Fonterra Shareholders’ Fund Interim Results 2021

Page 1


Results for announcement to the market
Name of issuer Fonterra Shareholders’ Fund
Reporting Period 6 months to 31 January 2021
Previous Reporting Period 6 months to 31 January 2020
Currency New Zealand Dollars
Amount (m’s) Percentage change
Revenue from continuing
operations
$81 189%
Total Revenue $81 189%
Net profit/(loss) from
continuing operations
$nil -%
Total net profit/(loss) $nil -%
Interim Dividend
Amount per Quoted Equity
Security
5 cents per share
Imputed amount per Quoted
Equity Security
Not Applicable
Record Date 24 March 2021
Dividend Payment Date 15 April 2021
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$4.54 $4.05
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Fonterra Shareholders’ Fund financial statements are prepared in accordance
with New Zealand Equivalents to International Financial Reporting Standards.
Revenue from continuing operations comprises net fair value movements of
Economic Rights of Fonterra Shares, and (if any) dividend income.
Authority for this announcement
Name of person authorised
to make this announcement
Andrew Cordner

Contact person for this
announcement
Simon Till

Contact phone number
+64 21 777 807

Contact email address Investor.relations@fonterra.com

Date of release through MAP
17/03/2021


Unaudited interim financial statements accompany this announcement.

---

Fonterra
Shareholders’ Fund
INTERIM FINANCIAL RESULTS
FOR SIX MONTHS ENDED
31 JANUARY 2021

Contents
CHAIRMAN’S REPORT1
MANAGER’S STATEMENT2
STATEMENT OF COMPREHENSIVE INCOME3
STATEMENT OF CHANGES IN AMOUNTS ATTRIBUTABLE TO UNIT HOLDERS3
STATEMENT OF FINANCIAL POSITION4
C A SH FLOW STATEMENT4
SIGNIFICANT ACCOUNTING POLICIES5
NOTES TO THE FINANCIAL STATEMENTS6
INDEPENDENT REVIEW REPORT8
DIRECTORY9
FONTERRA SHAREHOLDERS’ FUNDFONTERRA SHAREHOLDERS’ FUND

Dear Investors
Fonterra’s performance has continued to improve, and it has delivered
a strong set of results for the first six-months of the 2021 financial year.
These include Total Group normalised EBIT of $684 million, up 17% on the
comparative period, normalised profit after tax of $418 million, up 43%,
and a decision to pay an interim dividend. It is encouraging to see that these
results have been achieved alongside a strong forecast Farmgate Milk Price.
Fonterra’s reported profit after tax of $391 million is 22% lower than the
comparative period due to last year’s results including the gain on sale from
divesting DFE Pharma and foodspring
®
.
Fonterra has declared an interim dividend of 5 cents per share. As a
result unit holders will receive an interim distribution of 5 cents per unit.
The record date for the interim distribution is 24 March 2021 and the
payment date is 15 April 2021. Due to Fonterra’s ongoing capital structure
review, the distribution reinvestment plan has been suspended in relation
to this distribution.
STRATEGY
Staying on strategy has been important to Fonterra’s performance so
far this year. The strategy is to grow the value of New Zealand milk by
using innovation, sustainability and efficiency to deliver products that
customers value.
Fonterra is clear about the consumption categories they want to be in –
Core Dairy, Foodservice, Sports and Active Lifestyles, Medical and Aging
Nutrition, and Paediatrics. It already has a competitive advantage in some of
these categories and in others it wants to achieve the same, drawing on its
dairy know-how and innovation capabilities.
Fonterra remains committed to divesting non-core businesses so it can
continue to reduce debt, strengthen its balance sheet and continue the
strong focus on creating value.
Fonterra’s intellectual property, innovation and dairy know-how is a key
strength. Part of the strategy it has outlined is looking for ways to better
commercialise these strengths such as through licensing agreements or joint
ventures in the place of capital.
An example of this is the successful transition of Fonterra’s USA Foodservice
business to a new operating model partnership with Land O’Lakes, one
of America’s leading dairy co-operatives. This provides Fonterra access to
Land O’Lakes’ strong, well-established distribution network and its large
customer base.
As part of Fonterra’s continuous review of its asset portfolio, it has decided,
along with the joint venture partner, to undertake a sales process for the
joint venture farms in China.
FINANCIAL PERFORMANCE
Fonterra has advised that the core financial targets for the current financial
year are a return on capital of 6 to 7%, a debt to EBITDA ratio of 3 to 3.5
times, and a gearing ratio of 36 to 40%.
It considers it is on-track to achieve these targets. Key to this has been the
improved underlying performance, which can be seen in the $100 million
increase in Total Group normalised EBIT on the comparative period.
Fonterra has used its scale and the breadth and diversity of its markets
and products to its advantage, moving milk to where the most value can
be created. This can be seen in the improved Total Group normalised gross
margin, which has increased from 16.0% to 17.4%, while keeping control of
operating expenses. Fonterra’s profit after tax has also benefited from lower
average debt and a reduction in global interest rates.
The Greater China business increased normalised EBIT by 38% to
$339 million. This reflects the strength of the Foodservice channel, an
improved performance in the Consumer channel and China’s strong
economic recovery following the initial impact of COVID-19.
Asia Pacific’s normalised EBIT is up 9% to $190 million and this is
predominantly driven by people cooking more with dairy and Fonterra’s
renewed focus on its Consumer brands.
AMENA’s normalised EBIT is down 7% to $201 million due to reduced sales
volumes and lower gross margins in the Ingredients channel. The lower sales
volume reflects Fonterra making the most of its ability to move milk into
higher returning markets and products.
LOOKING AHEAD
Fonterra has had a strong first half, with its normalised earnings equating
to 25 cents per share after deducting non-controlling interests. Fonterra’s
earnings performance is heavily weighted to the first half and it expects its
second half earnings to come under significant pressure due to increasing
raw milk prices putting pressure on sales margins.
Fonterra CEO Miles Hurrell has said Fonterra will look to manage this by
staying on strategy, focusing on what’s in their control and driving demand
for New Zealand milk.
John Shewan
Chairman
FSF Management Company Limited
Chairman’s Report
INTERIM FINANCIAL RESULTS 2021
1

