 24% in the U.S. I'm just going to move around and move across to the right.

Speaker #1: That's healthy inventory. That's the targeted inventory that we've planned for. And as I said, we've had disciplined execution in taking that inventory up to that number.

Speaker #1: As I mentioned—and I'll talk more in a moment—about some of the reasons we had to put some additional money into our COGS.

Joe Coote: As I mentioned, and I will talk more in a moment about some of the reasons we had to put some additional money into our COGS, very disciplined execution of some challenges. The net of that meant that our gross margin was 39.8% in the year. That then pretty much dropped through to the bottom line. Our reported EBITDA is -AUD 1.8 million, which is within the guided range. Pleasingly, if you move across to the bottom left, that calculates to an underlying EBITDA of AUD 5.3 million, which does show very encouraging growth year over year. While we acknowledge and recognize the -AUD 1.8 million, it is significant that we do see that underlying strength in the business. If we move across just to the bullets, there are really two areas where we have needed to deploy very disciplined execution. The first one is around external disruptions.

Speaker #1: To do that, and to protect service, aligned with our purpose, as I mentioned, in the U.S. we had to air freight some product. So that cost us 3 million dollars, predominantly in the first half.

Speaker #1: Very disciplined execution of some challenges. But the net of that meant that our gross margin was 39.8 in the year. That then pretty much dropped through to the bottom line.

Speaker #1: That allowed us to protect service. That allowed us to be there for our moms and their babies. And that allows us to grow our brand equity and our reputation.

Speaker #1: So our reported EBITDA is minus $1.8 million, which is within the guided range. But pleasingly, if you move across to the bottom left, that calculates to an underlying EBITDA of $5.3 million, which does show very encouraging growth year over year.

Speaker #1: Additionally, as we've grown and become a little bit more sophisticated as a business, we've taken on some additional capability. We have some new folks that have joined the business.

Speaker #1: We've moved some key roles up to the U.S., we have a CMO based up in the U.S., we have a Chief Commercial Officer based up in the U.S.

Speaker #1: And while we acknowledge and recognize the minus 1.8, it is significant that we do see that underlying strength in the business. So, if we move across just to the bullets, there are really two areas where we've needed to deploy very disciplined execution.

Speaker #1: for that region. Very experienced ladies who come into the business with very relevant experience and relationships into the trade, and doing a great job.

Speaker #1: And then finally, our marketing. In the year we increased our marketing 21%, higher than our revenue growth. And that's to show confidence in our brand, and as we invest in marketing, and we're delivering better content, we're very happy that that'll set us up for future growth as we move forward.

Speaker #1: The first point is around external disruptions. So, we've had a lot of volatility in the U.S. with tariffs. It's been widely publicized, and most things you hear in the media are true.

Joe Coote: We've had a lot of volatility in the U.S. with tariffs. It's been widely publicized and most things you hear in the media are true. We've spent AUD 2.6 million on those tariffs in FY26. Secondarily, we've navigated a regulatory reset. This has been a global reset, and that started on 5 January. I can remember the day. We have been working with the regulators, with our customers to ensure that we stay on shelf for our moms, for our consumers and for our babies. In the second half, that's cost us just under AUD 4 million. In terms of building for growth, we started FY25 with a very low inventory level of just over AUD 20 million.

Joe Coote: We've had a lot of volatility in the US with tariffs. It's been widely publicized and most things you hear in the media are true. We've spent AUD 2.6 million on those tariffs in FY26. Secondarily, we've navigated a regulatory reset. This has been a global reset, and that started on 5th January. I can remember the day. We have been working with the regulators, with our customers to ensure that we stay on shelf for our moms, for our consumers and for our babies. In the second half, that's cost us just under AUD 4 million. In terms of building for growth, we started FY25 with a very low inventory level of just over AUD 20 million.

Speaker #1: So, we've spent $2.6 million on those tariffs in FY26. Secondarily, we've navigated a regulatory reset. Now, this has been a global reset, and that started on the 5th of January.

Speaker #1: Just to round out, we also came to the market on the 26th of March, with a growth strategy. Pleased to report, and I'll talk later, some more tangible examples of how we're progressing that strategy, particularly some of the value that it's delivering.

Speaker #1: I can remember the day. And so, we have been working with the regulators and with our customers to ensure that we stay on shelf for our moms, for our consumers, and for our babies.

Speaker #1: It gives us clarity and allows us to be really clear on how we execute our purpose. And then finally, I know it's something that everybody is eagerly awaiting, is the status with our FDA approval.

Speaker #1: And in the second half, that's cost us just under $4 million. In terms of building for growth, we started FY25 with a very low inventory level, with just an aspiration to sell $120 million of sales and a 4- to 6-month lead time in our supply chain. We really understood very quickly that we needed to restock our supply chain.

Speaker #1: We've progressed significantly. We are in the final review stage. And we are very confident that we will receive the FDA notification. With that said, I'll hand over to Chris to take us through the numbers.

Joe Coote: With an aspiration to sell AUD 120 million of sales and a four to six-month lead time in our supply chain, we really understood very quickly that we needed to restock our supply chain. We prioritized the U.S. It's our key growth market. It's our highest margin market. As Chris will talk about shortly, we exit the year at AUD 36.3 million of inventory. That's healthy inventory. That's the targeted inventory that we've planned for. As I said, we've had disciplined execution in taking that inventory up to that number. To do that and to protect service aligned with our purpose, as I mentioned, in the U.S., we had to air freight some product. That cost us AUD 3 million predominantly in the first half.

Joe Coote: With an aspiration to sell AUD 120 million of sales and a four to six-month lead time in our supply chain, we really understood very quickly that we needed to restock our supply chain. We prioritized the US It's our key growth market. It's our highest margin market. As Chris will talk about shortly, we exit the year at AUD 36.3 million of inventory. That's healthy inventory. That's the targeted inventory that we've planned for. As I said, we've had disciplined execution in taking that inventory up to that number. To do that and to protect service aligned with our purpose, as I mentioned, in the U.S., we had to air freight some product. That cost us AUD 3 million predominantly in the first half.

Speaker #1: We prioritized the U.S.; it's our key growth market and our highest margin market. So, as Chris will talk about shortly, we exited the year with $36.3 million of inventory.

Speaker #2: Thanks, Joe. Good morning, everyone. It's a pleasure to be here. Turning first to our income statement, key highlight is our revenue growth up 9.2% year on year, to just under 112 million dollars.

Speaker #1: That's healthy inventory. That's the targeted inventory that we've planned for. And as I said, we've had disciplined execution in taking that inventory up to that number.

Speaker #1: To do that, and to protect service, aligned with our purpose, as I mentioned, in the U.S. we had to air freight some product. So, that cost us $3 million, predominantly in the first half.

Speaker #2: And that was driven, as Joe mentioned, by increase in sales in the U.S. of 24% year on year. We've prioritized supply to the U.S.

Speaker #1: That allowed us to protect service. That allowed us to be there for our moms and their babies. And that allows us to grow our brand equity and our reputation.

Speaker #2: throughout the year. That also resulted in us incurring air freight in a program that is now finished, but it really did enable us to achieve that level of growth in our critical growth market.

Joe Coote: That allowed us to protect service, that allowed us to be there for our moms and their babies, and that allows us to grow our brand equity and our reputation. Additionally, as we've grown and become a little bit more sophisticated as a business, we've taken on some additional capability. We have some new folks that have joined the business. We've moved some key roles up to the U.S. We have a CMO based up in the U.S. We have a Chief Commercial Officer based up in the U.S. for that region. Very experienced ladies who come into the business with very relevant experience and relationships into the trade and doing a great job. Then finally, our marketing. In the year, we increased our marketing 21% higher than our revenue growth, and that's to show confidence in our brand.

Joe Coote: That allowed us to protect service, that allowed us to be there for our moms and their babies, and that allows us to grow our brand equity and our reputation. Additionally, as we've grown and become a little bit more sophisticated as a business, we've taken on some additional capability. We have some new folks that have joined the business. We've moved some key roles up to the US We have a CMO based up in the US We have a Chief Commercial Officer based up in the US for that region. Very experienced ladies who come into the business with very relevant experience and relationships into the trade and doing a great job. Then finally, our marketing. In the year, we increased our marketing 21% higher than our revenue growth, and that's to show confidence in our brand.

Speaker #1: Additionally, as we've grown and become a little bit more sophisticated as a business, we've taken on some additional capability. We have some new folks that have joined the business.

Speaker #2: When you turn to our gross profit, while revenue was up, our gross profit was down 9.4% to 44.5 million dollars. And that really reflected the impact of the air freight program that we talked about, regulatory challenges and changes that occurred throughout the year, and a combination of U.S.-specific and non-AU tariffs that impacted our cost of goods as well.

Speaker #1: We've moved some key roles up to the U.S. We have a CMO based in the U.S., and we have a Chief Commercial Officer based in the U.S.

Speaker #1: ...for that region. Very experienced ladies who come into the business with very relevant experience and relationships in the trade, and are doing a great job.

Speaker #1: And then, finally, our marketing. In the year, we increased our marketing by 21%, higher than our revenue growth. And that's to show confidence in our brand, and as we invest in marketing and we're delivering better content, we're very happy that that'll set us up for future growth as we move forward.

Speaker #2: Our operating expenses were up 5% to 48.8 million dollars. And that reflected an increase in our marketing spend that we incurred in order to activate our brand and drive our sales program.

Joe Coote: As we invest in marketing and we're delivering better content, we're very happy that that'll set us up for future growth as we move forward. Just to round out, we also came to the market on 26 March with a growth strategy. Pleased to report, and I'll talk later some more tangible examples of how we're progressing that strategy, particularly some of the value that it's delivering. It gives us clarity and allows us to be really clear on how we execute our purpose. Then finally, I know it's something that everybody is eagerly awaiting, is the status with our FDA approval. We've progressed significantly. We are in the final review stage, and we are very confident that we will receive the FDA notification. With that said, I'll hand over to Chris to take us through the numbers.

Speaker #1: Just to round out, we also came to the market on the 26th of March with a growth strategy. Pleased to report—and I'll talk later—some more tangible examples of how we're progressing that strategy, particularly some of the value that it's delivering. It gives us clarity and allows us to be really clear on how we execute our purpose.

Speaker #2: Overall, our OPEX revenue ratio saw a small improvement to 44% compared to 45% prior year. When we look at our underlying EBITDA, we were at 5.3 million, demonstrating strong underlying earnings, improvement, and operating leverage to a degree.

Speaker #1: And then finally, I know it's something that everybody is eagerly awaiting—the status with our FDA approval. We've progressed significantly; we are in the final review stage.

Speaker #2: That was despite incurring air freight, tariffs, regulatory-related changes, throughout the course of the year. And the bridge on the bottom left, shows the transition from our reported 1.8 million dollar EBITDA loss to the 5.3 million dollar underlying EBITDA.

Speaker #1: And we are very confident that we will receive the FDA notification. With that said, I'll hand over to Chris to take us through the numbers.

Speaker #2: Thanks, Joe. Good morning, everyone. It's a pleasure to be here. Turning first to our income statement, the key highlight is our revenue growth, up 9.2% year on year, to just under $112 million.

Chris Rowe: Thanks, Joe. Good morning, everyone. It's a pleasure to be here. Turning first to our income statement, key highlight is our revenue growth up 9.2% year-on-year to just under AUD 112 million. That was driven, as Joe mentioned, by increase in sales in the U.S. of 24% year-on-year. We've prioritized supply to the U.S. throughout the year. That also resulted in us incurring air freight, in a program that is now finished. It really did enable us to achieve that level of growth in our critical growth market. When you turn to our gross profit, while revenue was up, our gross profit was down 9.4% to AUD 44.5 million. That really reflected the impact of the air freight program that we talked about, regulatory challenges and changes that occurred throughout the year, and a combination of U.S. specific and non-U.S. tariffs that impacted our COGS as well.

Chris Rowe: Thanks, Joe. Good morning, everyone. It's a pleasure to be here. Turning first to our income statement, key highlight is our revenue growth up 9.2% year-on-year to just under AUD 112 million. That was driven, as Joe mentioned, by increase in sales in the US of 24% year-on-year. We've prioritized supply to the US throughout the year. That also resulted in us incurring air freight, in a program that is now finished. It really did enable us to achieve that level of growth in our critical growth market. When you turn to our gross profit, while revenue was up, our gross profit was down 9.4% to AUD 44.5 million. That really reflected the impact of the air freight program that we talked about, regulatory challenges and changes that occurred throughout the year, and a combination of U.S. specific and non-U.S. tariffs that impacted our COGS as well.

Speaker #2: We moved forward. Touching next on our balance sheet, we had a clear plan throughout the year to reinvest in inventory to support our growth of our business.

Speaker #2: We have a long physical supply chain, and that requires working capital support. And that saw our inventory increase 16.2 million dollars throughout the year, 36.3 million dollars.

Speaker #2: And that was driven, as Joe mentioned, by an increase in sales in the U.S. of 24% year-on-year. We've prioritized supply to the U.S.

Speaker #2: Throughout the year, that also resulted in us incurring air freight in a program that is now finished, but it really did enable us to achieve that level of growth in our critical growth market.

Speaker #2: That inventory increase was funded by a combination of cash and debt. And our operating cash flow closely reflects and matches that change in inventory level.

Speaker #2: So very much a plan that we've executed to a level that we're very happy with, and have now got to a position that is about right to support our business as we go forward.

