Fonterra Shareholders’ Fund 2024 Annual Meeting materials

18 November 2024
Fonterra
Shareholders’
Fund
2024
Annual Meeting

01
MJ Daly
FSF Chair
Welcome and
Introduction

Online question process
Unit holder & Proxyholder Q&A Participation

Written Questions:
•Questions may be submitted ahead of the meeting
•If you have a question to submit during the live
meeting, please select the Q&A tab on the right half
of your screen at anytime
•Type your question into the field and press submit
•Your question will be immediately submitted
Help:
•The Q&A tab can also be used for immediate help
•If you need assistance, please submit your query in
the same manner as typing a question and a
Computershare representative will respond to
you directly
3

Online voting process
Unit holder & Proxyholder Voting
•Once the voting has been opened, the resolution and
voting options will allow voting
•To vote, simply click on the Vote tab, and select
your voting direction from the options shown on
the screen
•Your vote has been cast when the tick appears
•To change your vote, select ‘Change Your Vote’
4

Agenda
01020304050607
MJ
Daly
MJ
Daly
Peter
McBride
Miles
Hurrell
MJ
Daly
MJ
Daly
MJ
Daly
Welcome and
Introduction
FSF
Management
Company
Chair’s
address
Fonterra
Chair’s
address
Fonterra
Chief
Executive
Officer’s
address
QuestionsResolution
to re-elect
Alastair
Hercus
General
Business
5

Fonterra Shareholders’ Fund
Fonterra Team
MJ Daly
Chair
Carlie Eve
Alastair Hercus
John NichollsAndy Macfarlane
Peter McBrideMiles HurrellRichard WhitemanSelena RobbJackie Floyd
Board of Directors
6

02
MJ Daly
FSF Chair
FSF Management
Company Chair’s
address

FSF Management Company Chair's address
Continued strong performance in 2024
Note: For the year ended 31 July 2024.
1.Includes amounts attributable to non-controlling interests.
2.Excludes amounts attributable to non-controlling interests.
Continuing operations’
profit after tax¹
Continuing operations’
earnings per share
2
Total cash
distribution
$1.17 billion70 cents$0.55 per unit
 from $1.24b from 75c from 50c
8

Total Shareholder Return for past 12-months
Note: Total Shareholder Return (TSR) is calculated from value weighted average traded prices for the period 14 November 2023 to 15 November 2024.
9
•FSF Total Shareholder Return (TSR) since 2023 AGM is 94.6%
•Comparatively, FCG and the S&P NZX50 Index TSR for the same period are 150.6% and 13.5%, respectively
(20)%
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
Nov 23Dec 23Jan 24Jan 24Feb 24Mar 24Apr 24Apr 24May 24Jun 24Jul 24Aug 24Aug 24Sep 24Oct 24Nov 24
NZXFSFFCG

Unit register analysis
Note: Register data is as at 31 October.
5%
11%
15%
69%
7%
10%
16%
67%
7%
9%
18%
66%
Private Wealth
Management
Farmer
Shareholder
InstitutionRetail
202220232024
2%2%
8%
88%
4%
1%
7%
88%
4%
1%
7%
88%
OtherUnited StatesAustraliaNew Zealand
202220232024
Investor TypeInvestor Location
•Continued increase of Institutions and private wealth holders
•Unit holders located in Australia remain stable at 7%. However, 96% of units are traded on the New Zealand stock
exchange (NZX), supporting the decision to move to a sole listing on the NZX
10

Units on Issue¹no change
Fund Market Capitalisation¹$259m
Fonterra Market Capitalisation¹$4.3b
Fund Size¹
,
²no change
Unit Price 12-month High/Low³(14 Nov 24) / (5 Dec 23)
Key Fund statistics as at 15 November 2024
1.At 15 November 2024, relative to 15 November 2023.
2.Fonterra Shareholders’ Fund units on issue as a percentage of Fonterra Co-operative Group shares on issue.
3.12 month period, 14 November 2023 – 15 November 2024.
11

03
Peter McBride
Fonterra Chair
Fonterra Chair’s
address

 from 16.3% from 15.7% from (3.9%)

 from $8.72
 from 12.4%
 from $3.00
 from 28.8%
*Share price as at 15 November.