FSF Management Company Limited (the Manager) presents to the unit
holders the interim financial statements for the Fonterra Shareholders’
Fund (the Fund) for the six months ended 31 January 2021.
The Manager is responsible for presenting interim financial statements for
the six months which fairly present the financial position of the Fund and
its financial performance and cash flows for that period.
The Manager considers the interim financial statements of the Fund have
been prepared using accounting policies which have been consistently
applied and supported by reasonable judgements and estimates, and that all
relevant financial reporting and accounting standards have been followed.
The Manager believes that proper accounting records have been kept
which enable, with reasonable accuracy, the determination of the financial
position of the Fund and facilitate compliance of the interim financial
statements with the Financial Markets Conduct Act 2013 and the Fonterra
Shareholders’ Fund Trust Deed.
The Manager considers that it has taken adequate steps to safeguard
the assets of the Fund, and to prevent and detect fraud and other
irregularities.
The Manager approves and authorises for issue the interim financial
statements for the six months ended 31 January 2021 presented on
pages 3 to 7.
For and on behalf of the Board of the Manager:
Manager’s Statement
FOR THE SIX MONTHS ENDED 31 JANUARY 2021
Kimmitt Ellis
Director
FSF Management Company Limited
16 March 2021
John Shewan
Chairman
FSF Management Company Limited
16 March 2021
FONTERRA SHAREHOLDERS’ FUND
2

Statement of Comprehensive Income
FOR THE SIX MONTHS ENDED 31 JANUARY 2021
Statement of Changes in Amounts
Attributable to Unit Holders
FOR THE SIX MONTHS ENDED 31 JANUARY 2021
$ MILLION
SIX MONTHS ENDEDYEAR ENDED
31 JAN 2021
UNAUDITED
31 JAN 2020
UNAUDITED
31 JUL 2020
AUDITED
Net fair value gain on revaluation of Economic Rights of Fonterra shares76286
Dividend income5––
Investment income81286
Net increase in fair value of amounts attributable to unit holders(76)(28)(6)
Distributions to unit holders(5)––
Finance cost(81)(28)(6)
Profit before tax–––
Tax exp ense–––
Profit for the period–––
There are no items of other comprehensive income.
$ MILLION
Amounts attributable to unit holders at 1 August 2020400
Movements:
Revaluation of amounts attributable to unit holders76
Issue of units21
Redemption of units(14)
Amounts attributable to unit holders at 31 January 2021 (unaudited)483
Amounts attributable to unit holders at 1 August 2019388
Movements:
Revaluation of amounts attributable to unit holders28
Issue of units17
Redemption of units(27)
Amounts attributable to unit holders at 31 January 2020 (unaudited)406
Amounts attributable to unit holders at 1 August 2019388
Movements:
Revaluation of amounts attributable to unit holders6
Issue of units65
Redemption of units(59)
Amounts attributable to unit holders at 31 July 2020 (audited)400
The accompanying notes from part of these interim financial statements.
INTERIM FINANCIAL RESULTS 2021
3