Speaker #2: We could move forward one. As I said, the inventory rebuild in our mind is largely complete. And levels of inventory relative to sales are back to around about where they were two years prior.

Speaker #2: Our operating expenses were up 5% to $48.8 million. That reflected an increase in our marketing spend that we incurred in order to activate our brand and drive our sales program.

Chris Rowe: Our operating expenses were up 5% to AUD 48.8 million. That reflected an increase in our marketing spend that we incurred in order to activate our brand and drive our sales program. Overall, our OPEX revenue ratio saw a small improvement to 44% compared to 45% prior year. When we look at our underlying EBITDA, we were at AUD 5.3 million, demonstrating strong underlying earnings improvement and operating leverage to a degree. That was despite incurring air freight, tariffs, regulatory-related changes throughout the course of the year. The bridge on the bottom left shows the transition from our reported AUD 1.8 million EBITDA loss to the AUD 5.3 million underlying EBITDA. We move forward. Touching next on our balance sheet, we had a clear plan throughout the year to reinvest in inventory to support the growth of our business. We have a long physical supply chain, and that requires working capital support.

Chris Rowe: Our operating expenses were up 5% to AUD 48.8 million.

Speaker #2: We are comfortable with that level of inventory. We think it's the right level to support a growth ambitions, given out the length of our supply chain, and we really only see inventory moving upwards in line with sales as we progress forwards.

Chris Rowe: That reflected an increase in our marketing spend that we incurred in order to activate our brand and drive our sales program. Overall, our OPEX revenue ratio saw a small improvement to 44% compared to 45% prior year. When we look at our underlying EBITDA, we were at AUD 5.3 million, demonstrating strong underlying earnings improvement and operating leverage to a degree. That was despite incurring air freight, tariffs, regulatory-related changes throughout the course of the year. The bridge on the bottom left shows the transition from our reported AUD 1.8 million EBITDA loss to the AUD 5.3 million underlying EBITDA. We move forward. Touching next on our balance sheet, we had a clear plan throughout the year to reinvest in inventory to support the growth of our business. We have a long physical supply chain, and that requires working capital support.

Speaker #2: Overall, our OPEX-to-revenue ratio saw a small improvement to 44%, compared to 45% in the prior year. When we look at our underlying EBITDA, we were at $5.3 million, demonstrating strong underlying earnings improvement and operating leverage, to a degree—that was despite incurring air freight, tariffs, and regulatory-related changes throughout the course of the year.

Speaker #2: With that, I'll hand back to Joe.

Speaker #1: Thank you, Chris. If we could tab, please. I'll now take us through a summary of our four regions. I'll start with the USA. Where we delivered 65.8 million dollars of net revenue.

Speaker #1: That now represents 59% of our total revenue line. So it's been a great growth story for us. We're very proud of the team. Yasmin, who leads the team up there, does a great job.

Speaker #2: And the bridge on the bottom left shows the transition from our reported $1.8 million EBITDA loss to the $5.3 million underlying EBITDA.

Speaker #1: The picture there on the left shows the coverage that we have now across the U.S. So we're in all 50 states. Pleasingly, we're in the six retail formats that we choose to be in.

Speaker #2: We moved forward. Touching next on our balance sheet, we had a clear plan throughout the year to reinvest in inventory to support the growth of our business.

Speaker #1: So with Amazon, we have a direct-to-consumer capability where anybody in the U.S. can source our product. We're also in the mass format. We're in grocery.

Speaker #2: We have a long physical supply chain, and that requires working capital support. That saw our inventory increase by $16.2 million throughout the year, to $36.3 million.

Speaker #1: We've recently joined the club format, where we're now ranged at Sam's Club, and we have a particular unique SKU for that format. We've recently come into the drug format.

Chris Rowe: That saw our inventory increase AUD 16.2 million throughout the year to AUD 36.3 million. That inventory increase was funded by a combination of cash and debt, and our operating cash flow closely reflects and matches that change in inventory level. So very much a plan that we've executed to a level that we're very happy with and have now got to a position that is about right to support our business as we go forward. We could move forward one. As I said, the inventory rebuild, in our mind, is largely complete, and levels of inventory relative to sales are back to around about where they were two years prior. We are comfortable with that level of inventory.

Speaker #2: That inventory increase was funded by a combination of cash and debt. Our operating cash flow closely reflects and matches that change in inventory level.

Speaker #1: Which is targeting convenience. And for those mums who may run out of formula, out of ours, that's a great channel for them to ensure that we can keep in supply and live our purpose.

Speaker #2: So very much a plan that we've executed to a level that we're very happy with, and have now got to a position that is about right to support our business as we go forward.

Speaker #1: And then finally, we're doing very well on the specialty channel. And so we're very happy with our ranging now. We've met our targets of over 10,000 stores.

Speaker #1: And now it's all about driving velocities in each of those stores. In terms of the macro market conditions, the area that we play in is premium natural.

Speaker #2: We could move forward one. As I said, the inventory rebuild, in our mind, is largely complete. And levels of inventory relative to sales are back to around about where they were two years prior.

Speaker #1: So it's a subsegment of the total category. So within the total category, we're 1%, which in such a big market is actually significant. But in the premium natural, high margin, better for you, subsector, we're actually 8%.

Speaker #2: We are comfortable with that level of inventory. We think it's the right level to support our growth ambition, given the length of our supply chain.

Chris Rowe: We think it's the right level to support our growth ambitions, given out the length of our supply chain, and we really only see inventory moving upwards in line with sales as we progress forwards. With that, I'll hand back to Joe.

Speaker #1: And that's something we're very proud of. Additionally, in the GOAT subsegment, which is a subsegment to premium natural, we are 20%. There is no GOAT infant formula produced in the U.S.

Speaker #2: And we really only see inventory moving upwards in line with sales as we progress forward. With that, I'll hand back to Joe.

Speaker #1: And so our GOAT product does particularly well, and we're very proud of the growth that we've experienced there. So in terms of turning the ranging of over 10,000 stores now into velocities and more revenue, it comes down to marketing.

Speaker #1: Thank you, Chris. If we could tab, please. I'll now take us through a summary of our four regions. I'll start with the USA, where we delivered $65.8 million of net revenue.

Joe Coote: Thank you, Chris. If we could tab, please. I will now take us through a summary of our four regions. I will start with the U.S., where we delivered AUD 65.8 million of net revenue. That now represents 59% of our total revenue line. It has been a great growth story for us. We are very proud of the team. Yasmin, who leads the team up there, does a great job. The picture there on the left shows the coverage that we have now across the U.S. So we are in all 50 states. Pleasingly, we are in the six retail formats that we choose to be in. So with Amazon, we have a direct-to-consumer capability where anybody in the U.S. can source our product. We are also in the mass format. We are in grocery.

Speaker #1: So we've done some great work on repositioning our brand. We really are proudly of Australia. We talk about being gentle functionality for the baby.

Speaker #1: That now represents 59% of our total revenue line, so it's been a great growth story for us. We're very proud of the team. Yasmin, who leads the team up there, does a great job.

Speaker #1: And we're a clean label product. And all these attributes are very on trend for our targeted consumers and their babies. We've been shifting our spend, looking for where we can track these mothers down and have them know who we are, and then come into the store and try our product and become users of our product.

Speaker #1: The picture there on the left shows the coverage that we have now across the U.S. So we're in all 50 states. Pleasingly, we're in the six retail formats that we choose to be in.

Speaker #1: So, with Amazon, we have a direct-to-consumer capability, where anybody in the U.S. can source our product. We're also in the mass format, and we're in grocery.

Speaker #1: So some of the more contemporary platforms we use are Reddit and TikTok. So we're very interested in TikTok, and we're very pleased with how that platform is driving our brand.

Speaker #1: Our click-through rate on Amazon is up 20%. We have been with Amazon for a number of years. But we're very pleased with our business there as well.

Speaker #1: We've recently joined the club format, where we're now ranged at Sam's Club, and we have a particularly unique SKU for that format. We've also recently come into the drug format.

Joe Coote: We have recently joined the club format, where we are now ranged at Sam's Club, and we have a particular unique SKU for that format. We have recently come into the drug format, which is targeting convenience. For those moms who may run out of formula out of hours, that is a great channel for them to ensure that we can keep in supply and live our purpose. Then finally, we are doing very well on the specialty channel. So we are very happy with our ranging now. We have met our targets of over 10,000 stores, and now it is all about driving velocities in each of those stores. In terms of the macro market conditions, the area that we play in is premium natural, so it is a sub-segment of the total category. So within the total category, we are 1%, which in such a big market is actually significant.

Joe Coote: We have recently joined the club format, where we are now ranged at Sam's Club, and we have a particular unique SKU for that format.

Speaker #1: And so overall in the U.S., we're very happy. We've navigated the tariffs. We're on shelf, and we're really set for what should be a great future.

Joe Coote: We have recently come into the drug format, which is targeting convenience. For those moms who may run out of formula out of hours, that is a great channel for them to ensure that we can keep in supply and live our purpose. Then finally, we are doing very well on the specialty channel. So we are very happy with our ranging now. We have met our targets of over 10,000 stores, and now it is all about driving velocities in each of those stores. In terms of the macro market conditions, the area that we play in is premium natural, so it is a sub-segment of the total category. So within the total category, we are 1%, which in such a big market is actually significant.

Speaker #1: Which is targeting convenience. And for those moms who may run out of formula outside of business hours, that's a great channel for them to ensure that we can keep in supply and live our purpose.

Speaker #1: If we tab forward. Our second biggest market is China. And so in China, we deliver 21.4 million dollars of revenue. About 19.1% of our total.

Speaker #1: And then finally, we're doing very well on the specialty channel, and so we're very happy with our ranging now. We've met our targets of over 10,000 stores.

Speaker #1: So very important market. In an important to note that both these markets outside of our home market, Australia, there's a graveyard of Australian brands that have had the ambition to take themselves offshore.

Speaker #1: And now, it's all about driving velocities in each of those stores. In terms of the macro market conditions, the area that we play in is premium natural.

Speaker #1: Our U.S. market's three times bigger than Australia and our China market is bigger than our Australian market as well. So we're really a business that is globalizing.

Speaker #1: So, it's a subsegment of the total category. Within the total category, we're at 1% market share—which, in such a big market, is actually significant. But in the premium, natural, high-margin, better-for-you subsector, we're actually at 8%.

Speaker #1: And our brand and our product being proudly Australian is resonating with those mums in those different geographies. Now in China, there has been a lower birth rate.

Joe Coote: But in the premium natural, high margin, better for you sub-sector, we are actually 8%, and that is something we are very proud of. Additionally, in the goat sub-segment, which is a sub-segment to premium natural, we are 20%. There is no Goat Milk Infant Formula produced in the U.S., and so our goat product does particularly well, and we are very proud of the growth that we have experienced there. So in terms of turning the ranging of over 10,000 stores now into velocities and more revenue, it comes down to marketing. So we have done some great work on repositioning our brand. We really are proudly of Australia. We talk about being gentle functionality for the baby, and we are a clean label product. All these attributes are very on-trend for our targeted consumers and their babies.

Speaker #1: And that's something we're very proud of. Additionally, in the GOAT subsegment, which is a subsegment of premium natural, we are at 20%. There is no GOAT infant formula produced in the U.S.

Speaker #1: But the premiumization within the total category is positive. And particularly for the English label. So we're happy with the progress our brand is making.

Speaker #1: We have a great team in China led by a gentleman called Jackie. And within China, the regulatory reset has been something that we've navigated with a lot of other industry players.

Speaker #1: And the product flows now are normalizing. And we've reset. And we are as we get through H1, feeling good about the momentum in China.

Speaker #1: So we've done some great work on repositioning our brand. We really are proud of Australia. We talk about being gentle functionality for the baby.

Speaker #1: In terms of our portfolio, China is a market where our core offer is infant. And we sell through the offline to online channel. We're in the year we've grown to over 1,800 stores.

Speaker #1: And we're a clean label product, and all these attributes are very on-trend for our targeted consumers and their babies. We've been shifting our spend, looking for where we can track these mothers down and have them know who we are, and then come into the store, try our product, and become users of our product.

Speaker #1: And our sellout has increased by 30%. So some really stellar numbers there. We've historically been in the CBEC channel, which is the cross-border e-commerce.

Joe Coote: We have been shifting our spend, looking for where we can track these mothers down and have them know who we are, then come into the store and try our product and become users of our product. Some of the more contemporary platforms we use are Reddit and TikTok. So we are very interested in TikTok, and we are very pleased with how that platform is driving our brand. Our click-through rate on Amazon is up 20%. We have been with Amazon for a number of years, but we are very pleased with our business there as well. So overall in the U.S., we are very happy. We have navigated the tariffs, we are on shelf, and we are really set for what should be a great future. If we tab forward. Our second biggest market is China. In China, we deliver AUD 21.4 million of revenue, about 19.1% of our total.

Speaker #1: And our sellout in that channel was up 34%. So you might note that both those sellout numbers are over 30%. And that was digesting what was a little bit of an inventory imbalance that we came into the year with.

Speaker #1: Some of the more contemporary platforms we use are Reddit and TikTok. We're very interested in TikTok, and we're very pleased with how that platform is driving our brand.

Joe Coote: Some of the more contemporary platforms we use are Reddit and TikTok. So we are very interested in TikTok, and we are very pleased with how that platform is driving our brand. Our click-through rate on Amazon is up 20%. We have been with Amazon for a number of years, but we are very pleased with our business there as well. So overall in the U.S., we are very happy. We have navigated the tariffs, we are on shelf, and we are really set for what should be a great future. If we tab forward. Our second biggest market is China. In China, we deliver AUD 21.4 million of revenue, about 19.1% of our total.

