February 20, 2020

At Salada Food Limited’s 55th Annual General Meeting, Mrs. Dianna Blake-Bennett commented on the performance of the Company stating, “export revenue grew by 10% year on year, however, domestic sales outpaced export sales.” Additionally, “although there was a 7% increase in revenue, the impact of the Cess led to an increase of 17% on Cost of Sales,” according to Management. Thus, gross profit slipped 10% to $361.57 million  (2018: $399.96 million). Notably, SALF’s profitability fell 36% to close at $141.37 million relative to $219.18 million for the same period in 2018. Mrs. Blake-Bennett stated that “the business was impacted by major events for the FY2019.” These included:

1. The loss in production for two months due to a Boiler accident in October,
2. The impact of the Cess on coffee green beans reduced profitability by $90 million,
3. The rescuing Blue Mountain coffee industry by injecting $189 million into the local Coffee Industry

Accordingly, the Company’s investment of $189 million into the coffee industry allowed SALF:

1. To connect with more than 300 farmers
2. To provide $90 million in income to them
3. To provide a new revenue stream from green bean sales
4. The opportunity to develop premium products

Outlook:

The Company’s focus going forward was presented to shareholders present at the Annual General Meeting (AGM). These initiatives will see SALF targeting the following:

1. Growing Exports

• Solidify partnerships with key retailers in USA, Canada, as well as follow through on marketing strategies, as Management believes growth prospects remain promising

• Connect to the diaspora

2. Diversifying Strategies in order to mitigate the impact of cess

• Introduce non-coffee based products

3. Growing Domestic Sales

• The Introduction of two new products this year (premium coffee and a line extension of ginger teas). This will be coupled with the Company’s continued push to enter new channels geared at increasing market share all around.

4. Growing Contract Manufacturing and Bulk Sales

Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer(s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation(s) or view(s) expressed by that research analyst in this research report.

Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.