Statement of Financial Position
AS AT 31 JANUARY 2021
Cash Flow Statement
FOR THE SIX MONTHS ENDED 31 JANUARY 2021
$ MILLION
SIX MONTHS ENDEDYEAR ENDED
31 JAN 2021
UNAUDITED
31 JAN 2020
UNAUDITED
31 JUL 2020
AUDITED
Cash flows from operating activities
Cash was provided from:
– Sale of Economic Rights of Fonterra shares142759
– Dividends received (net of dividends reinvested)4––
Cash was applied to:
– Purchase of Economic Rights of Fonterra shares(20)(17)(65)
Net cash flows from operating activities(2)10(6)
Cash flows from financing activities
Cash was provided from:
– Proceeds from issue of units201765
Cash was applied to:
– Outflows on redemption of units(14)(27)(59)
– Distributions paid to unit holders (net of distributions reinvested)(4)––
Net cash flows from financing activities2(10)6
Net change in cash and cash equivalents–––
Cash and cash equivalents at the beginning of the period–––
Cash and cash equivalents at the end of the period–––
$ MILLION
NOTES
31 JAN 2021
UNAUDITED
31 JAN 2020
UNAUDITED
31 JUL 2020
AUDITED
Assets
Economic Rights of Fonterra shares2483406400
Total assets483406400
Liabilities
Amounts attributable to unit holders3483406400
Total liabilities483406400
The accompanying notes from part of these interim financial statements.
FONTERRA SHAREHOLDERS’ FUND
4

Significant Accounting Policies
FOR THE SIX MONTHS ENDED 31 JANUARY 2021
A) GENERAL INFORMATION
The Fonterra Shareholders’ Fund (FSF or the Fund) is a New Zealand
managed investment scheme established to be the ‘Authorised Fund’
under Fonterra’s Trading Among Farmers scheme. It is registered under
the Financial Markets Conduct Act 2013 and its governing document is the
Fonterra Shareholders’ Fund Trust Deed (the Trust Deed) dated 23 October
2012 (as amended) and has a life of 80 years. Under the Trust Deed, the
Fund may invest only in authorised investments, which are Economic Rights
of Fonterra shares (Economic Rights), and issue units to investors. It may
not invest directly in Fonterra shares.
The Fund is listed on the NZX Main Board operated by NZX Limited and as
a Foreign Exempt Listing on the Australian Securities Exchange operated by
ASX Limited. The Manager is an FMC reporting entity under the Financial
Markets Conduct Act 2013.
These interim financial statements were authorised for issue by the Manager
on 16 March 2021.
Fonterra interim financial statements
Investors are encouraged to read the interim financial statements of Fonterra
Co-operative Group Limited (Fonterra), together with the interim financial
statements of the Fund, given that the performance of the Fund is driven by
the performance of Fonterra. The Fonterra interim financial statements can
be found at www.fonterra.com in the ‘Investors/Financial Results’ section.
Activities
The principal activity of the Fund is to acquire Economic Rights and issue
units to investors. It allows investors in the Fund an opportunity to earn
returns based on the financial performance of Fonterra.
B) BASIS OF PREPARATION
These unaudited interim financial statements have been prepared in
accordance with International Accounting Standard 34 Interim Financial
Reporting and New Zealand Equivalent to International Accounting
Standard 34 Interim Financial Reporting. They have also been prepared
in accordance with Generally Accepted Accounting Practice (GAAP)
applicable to for-profit entities. These interim financial statements do not
include all the information and disclosures required in the annual financial
statements, and should be read in conjunction with the financial statements
for the year ended 31 July 2020.
These interim financial statements are presented in New Zealand dollars ($),
which is the Fund’s functional and presentation currency, and rounded to
the nearest million, except where otherwise stated.
The accounting policies applied in the preparation of these interim financial
statements are consistent with those applied in the financial statements for
the year ended 31 July 2020.
C) OPERATING SEGMENTS
The Fund’s investments only include Economic Rights assets and the
Fund’s performance is evaluated on an overall basis. Therefore, the Fund
is a single-segment entity.
All of the Fund’s income is from investments in the Economic Rights.
The internal reporting provided to the Board of the Manager, which is the
Fund’s chief operating decision maker, for the Fund’s assets, liabilities and
performance is prepared on a consistent basis with the measurement and
recognition principles of NZ IFRS. The Board of the Manager reviews the
Fund’s internal reporting in order to assess the performance and position
of the Fund.
INTERIM FINANCIAL RESULTS 2021
5