Speaker #1: But the team has navigated that. And our inventory now is balanced and have 27. And we're moving forward positively. Additionally, TikTok our profile of consumers tend to be those types of mums that are consuming a lot of digital.

Speaker #1: Our click-through rate on Amazon is up 20%. We have been with Amazon for a number of years, and we're very pleased with our business there as well.

Speaker #1: And so, overall in the U.S., we're very happy. We've navigated the tariffs, we're on shelf, and we're really set for what should be a great future.

Speaker #1: And TikTok is a preferred platform. So we're investing not just in the U.S., but also in China with TikTok. And the other thing I'll mention in China is we're very proud of the progress we've made in the adult category.

Speaker #1: If we tab forward, our second biggest market is China. So, in China, we delivered $21.4 million of revenue, about 19.1% of our total.

Speaker #1: So we have a separate brand called Caprulac. Watch this space. We are very positive about the expansion into adult. The lifetime value that we can accrue from an individual consumer in adult is significantly longer, typically an infant is in our system for one to two years.

Speaker #1: So, very important market. It's important to note that both these markets, outside of our home market, Australia, have a graveyard of Australian brands that have had the ambition to take themselves offshore.

Joe Coote: A very important market. It is important to note that both these markets are outside of our home market, Australia. There is a graveyard of Australian brands that have had the ambition to take themselves offshore. Our U.S. market is three times bigger than Australia, and our China market is bigger than our Australian market as well. We are really a business that is globalizing, and our brand and our product, being proudly Australian, is resonating with those moms in those different geographies. In China, there has been a lower birth rate, but the premiumization within the total category is positive, and particularly for the English label. We are happy with the progress our brand is making. We have a great team in China led by a gentleman called Jackie.

Speaker #1: And so the team in China have done great work to expand into bricks and mortar. We're in 100 premium retail outlets. We do really well on the Tmall platform.

Speaker #1: Our U.S. market is three times bigger than Australia. And our China market is bigger than our Australian market as well. So we're really a business that is globalizing.

Speaker #1: And we've launched a China label, Caprulac product. So it's an area that we have strong strategic focus moving forward. If we tab. Our home market.

Speaker #1: And our brand and our product, being proudly Australian, is resonating with those moms in those different geographies. Now, in China, there has been a lower birth rate.

Speaker #1: But the premiumization within the total category is positive, and particularly for the English label. So we're happy with the progress our brand is making.

Speaker #1: Critically important market for us, Australia. 16.3%. Disappointed with our result in Australia. Wonderful shot of a farm there. I love showing that shot to our retailers.

Speaker #1: We have a great team in China, led by a gentleman called Jackie. Within China, the regulatory reset has been something we've navigated alongside many other industry players.

Joe Coote: Within China, the regulatory reset has been something that we have navigated with a lot of other industry players, and the product flows now are normalizing. We have reset, and we are, as we get through H1, feeling good about the momentum in China. In terms of our portfolio, China is a market where our core offer is infant, and we sell through the offline to online channel, where in the year, we have grown to over 1,800 stores, and our sellout has increased by 30%. Some really stellar numbers there. We have historically been in the CBEC channel, which is the cross-border e-commerce, and our sellout in that channel was up 34%. You might note that both those sellout numbers are over 30%, and that was digesting what was a little bit of an inventory imbalance that we came into the year with.

Speaker #1: That's one of our farming partners in Victoria. Beautiful, beautiful setup there with the green grass. Very different particularly to what people expect in the U.S.

Speaker #1: And the product flows now are normalizing, and we've reset. As we get through H1, we're feeling good about the momentum in China.

Speaker #1: and China. So that of Australia attribute is something that we really accentuate and we're very proud of. Maybe we take it for granted in Australia.

Speaker #1: In terms of our portfolio, China is a market where our core offer is infant. And we sell through the offline-to-online channel, where in the year we've grown to over 1,800 stores.

Speaker #1: But that's a snapshot of one of our farms. In terms of the market condition, Australia is a market again where the global macro is true in that the birth rates are down, the mass market is challenged.

Speaker #1: And our sell-out has increased by 30%, so some really stellar numbers there. We've historically been in the CBEC channel, which is the cross-border e-commerce.

Speaker #1: There is some pockets of value. There's some premiumization opportunities. That's where we play. If we come back to the year though, it's been a little bit of a journey.

Speaker #1: And our sell-out in that channel was up 34%. So, you might note that both those sell-out numbers are over 30%. And that was digesting what was a little bit of an inventory imbalance that we came into the year with.

Speaker #1: So we've navigated through four steps as I would see it. We entered 26 with a little bit of negative momentum. We weren't spending the money that we would hope to spend on advertising promotion.

Speaker #1: But the team has navigated that, and our inventory now is balanced. And have 27, and we're moving forward positively. Additionally, TikTok, our profile of consumers tend to be those types of moms that are consuming a lot of digital.

Joe Coote: The team has navigated that, and our inventory now is balanced in FY27, and we are moving forward positively. Additionally, TikTok. Our profile of consumers tend to be those types of moms that are consuming a lot of digital, and TikTok is their preferred platform. We are investing not just in the U.S., but also in China with TikTok. The other thing I will mention in China is we are very proud of the progress we have made in the adult category. We have a separate brand called CapriLac. Watch this space. We are very positive about the expansion into adult. The lifetime value that we can accrue from an individual consumer in adult is significantly longer. Typically, an infant is in our system for one to two years. The team in China have done great work to expand into bricks and mortar. We are in 100 premium retail outlets.

Speaker #1: Some of the content we had to sharpen up. And so we spent the first half really looking at recalibrating our brand creative. We've really gone for our purple.

Speaker #1: Our of Australia. And our gentle on the tummy. And our resonating. With our consumers. So once we had the enhanced creative, we upped our advertising promotion spend in the second half.

Speaker #1: And TikTok is a preferred platform, so we're investing not just in the U.S., but also in China with TikTok. And the other thing I'll mention in China is we're very proud of the progress we've made in the adult category.

Speaker #1: So we have a separate brand called Caprulac; watch this space. We are very positive about the expansion into adult. The lifetime value that we can accrue from an individual consumer in adult is significantly longer. Typically, an infant is in our system for one to two years.

Speaker #1: To 16%. And then what we're seeing now coming out of the year and into FY27 in H1 is that we're regaining market share. And our brand awareness has increased a total of 10 points, which is very significant.

Speaker #1: And so the team in China have done great work to expand into bricks and mortar. We're in 100 premium retail outlets, and we do really well on the Tmall platform.

Speaker #1: So while we're not happy with Australia, we feel positive about the momentum as we come through H1. And we'll share more on that in due course.

Joe Coote: We do really well on the Tmall platform, and we have launched a China label CapriLac product. It is an area that we have strong strategic focus moving forward. If we tab. Our home market. Critically important market for us, Australia, 16.3%. Disappointed with our result in Australia. Wonderful shot of a farm there. I loved showing that shot to our retailers. That is one of our farming partners in Victoria. Beautiful, beautiful set up there with the green grass. Very different particularly to what people expect in the U.S. and China. That of Australia attribute is something that we really accentuate and we are very proud of. Maybe we take it for granted in Australia, but that is a snapshot of one of our farms.

Speaker #1: And we've launched a China label Caprilac product, so it's an area that we have strong strategic focus on moving forward. If we tab to our home market…

Speaker #1: If we could tab please. To our final geographic segment, which is our rest of the world. The rest of the world was 6.4 million of revenue, 5.7.

Speaker #1: It was down 25%. This is where we really had some very significant impacts from the regulatory reset, particularly in the second half. We did have some challenges in the first half with product availability.

Speaker #1: Critically important market for us: Australia, 16.3%. Disappointed with our result in Australia. Wonderful shot of a farm there— I love showing that shot to our retailers.

Speaker #1: One of our large markets, Vietnam, had some changes to their nutritional panels. Around carbohydrates. So we navigated that with that market. In the second half, we did pause in Vietnam.

Speaker #1: That's one of our farming partners in Victoria. Beautiful, beautiful setup there with the green grass—very different, particularly compared to what people expect in the U.S.

Speaker #1: We just really wanted to be sure that we understood the regulatory environment. We took the time to make sure that we protected our consumers.

Speaker #1: ...and China. So, that 'of Australia' attribute is something that we really accentuate, and we're very proud of. Maybe we take it for granted in Australia.

Speaker #1: But that's a snapshot of one of our farms. In terms of the market condition, Australia is a market, again, where the global macro is true in that the birth rates are down.

Speaker #1: In Vietnam. And we'll very shortly be relaunching in Vietnam. And we feel positive about that as a market that has huge opportunity. We've got a great distribution partner.

Joe Coote: In terms of the market condition, Australia is a market again where the global macro is true and the birth rates are down, the mass market is challenged. There are some pockets of value. There are some premiumization opportunities. That is where we play. If we come back to the year, though, it has been a little bit of a journey. We have navigated through four steps as I would see it. We ended 2026 with a little bit of negative momentum. We were not spending the money that we would hope to spend on advertising promotion. Some of the content we had to sharpen up. We spent the H1 really looking at recalibrating our brand creative. We have really gone for our purple, our of Australia, and our gentle on the tummy, and our clean label attributes, and it is resonating with our consumers.

Speaker #1: The mass market is challenged. There are some pockets of value. There are some premiumization opportunities—that's where we play. If we come back to the year, though, it's been a little bit of a journey.

Speaker #1: Up in Vietnam as well. Japan, a little bit similar. Suffered a little bit from stock rationing. We were prioritizing markets. And so a little bit softer.

Speaker #1: So we've navigated through four steps, as I would see it. We entered '26 with a little bit of negative momentum. We weren't spending the money that we would hope to spend on advertising and promotion.

Speaker #1: But they're our two big markets. We also have presence in some other markets. And we do have an ambition to continue to grow our rest of the world business.

Speaker #1: So if we could tab please. Just some words on the strategy. As I mentioned, we shared our strategy with the market on the 26th of March.

Speaker #1: Some of the content we had to sharpen up, and so we spent the first half really looking at recalibrating our brand creative. We've really gone for our purple.

Speaker #1: It's now five months. Subsequent. What I can say confidently is we're bringing the strategy to life. There's a lot of activity. There's a lot of inputs.

Speaker #1: Out of Australia. And are gentle on the tummy. And are clean label attributes. And it's resonating with our consumers. So, once we had the enhanced creative, we upped our advertising promotion spend in the second half.

Speaker #1: But we're driving to outputs. There's an ROI. There's tangible outputs. And there's a contribution to the growth of the business and to a stronger bottom line.

Joe Coote: Once we had the enhanced creative, we upped our advertising promotion spend in the H2 to 16%. What we are seeing now coming out of the year and into FY27 in H1 is that we are regaining market share. Our brand awareness has increased a total of 10 points, which is very significant. While we are not happy with Australia, we feel positive about the momentum as we come through H1 and we will share more on that in due course. If we could tab, please, to our final geographic segment, which is our Rest of World. The Rest of World was AUD 6.4 million of revenue to AUD 5.7 million. It was down 25%. This is where we really had some very significant impacts from the regulatory reset, particularly in the H2. We did have some challenges in the H1 with product availability.

Speaker #1: We're doing that through our three strategic pillars. Our first pillar is owned by Annie, our Chief Marketing Officer. And it's really about activating our brand for our consumers.

Speaker #1: ...to 16%. And then what we're seeing now, coming out of the year and into FY27 in H1, is that we're regaining market share. Our brand awareness has increased a total of 10 points, which is very significant.

Speaker #1: Our second pillar is around building winning portfolios. It's led by our three commercial leaders, Chris in Australia and rest of the world, Yasmin up in the U.S.

Speaker #1: So, while we're not happy with Australia, we feel positive about the momentum as we come through H1. We'll share more on that in due course.

Speaker #1: and Jackie in China. It's really about having the products that are on trend with our targeted consumers. It's about working with the right retailers and the right formats and channels.

Speaker #1: If we could tab, please, to our final geographic segment, which is our Rest of the World. The Rest of the World was $6.4 million of revenue, $5.7 million.

Speaker #1: And it's about differentiating ourselves from our competition through price and promotion. So it all comes together commercially. And then finally, a large part of what we do, this pillar is led by Richard Payne, our COO.

Speaker #1: Is connecting our farms to our families with our formula. And so we've done a lot of work in this area. And I'll share some of those examples at the moment.

Speaker #1: One of our large markets, Vietnam, had some changes to their nutritional panels—around carbohydrates. So, we navigated that with that market. In the second half, we did pause in Vietnam.

Joe Coote: One of our large markets, Vietnam, had some changes to their nutritional panels around carbohydrates, so we navigated that with that market. In the H2, we did pause in Vietnam. We just really wanted to be sure that we understood the regulatory environment. We took the time to make sure that we protected our consumers in Vietnam, and we will very shortly be relaunching in Vietnam, and we feel positive about that as a market that has huge opportunity. We have a great distribution partner up in Vietnam as well. Japan, a little bit similar. Suffered a little bit from stock rationing. We were prioritizing markets, so a little bit softer, but they are our two big markets. We also have presence in some other markets, and we do have an ambition to continue to grow our Rest of World business. If we could tab, please.

Speaker #1: But it is great as someone who's worked for non-Australian businesses for most of my career to be representing Australia and sharing the amazing goodness that we bring in our products from our Australian farming partners and our high quality manufacturing and supply chain systems.