04
Miles Hurrell
Fonterra CEO
Fonterra Chief
Executive Officer’s
address

 from $8.22
 from $0.50
 from 12.4% from 28.8%
 from 1,755m from 75c
per kgMScents per share

Expand our successful Foodservice business in and beyond China to grow earnings

05
Questions

06
Resolution
and Voting

Resolution 1:
Re-election of Alastair Hercus

Resolution 1
To re-elect Alastair Hercus, who
retires by rotation, and stands for
re-election as a director of the
Manager of theFund

Proxy Voting
As at 9am Saturday 16 November 2024
1.5%
AGAINST
8.9%
Non-Board
89.6%
FOR
15.1m units0.1m units1.4m units
0.8%
8.1%
Board
DISCRETIONARY
Alastair Hercus

18 November 2024
Fonterra
Shareholders’
Fund
2024
Annual Meeting

Voting
•In respect of the resolution, please tick the “for”, “against” or “abstain” box.
•Once you have completed your voting, please place your vote in a ballot box.
•Please raise your hand if you require a pen.
•Results will be announced to the NZX and ASX as soon as they areavailable.
29

18 November 2024
Fonterra
Shareholders’
Fund
2024
Annual Meeting

07
General
Business

Thank you,
meeting closed

---

FONTERRA SHAREHOLDERS’ FUND 2024 ANNUAL MEETING
18 NOVEMBER 2024
FSF CHAIR’S ADDRESS

It has been another good year for Fonterra, delivering a strong profit off the back of a record
high last year.
Fonterra’s continuing operations’ profit after tax was $1.17 billion, meaning earnings per share
came in at the top end of the forecast range, at 70 cents per share.
Fonterra declared a total dividend of 55 cents per share which fully flows through to unit
holders as a distribution of 55 cents per unit.
This was made up of an interim distribution of 15 cents per unit and a final distribution of 40
cents per unit.
Fonterra has also released a refreshed strategy and more recently, confirmed its intention to
divest its Consumer business. In addition to the strong financial performance, these
announcements have also positively impacted the Fund’s performance. Peter and Miles will
speak to Fonterra’s operational performance in their presentations.
Before I move on to discuss the Fund’s performance in more detail, it is important to
acknowledge the role of the Board of the Manager.
The Fonterra Shareholders’ Fund Board has statutory responsibilities for the activities of the
Management Company and the Fund. These include monitoring compliance with regulatory
requirements and ensuring that unit holders’ interests are managed and protected in
accordance with the constituent documents that relate to the Fund.
Directors of the Fund have no role in the governance or operation of Fonterra.
Although we have no decision-making role in these areas, we do consider it important to
actively represent the interests and views of unit holders to Fonterra, and we do that.
One of the items we addressed this year was a request for Fonterra to review the Fund unit
buyout price formula in the Authorised Fund Contract.
The purpose of the buy-out formula is to set a proxy for a fair market value for certain
termination events.
To date this has been based on a volume weighted average price; 50% weighted to the
Fonterra Share price and 50% weighted to the Fund unit price.
Under the Flexible Shareholding capital structure, where the price of Fonterra shares and
Fund units are de-linked, FSF Board considered it appropriate to amend the Authorised Fund

Contract so that the pricing formula only references the volume weighted average price of
Fund units.
Whilst this change has been made to reflect a fairer buyout price under certain termination
provisions, there is no intention at this time to terminate the Fund.
The Board has also continued to engage with Fonterra management to understand and
provide feedback on Fonterra’s equity strategy and Fund strategy with a unit holders lens.
We have also held regular education sessions on areas of particular interest to provide more
transparency of what is happening in Fonterra and understanding of the key drivers that can
impact the Fund – such as sustainability, and its optimisation function - namely the allocation
of milk to products.
Fonterra’s strong performance, and market communications on strategy and the divestment
of its Consumer business is reflected in the total shareholder returns.
Total returns for the Fund since the last AGM is 95%, made up of 239 cents in unit price
appreciation and 55 cents in distributions.
This level of return is pleasing to see, particularly given that the prior period, from the Fund’s
2022 AGM to 2023 AGM was 37%, made up of 11 cents in unit price appreciation and one
dollar in distributions which included the 50 cent capital return on completion of the Soprole
divestment.
Over the same period, FCG and the S&P NZX50 Index returned 151% and 14%, respectively.
Considering the historical performance of the Fund, these returns are very pleasing to see.
Looking at the composition of the register, there continues to be a healthy shift from retail and
supplying Fonterra farmers to private wealth and institutions.
The drop off in units held by supplying farmers is expected as shares can no longer flow
through to the Fund under Fonterra’s capital structure.
Of the 66% or 71 million units held by retail investors, around half are held by former supplying
farmers. When combined with the nearly 10 million units held by supplying farmer
shareholders, around 40% of the Fund is held by current or former supplying farmers. This is
a material decrease on the prior year where roughly half of the Fund was held by this group.
The Fund Board are pleased to see this improving spread of ownership type, which supports
liquidity through different investment horizons and trading behaviours.
This month Fonterra, having completed a review of its equity listings, announced its intention
to shift Fonterra Co-operative Group from its private market operated by NZX to the NZX Main