Notes to the Financial Statements
FOR THE SIX MONTHS ENDED 31 JANUARY 2021
1 FAIR VALUE MEASUREMENT
Economic Rights of Fonterra shares and amounts attributable to unit holders
are measured at fair value.
The Fund uses the following fair value hierarchy that reflects the significance
of the inputs used in making the measurements:
– Level 1: Quoted price (unadjusted) in an active market for an identical
instrument.
– Level 2: Valuation techniques based on observable inputs, either directly
(i.e. as prices) or indirectly (i.e. derived from prices). This category includes
instruments valued using: quoted prices in active markets for similar
instruments; quoted prices for identical or similar instruments in markets
that are considered less than active; or other valuation techniques for
which all significant inputs are directly or indirectly observable from
market data.
– Level 3: Valuation techniques using significant unobservable inputs.
The Fund has no Level 3 instruments.
The Fund’s amounts attributable to unit holders is a Level 1 instrument
as the unit price is quoted on the NZX Main Board, which is considered to
be an active market. The Manager considers market prices to be the most
representative measure of fair value as they are used by market participants
as a practical expedient for fair value measurement. The market is monitored
on an on-going basis to confirm that it remains active for the purposes of
establishing fair value.
Economic Rights are Level 2 instruments as Economic Rights are not listed
and there is no active market for Economic Rights assets. Economic Rights
are valued using the quoted price of units (which are considered to be a
materially comparable instrument) in the Fund listed on the NZX Main
Board. The on-going validity of assumptions relating to the comparability
between a unit and an Economic Right is regularly reviewed.
There have been no transfers between the categories in the fair value
hierarchy during any of the periods presented.
2 ECONOMIC RIGHTS OF FONTERRA SHARES
The Economic Rights are held on trust for the Fund by the Fonterra Farmer Custodian Trust under the Fonterra Economic Rights Trust.
AS AT
31 JAN 2021
UNAUDITED
AS AT
31 JAN 2020
UNAUDITED
AS AT
31 JUL 2020
AUDITED
Value of Economic Rights ($ million)483406400
Number of Economic Rights106,336,39610 0 , 1 8 7, 3 85104,581,516
The Economic Rights are measured at fair value, calculated as the number of Economic Rights held multiplied by the established fair value for each
Economic Right.
$ MILLION
SIX MONTHS ENDEDYEAR ENDED
31 JAN 2021
UNAUDITED
31 JAN 2020
UNAUDITED
31 JUL 2020
AUDITED
Opening value of Economic Rights 400388388
Movements:
Purchase of Economic Rights
1
211765
Sale of Economic Rights(14)(27)(59)
Revaluation of Economic Rights76286
Closing value of Economic Rights483406400
1 Purchase of Economic Rights includes $0.6 million for Economic Rights acquired in conjunction with Fonterra’s Dividend Reinvestment Plan (31 January 2020: $nil; 31 July 2020: $nil).
FONTERRA SHAREHOLDERS’ FUND
6