Speaker #1: We just really wanted to be sure that we understood the regulatory environment. We took the time to make sure that we protected our consumers.

Speaker #1: A couple of the enablers I'll talk to is innovation, technology we're doing, some work in AI. We do work very hard on our performance culture.

Speaker #1: In Vietnam, and we'll very shortly be relaunching in Vietnam. We feel positive about that, as it's a market that has huge opportunity. We've got a great distribution partner up in Vietnam as well.

Speaker #1: And ultimately, that's about living our values. So if we tab over. A couple of examples here. In terms of what we're doing in the strategy that we'll create value for our shareholders in the future.

Speaker #1: Japan, a little bit similar—suffered a little bit from stock rationing. We were prioritizing markets, and so a little bit softer. But they're our two big markets.

Speaker #1: If we start on the left with Activate Brand and Consumer. As I mentioned, we've reweighted our digital presence. We're finding there's some great results from TikTok as an example.

Speaker #1: We also have a presence in some other markets, and we do have an ambition to continue to grow our Rest of the World business. So, if we could tab, please.

Speaker #1: And that's an ongoing process. And our CMO, Annie, has built a process to look at that objectively with some technology that looks at the math.

Speaker #1: Just a few words on the strategy. As I mentioned, we shared our strategy with the market on the 26th of March. It's now five months.

Joe Coote: Just some words on the strategy. As I mentioned, we shared our strategy with the market on 26 March. It is now five months subsequent. What I can say confidently is we are bringing the strategy to life. There is a lot of activity, there is a lot of inputs, but we are driving to outputs. There is an ROI, there are tangible outputs, and there is a contribution to the growth of the business and to a stronger bottom line. We are doing that through our three strategic pillars. Our first pillar is owned by Annie, our Chief Marketing Officer, and it is really about activating our brand for our consumers. Our second pillar is around building winning portfolios. It is led by our three commercial leaders, Chris in Australia and Rest of World, Yasmin up in the U.S., and Jackie in China. It is really about having the products that are on trend with our targeted consumers.

Joe Coote: Just some words on the strategy. As I mentioned, we shared our strategy with the market on 26 March. It is now five months subsequent.

Speaker #1: And we chase the ROI. And we go to where our consumers are. And we engage with those consumers. So they're aware of who we are.

Speaker #1: Subsequently, what I can say confidently is we're bringing the strategy to life. There's a lot of activity. There are a lot of inputs, but we're driving to outputs.

Joe Coote: What I can say confidently is we are bringing the strategy to life. There is a lot of activity, there is a lot of inputs, but we are driving to outputs. There is an ROI, there are tangible outputs, and there is a contribution to the growth of the business and to a stronger bottom line. We are doing that through our three strategic pillars. Our first pillar is owned by Annie, our Chief Marketing Officer, and it is really about activating our brand for our consumers. Our second pillar is around building winning portfolios. It is led by our three commercial leaders, Chris in Australia and Rest of World, Yasmin up in the U.S., and Jackie in China. It is really about having the products that are on trend with our targeted consumers.

Speaker #1: They trial us. And then they stay with us. We've also got some exciting news coming down the pipe with a brand refresh. Later in the year, we'll share more on that.

Speaker #1: There's an ROI, there are tangible outputs, and there's a contribution to the growth of the business and to a stronger bottom line. We're achieving that through our three strategic pillars.

Speaker #1: I'd love to share more today. But it's very exciting. And we'll be something that we'll share in due course. If I move across to building a winning portfolio.

Speaker #1: Our first pillar is owned by Annie, our Chief Marketing Officer, and it's really about activating our brand for our consumers. Our second pillar is around building winning portfolios.

Speaker #1: It's really about expanding our presence. As I mentioned, Yasmin and the team up in the U.S. have got to over 10,000 stores in all the retail formats that we're targeting.

Speaker #1: It's led by our three commercial leaders: Chris in Australia and Rest of the World, Yasmin up in the U.S., and Jackie in China. It's really about having the products that are on trend with our targeted consumers.

Speaker #1: We do have an innovation pipeline. There's a big focus on adult. I mentioned that in the China update. And we do have an aspiration to launch into Canada.

Speaker #1: It's about working with the right retailers and the right formats and channels. And it's about differentiating ourselves from our competition through price and promotion.

Joe Coote: It's about working with the right retailers and the right formats and channels. It's about differentiating ourselves from our competition through price and promotion. So it all comes together commercially. Then finally, a large part of what we do, this pillar is led by Richard Paine, our COO, is connecting our farms to our families with our formula. We've done a lot of work in this area, and I'll share some of those examples at the moment. But it is great, as someone who's worked for non-Australian businesses for most of my career, to be representing Australia and sharing the amazing goodness that we bring in our products from our Australian farming partners and our high-quality manufacturing and supply chain systems. Couple of the enablers I'll talk to is innovation, technology. We're doing some work in AI.

Speaker #1: We move one step further. A lot of activity in this area with Richard Payne, our COO. We have streamlined and optimized our farm. And production network.

Speaker #1: So, it all comes together commercially. And then finally, a large part of what we do—this pillar is led by Richard Payne, our COO.

Speaker #1: So we are working more deeply with less partners. And we are feeling really good about bringing the goodness of the Australian farms to our markets around the world.

Speaker #1: Connecting our farms to our families with our formula. We've done a lot of work in this area, and I'll share some of those examples in a moment.

Speaker #1: But it is great, as someone who’s worked for non-Australian businesses for most of my career, to be representing Australia and sharing the amazing goodness that we bring in our products from our Australian farming partners and our high-quality manufacturing and supply chain systems.

Speaker #1: In the logistics and manufacturing space, we have delivered hard cash reductions of 1.15 million. That relates to how we're packing containers for export. It also relates to how we're reducing the number of steps in our manufacturing process.

Speaker #1: And that's money that's been banked to the bottom line. We've also made commitments to extend our go herd through our partners in Australia by 70%.

Speaker #1: A couple of the enablers I'll talk to are innovation and technology. We're doing some work in AI. We also work very hard on our performance culture.

Joe Coote: We do work very hard on our performance culture, and ultimately that's about living our values. If we tab over, couple of examples here in terms of what we're doing in the strategy that will create value for our shareholders in the future. If we start on the left with activate brand and consumer. As I mentioned, we've reweighted our digital presence. We're finding there's some great results from TikTok as an example, and that's an ongoing process. Our CMO, Annie, has built a process to look at that objectively with some technology that looks at the math. We chase the ROI, and we go to where our consumers are. We engage with those consumers so they're aware of who we are, they trial us, and then they stay with us.

Speaker #1: We're very confident that we're working with great people there on farm. And it's a key part of our value proposition. We did talk at the strategy about the future network for growth.

Speaker #1: And ultimately, that's about living our values. So if we tab over—a couple of examples here in terms of what we're doing in the strategy that will create value for our shareholders in the future.

Speaker #1: If we start on the left with Activate Brand and Consumer: as I mentioned, we've reweighted our digital presence. We're finding there are some great results from TikTok, as an example.

Speaker #1: We have done a lot of work to understand the options and scenarios between buy, build, and rent. I think we've mapped the options. We've got some preferred scenarios.

Speaker #1: There's nothing that I will share today on that. But we have very clear view of where we will go and when we will go.

Speaker #1: And that's an ongoing process. Our CMO, Annie, has built a process to look at that objectively, with some technology that looks at the math.

Speaker #1: As the triggers in the business call for those additional capacities. Finally, on the enablers. Important that we have strong enablers. In terms of living our values at a core.

Speaker #1: And we chase the ROI. And we go to where our consumers are. And we engage with those consumers so they're aware of who we are.

Speaker #1: They trial us, and then they stay with us. We've also got some exciting news coming down the pipeline with a brand refresh. Later in the year, we'll share more on that.

Speaker #1: But also some of our operating platforms. We've done a lot of work in the safety and quality. Our quality systems of held up very, very well.

Joe Coote: We've also got some exciting news coming down the pipe with a brand refresh later in the year. We'll share more on that. I'd love to share more today. But it's very exciting and will be something that we'll share in due course. If I move across to building a winning portfolio, it's really about expanding our presence. As I mentioned, Yasmin and the team up in the U.S. have got to over 10,000 stores in all the retail formats that we're targeting. We do have an innovation pipeline. There's a big focus on adult. I mentioned that in the China update, and we do have an aspiration to launch into Canada. If we move one step further, a lot of activity in this area with Richard Paine, our COO. We have streamlined and optimized our farm and production network, so we are working more deeply with less partners.

Speaker #1: I'd love to share more today, but it's very exciting, and it will be something that we'll share in due course. If I move across to building a winning portfolio...

Speaker #1: I'm very proud of our quality team. All the work we do at the regulators particularly the FDA. Our quality capability is always something they give us credit on.

Speaker #1: It's really about expanding our presence. As I mentioned, Yasmin and the team up in the U.S. have gotten to over 10,000 stores across all the retail formats.

Speaker #1: The audits that we've had have all been successfully navigated. And I really put that down to the strong focus and the capability we have in our quality team.

Speaker #1: That we're targeting. We do have an innovation pipeline. There's a big focus on adult—I mentioned that in the China update. And we do have an aspiration to launch into Canada.

Speaker #1: Additionally, in our finance and planning area, our operational planning financial planning. Some of the work that Chris Rowe did before he stepped into the CFO was in that space.

Speaker #1: And we've strengthened our capability there. The other one I'll mention before I close is just AI. It's everywhere. I'm sure everybody is using it.

Speaker #1: We move one step further. There's been a lot of activity in this area with Richard Payne, our COO. We have streamlined and optimized our farm and production network.

Speaker #1: We have some targeted functional use cases. Not surprisingly, we're going to where value is. For us, it's procurement. We spend a lot of money on dairy solids and other ingredients.

Speaker #1: So, we are working more deeply with fewer partners, and we are feeling really good about bringing the goodness of Australian farms to our markets around the world.

Speaker #1: So we've got some activity around procurement. And then additionally, in trade spend and marketing. We spend a lot of money where our two biggest areas.

Joe Coote: We are feeling really good about bringing the goodness of the Australian farms to our markets around the world. In the logistics and manufacturing space, we have delivered hard cash reductions of AUD 1.15 million. That relates to how we're packing containers for export. It also relates to how we're reducing the number of steps in our manufacturing process, and that's money that's being banked to the bottom line. We've also made commitments to extend our goat herd through our partners in Australia by 70%. We're very confident that we're working with great people there on farm, and it's a key part of our value proposition. We did talk at the strategy about the future network for growth. We have done a lot of work to understand the options and scenarios between buy, build, and rent. I think we've mapped the options. We've got some preferred scenarios.

Speaker #1: In the logistics and manufacturing space, we have delivered hard cash reductions of $1.15 million. That relates to how we're packing containers for export. It also relates to how we're reducing the number of steps in our manufacturing process.

Speaker #1: So we're targeting where the value is. And at this point in time, we've got targeted use cases. And we're test and learn cycle. And we hope through 2027 to do more in that space.

Speaker #1: With that, I will ask that we could tab across. And start to look at the outlook. So it's clear that FY26 had some challenges as Chris and I have highlighted.

Speaker #1: And that's money that's been banked to the bottom line. We've also made commitments to extend our goat herd through our partners in Australia by 70%.

Speaker #1: We're very confident that we're working with great people there on farm, and it's a key part of our value proposition. We did talk at the strategy about the future network for growth.

Speaker #1: H1 largely restocking from that very low inventory position. We stayed in stock. We did that for our consumers. H2 we navigated the global regulatory reset.

Speaker #1: We have done a lot of work to understand the options and scenarios between buy, build, and rent. I think we've mapped the options, and we've got some preferred scenarios.

Speaker #1: Some of the momentum coming into the year is still building. We hope to see that build through H1. And as we have something to share, we will.

Speaker #1: There's nothing that I will share today on that. But we have a very clear view of where we will go and when we will go.

Joe Coote: There's nothing that I will share today on that, but we have a very clear view of where we will go and when we will go as the triggers in the business call for those additional capacities. Finally, on the enablers. Important that we have strong enablers in terms of living our values at a core, but also some of our operating platforms. We've done a lot of work in safety and quality. Our quality systems have held up very well. I'm very proud of our quality team. All the work we do with the regulators, particularly the FDA, and our quality capability is always something they give us credit on. The audits that we've had have all been successfully navigated, and I really put that down to the strong focus and the capability we have in our quality team.

Speaker #1: But the environment has normalized. And the product flows are coming back to normal. In terms of revenue outlook. We are a growth business. We're very confident in growth.

Speaker #1: As the triggers in the business call for those additional capacities. Finally, on the enablers—it's important that we have strong enablers in terms of living our values at our core.

Speaker #1: The US, as we said, we've got our 10,000 stores. We've got our marketing stepped up. We now need to have the flywheel spin. And turn those doors into dollars.

Speaker #1: But also some of our operating platforms. We've done a lot of work in safety and quality. Our quality systems have held up very, very well.

Speaker #1: And that's something where we do have strong momentum. China. We've got expanded distribution. We have the adult focus. And we've sharpened our marketing. And we feel good about growth in China.

Speaker #1: I'm very proud of our quality team and all the work we do with the regulators, particularly the FDA. Our quality capability is always something they give us credit for.

Speaker #1: The audits that we've had have all been successfully navigated, and I really put that down to the strong focus and the capability we have in our quality team.

Speaker #1: Australia, we're continuing to invest. We want to accelerate our recovery. We've got some green shoots of recovery. But we need to see more. And we're very confident that we've got the right strategy in place to see that recovery.