Board. In addition, it has also decided to delist FSF from the ASX and have a sole listing on
the NZX.
Fonterra consulted with the FSF Board on this matter, and we are supportive of the shift to a
single listing for FSF.
Broadly speaking, dual listings are becoming less popular due to the increased cost, regulatory
complexities, and administrative burdens of complying with multiple exchanges. In addition,
advances in global trading technology make it easier for companies to access international
investors through a single primary listing.
You can see on the slide, units held geographically in Australia represent 7% of the Fund.
However, units registered to trade on the ASX is actually only 4%, with 96% of units registered
under the NZX. With several Australian institutions preferring to hold and trade units in the
bigger pool of liquidity here in New Zealand.
As mentioned, the sole FSF listing will reduce cost and complexity, as well as support liquidity
in the Fund with all capital trading on one exchange.
Fonterra management is currently working with the ASX and will provide further
communications to unit holders as this process progresses.
Lastly from me, I will briefly touch on some of the key Fund statistics.
With the cap on the Fund a permanent feature of the capital structure and the lower value of
a Fonterra share relative to the Fund unit, there has been no change in the 107 million units
on issue.
Fonterra’s market capitalisation is up $4.3 billion to $7.7 billion, and the Fund’s market
capitalisation is $581 million, up $259 million.
The Fund’s increase in market capitalisation is due to an increase in the unit price, from $3.14
this time last year to a closing unit price of $5.41 last Friday.
The Fund size as a percentage of the total Fonterra shares remains unchanged year-on-year
at 6.7% due to no buyback of Fonterra shares over the period.

ENDS

---

FONTERRA SHAREHOLDERS’ FUND 2024 ANNUAL MEETING
18 NOVEMBER 2024
FONTERRA CHAIR’S ADDRESS

Good morning everyone, thank you all for attending today.
In a few minutes Miles will talk you through a short summary of our financial performance. I
know many of you will also be keen to hear his comments on our strategy refresh and the
intended divestment of consumer.
Before we hear from Miles, I thought it would be informative to talk you through a couple of
key insights that the board considers important in the development of strategy.
These form the background of the conversations we have as a leadership team when we
consider our options around the strategy, including the decision to divest our wider consumer
business.
The first insight is our global operating context – which continues to change.
And the second is risk – how we manage risk on your behalf and the way we treat your capital.
We are and always will be a New Zealand farmer-owned Co-op, but we are also a global
export business.
When considering our strategy we need to challenge ourselves to look past the here and now.
The world is changing. We are moving out of an era of trade liberalisation and co-operation
and into a world that’s more expensive, competitive and volatile. Where expectations are
evolving and New Zealand milk is becoming more scarce.
Customers are increasingly calling on us to partner with them to improve their sustainability
and innovation capabilities. And there’s even more focus on sustainability from banks,
regulators, and from a market access perspective.
The cost of capital has increased, and many industries – including agriculture and our bankers
– face higher capital requirements.
In this new global context, Fonterra also faces increasing competition for both milk and capital
here at home.
That all sounds inherently negative, and it’s certainly not without risk, but the opportunity for
us still absolutely exists.