3 AMOUNTS ATTRIBUTABLE TO UNIT HOLDERS
SIX MONTHS ENDEDYEAR ENDED
31 JAN 2021
UNAUDITED
31 JAN 2020
UNAUDITED
31 JUL 2020
AUDITED
Value of amounts attributable to unit holders at the end of the period ($ million)
1
483406400
Opening number of units on issue
2
104,581,516102,934,582102,934,582
Movements:
Number of units issued
3
5,111,8894,410,77917,298,927
Number of units redeemed ( 3 , 35 7, 0 0 9 )( 7, 1 5 7, 976 )(15,651,993)
Closing number of units on issue106,336,39610 0 , 1 8 7, 3 85104,581,516
1 The amounts attributable to unit holders is measured at fair value, calculated as the number of units on issue multiplied by the unit market price at 31 January 2021 of $4.54 (31 January 2020: $4.05;
31 July 2020: $3.82).
2 Included in the total number of units is one Fonterra unit, held by the Fonterra Farmer Custodian Trust, which was issued at inception of the Fund. The key rights of the Fonterra unit holder are set out
in the Fund’s Annual Financial Statements for the year ended 31 July 2020.
3 Included in the number of units issued are 145,300 units with a total value of $0.6 million that were issued under the Distribution Reinvestment Plan (31 January 2020: nil; 31 July 2020: nil).
4 NET ASSETS PER SECURITY
As at 31 January 2021, the net assets per unit on issue was $4.54
(31 January 2020: $4.05; 31 July 2020: $3.82).
5 COMMITMENTS AND CONTINGENT LIABILITIES
The Fund has no material commitments or contingent liabilities as at
31 January 2021 (31 January 2020: nil; 31 July 2020: nil).
6 SUBSEQUENT EVENTS
Declaration of distribution
On 16 March 2021, the Board of Directors of Fonterra declared an interim
dividend of 5 cents per share. Following Fonterra’s dividend declaration, the
Board of the Manager declared an interim distribution of 5 cents per unit.
The distribution will be paid on 15 April 2021 to the unit holders on the
register at 24 March 2021.
The Distribution Reinvestment Plan does not apply to this distribution.
Changes in unit price
Units are traded on the NZX and ASX and accordingly the unit price changes
regularly, including during the period between balance date and the date
these interim financial statements were authorised for issue. Changes in the
market price of the units result in a corresponding change in the value of the
Economic Rights asset held by the Fund. Daily unit prices are available on the
NZX website.
Notes to the Financial Statements CONTINUED
FOR THE SIX MONTHS ENDED 31 JANUARY 2021
INTERIM FINANCIAL RESULTS 2021
7

Independent Review Report
To the unit holders of Fonterra Shareholders’ Fund
REPORT ON THE INTERIM FINANCIAL STATEMENTS
Conclusion
We have completed a review of the accompanying interim financial statements which comprise:
— the statement of financial position as at 31 January 2021;
— the statements of comprehensive income, changes in amounts attributable to unit holders and the cash flow statement for the 6 month period then ended;
and
— notes, including a summary of significant accounting policies and other explanatory information.
Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements on pages 3 to 7 do not:
i. present fairly in all material respects, the Fund’s financial position as at 31 January 2021 and its financial performance and cash flows for the 6 month
period ended on that date; and
ii. comply with NZ IAS 34 Interim Financial Reporting (NZ IAS 34) and IAS 34 Interim Financial Reporting (IAS 34).
Basis for conclusion
A review of interim financial statements in accordance with NZ SRE 2410 Review of Financial Statements Performed by the Independent Auditor of the Entity
(“NZ SRE 2410”) is a limited assurance engagement. The auditor performs procedures, consisting of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review procedures.
As the auditor of Fonterra Shareholders’ Fund, NZ SRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial
statements.
Other than in our capacity as auditor we have no relationship with, or interests in, the Fund.
Use of this Independent Review Report
This report is made solely to the unit holders as a body. Our review work has been undertaken so that we might state to the unit holders those matters we
are required to state to them in the Independent Review Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the unit holders as a body for our review work, this report, or any of the opinions we have formed.
Responsibilities of the Manager for the interim financial statements
The Manager, on behalf of the Fund, are responsible for:
— the preparation and fair presentation of the interim financial statements in accordance with NZ IAS 34 and IAS 34;
— implementing necessary internal control to enable the preparation of interim financial statements that are fairly presented and free from material
misstatement, whether due to fraud or error; and
— assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless they either intend to liquidate or to cease operations or have no realistic alternative but to do so.
Auditor’s Responsibilities for the review of the interim financial statements
Our responsibility is to express a conclusion on the interim financial statements based on our review. We conducted our review in accordance with
NZ SRE 2410. NZ SRE 2410 requires us to conclude whether anything has come to our attention that causes us to believe that the interim financial statements
are not prepared, in all material respects, in accordance with NZ IAS 34 and IAS 34.
The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International Standards on
Auditing (New Zealand). Accordingly, we do not express an audit opinion on these interim financial statements.
This description forms part of our Independent Review Report.
KPMG
Auckland
16 March 2021
FONTERRA SHAREHOLDERS’ FUND
8