Speaker #1: Additionally, in our finance and planning area—our operational planning and financial planning—some of the work that Chris Rowe did before he stepped into the CFO role was in that space.

Joe Coote: Additionally, in our finance and planning area, our operational planning, financial planning, some of the work that Chris Rowe did before he stepped into the CFO was in that space, and we've strengthened our capability there. The other one I'll mention before I close is just AI. It's everywhere. I'm sure everybody is using it. We have some targeted functional use cases. Not surprisingly, we're going to where value is. For us, it's procurement. We spend a lot of money on dairy solids and other ingredients. So we've got some activity around procurement. Additionally, in trade spend and marketing, we spend a lot of money. They're our two biggest areas, so we're targeting where the value is. At this point in time, we've got targeted use cases and we're test and learn cycle, and we hope through FY27 to do more in that space.

Speaker #1: And then finally, and rest of world. It does remain mixed. We will be relaunching in some markets. Product flows are improving. But they do tend to be the markets that when we're rationing, where we tend to go to the other markets above rest of world.

Speaker #1: And we've strengthened our capability there. The other one I'll mention before I close is just AI—it's everywhere. I'm sure everybody is using it.

Speaker #1: We have some targeted, functional use cases. Not surprisingly, we're going to where the value is. For us, it's procurement. We spend a lot of money on dairy solids and other ingredients.

Speaker #1: But they are critical markets. There's growth. There's good margin. And so we'll remain focused on those. Our gross margin is expected to improve and normalize.

Speaker #1: So we've got some activity around procurement. And then additionally, in trade spend and marketing—we also spend a lot of money there. They are our two biggest areas.

Speaker #1: Chris spoke about that. We have the working capital in place. We have the targeted weeks of inventory in the US in our warehouse. We're in good shape.

Speaker #1: So we're targeting where the value is. At this point in time, we've got targeted use cases, and we're in a test-and-learn cycle. We hope, through 2027, to do more in that space.

Speaker #1: We can be there for those consumers. And we can fulfill those orders for those retailers. And then finally, we will continue to invest in our brand.

Speaker #1: We have stepped up our percentage of net revenue investment in marketing. We're proudly doing that. We're watching that mindfully. We're ensuring there's an ROI.

Speaker #1: With that, I will ask that we could tab across and start to look at the outlook. So it's clear that FY26 had some challenges, as Chris and I have highlighted.

Joe Coote: With that, I will ask that we could tab across and start to look at the outlook. It's clear that FY26 had some challenges, as Chris and I have highlighted. H1 largely restocking from that very low inventory position. We stayed in stock. We did that for our consumers. H2, we navigated the global regulatory reset. Some of the momentum coming into the year is still building. We hope to see that build through H1. As we have something to share, we will. But the environment has normalized and the product flows are coming back to normal. In terms of revenue outlook, we are a growth business. We're very confident in growth. The U.S., as we said, we've got our 10,000 stores, we've got our marketing stepped up.

Speaker #1: And more from that as we move forward. And then finally, it's hard to manage a regulator like the US FDA. So we don't make commitments on their behalf.

Speaker #1: H1 was largely restocking from that very low inventory position. We stayed in stock—we did that for our consumers. In H2, we navigated the global regulatory reset.

Speaker #1: But we are in the very final steps. And we're very confident that we will come to the market with some news from the FDA in due course.

Speaker #1: Some of the momentum coming into the year is still building. We hope to see that build through H1, and as we have something to share, we will.

Speaker #1: With that said, I'll close and ask for questions.

Speaker #2: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two.

Speaker #1: But the environment has normalized, and the product flows are coming back to normal. In terms of revenue outlook, we are a growth business—we're very confident in growth.

Speaker #2: If you are on a speakerphone, please pick up the handset to ask your question. Today's first question comes from Jonathan Snape at Bell Potter.

Speaker #1: In the US, as we said, we've got our 10,000 stores. We've stepped up our marketing. Now, we need to have the flywheel spin and turn those doors into dollars.

Speaker #2: Please go ahead.

Joe Coote: We now need to have the flywheel spin and turn those doors into dollars, and that's something where we do have strong momentum. China, we've got expanded distribution. We have the adult focus, and we've sharpened our marketing, and we feel good about growth in China. Australia, we're continuing to invest. We want to accelerate our recovery. We've got some green shoots of recovery, but we need to see more, and we're very confident that we've got the right strategy in place to see that recovery. Finally, in rest of world, it does remain mixed. We will be relaunching in some markets. Product flows are improving. But they do tend to be the markets that when we're rationing, where we tend to go to the other markets above rest of world. But they are critical markets. There's growth, there's good margin, and so we'll remain focused on those.

Speaker #3: Yeah. Hey guys. Can you hear me okay?

Speaker #1: And that's something where we do have strong momentum. In China, we've got expanded distribution, we have the adult focus, and we've sharpened our marketing. We feel good about growth in China.

Speaker #4: Yeah. We can hear you, Jonah.

Speaker #3: Great. Well, can I just ask around the one of costs? It looks a little bit bigger than where you were thinking. The big one is probably that 3.9.

Speaker #3: How do I have to think about that? I guess, A, what is it? What was the 3.9 spent on? And B, how do I kind of think about that into 2027?

Speaker #1: Australia, we're continuing to invest. We want to accelerate our recovery. We've got some green shoots of recovery, but we need to see more. And we're very confident that we've got the right strategy in place to see that recovery.

Speaker #3: Are there still some residual costs in these resets around the US? Or does it largely kind of flow out next year?

Speaker #1: And then finally, the rest of the world does remain mixed. We will be relaunching in some markets. Product flows are improving, but they do tend to be the markets that, when we're rationing, we tend to prioritize other markets above the rest of the world.

Speaker #4: I'll take that one. We see those very much as one-off costs. And we don't expect to have those sorts of costs flowing into our result in any material form in F27.

Speaker #1: But they are critical markets. There's growth, and there's good margin, so we'll remain focused on those. Our gross margin is expected to improve and normalize.

Joe Coote: Our gross margin is expected to improve and normalize. Chris spoke about that. We have the working capital in place. We have the targeted weeks of inventory in the U.S. in our warehouse. We are in good shape. We can be there for those consumers, and we can fulfill those orders for those retailers. Finally, we will continue to invest in our brand. We have stepped up our percentage of net revenue investment in marketing. We are proudly doing that. We are watching that mindfully. We are ensuring there is an ROI and more from that as we move forward. Finally, it is hard to manage a regulator like the US FDA. We do not make commitments on their behalf, but we are in the very final steps, and we are very confident that we will come to the market with some news from the FDA in due course.

Speaker #4: The type of the nature of the costs are essentially around inventory provisioning, we had a level of inventory write-off, and some specific cases as we made sure that all of our product was really what we wanted it to be, to meet the needs of our consumers.

Speaker #1: Chris spoke about that. We have the working capital in place. We have the targeted weeks of inventory in the U.S. in our warehouse. We're in good shape.

Speaker #1: We can be there for those consumers, and we can fulfill those orders for those retailers. And then finally, we will continue to invest in our brand.

Speaker #1: We have stepped up our percentage of net revenue investment in marketing. We're proudly doing that. We're watching that mindfully. We're ensuring there's an ROI.

Speaker #4: Okay. So we protected our consumers.

Speaker #3: Okay. Yeah.

Speaker #4: Write-downs and the flows are returning to normal now with the resets that we've seen from the regulators and the different markets around the world.

Speaker #1: And more from that as we move forward. And then, finally, it's hard to manage a regulator like the US FDA, so we don't make commitments on their behalf.

Speaker #4: So we feel good about the future, Jonah. And it's rapidly normalizing.

Speaker #1: But we are in the very final steps, and we're very confident that we will come to the market with some news from the FDA in due course.

Speaker #3: Okay. So that includes, I think, when I looked in the segment notes, there's about kind of 1.5 million dollars in provisioning and inventory write-downs in the inventory note.

Speaker #1: With that said, I'll close and open the floor for questions.

Joe Coote: With that said, I will pause and ask for questions.

Speaker #3: That's included in that 3.9, is it?

Speaker #4: Yes.

Speaker #2: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two.

Operator: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Today's first question comes from Jonathan Snape at Bell Potter. Please go ahead.

Speaker #3: Okay. I can see the landed costs the difference between 8 charging has come down a long way in the stuff that's landing at the moment in the US.

Speaker #2: If you are on speakerphone, please pick up the handset to ask your question. Today's first question comes from Jonathan Snape at Bell Potter.

Speaker #3: So that's largely true of the system. Or is there still some legacy kind of inbuilt cog that flows through in 2027 in some of the early parts of the year?

Speaker #2: Please go ahead.

Speaker #1: Yeah. Hey guys, can you hear me okay?

Jonathan Snape: Yeah. Hey, guys. Can you hear me okay?

Speaker #3: Or is it kind of all washed through now, the P&L?

Speaker #3: Yeah, we can hear you, Jonah.

Joe Coote: Yeah, we can hear you, Jono.

Speaker #1: Great. Can I just ask about the one-off costs? It looks a little bit bigger than where you were thinking. The big one is probably that $3.9 million.

Jonathan Snape: Great. Could I touch around the one-off costs? It looks a little bit bigger than where you were thinking. The big one is probably that AUD 3.9 million. How do I have to think about that? I guess, A, what is it? What was the AUD 3.9 million spent on? B, how do I think about that into FY27? Are there still some residual costs in these resets around the U.S. or does it largely flow out next year?

Speaker #4: Mostly washed through, but a little bit of legacy. We have enough stock, particularly of the key goats, infant formula in the US. That takes a little while to wash through the system.

Speaker #1: How should I be thinking about that? First, what exactly is it—what was the $3.9 million spent on? And second, how should I think about that heading into 2027?

Speaker #1: Are there still some residual costs in these resets around the U.S., or does it largely kind of flow out next year?

Speaker #4: We finished air freighting in about towards the back end of half two. So there will be a little bit left of that cost sitting in inventory.

Speaker #3: I'll take that one. We see those very much as one-off costs, and we don't expect to have those sorts of costs flowing into our result in any material form in FY27.

Joe Coote: I will take that one. We see those very much as one-off costs. We do not expect to have those sorts of costs flowing into our result in any material form in FY27. The nature of the costs are essentially around inventory provisioning. We had a level of inventory write-off in some specific cases as we made sure that all of our product was really what we wanted it to be to meet the needs of our consumers. So we protected our consumers. We have taken those-write-downs and the flows are returning to normal now with the resets that we've seen from the regulators in the different markets around the world. We feel good about the future, Jono, and it's rapidly normalizing.

Speaker #4: But it's not going to last long.

Speaker #3: Yeah. And physically. And all product is now back on the water. And if something happened in market, like a competitor went out of stock and we had to surge, we've built the muscle to surge and we still have positive gross margin.

Speaker #3: The type and nature of the costs are essentially around inventory provisioning. We had a level of inventory write-off, and some specific cases as we made sure that all of our product was really what we wanted it to be, to meet the needs of our consumers.

Speaker #3: But clearly, as you can see from the data, you look at, Jonah, that ocean freight is far, far more lower cost per unit than the air freight.

Speaker #3: So we would only do that if we had to. And we don't plan to.

Speaker #4: Yep.

Speaker #3: Yep. Definitely. And look, the marketing investment, I did notice a drop down in this result. It's kind of a third and a half, 14% kind of level.

Speaker #3: So we protected our consumers. We've taken those write-downs, and the flows are returning to normal now with the resets that we've seen. So we feel good about the future, Jonah.

Jonathan Snape: Okay.

Joe Coote: We have taken those-

Jonathan Snape: Yeah

Joe Coote: write-downs and the flows are returning to normal now with the resets that we've seen from the regulators in the different markets around the world. We feel good about the future, Jono, and it's rapidly normalizing.

Speaker #3: Or third and a half, I think it was. I think you put a number in there for Australia with the relaunch was a bit higher than that.

Speaker #3: If we're looking at the US, the relaunch in Vietnam, where should sales to marketing kind of sit? It used to be up much closer to 20%.

Speaker #3: And it's rapidly normalizing.

Speaker #1: Okay, so that includes—I think when I looked in the segment notes, there’s about $1.5 million in provisioning and inventory write-downs in the inventory note.

Jonathan Snape: Okay. That includes, I think when I looked in the segment notes, there's about AUD 1.5 million in provisioning and inventory write-downs in the inventory note. That's included in our 3.9, is it? Okay. If I look at freight, I can see the landed costs, the difference between freight charging has come down a long way in the stuff that's landing at the moment in the U.S. That's largely through the system or is there still some legacy kind of inbuilt COGS that flows through in FY27, some of the early parts of the year? Or is it kind of all washed through now, the P&L?

Speaker #3: And I think there used to be a target floating around of closer to 15. Is the 15 kind of the right number for a business like this?

Speaker #1: That's included in that 3.9, is it?

Speaker #3: Yes.

Joe Coote: Yes.

Speaker #1: Okay. And if I look at freight, I can see the landed cost—the difference between freight charges—has come down a long way in the stuff that's landing at the moment in the U.S.

Jonathan Snape: Okay. If I look at freight, I can see the landed costs, the difference between freight charging has come down a long way in the stuff that's landing at the moment in the U.S. That's largely through the system or is there still some legacy kind of inbuilt COGS that flows through in FY27, some of the early parts of the year? Or is it kind of all washed through now, the P&L?

Speaker #3: Or is there a little bit more in that first period?

