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Zester Intranet Introduction Jasmin and Harvey were raised on their parent' s almond farm in the South Australian Riverland. They listened to their father complain about his inability to market the best crop of almonds in the world'. Jasmin and Harvey realised that if they could control a larger supply of almonds, they would have greater marketing power, which would enable them to obtain higher prices for their products. Their concept was to create a corporate co-operative, which would purchase all the almonds produced by Riverland producers, consolidate that produce and sell it at market. This led them to establish Zester Company Limited (Zester). Given the fragmentation within the almond market, their strategy enabled them to obtain a market premium for their product of over 10%. Over time, they were able to entice farmers from the Sunraysia and Riverina growing areas to distribute their products via Zester. This allowed them to control approximately 50% of the Australian almond market. Initially Jasmin and Harvey each owned a 30% share of Zester, with the remaining shares held by 10 different farmers. In 2004, with demand for almonds growing, Jasmin and Harvey were no longer satisfied with simply on-selling almonds and decided to establish a processing facility in Adelaide, South Australia. The site provided ease of access to Riverland farms, as well as port facilities, allowing the company to take advantage of expected export opportunities. Given the seasonal nature of almonds (harvesting in Australia typically runs from February to April), and Zester's growing international reputation, the board of Zester decided to expand into the United States. In 2008, Zester was listed on the Australian Securities Exchange (ASX), in the middle of a global financial crisis. The funds from the initial public offering (IPO) enabled Zester to acquire a US grower and manufacturer, located in California, called Calimond Limited. This acquisition doubled the size of Zester' s almond supply. The board was concerned about the growing level of world almond supply and wished to diversify. In 2014, the board diversified into ginger. Ginger was chosen as it is not a nut-based product, it is produced in Australia which has a reputation for producing high-quality ginger, and it is a health-based crop (like almonds) allowing secondary processing to maximise revenue opportunities. To facilitate this diversification Zester acquired an Australian ginger producer, Galangal Pty Limited. Galangal was a family owned business, based in Queensland, providing a significant range of ginger products to the Australian market. In addition to ginger production, Galangal owned and operated five retail outlets on the east coast of Australia, which stocked its range of ginger-based products. Zester saw this as an opportunity to also distribute its almond products, direct to consumers. In 2016, the Adelaide production facility was given a major upgrade. This upgrade enabled the processing of ginger and the creation of a research and development (R&D) department. The R&D department was tasked with exploring the benefits of almonds and ginger and developing new products. The Galangal acquisition proved so successful that, in line with its almond strategy, Zester acquired an 80% interest in a US-based ginger operation (GaZing Limited), located in Hawaii, during 2019. Since listing on the ASX, Zester has funded its expansion through a mix of equity and debt raisings. While the company s top line (revenue) has clearly benefited from the expansion strategy, the bottom line (profit) has not responded as the directors or shareholders would have liked. This has principally been due to the costs of integration, the impact of unpredicted movements in world prices for almonds and ginger and shifts in exchange rates. Today, Zester has manufacturing operations in Australia, California and Hawaii, and retail operations in Australia, which are all growing. The