Directory
REGISTERED OFFICE OF THE MANAGER OF THE FUND –
NEW ZEALAND
109 Fanshawe Street
Auckland Central, Auckland 1010
Telephone: +64 9 374 9000
REGISTERED OFFICE OF THE MANAGER OF THE FUND –
AUSTRALIA
C/o Fonterra Australia Pty. Ltd.
Level 2, 40 River Boulevard
Richmond, Victoria 3121
Telephone: +61 3 8541 1588
DIRECTORS OF THE MANAGER OF THE FUND
Mary-Jane Daly
Kimmitt Rowland Ellis
Andrew Webster Macfarlane
John Bruce Shewan
Donna Maree Smit
COMPANY SECRETARY
Andrew Cordner
SUPERVISOR
The New Zealand Guardian Trust Company Limited
Level 8, 191 Queen Street
Auckland Central, Auckland 1010
New Zealand
AUDITOR OF THE FUND AND THE MANAGER OF THE FUND
KPMG
18 Viaduct Harbour Ave
Auckland 1010
New Zealand
LEGAL ADVISERS TO THE MANAGER OF THE FUND
Chapman Tripp
Level 34, PwC Tower
15 Customs Street West, Auckland 1010
New Zealand
SHARE REGISTRAR – NEW ZEALAND
Computershare Investor Services Limited
Level 2, 159 Hurstmere Road
Takapuna, Auckland 0622
Private Bag 92119, Auckland 1142
Telephone: +64 9 488 8777
SHARE REGISTRAR – AUSTRALIA
Computershare Investor Services Pty. Limited
Yarra Falls, 452 Johnston Street
Abbotsford, Victoria 3067
GPO Box 3329
Melbourne, Victoria 3001
Telephone: 1800 501 366 (within Australia)
Telephone: +61 3 9415 4083 (outside Australia)
insight
creative.co.nz
FONTERRA073
This document is printed on an
environmentally responsible paper
produced using elemental chlorine free
(ECF)FSC® certified mixed source pulp,
sourced from well managed and legally
harvested forests, and manufactured
under the strict ISO14001
environmental management system.
9
INTERIM FINANCIAL RESULTS 2021

fonterra.com

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Confidential to Fonterra Co-operative Group Page 1

Distribution Notice
Section 1: Issuer information
Name of issuer
Fonterra Shareholders’ Fund
Financial product name/description Fonterra Shareholders’ Fund Units
NZX ticker code FSF
ISIN (If unknown, check on NZX website) NZFSFE0001S5
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year Quarterly
Half Year X Special
DRP applies
Record date 24/03/2021
Ex-Date (one business day before the
Record Date)
23/03/2021
Payment date (and allotment date for DRP) 15/04/2021
Total monies associated with the
distribution
1

$5,311,624

Source of distribution (for example, retained
earnings)
Retained earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.05000000
Gross taxable amount
3
$0.05000000
Total cash distribution
4
$0.05000000
Excluded amount (applicable to listed PIEs) $0.05000000
Supplementary distribution amount N/A
NOTE: FSF is a Foreign Investment Variable Rate PIE. The whole distribution is excluded income for NZ
resident investors. PIE tax (for resident investors) or NRWT (for non-residents) may be deducted at the rate
appropriate for the investor.

1
Based on the number of units on issue at the date of the form.
2
“Gross distribution” is the total cash distribution plus the amount of imputation credits, per financial product, before the deduction of Resident
Withholding Tax (RWT).
3
“Gross taxable amount” is the gross distribution minus any excluded income.
4
“Total cash distribution” is the cash distribution excluding imputation credits, per financial product, before the deduction of RWT. This should include
any excluded amounts, where applicable to listed PIEs.

Fonterra Co-operative Group
Confidential to Fonterra Co-operative Group Page 2

Section 3: Imputation credits and Resident Withholding Tax
5

Is the distribution imputed Fully imputed
Partial imputation
No imputation
If fully or partially imputed, please state
imputation rate as % applied
6

N/A
Imputation tax credits per financial product N/A
Resident Withholding Tax per financial
product
$-
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any) N/A
Start date and end date for determining
market price for DRP
N/A N/A
Date strike price to be announced (if not
available at this time)
N/A
Specify source of financial products to be
issued under DRP programme (new issue
or to be bought on market)
N/A
DRP strike price per financial product N/A
Last date to submit a participation notice for
this distribution in accordance with DRP
participation terms
N/A
Section 5: Authority for this announcement
Name of person authorised to make this
announcement
Andrew Cordner
Contact person for this announcement Simon Till
Contact phone number +64 21 777 807
Contact email address Investor.relations@fonterra.com
Date of release through MAP 17/03/2021


5
The imputation credits plus the RWT amount is 33% of the gross taxable amount for the purposes of this form. If the distribution is fully imputed the
imputation credits will be 28% of the gross taxable amount with remaining 5% being RWT. This does not constitute advice as to whether or not RWT
needs to be withheld.
6
Calculated as (imputation credits/gross taxable amount) x 100. Fully imputed dividends will be 28% as a % rate applied.