Speaker #4: Yeah. Jonah, I'd say mid-teens. Like the NBA classes will tell you 10 to 12. I think we're in a category where we've got a shorter customer lifecycle.

Speaker #1: So that's largely through the system, or is there still some legacy, kind of inbuilt cog that flows through in 2027 in some of the early parts of the year?

Speaker #4: So we need to we move those mums through pretty much on an annual basis. So I would say mid-teens. And we are very committed to investing.

Speaker #1: Or is it kind of all washed through now, the P&L?

Speaker #3: Mostly washed through, but a little bit of legacy. We have enough stock, particularly of the key goat’s infant formula, in the US. That takes a little while to wash through the system.

Chris Rowe: Mostly washed through, but little bit of legacy. We have enough stock, particularly of the key Goat Milk Infant Formula in the U.S., that takes a little while to wash through the system. We finished air freighting in about towards the back end of H2. So there will be a little bit left of that cost sitting in inventory, but it's not going to last long.

Speaker #4: That ANP. And it varies by market. The big quantum of spend is in the US. And so I would say mid-teens is where we will be moving forward.

Speaker #3: All right. Great. Thanks, guys.

Speaker #3: We finished air freighting in about towards the back end of half two. So there will be a little bit left of that cost sitting in inventory.

Speaker #2: Thank you. There are no further questions from the teleconference currently. And I'll hand back to the room to address pre-submitted questions.

Speaker #4: Thank you, Rocco. There were a number of investors that had pre-submitted questions. And off that, some of them were governance related. And we've passed them on to the chair, Paul Jensen, to take them into consideration with the AGM itself.

Speaker #3: But it's not going to last long.

Speaker #1: Yeah. And physically. And.

Joe Coote: Yeah. And physically

Jonathan Snape: All right. And the main

Speaker #3: All product is now back on the water. And if something happened in the market, like a competitor went out of stock and we had to surge, we've built the muscle to surge.

Joe Coote: All product is now back on the water. If something happened in market, like a competitor went out of stock and we had to surge, we have built the muscle to surge, and we still have positive gross margin. But clearly, as you can see from the data you look at, Jono, that ocean freight is far, far more lower cost per unit than the air freight. So we would only do that if we had to, and we do not plan to.

Speaker #4: But sticking to the operational questions, first one, and you've kind of addressed this, Joe, but when will you receive permanent FDA approval? And what is the reason for the delay?

Speaker #3: And we still have positive gross margin. But clearly, as you can see from the data you look at, Jonah, ocean freight is far, far lower cost per unit than air freight.

Speaker #5: Yeah. So as we said, we've been working with the FDA in the US now for over four years. So it's a long process. But it's a very worthwhile achievement when it's finally granted.

Speaker #3: So, we would only do that if we had to, and we don't plan to.

Speaker #1: Yep. Yep. Definitely. And look, the marketing investment—I did notice a drop down in this result. It's kind of a third-and-a-half, 14% kind of level.

Jonathan Snape: Yep. Definitely. Look, the marketing investment, I did notice a drop-down in this result. It is kind of that 13.5%, 14% kind of level, or 13.5%, I think it was. I think you put a number in there for Australia with the relaunch was a bit higher than that. If we are looking at the U.S., the relaunch in Vietnam, where should sales to marketing kind of sit? It used to be up much closer to 20%. I think there used to be a target floating around of closer to 15%. Is the 15% kind of the right number for a business like this, or is there a little bit more in that first period?

Speaker #5: And we are in the final stages. So we have been through the infant growth study, which is the very expensive and time-consuming part of the process.

Speaker #1: Or third and a half, I think it was. I think you put a number in there for Australia with the relaunch—it was a bit higher than that.

Speaker #5: We've had people doing desktop reviews of auditing operational processes. And we've also had FDA inspectors out in Australia ordering physical facilities. So that's now wrapping up.

Speaker #1: If we're looking at the U.S., the relaunch in Vietnam, where should sales to marketing kind of sit? It used to be up much closer to 20%.

Speaker #5: We are in regular contact, we have good we're in good standing with the FDA. I have been in the US, attended personal meetings, I've attended an industry roundtable with 12 CEOs.

Speaker #1: And I think there used to be a target floating around of closer to 15. Is 15 kind of the right number for a business like this?

Speaker #1: Or is there a little bit more in that first period?

Speaker #5: So we are included in that network now. So we though, it's difficult to make a commitment on behalf of a US regulatory agency. And all I can say is that we are wrapping up the final stages.

Speaker #3: Yeah, Jonah, I’d say mid-teens. Like, the NBA classes will tell you 10 to 12. I think we’re in a category where we’ve got a shorter customer lifecycle.

Joe Coote: Yeah, Jono, I would say mid-teens. The MBA classes will tell you, 10% to 12%. I think we are in a category where we have got a shorter customer life cycle. So we need to, we move those moms through pretty much on an annual basis. So, I would say mid-teens is where we will be moving forward.

Speaker #5: And as a team, we feel very confident that that will be forthcoming.

Speaker #3: So we need to, we move those mums through pretty much, so I would say mid-teens. And we are very committed to investing that A&P.

Speaker #4: Thanks, Joe. Next one, AI. So not surprising to see this. So does BUBS intend to use AI to reduce freight and logistics costs?

Speaker #3: And it varies by market. The big quantum of spend is in the US, and so I would say mid-teens is where we will be moving forward.

Speaker #5: Yeah. As I said, I gave two examples where our biggest spend buckets are. And so one of those sub-spend buckets on the procurement side is freight.

Speaker #5: And particularly around manufacturing costs as well. So yeah, so we have deployed AI. We've been working with a US business for about six months.

Speaker #1: All right. Great. Thanks, guys.

Jonathan Snape: All right, great. Thanks, guys.

Speaker #2: Thank you. There are no further questions from the teleconference currently, so I'll hand back to the room to address pre-submitted questions.

Operator: Thank you. There are no further questions from the teleconference currently. I will now hand back to the room to address pre-submitted questions.

Speaker #5: And we are also speaking to some other folks. Because what I would say with AI is it's evolving rapidly. So we're staying very flexible.

Speaker #3: Thank you, Rocco. There were a number of investors that had pre-submitted questions. And of that, some of them were governance related. And we've passed them on to the chair, Paul Jensen, to take them into consideration with the AGM itself.

[Company Representative] (Bubs): Thank you, Rocco. There were a number of investors that had pre-submitted questions, and of that, some of them were governance-related, and we passed them onto the Chair, Paul Jensen, to take them into consideration with the AGM itself. But sticking to the operational questions. First one, and you have kind of addressed this, Joe, but when would you receive permanent FDA approval, and what is the reason for the delay?

Speaker #5: We're curious. We've got very focused use cases in functional areas. And certainly logistics and manufacturing is on the radar. And we will continue that focus as we continue through the current financial year.

Speaker #3: But sticking to the operational questions, first one—and you've kind of addressed this, Joe—but when would you receive permanent FDA approval, and what is the reason for the delay?

Speaker #4: Thanks, Joe. Turning to the US, the competitive landscape. How competitive is the US market? And how many players?

Speaker #1: Yeah. So, as we said, we've been working with the FDA in the US now for over four years. So it's a long process, but it's a very worthwhile achievement when it's finally granted.

Joe Coote: Yeah. As we've said, we've been working with the FDA in the U.S. now for over four years. It's a long process, but it's a very worthwhile achievement when it's finally granted. We are in the final stages. We have been through the infant growth study, which is the very expensive and time-consuming part of the process. We've had people doing desktop reviews of auditing operational processes, and we've also had FDA inspectors out in Australia auditing physical facilities. That's now wrapping up. We are in regular contact. We're in good standing with the FDA. I have been in the U.S., attended personal meetings. I've attended an industry roundtable with 12 CEOs. We are included in that network now.

Speaker #5: Yeah. Look, it's a very competitive market. I mean, as is China, as is Australia. So this is an interesting category. As I always say, it's a precious category in the sense that those mums are putting sole source of nutrition accountability into a brand.

Speaker #1: And we are in the final stages. So we have been through the infant growth study, which is the very expensive and time-consuming part of the process.

Speaker #5: So any retail store, the infant formula is calling for the highest trust out of any product in the whole store. So that does tend to attract relatively interesting margins, particularly in the dairy complex.

Speaker #1: We've had people doing desktop reviews of auditing operational processes, and we've also had FDA inspectors out in Australia auditing physical facilities. So that's now wrapping up.

Speaker #5: So there are a lot of people interested in that. And what we see globally is there's the macro market, largely driven by birth rates and feed rates.

Speaker #1: We are in regular contact. We are in good standing with the FDA. I have been in the U.S., attended personal meetings, and attended an industry roundtable with 12 CEOs.

Speaker #5: And there's a sort of participation there. But the really interesting piece where we play as BUBS is in this premium subsegment. And so the subsegment is where there's more growth.

Speaker #1: So, we are included. So we thought, it's difficult to make a commitment on behalf of a US regulatory agency. All I can say is that we are wrapping up the final stages.

Speaker #5: We're seeing that all around the world. So typically, the category is growing on value, not on volume. And then in that value space, the premium natural are better for you, the better for the environment, better for the baby, better for the animals, better for the world space is where we play.

Joe Coote: We, though it's difficult to make a commitment on behalf of a U.S. regulatory agency, and all I can say is that we are wrapping up the final stages, and as a team, we feel very confident that that will be forthcoming.

Speaker #1: And as a team, we feel very confident that that will be forthcoming.

Speaker #5: We're of Australia. We're clean label. And so that resonates with people. And then within that category, we are GOAT. So in the macro category, there is a dominant number of large multinationals that play.

Speaker #3: Thanks, Joe. Next one, AI. Not surprising to see this. Does Bubs intend to use AI to reduce freight and logistics costs?

[Company Representative] (Bubs): Thanks, Joe. Next one, AI. Not surprising to see this. Does Bubs intend to use AI to reduce freight and logistics costs?

Speaker #1: Yeah. As I said, I gave two examples where our biggest spend buckets are, and one of those sub-spend buckets on the procurement side is freight.

Speaker #5: There's two science-based players and two consumer-based players in that mass market. In the premium natural, it does tend to vary by market. But in the US, there's about five competitors that we look at very closely.

Joe Coote: Yeah. As I said, I gave two examples where our biggest spend buckets are. One of those sub-spend buckets on the procurement side is freight, and particularly around manufacturing costs as well. Yeah, so we have deployed AI. We've been working with a U.S. business for about six months, and we are also speaking to some other folks, because what I would say with AI, it's evolving rapidly. We're staying very flexible. We're curious. We've got very focused use cases in functional areas, and certainly logistics and manufacturing is on the radar. We will continue that focus as we continue through the current financial year.

Speaker #1: And particularly around manufacturing costs as well, so yeah. We have deployed AI, and we've been working with a US business for about six months.

Speaker #5: We respect them. There's one other that's in GOAT, where the silver medal in GOAT, not the gold medal. There's a few other premium natural players.

Speaker #1: And we are also speaking to some other folks because what I would say with AI is, it's evolving rapidly, so we're staying very flexible.

Speaker #5: And so but we're in there fighting. We're 8% of that category and we're 20% of the GOAT category. So but it is very competitive.

Speaker #1: We're curious. We've got very focused use cases in functional areas, and certainly logistics and manufacturing are on the radar. We will continue that focus as we proceed through the current financial year.

Speaker #5: And we are unique, though, as Australian. And our product really does resonate. Because of those attributes around our functional benefit, gentle, enable sleep, gentle tummy for baby, happy family.

Speaker #3: Thanks, Joe. Turning to the US and the competitive landscape—how competitive is the US market, and how many players are there?

[Company Representative] (Bubs): Thanks, Joe. Turning to the U.S., the competitive landscape. How competitive is the U.S. market, and how many players?

Speaker #5: We also have a clean label attribute. And the of Australia makes us really interesting. There's no one else from Australia that we compete with.

Speaker #1: Yeah, look, it's a very competitive market. I mean, as is China, as is Australia. So this is an interesting category. As I always say, it's a precious category in the sense that those mums are putting sole source of nutrition accountability into a brand.

Joe Coote: Yeah, look, it is a very competitive market. I mean, as is China, as is Australia. This is an interesting category. As I always say, it is a precious category in the sense that those mums are putting sole source of nutrition accountability into a brand. Any retail store, the infant formula is pulling for the highest trust out of any product in the whole store. That does tend to attract relatively interesting margins, particularly in the dairy complex. There are a lot of people interested in that. What we see globally is there is the macro market, largely driven by birth rates and feed rates, and there is a sort of participation there. The really interesting piece where we play as Bubs is in this premium subsegment. The subsegment is where there is more growth. We are seeing that all around the world.

Speaker #5: And the Australian brand does resonate well, particularly with the US consumer.

Speaker #4: Yeah. Thanks, Joe. Just on tariffs now, US. Is BUBS going to move their primary source of goat milk from the USA to maximize profits and minimize tariff-related costs and risks?

Speaker #1: So, in any retail store, the infant formula is calling for the highest trust out of any product in the whole store. So, that does tend to attract relatively interesting margins, particularly in the dairy complex.

Speaker #5: Yeah. So we don't have goat milk that's produced in the US. Nobody does, actually. So the goat category in the US is supplied out of UK, Europe, and Australia.

Speaker #1: So there are a lot of people interested in that. And what we see globally is there's the macro market, largely driven by birth rates and feed rates.

Speaker #5: A little bit from New Zealand, potentially. So we over time, we're very proudly Australian. So our focus is on growing the goat herd, as I said, 70% up.