Demand for dairy continues to grow and, in a rapidly changing world, we are uniquely
positioned to capitalise on any shifts.
We have high quality New Zealand milk which is becoming more scarce.
And most critically, we have scale.
That gives us great confidence in the future of our Co-op. Success will come by focusing on
our comparative advantages, simplifying the business to meet that, and then aligning our
people to achieve that singular vision.
The second insight we consider is risk.
Fonterra is an extension of our farmers’ businesses. It exists to provide certainty and manage
risk on their behalf, while also maximising returns via a competitive and sustainable milk price,
and a respectable return on the capital you invest in the Co-op.
We govern Fonterra through a set of financial settings and a risk appetite that is now more
appropriately aligned to that of our farmer owners.
As you’ve seen from our recent financial performance, this approach has served us well in
recent years and has set a strong platform for this next phase in Fonterra’s evolution.
Fonterra adds value for all dairy farmers by creating stability for the industry and de-risking
the on-farm investment.
We add value through the milk price - delivering a return on the $50 billion invested in on-farm
capital.
And by generating a return on the $12 billion worth of capital farmers and unit holders have
invested in the Co-op.
This last piece is central to the conversation on our strategy and the divestment of our
consumer business.
Right now, we estimate the weighted average cost of capital for a dairy farmer is somewhere
around 10%.
Consumer businesses are inherently more capital intensive and riskier businesses to operate
- you’ve seen that play out over time in our own operation.

Overlay that with the potentially higher geographic risk in the markets where our consumer
businesses operate, and a respectable return on capital for the consumer business should be
something north of 15%.
Our Consumer business had one of its better years in 2024, but despite that, its return on
capital was just 6.8%, up from negative 3.9% in 2023 and 0.2% in 2022.
We cannot justify investing money into a business that generates returns lower than our
farmers’ opportunity cost of capital, whilst at the same time exposing shareholders and unit
holders to more risk.
We are better off returning that capital to you, reinvesting it into the parts of our business
where we have a comparative advantage, or a mixture of both.
That might seem like a cold message to the people in the room that have an emotional
connection to those brands. We understand that. Those brands and the associated assets
that go with them do hold a lot of value, to the right owner.
Fonterra, as a farmer-owned co-operative and the associated cost of capital that comes with
that model, is not the natural owner of a consumer business.
Having reached that conclusion, our focus from here is on running a process that maximises
value in a way that is in the best long-term interests of shareholders and unit holders.
The evolved Fonterra that remains will be a simplified business focused on our comparative
advantages. It will be lower risk, be less capital intensive, and achieve an increased return on
capital overall.
I hope that’s a useful insight into the way the Board looks at these strategic choices. Having
options is a good thing and you are right to want more information around these big decisions.
Ultimately this will be a decision for our farmer shareholders to make. We will keep you
updated as much as possible along the way and provide you with the details that sit behind
any final decision.
Miles will give you his perspective shortly, but before we go there, I do need to quickly cover
off some other governance matters.
Given the heightened uncertainty and volatility I mentioned earlier, the Co-op can be proud of
the set of financial results it has put up this year.

We did have some tail winds in terms of favourable price relativities, but the team worked hard
to take full advantage of those and our underlying performance has improved significantly
through time.
In my opinion, the shift in the unit price reflects performance, and the returning confidence
investors have in Fonterra.
As MJ mentioned earlier, over the past 12 months the unit price has increased from $3.14 to
$5.41.
You should have seen an announcement last week that we are moving Fonterra Co-operative
Group shares onto the NZX main board.
I want to reiterate that there is no change who can buy shares in the Co-op or units in the
Fund.
This is a simple but important cost-saving exercise that we have initiated and, as MJ has
already mentioned, was supported by the Fonterra Shareholders’ Fund Board.
Lastly, I’d like to touch on the Board changes that came into effect at the conclusion of last
week’s Fonterra’s Annual Meeting.
Last year, just over 88% of voting farmers supported the recommendation for the Board size
to reduce from 11 down to 9 directors. That change came into effect at the end of last week
and Fonterra’s Board now comprises six farmer elected directors and three appointed
independent directors.
One of those independent directors is Alistair Field, who we welcomed to the Board earlier
this month.
As I told our farmers last week, our Co-op is in good health.
The sentiment we are receiving from stakeholders right now is overwhelmingly positive and
there is a huge amount of positive momentum in the Co-op.
Our teams are confident and energised, which is important as we look to lean into increasing
competition overseas and back here at home.
Thank you. I look forward to answering any questions you have on these comments later in
the meeting.
ENDS