---

For the 2020 financial year relating to the new operating model
17 March 2021

Confidential to Fonterra Co-operative Group Page 1

In our FY21 interim results, we have reported our financial performance based on our new operating model
and this includes the new reportable segments plus some other additional supplementary information.
Our new operating model is based around three regional business units (Asia Pacific, AMENA, and Greater
China) supported by a shared infrastructure that includes New Zealand milk collection and processing
operations and assets Group IT, Innovation functions and a Central Portfolio Management function. We
refer to the shared infrastructure as Group Operations.
Fonterra’s new reportable segments are each of the three regions: APAC, AMENA and Greater China.
In our FY21 interim results we also provide additional supplementary information, including:
- For each region, performance by product channel: Ingredients, Foodservice and Consumer;
- The amount of Group Operations’ earnings before interest and tax (EBIT) that has been attributed to
each region;
- Summary earnings performance for each of the Australian and Latin American businesses;
- Summary earnings performance split between New Zealand and non-New Zealand sourced
milk; and
- Regional and product performance for New Zealand sourced milk.
This pack includes this additional supplementary unaudited information for FY20 to assist with comparison
of performance over the periods.

Fonterra Co-operative Group
Confidential to Fonterra Co-operative Group Page 2





Summary of Regional Performance
1

31 July 2020
Normalised basis
NZD million Total
Asia
Pacific AMENA
Greater
China
Unallocated
Costs and
Eliminations
Sales volume (‘000 MT)
2
3,842 1,406 1,433 1,021 (18)
Revenue 20,282 7,139 7,819 5,364 (40)
Cost of goods sold (17,236) (5,939) (6,750) (4,591) 44
Gross profit 3,046 1,200 1,069 773 4
Gross margin 15.0% 16.8% 13.7% 14.4% –
Operating expenses (2,194) (951) (612) (390) (241)
Other
3
(5) (1) (6) (12) 14
EBIT
4
847 248 451 371 (223)
Includes EBIT attribution from
Group Operations
5

170 55 27 88 –
EBIT excludes discontinued
operations
32 – 21 11 –

EBIT Contribution of Regions and Product Channels
1

31 July 2020
Normalised basis
EBIT (NZD million) Total Asia Pacific AMENA
Greater
China
Ingredients 714 143 395 176
Foodservice 221 7 (15) 229
Consumer 135 98 71 (34)
Unallocated costs & eliminations (223) – – –
Continuing operations
6
847 248 451 371
Discontinued operations 32 – 21 11
Total Group EBIT 879


1 Regions performance is shown on a continuing operations basis.
2 Includes sales to other regions.
3 Consists of other operating income, net foreign exchange gains and losses, share of profit or loss on equity accounted investees.
4 EBIT includes Group Operations attribution.
5 The Group Operations attribution is the EBIT attribution from a shared infrastructure that includes New Zealand milk collection and processing
operations and assets, Group IT and Innovation and a Central Portfolio Management function.
6 Include unallocated costs and eliminations to add across.

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Confidential to Fonterra Co-operative Group Page 3

Asia Pacific
1

31 July 2020
Normalised basis
NZD million Total Ingredients Foodservice Consumer
Sales volume (‘000 MT)
2
1,406 623 143 640
Revenue 7,139 3,693 918 2,528
Cost of goods sold (5,939) (3,285) (778) (1,876)
Gross profit 1,200 408 140 652
Operating expenses (951) (271) (136) (544)
Other
3
(1) 6 3 (10)
EBIT
4
248 143 7 98
Includes EBIT attribution from Group
Operations
5

55
Gross margin 16.8% 11.0% 15.3% 25.8%

Australia Performance
6

Normalised basis
NZD million 31 July 2020
Production volume (‘000 MT) 365
Sales volume (‘000 MT)
2
406
Revenue 2,036
Cost of goods sold (1,821)
Gross profit 215
Operating expenses (157)
Other
3
(3)
EBIT 55
Gross margin 10.6%


1 Asia Pacific performance represents continuing operations.
2 Includes sales to other regions.
3 Consists of other operating income, net foreign exchange gains and losses, share of profit or loss on equity accounted investees.
4 EBIT includes Group Operations attribution.
5 Included in Asia Pacific’s EBIT is the Group Operations attribution of $55 million.
6 Performance does not include Group Operations attribution.