Speaker #1: And there's a sort of participation there. But the really interesting piece, where we play as Bubs, is in this premium sub-segment. And so, the sub-segment is where there's more growth.

Speaker #5: We've made commitments to our farming partners. Over time, we are looking at options. We've got to be meeting the needs of the consumers. At the moment, our focus is on goat supply from Australia.

Speaker #1: We're seeing that all around the world. So typically, the category is growing on value, not on volume. And then, in that value space, that premium natural, or "better for you"—better for the environment, better for the baby, better for the animals, better for the world—space is where we play.

Joe Coote: Typically, the category is growing on value, not on volume. In that value space, the premium natural, the better for you, the better for the environment, better for the baby, better for the animals, better for the world space is where we play. We are of Australia, we are clean label, and that resonates with people. Within that category, we are goat. In the macro category, there is a dominant number of large multinationals at play. There are two science-based players and two consumer-based players in that mass market. In the premium natural, it does tend to vary by market. In the U.S., there are about five competitors that we look at very closely. We respect them. There is one other that is in goat, we are the silver medal in goat, not the gold medal.

Speaker #5: Full responsiveness for the retailer at some point. It's a very expensive supply chain to run with working capital and lead time. When we spoke at the strategy, we spoke about some alternative supply network options.

Speaker #1: We're of Australia. We're clean label, and so that resonates with people. And then, within that category, we are goat. So in the macro category, there is a dominant number of large multinationals that play.

Speaker #5: One of which could be some canning capacity up in the US. That would potentially be supplied with powder from Australia. And that would give us maybe the best of both worlds with Australian powder.

Speaker #1: There are two science-based players and two consumer-based players in that mass market. In the premium natural segment, it does tend to vary by market, but in the U.S., there are about five competitors that we look at very closely.

Speaker #5: But canned in the US for responsiveness. But we're still looking at buy build and rent scenarios there. And we don't feel we have to make a decision on that at the moment.

Speaker #5: We're happy we've got capacity. We're making the supply chain work. And we feel good about supporting the growth at the moment from Australia.

Speaker #1: We respect them. There's one other that's in GOAT, where they're the silver medal in GOAT, not the gold medal. There's a few other premium natural players.

Joe Coote: There are a few other premium natural players, but we are in there fighting. We are 8% of that category and we are 20% of the goat category. It is very competitive. We are unique though as Australian, and our product really does resonate because of those attributes around our functional benefit, gentle, enables sleep, gentle tummy for baby, happy family. We also have a clean label attribute, and the of Australia makes us really interesting. There is no one else from Australia that we compete with. The Australian brand does resonate well, particularly with the U.S. consumer.

Speaker #1: And so, but we're in there fighting. We're 8% of that category, and we're 20% of the GOAT category. So, but it is very competitive.

Speaker #4: Thanks, Joe. Sticking on the tariff question, this one came in a bit more recently. So why is BUBS incurring tariff costs, which is clearly something an importer would incur and not an exporter?

Speaker #1: And we are unique, though, as Australians. And our product really does resonate because of those attributes around our functional benefit—gentle, enables sleep, gentle tummy for baby, happy family.

Speaker #4: And is BUBS absorbing some of those tariff costs in the US? Has it now claimed a refund, given they were deemed illegal? Maybe a question for Eucharist.

Speaker #1: We also have a clean label attribute, and the 'of Australia' makes us really interesting. There's no one else from Australia that we compete with.

Speaker #5: Sure. Thanks. So BUBS is actually the importer into the United States. So we send product from Australia to our business in Australia, which imports that in the US, which imports that product.

Speaker #1: And the Australian brand does resonate well, particularly with the U.S. consumer.

Speaker #3: Yeah, thanks, Joe. Just on tariffs now—U.S. Is Bubs going to move their primary source of goat milk from the U.S. to maximize profits and minimize tariff-related costs and risks?

[Company Representative] (Bubs): Thanks, Joe. Just on tariffs now, US. Is Bubs going to move their primary source of goat milk from the US to maximize profits and minimize tariff-related costs and risks?

Speaker #5: And as a result, we have to pay whatever tariffs customs duties, fees, and the like to bring that product into the United States. Equally, we need to ensure, and we do, that the margins that we earn on that product are sufficient to cover all of the costs, which clearly include tariffs.

Speaker #1: Yeah. So, we don't have goat milk that's produced in the US. Nobody does, actually. So, the goat category in the US is supplied out of the UK, Europe, and Australia.

Joe Coote: Yeah. We don't have goat milk that's produced in the US. Nobody does, actually. The goat category in the US is supplied out of UK, Europe, and Australia. A little bit from New Zealand, potentially. Over time, we're very proudly Australian, so our focus is on growing the goat herd. As I said, 70% up, we've made commitments to our farming partners. Over time, we are looking at options. We've got to be meeting the needs of the consumers. At the moment, our focus is on goat supply from Australia. For responsiveness for the retailer, at some point, it's a very expensive supply chain to run with working capital and lead time. When we spoke at the strategy, we spoke about some alternative supply network options. One of which could be some canning capacity up in the US that would potentially be supplied with powder from Australia.

Speaker #1: A little bit from New Zealand, potentially. Over time, we’re very proudly Australian, so our focus is on growing the goat herd. As I said, it’s up 70%.

Speaker #5: There were a range of different tariffs that applied throughout the year under different rules and regulations in the US. And the amount of tariff depends or differs depending on the source of the components.

Speaker #1: We've made commitments to our farming partners. Over time, we are looking at options. We've got to be meeting the needs of the consumers. At the moment, our focus is on goat supply from Australia.

Speaker #5: So product that had Australian source components was tariffed differently to products that had a mixture of Australian and, say, for example, European source products.

Speaker #1: For responsiveness for the retailer, at some point, it's a very expensive supply chain to run with working capital and lead time. When we spoke at the strategy, we spoke about some alternative supply network options.

Speaker #5: So the rate the tariff rates differed quite a lot. The legal position on tariffs in the US also shifted quite a lot during the year.

Speaker #1: One of which could be some canning capacity up in the US. That would potentially be supplied with powder from Australia, and that would give us maybe the best of both worlds with Australian powder.

Speaker #5: Where there is an opportunity to claim refunds or apply for refunds, we are taking that opportunity. But we don't actually expect that to be material because the way the tariffs worked and were applied through the year are exposure to the tariffs that were subsequently deemed to be illegal was actually quite small.

Joe Coote: That would give us maybe the best of both worlds with Australian powder, but canned in the US for responsiveness. We're still looking at buy build and rent scenarios there, and we don't feel we have to make a decision on that at the moment. We're happy we've got capacity. We're making the supply chain work, and we feel good about supporting the growth at the moment from Australia.

Speaker #1: But canned in the U.S. for responsiveness. But we're still looking at buy, build, and rent scenarios there. And we don't feel we have to make a decision on that at the moment.

Speaker #1: We're happy we've got capacity. We're making the supply chain work, and we feel good about supporting the growth at the moment from Australia.

Speaker #5: And the bulk of them were paid under regulations that were not subject to challenge later on in the year.

Speaker #3: Thanks, Joe. Sticking on the tariff question, this one came in a bit more recently. So, why is Bubs incurring tariff costs, which is clearly something an importer would incur and not an exporter?

[Company Representative] (Bubs): Thanks, Joe. Sticking on the tariff question, this one came in a little more recently. Why is Bubs incurring tariff costs, which is clearly something an importer would incur and not an exporter? Is Bubs absorbing some of those tariff costs in the US? Has it now claimed a refund given they were deemed illegal? Maybe a question for you, Chris.

Speaker #4: Thanks, Chris. Turning to China. Joe, so what is the current situation of the China markets? And what is the plan for the coming year?

Speaker #3: And is Bubs absorbing some of those tariff costs in the US? Has it now claimed a refund, given they were deemed illegal? Maybe a question for Eucharist.

Speaker #4: And will China be a key growth priority?

Speaker #5: Yeah. I mean, China is a huge market. It's a priority market. It's our second biggest market. We have a great team up there led by Jackie.

Speaker #1: Sure, thanks. So Bubs is actually the importer into the United States. So we send product from Australia to our business in Australia, which imports that into the US, which imports that product.

Chris Rowe: Sure. Thanks. Bubs is actually the importer into the United States. So we send product from Australia to our business in Australia, which imports that in the U.S., which imports that product. As a result, we have to pay whatever tariffs, custom duties, fees, and the like, to bring that product into the United States. Equally, we need to ensure, and we do, that the margins that we earn on that product are sufficient to cover all of the costs, which clearly include tariffs. There were a range of different tariffs that applied throughout the year under different rules and regulations in the U.S., and the amount of tariff depends or differs depending on the source of the components. So, product that had Australian source components was tariffed differently to products that had a mixture of Australian and, say for example, European source products.

Speaker #5: Yeah. I mean, it's a massive scale market. It's very competitive. Jackie tells me there's over 1,000 brands. There's the imported brands. There's the domestic brands.

Speaker #5: There's goat. There's bovine. There's always something going on. There's even camel up there, actually. So there's a lot to navigate. It's a hyper-competitive market.

Speaker #1: And as a result, we have to pay whatever tariffs, customs duties, fees, and the like to bring that product into the United States. Equally, we need to ensure—and we do—that the margins we earn on that product are sufficient to cover all of the costs, which clearly include tariffs.

Speaker #5: A lot of the marketing occurs on digital platforms. We don't have a China label market that's in the general trade. So our products are O2O and Seabeck.

Speaker #5: But we're very happy with our business in China. The disruptions that we saw in the year through navigated very, very well. We protected service.

Speaker #1: There were a range of different tariffs that applied throughout the year under different rules and regulations in the US. And the amount of tariff depends or differs depending on the source of the components.

Speaker #5: We protected our consumers. And so we also have adult business in China and that's where we see some interesting growth as well. So our adult brand up there is Caprolac.

Speaker #1: So, products that had Australian-sourced components were tariffed differently to products that had a mixture of Australian and, say, for example, European-sourced products.

Speaker #5: It's different to our BUBS brand. And that's where we have some innovation focus. So yeah, we feel good about China. We want to keep growing in China.

Speaker #5: But it is a very competitive market. The other thing that we've seen is the cost to activate the brand in China. There's been quite a step up there because of the competitive nature.

Speaker #1: So, the tariff rates differed quite a lot. The legal position on tariffs in the US also shifted quite a lot during the year. Where there is an opportunity to claim refunds, or apply for refunds, we are taking that opportunity.

Chris Rowe: So the tariff rates differed quite a lot. The legal position on tariffs in the U.S. also shifted quite a lot during the year. Where there is an opportunity to claim refunds or apply for refunds, we are taking that opportunity, but we don't actually expect that to be material because the way the tariffs worked and were applied through the year, our exposure to the tariffs that were subsequently deemed to be illegal was actually quite small, and the bulk of them were paid under regulations that were not subject to challenge later on in the year.

Speaker #5: People essentially bid for the slots. It's a little bit like Uber surge pricing. We've been in surge pricing mode in China for a little while now.

Speaker #5: So the dollars that we have maybe don't go as far as we would like. But we've got a great team. And we are growing our business in China absolutely.

Speaker #1: But we don't actually expect that to be material, because the way the tariffs worked and were applied through the year, our exposure to the tariffs that were subsequently deemed to be illegal was actually quite small.

Speaker #4: Thanks, Joe. Sticking with China, this might be one that both you and Chris can respond to. So in China, the FY26 result was offset by what appears to be elevated inventory levels, carried over from FY25.

Speaker #1: And the bulk of them were paid under regulations that were not subject to challenge later on in the year.

Speaker #4: Can you talk us through how tracking inventory levels in China has improved?

Speaker #3: Thanks, Chris. Turning to China—Joe, what is the current situation of the China market, and what is the plan for the coming year?

[Company Representative] (Bubs): Thanks, Chris. Turning to China, Joe. So what is the current situation of the China market, and what is the plan for the coming year? Will China be a key growth priority?

Speaker #5: Yeah. So it's one of those things that market in China, the sales that we report are sales into our distributors. So essentially, it's an inbound sale.

Speaker #3: And will China be a key growth priority?

Speaker #5: And then the sell-through is where the consumer then purchases that product through the channel. So yeah, coming into the year, we had a little bit of an imbalance there.

Speaker #1: Yeah, I mean, China is a huge market. It's a priority market. It's our second-biggest market. We have a great team up there led by Jackie.

Joe Coote: Yeah, China's a huge market. It's a priority market. It's our second biggest market. We have a great team up there led by Jackie. It's a massive scale market. It's very competitive. Jackie tells me there's over 1,000 brands. There's the imported brands, there's the domestic brands, there's goat, there's bovine, there's always something going on. There's even camel up there, actually. So there's a lot to navigate. It's a hyper-competitive market, and a lot of the marketing occurs on digital platforms. We don't have a China label market that's in the general trade, so our products are O2O and CBEC. But we're very happy with our business in China. The disruptions that we saw in the year through the regulatory reset, we have navigated very well. We protected service, we protected our consumers.

Speaker #5: So we've worked that through. So essentially, the sell-out of those numbers in both O2O and Seabeck of over 30%. So the sell-out is up quite handsomely.

Speaker #1: Yeah. I mean, it's a massive-scale market. It's very competitive. Jackie tells me there's over 1,000 brands—there are the imported brands, and there are the domestic brands.

Speaker #5: But the thing was, we had a little bit of inventory sitting in the pipe. So we had to pull that inventory through. Now we've normalized that.