direct-to-consumer operations include 15 retail outlets and an online presence. Expansion of Zester Zester timeline 1992 2008 Zester incorporated IPO and listing on ASX 2014 Diversification into ginger through acquisition of Galangal 2004 2008 Processing facility established Acquisition of Calimond in Adelaide (US almond supplier) 2019 Acquisition of 80% interest in Hawaii based ginger supplier (Gazing Limited) Board and executive structure Board Maxwell O'Reilly (Chair), GAICD age 72, appointed 2018. Max has significant board. experience, including terms on the boards of large retailers and mining companies. Jasmin Winchester, BA age 57, appointed 1992. Prior to starting Zester with Harvey, Jasmin worked as a buyer for a major retail chain. Harvey Winchester, B Agric Sc age 55, appointed 1992. Prior to starting Zester with Jasmin, Harvey worked as a research scientist. His research focused on developing water efficient crop management within the Australian environment. - Constance Wu, LLB age 61. Constance is an experienced director, previously a partner in a boutique law firm specialising in mergers and acquisitions. Raj Koji, CA, BBus age 42. Raj is a Chartered Accountant working for the Australian investment arm of a major Asian investment company (Asian Big Dev Fund Ltd). Megan Houlihan, BSc health benefits of nuts. age 50. Megan is a research scientist specialising in the long-term Zester has established an audit and risk committee. Executive team Jasmin Winchester (Chief Executive Officer) Harvey Winchester (Chief Operating Officer) Shelby Woo, CA (Chief Financial Officer). Shelby is a Chartered Accountant who has been with Zester for over 20 years. Shelby has been instrumental in helping Jasmin and Harvey grow the company into what it is today. Dove Pierce (Global Head of Sales and Marketing). Dove joined Zester six months ago, following the retirement of her predecessor. Dove is responsible for the development and maintenance of Zester' s brands and sales strategies. Henry Blake (Head of Australian Operations). Henry joined Zester five years ago bringing over 30 years of manufacturing experience. Henry is reliant on key members of his staff to provide expertise in relation to farming operations. Frances Burns (Head of US Operations). Frances joined Zester as part of its acquisition of Calimond. He has experience in almond farming and manufacturing. Frances is reliant on key members of his staff to provide expertise in relation to ginger. Fiona Manchu (Global Head of People and Culture). Fiona joined Zester from a key Australian almond competitor (Almond Man Limited) four months ago. Since starting, she has spent most of her time visiting Zester' s operations to gain an understanding of the company culture and what is needed to support the next stage of growth. Bruce Hunnicutt (Global Head of Information Technology). Bruce joined Zester three years ago from a national IT company. Bruce was head hunted for his knowledge of all things IT. He has been progressively bringing Zester' s systems up to date. Organisational chart Harvey Winchester (COO) Henry Blake (Head Aus Ops) Australia Almond Farming Australia Ginger Farming Jasmin Winchester (CEO) Dove Pierce Fiona Manchu (GH S&M) (GH P&C) Bruce Hunnicutt (GH IT) Shelby Woo Legal Counsel (CFO) (P/T) Frances Burns Brand Recruitment (Head US Ops) IT Help Desk Reporting & Analysis US Almond Farming New Product Network Design Payroll Development & Support Accounts Receivable US Ginger Farming Retail Shop Network Work Health & Safety IT Security Accounts Payable Australia Food Production US Food Production Training & Online Sales Education Australia Logistics US Logistics Major Retailers Corporate structure Speciality Retailers Wholesale Zester Company Limited Global Taxation Calimond Limited Galangal Pty Ltd Gazing Limited US - 100% Aust - 100% US - 80% Treasury Centralised services Zester utilises a centralised services model. This model entails the provision of designated services to all business units from two central