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Confidential to Fonterra Co-operative Group Page 4

AMENA Performance
1

31 July 2020
Normalised basis
NZD million Total Ingredients Foodservice Consumer
Sales volume (‘000 MT)
2
1,433 1,041 14 378
Revenue 7,819 6,522 158 1,139
Cost of goods sold (6,750) (5,746) (139) (865)
Gross profit 1,069 776 19 274
Operating expenses (612) (378) (37) (197)
Other
3
(6) (3) 3 (6)
EBIT
4
451 395 (15) 71
Includes EBIT attribution from Group
Operations
5

27
Gross margin 13.7% 11.9% 12.0% 24.1%

Latin America Performance
6,7

Normalised basis
NZD million 31 July 2020
Sales volume (‘000 MT)
14
346
Revenue 926
Cost of goods sold (685)
Gross profit 241
Operating expenses (192)
Other
3
(7)
EBIT 42
Gross margin 26.0%


1 AMENA’s performance represents continuing operations.
2 Includes sales to other regions.
3 Consists of other operating income, net foreign exchange gains and losses, share of profit or loss on equity accounted investees.
4 EBIT includes Group Operations attribution.
5 Included in AMENA’s EBIT is the Group Operations attribution of $27 million.
6 Performance does not include Group Operations attribution.
7 Latin America includes Chile, Brazil and Venezula

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Greater China Performance
1

31 July 2020
Normalised basis
NZD million Total Ingredients Foodservice Consumer
Sales volume (‘000 MT)
2
1,021 691 257 73
Revenue 5,364 3,471 1,555 338
Cost of goods sold (4,591) (3,136) (1,222) (233)
Gross profit 773 335 333 105
Operating expenses (390) (149) (102) (139)
Other
3
(12) (10) (2) –
EBIT
4
371 176 229 (34)
Includes EBIT attribution from Group
Operations
5

88
Gross margin 14.4% 9.7% 21.4% 31.1%

Group Operations Attribution
31 July 2020
Normalised basis
NZD million Total Asia Pacific AMENA
Greater
China
EBIT Group Attribution 170 55 27 88

New Zealand and non-New Zealand Milk Performance
6

31 July 2020
NZD million Total New Zealand Milk
Non-New Zealand
Milk
Sales volume (‘000 MT) 3,842 3,003 839
Revenue 20,282 17,212 3,070
Cost of goods sold (17,236) (14,615) (2,621)
Gross profit 3,046 2,597 449
Operating expenses (2,194) (1,813) (381)
Other
3
(5) (7) 2
EBIT 847 777 70
Discontinued Operations 32 – 32
Gross margin 15.0% 15.1% 14.6%


1 Greater China performance represents Continuing Operations.
2 Includes sales to other regions.
3 Consists of other operating income, net foreign exchange gains and losses, share of profit or loss on equity accounted investees.
4 EBIT includes Group Operations attribution.
5 Included in Greater China’s EBIT is the Group Operations attribution of $88 million.
6 Shown on a continuing operations basis.

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New Zealand Milk by Product Channel – Sales Volume
1

31 July 2020
(‘000 MT) Total Ingredients Foodservice Consumer
Unallocated Costs
and Eliminations
Asia Pacific 1,079 518 116 445 –
AMENA 981 922 12 47 –
Greater China 961 676 220 65 –
Eliminations (18) – – – (18)
Total 3,003 2,116 348 557 (18)

New Zealand Milk by Product Channel – Revenue
26

31 July 2020
NZD million Total Ingredients Foodservice Consumer
Unallocated Costs
and Eliminations
Asia Pacific 5,673 3,135 706 1,832 –
AMENA 6,359 5,959 79 321 –
Greater China 5,220 3,409 1,495 316 –
Eliminations (40) – – – (40)
Total 17,212 12,503 2,280 2,469 (40)

New Zealand Milk by Product Channel – Gross Margin
26
31 July 2020
NZD million Total Ingredients Foodservice Consumer
Asia Pacific 17.8% 12.1% 14.9% 28.7%
AMENA 12.8% 12.4% 26.6% 17.4%
Greater China 14.8% 9.8% 22.2% 33.2%
Total 15.1% 11.6% 20.1% 27.8%

New Zealand Milk by Product Channel – EBIT
26

31 July 2020
NZD million Total Ingredients Foodservice Consumer
Unallocated Costs
and Eliminations
Asia Pacific 206 165 (7) 48 –
AMENA 405 374 7 24 –
Greater China 389 175 239 (25) –
Eliminations (223) – – – (223)
Total 777 714 239 47 (223)


1 Shown on a continuing operations basis.