Speaker #1: There's goat, there's bovine—there's always something going on. There's even camel up there, actually. So there's a lot to navigate. It's a hyper-competitive market.

Speaker #5: And it's more synchronized between the inbound and the outbound to consumers. And so how we've done that is just in terms of working with our partners.

Speaker #1: A lot of the marketing occurs on digital platforms. We don't have a China label market that's in the general trade, so our products are O2O and Seebec.

Speaker #5: Working with our China team. And we've also done a better job of looking at the macro we call it integrated business planning, where we're balancing the supply and the demand.

Speaker #1: But we're very happy with our business in China. The disruptions that we saw in the year through the regulatory reset we have navigated very, very well.

Speaker #5: And we're looking at product that's on the water. And we're ensuring that we're running a leaner supply chain. So we're there for consumers and we're supporting our trade channel partners.

Speaker #1: We protected service. We protected our consumers. And so we also have adult business in China, and that's where we see some interesting growth as well.

Joe Coote: We also have adult business in China, and that is where we see some interesting growth as well. Our adult brand up there is CapriLac. It is different to our Bubs brand, and that is where we have some innovation focus. We feel good about China. We want to keep growing in China, but it is a very competitive market. The other thing that we have seen is the cost to activate the brand in China. There has been quite a step-up there because of the competitive nature. People essentially bid for the slots. It is a little bit like Uber surge pricing. We have been in surge pricing mode in China for a little while now. The AUD dollars that we have maybe do not go as far as we would like. But we have got a great team, and we are growing our business in China absolutely.

Speaker #5: And so coming now into 27, we believe we're in better balance. And yeah, again, we feel good about the work we've done there.

Speaker #1: So, our adult brand up there is Caprilac. It's different from our Bubs brand, and that's where we have some innovation focus. So yeah, we feel good about China.

Speaker #4: Did you want to add anything, Chris?

Speaker #3: Oh, I think Joe's covered most of it. But it is a slightly different model for us from the standard sell-in to a retailer model that we operate in other markets.

Speaker #1: We want to keep growing in China, but it is a very competitive market. The other thing that we've seen is the cost to activate the brand in China.

Speaker #3: And the team in China are really focused on making sure that close to those distributors understand how much stock they've got in market and really balance up inbound orders with the off-take so that we keep that in balance from a stock flow perspective, but also make sure that the age of stock that's sitting in with the distributors is appropriate because there's quite a there's always pressure on making sure there's plenty of shelf life left on stock.

Speaker #1: There's been quite a step up there because of the competitive nature. People essentially bid for the slots. It's a little bit like Uber surge pricing.

Speaker #1: We've been in surge pricing mode in China for a little while now, so the dollars that we have maybe don't go as far as we would like.

Speaker #1: But we've got a great team, and we are growing our business in China, absolutely.

Speaker #3: Thanks, Joe. Sticking with China, this might be one that both you and Chris can respond to. So, in China, the FY26 result was offset by what appears to be elevated inventory levels carried over from FY25.

[Company Representative] (Bubs): Thanks, Joe. Sticking with China, this might be one that both you and Chris can respond to. In China, the FY26 result was offset by what appears to be elevated inventory levels carried over from FY25. Can you talk us through how tracking inventory levels in China has improved?

Speaker #3: It's sold. So you have to get that right.

Speaker #4: Great. Very comprehensive. So next question, and this goes to kind of the effectiveness of marketing investments ultimately. So if BUBS have been going for more than 20 years, what happened to the brand such that it needed even more marketing costs to be spent on a brand reset?

Speaker #3: Can you talk us through how tracking inventory levels in China has improved?

Speaker #1: Yeah, so it's one of those things in the market in China, that sales that we report are our sales into our distributors. So, essentially, it's an inbound sale.

Joe Coote: Yeah. It is one of those things, the market in China, the sales that we report our sales into our distributors. Essentially it is an inbound sale, and then the sell-through is where the consumer then purchases that product through the channel. Coming into the year, we had a little bit of an imbalance there. We have worked that through. Essentially, the sell-out of those numbers in both O2O and CBEC of over 30%. The sell-out is up quite handsomely. But the thing was, we had a little bit of inventory sitting in the pipe, so we had to pull that inventory through. Now we have normalized that, and it is more synchronized between the inbound and the outbound to consumers.

Speaker #5: Yeah. I mean, it's a critical item on any business that has a consumer brand's P&L. So as I said, maybe the MBA case studies will tell you about 12% in infant formula because we have a relatively short lifetime value.

Speaker #1: And then the sell-through is where the consumer then purchases that product through the channel. So, yeah, coming into the year, we had a little bit of an imbalance there.

Speaker #1: So we’ve worked that through. So, essentially, the sell-out of those numbers in both O2O and Seebeck is over 30%. So the sell-out is up quite handsomely.

Speaker #5: So we bring a mum into our system. Her and her baby might stay with us for one year, maybe 18 months, two years if you're lucky.

Speaker #1: But the thing was, we had a little bit of inventory sitting in the pipe. So we had to pull that inventory through. Now, we've normalized that, and it's more synchronized between the inbound and the outbound to consumers.

Speaker #5: So we've always got to be marketing to new mums. So it's a little bit different to your six years old and you become enamored with Coke or Pepsi and you consume for life.

Speaker #1: And so how we've done that is just in terms of working with our partners, working with our China team. We've also done a better job of looking at the macro—we call it integrated business planning—where we're balancing the supply and the demand.

Joe Coote: How we have done that is just in terms of working with our partners, working with our China team, and we have also done a better job of looking at the macro. We call it Integrated Business Planning, where we are balancing the supply and the demand, and we are looking at product that is on the water, and we are ensuring that we are running a leaner supply chain. We are there for consumers, and we are supporting our trade, our channel partners. Coming now into FY27, we believe we are in better balance. Again, we feel good about the work we have done there.

Speaker #5: Maybe there's an 80-year life cycle of consumption. So every year, there's new mums. And as we know, only mums can have babies. And mums can have babies, of a certain age.

Speaker #1: And we're looking at product that's on the water, and we're ensuring that we're running a leaner supply chain. So we're there for consumers, and we're supporting our trade channel partners.

Speaker #5: So the new mums that are coming through are essentially who we're marketing to. So they don't know us when they're 16 or 14. They don't know us when they decide to have a child.

Speaker #1: And so, coming now into '27, we believe we're in better balance. And, yeah, again, we feel good about the work we've done there. I think Joe's covered most of it.

Speaker #5: Then they look and then they find and then they become enamored. And that's where we've got to be. And those types of mums, s, for us, because we're a premium brand, are mums that are high consumers of digital media.

[Company Representative] (Bubs): Did you want to add anything, Chris?

Speaker #5: They're high consumers of contemporary platforms like TikTok. So that's where we go. That's where we hunt. That's where we make ourselves known. And then we do a great job to be there for those mums when they need us.

Chris Rowe: I think Joe's covered most of it, but it is a slightly different model for us from the standard sell into a retailer model that we operate in other markets. The team in China are really focused on making sure they're close to those distributors, understand how much stock they've got in market, and really balance up inbound orders with the off take so that we keep that in balance from a stock flow perspective, but also make sure that the age of stock that's sitting in with the distributors is appropriate, because there's always pressure on making sure there's plenty of shelf life left on stock that's sold. You have to get that right.

Speaker #1: But it is a slightly different model for us from the standard sell-in to a retailer model, the operator, and other markets. And the team in China are really focused on making sure they're close to those distributors, understand how much stock they've got in market, and really balance up inbound orders with the offtake, so that we keep that in balance from a stock flow perspective, but also make sure that the age of stock that's sitting in with the distributors is appropriate. Because there's always pressure on making sure there's plenty of shelf life left on stock.

Speaker #5: So that's why we have to activate our brand. That's why we have to invest. And so in our category, I'm saying mid-teens. That's where we need to be to grow the business and to keep fueling the growth that we believe we can deliver for our shareholders.

Speaker #4: Thanks, Joe. We've exhausted the group. So they're all the pre-submitted ones and ones that came through. So I'll just pass back to you for closing remarks.

Speaker #5: Right. Well, thank you, I appreciate everybody's time. I know everybody's busy. It's a busy time of year for certain folks. And we're very much looking forward to some follow-up meetings.

Speaker #1: It's sold. So, you have to get that right.

Speaker #3: Great, very comprehensive. So, next question, and this goes to the effectiveness of marketing investments ultimately. If Bubs has been going for more than 20 years, what happened to the brand such that it needed even more marketing costs to be spent on a brand reset?

[Company Representative] (Bubs): Very comprehensive. So next question, this goes to kind of the effectiveness of marketing investments, ultimately. If Bubs have been going for more than 20 years, what happened to the brand such that it needed even more marketing costs to be spent on a brand reset?

Speaker #5: Myself and Chris are available. Should anybody wish to reach out, we appreciate the support of our investors and we really hope we come with some good news.

Speaker #5: In the near future, as we have new news, we will be back in touch with the market. But thank you for your time today.

Speaker #1: Yeah. I mean, it's a critical item on any business that has a consumer brand's P&L. So as I said, maybe the MBA case studies will tell you about 12% in infant formula, because we have a relatively short lifetime value.

Speaker #5: And have a good rest of the day. Thank you.

Joe Coote: Yeah, it's a critical item on any business that has a consumer brand's P&L. As I said, maybe the MBA case studies will tell you about 12% in infant formula, because we have a relatively short lifetime value. We bring a mom into our system. Her and her baby might stay with us for 1 year, maybe 18 months, 2 years, if you're lucky. So we've always got to be marketing to new moms. So it's a little bit different to you're 6 years old and you become enamored with Coke or Pepsi and you consume for life. Maybe there's an 80-year life cycle of consumption. So every year there's new moms and, as we know, only moms can have babies, and moms can have babies of a certain age. The new moms that are coming through are essentially who we're marketing to.

Speaker #4: Thank you very much. And welcome, everybody, to the BUBS FY26 results presentation. My name's Joe Cood. I'm joined here this morning by Chris Row, our CFO.

Speaker #4: And we will take you through our results, if we could tab, please. We could tab again, please. So BUBS acknowledges the traditional custodians of the lands on which we operate.

Speaker #1: So we bring a mum into our system. She and her baby might stay with us for one year, maybe 18 months, two years if you're lucky.

Speaker #1: So we've always got to be marketing to new mums. So it's a little bit different to if you're six years old and you become enamored with Coke or Pepsi and you consume for life.

Speaker #4: We pay our respects to elders past, present, and emerging. Tab, please. So as I mentioned, my name's Joe Cood. I'm the CEO at BUBS.

Speaker #1: Maybe there's an 80-year life cycle of consumption. So every year, there are new mums. And, as we know, only mums can have babies. And mums can have babies of a certain age.

Speaker #4: I've been in the role for 11 of the 12 months of the FY26 financial year. So it gives me pleasure to be here today to present our results.

Speaker #1: So the new mums that are coming through are essentially who we're marketing to. So, they don't know us when they're 16 or 14. They don't know us.

Speaker #4: I am joined by our newly appointed CFO, Chris Row. Chris Row joins the business with extensive experience, across the markets that we operate in, particularly most recently in the US.

Joe Coote: So they don't know us. When they're 16 or 14, they don't know us. When they decide to have a child, then they look and then they find, and then they become enamored, and that's where we've got to be. And those types of moms for us, because we're a premium brand, are moms that are high consumers of digital media. They're high consumers of contemporary platforms like TikTok. So that's where we go, that's where we hunt, that's where we make ourselves known, and then we do a great job to be there for those moms when they need us. So that's why we have to activate our brand. That's why we have to invest. So in our category, I'm saying mid-teens. That's where we need to be to grow the business and to keep fueling the growth that we believe we can deliver for our shareholders.

Speaker #1: When they decide to have a child, then they look, and then they find, and then they become enamored. And that's where we've got to be.

Speaker #1: And those types of mums, for us, because we're a premium brand, are mums who are high consumers of digital media. They're high consumers of contemporary platforms like TikTok.

Speaker #1: So that's where we go. That's where we hunt. That's where we make ourselves known. And then we do a great job to be there for those mums when they need us.

Speaker #1: So that's why we have to activate our brand. That's why we have to invest. And so, in our category, I'm saying mid-teens—that's where we need to be to grow the business and to keep fueling the growth that we believe we can deliver for our shareholders.

Speaker #3: Thanks, Joe. We've exhausted the group—so those are all the pre-submitted questions and the ones that came through. I'll just pass back to you for closing remarks.

[Company Representative] (Bubs): Thanks, Joe. We've exhausted the group. So they're all the pre-submitted ones and ones that came through. So I'll just pass back to you for closing remarks.

Speaker #1: Right. Well, thank you. I appreciate everybody's time. I know everybody's busy. It's a busy time of year for certain folks, and we're very much looking forward to some follow-up meetings.

Joe Coote: Well, thank you. I appreciate everybody's time. I know everybody's busy. It's a busy time of year for certain folks, and we're very much looking forward to some follow-up meetings. Myself and Chris are available should anybody wish to reach out. We appreciate the support of our investors, and we really hope we come with some good news in the near future. As we have new news, we will be back in touch with the market. But thank you for your time today, and have a good rest of the day. Thank you.

Speaker #1: Chris and I are available. Should anybody wish to reach out, we appreciate the support of our investors and we really hope we come with some good news.

Speaker #1: In the near future, as we have new news, we will be back in touch with the market. But thank you for your time today.

Speaker #1: And have a good rest of the day. Thank you.

Operator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect your lines.

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