services hubs. The first hub is based in the corporate head office in Adelaide, South Australia and the second in California. Centralised services include: financial reporting and analysis accounts payable accounts receivable treasury payroll work health and safety staff recruitment and induction brand maintenance and development new product development IT help desk legal council. Profit & loss statement (000's) Sales revenue Cost of goods sold Gross profit Selling and distribution expenses Contribution margin Other revenue Government support/grants Foreign exchange gains Sundry income Other expenses Marketing expenses Administration expenses Asset impairment - Property, Asset impairment - Intangible assets Depreciation and amortisation Zester Company Limited Group Profit and Loss Jun-21 Jun-20 Jun-19 Jun-18 Jun-17 170,648 156,416 110,037 98,139 91,344 110,759 102,144 70,802 62,818 58,750 59,889 54,272 39,235 35,321 32,594 12,799 11,731 8,253 7360 6,851 47,090 42,541 30,982 27,960 25.743 195 175 20 15 25 150 (91) (102) (115) 75 30 30 30 30 30 375 114 (52) (70) 130 2,560 3,910 1,651 1,472 1,370 20,136 18,457 12,984 11,580 10,779 plant and equipment 0 1,250 0 0 550 3,500 0 650 0 9,548 7,253 7,083 6,063 5,893 Amortisation of Right-to-use Asset 750 750 0 0 Other expenses 3,925 1.486 946 837 776 37,469 36,607 22,664 20,602 18,818 Profit/(Loss) before tax and finance costs. 9,996 6,048 8,266 7,288 7,055 Finance costs External debt. 1,826 1,543 808 1,048 Lease liability Profit/(Loss) before tax Income tax expense 155 180 0 0 8,015 4,325 7,457 6,379 6,007 2,184 2,314 2,051 1,933 1,652 Profit/(Loss) after tax 5,831 2.011 5,407 4,446 4,355 Exchange differences on translation of foreign operations (net of tax) Net Profit/(Loss) attributed to non-controlling interests 752 505 0 Net Profit/(Loss) attributable to equity holders of Zester Co Ltd 5,079 1,506 5,407 4,446 4,355 Dividends Declared 508 151 1,081 889 871 Adjustment of opening retained earnings (adoption of AASB16) Employee benefits (including direct labour) 250 40,481 37,462 26,519 23,799 21,466 Transfer from/(to) reserves 5,000 Balance sheet (000's) Current assets Cash and cash equivalents Trade and other receivables Inventories Other current assets Biological assets (almonds on trees) Total current assets Non-current assets Property, plant and equipment Right-to-use Assets Deferred tax assets Intangible assets Total non-current assets Total assets Current liabilities Trade and other payables Interest-bearing liabilities Employee entitlements Lease liability Dividends payable Income tax Total current liabilities Non-current liabilities Interest-bearing liabilities Employee entitlements Lease liability Convertible notes Zester Company Limited Group Balance sheet Jun-21 Jun-20 Jun-19 Jun-18 Jun-17 Jun-16 558 28,052 4,287 12,513 11,261 1,493 14,999 12,038 17,848 23,570 15,074 13,444 57,655 50,372 32,976 29,258 27,363 35,472 3,018 2,744 2,494 2,268 2,061 1,874 1,953 1,302 868 827 788 750 91,236 79,481 66,411 57,833 60,572 53,644 113,082 111,082 85,332 83,332 71,332 69,332 2,100 2,850 0 0 0 0 872 793 721 655 596 541 7,334 7,884 8,334 8,334 8,984 8,984 123.388 78,857 150,154 141,484 132,502 122,609 94,387 92,321 80,912 214,624 202,089 160,798 60,296 44,664 37,220 31,016 25,847 61,200 500 500 1,500 1,500 1,500 1,500 2,551 2,319 2,108 1,917 1,742 1,584 750 750 0 0 0 0 305 90 649 533 523 268 2,184 2,314 2,051 1.933 1,652 350 43,103 36,433 29,549 13,475 14,975 620 512 466 424 385 1,600 2,350 0 0 0 0 7,500 5,000 0 0 0 0 924 987 750 847 945 869 67,490 66,269 50,971 22,475 17,475 10,475 11,975 564 33,119 26,376 11,737 13.288 14.844 16,229 Deferred tax liabilities Total non-current liabilities 100,609 92,645 Total liabilities Net assets Equity Contributed equity Reserves Retained profits/(Accumulated losses) Total equity 114,015 62,709 56,390 51,277 45,778 109,444 98,089 93,764 90,207 86,724 98,502 98,502 88.252 9,170 6,344 114,016 88,252 88,252 88,252 9,170 14,170 14,170 14,170 14,170 1.773 (4,332) (8,658) (12,214) (15,698) 109,445 