---

FONTERRA SHAREHOLDERS’ FUND 2024 ANNUAL MEETING
18 NOVEMBER 2024
FONTERRA CEO’S ADDRESS

Thank you.
Today I’ll cover the Co-op’s performance for F24 and then our plans for the years ahead as
we implement our revised strategy.
Looking first at our F24 annual results.
I’m proud to say the Co-op had a strong year and maintained the positive momentum we
saw in F23.
We delivered earnings of 1.6 billion dollars, which was driven by strong performance across
all three of our sales channels.
Our Foodservice margins improved, and we allocated more milk to this high performing
channel.
Our Consumer business also improved its margins and lowered its operating expenses too.
While our Ingredients earnings were down when compared to last year’s historic highs, this
channel still delivered a substantial proportion of our Co-op’s earnings for the year.
As a result, our net earnings were at the top end of our guidance range, at 70 cents per
share.
This allowed us to pay a 15 cent interim dividend during the year and a 25 cent final
dividend.
Our ongoing balance sheet strength also enabled us to return an extra 15 cents through a
special dividend, making the total dividend payment for F24 55 cents per share.
When combined with our final Farmgate Milk Price of $7.83, our total payout to fully shared-
up farmers was $8.38.
Looking at the rest of the year ahead, I’m pleased to say we’re forecasting a stronger
Farmgate Milk Price.
Earlier this week, we lifted our midpoint by 50 cents to $9.50, giving us a new forecast range
of $9 to $10 per kgMS.
This lift was largely driven by demand out of China, where we are starting to see domestic
milk production slow.
And we continue to monitor global factors including New Zealand milk supply.
Looking at our earnings for F25, we have a forecast range of 40-60 cents per share.
This outlook signals another year of stable performance from the Co-op.

With Fonterra delivering consistent and reliable results over the last few years, we’ve seen a
steady lift in farmer confidence and sentiment.
It’s this foundation that allows us to think ahead and have conversations about our strategy.
Recently, we conducted a strategic review, honing in on where we create value today and
see long term growth.
This has resulted in us focusing even further on Foodservice and Ingredients.
By streamlining the business to focus on these areas, we can grow greater value for the Co-
op, even if we divest our Consumer businesses.
As an example of this strategy in action, I want to touch on a recent announcement relating
to our Foodservice business.
Recently I was in China for the annual China International Importers Expo.
It’s an impressive event, where we showcased our business to customers and stakeholders,
with lots of energy around dairy nutrition and our innovative products.
At this event, we launched a new Anchor UHT cream product, designed to grow our share of
China’s growing Foodservice market.
We already have a strong Foodservice business in China, primarily targeted at the premium
end of the market.
This new cream product will target the mid-tier market, the fastest growing segment in the
UHT cream category.
Often, to achieve the lower price point needed to access the mid-tier market, products are
made using plant-based fats.
Using our innovation expertise, we’ve developed a 100% dairy product, with the right
functionality and at a competitive price point.
This move will help us attract new Foodservice customers and consolidate our leadership
position in the UHT market.
Our investment in a new UHT plant at our Edendale site will support this ongoing growth, as
we look to allocate more milk to our Foodservice channel.
It’s examples such as these that give us confidence in our revised strategy and our potential
to create further value for shareholders and unit holders.
Our revised strategy has allowed us to lift our target average return on capital to 10-12%, up
from 9-10%.
We’ve also committed to returning more of the Co-op’s earnings, with an enhanced dividend
policy of 60-80% of earnings, up from 40-60%.
We are confident we can achieve these outcomes while continuing to invest in the Co-op
and maintaining the strong balance sheet we’ve worked so hard to rebuild over recent
years.

We’re making choices about where we want to focus, so we can go further, faster.
This is why we believe a divestment of our global Consumer businesses is in the best
interests of the Co-op and are proceeding with a sales process.
As announced last week, we have assessed both a trade sale and IPO as attractive options
and will now pursue both.
I recognise there is significant interest in this process, and we will keep you updated as this
work progresses.
This is a pivotal time for the Co-op.
We’re in a strong position today and have an exciting future.
Thank you.
ENDS