98,090 93,764 90,208 86,724 Statement of cash flows (000's) Zester Company Limited Group Statement of cash flows Jun-21 Jun-20 Jun-19 Jun-18 Jun-17 Cash flows from operating activities Receipts from customers (exclusive of GST) Payments to suppliers and employees (exclusive of GST) Other receipts Interest received Interest and other finance costs paid Lease costs paid Income tax paid Net cash flow re non-controlled interest Net cash flows from perating activities Cash flows from investing activities Purchase of property, plant and equipment Consideration paid for businesses Net cash flows from investing activities Cash flows from financing activities Proceeds from issue of shares Proceeds from convertible notes Net proceeds/(repayments) from borrowings Dividends paid Net cash flows from financing activities Net increase/decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at end of the year 166,165 147,920 108,407 97,208 90,092 (157,045) (140,005) (91,042) (79,903) (65,200) 195 175 20 15 25 30 30 30 30 30 (1,826) (1,543) (808) (910) (1,048) (905) (930) (2,456) (1,886) (2,095) (1,809) (328) (752) (505) 0 0 23,570 3,407 3,256 14,511 14,631 (11,548) (9,253) 0 (28,050) (9,083) (18,063) (7,893) 0 0 (11,548) (37,303) (9,083) (18,063) (7,893) 0 10,250 0 0 0 2,500 5,000 0 0 0 5,000 6,000 (1,500) (1,500) (1,500) (293) (709) (966) (878) (616) 7,207 20,541 (2,466) (2,378) (2,116) 2,962 13,561 (935) (13,507) (5,810) 1,493 14,999 12,038 17,848 4,287 558 1,493 14,999 12,038 17,848 Summary of ratios Zester Company Limited Group Summary of ratios Australia US Benchmark Benchmark 35.68% 40.00% 35.00% 5.00% 6.00% 10.00% 45.00 150.00 90.00 105.00 0.75 140 1.50 0.65 Jun-21 Jun-20 Jun-19 Profitability ratios Gross margin 35.09% 34.70% 35.66% 5.86% 3.87% 7.51% 4.80% 3.33% 5.32% 4.45% 1.38% 5.51% 55.21 45.09 47.30 178.00 148.92 160.42 200.19 187.53 211.06 33.01 6.48- 3.35 0.82 0.86 0.71 139 144 118 1.35 1.20 1.30 0.50 0.44 0.66 4.55% 1,45% 5.64% 4.83% 4.92% 10.00% 7.22% 4.99% 7.61% 6.86% 6.77% 12.00% 0.47 0.46 0.39 0.36 0.50 0.88 0.85 0.64 0.57 0.75 5.05 3.51 10.23 6.73 3.50 EBIT Margin Return on assets (ROA) Return on shareholders' equity Activity ratios Debtor days. Inventory days Creditor days (based on COGS) Working capital days Asset turnover Fixed asset turnover Liquidity ratios Current ratio Quick ratio Financing ratios Return on equity (ROE) Return on capital employed (ROCE) Debt ratio Debt-equity ratio Interest coverage ratio Other ratios Dividend payout Return on investment (ROI) Operating cash flow ratio. 10.00% 10.00% 20.00% 20.00% 20.00% 40.00% 4.66% 2.99% 5.14% 4.85% 4.99% 10.00% 0.05 0.05 0.28 0.34 0.65 0.25 Operating cash flows to net profit 0.67 2.16 2.68 3.29 5.41 1.20 1.20 Current liability coverage Self generation 0.04 0.05 0.26 0.32 0.62 0.20 0.20 -$ 8,649 $ 6,148 $ 4,346 $ 4,321 $14,806 positive positive Business segment report (000's) Sales of goods to external customers Cost of goods sold Jun-21 Segment gross margin Selling and distribution expenses Other operating costs Impairment expense Segment EBITDA Depreciation and amortisation Segment result Corporate revenue Corporate overheads EBIT Net financing costs Profit/(Loss before income tax) Income tax Net profit/(Loss after income tax) Includes corporate depreciation and amortisation costs Company Split Zester Calimond Galangal Gazing Geographic segment report Almonds Zester Company Limited Group Business segment report Ginger Retail Total Jun-20 Jun-21 Jun-20 Jun-21 Jun-201 Jun-21 Jun-20 75,766 76,391 85,142 71,417 9.740 8,608 170,648 156,416 47,721 47,714 58,054 49,834 4,984 4,596 110.759 102,144 28,046 28,677 27,087 21,583 4,756 4,011 59,889 54,272 37.02% 37.54% 31.81% 30.22% 48.83% 46.60% 35.09% 34.70% 6,399 7,039 5,887 4,106 512 587 12,799 11,731 13.311 14,312 12,246 8,349 266 239 25.822 22,899 550 4,750 0 _0 0 550 4,750 7.786 2,577 8,954 9,129 3,977 3,186 20,718 14.891 4,774 4,352 4,392 2.539 845 823 10,012 7,713 3,012 (1,775) 4,562 6,590 2.364 10,706 7,178 375 114 1,085 1.244 9,996 6,048 155 180 1,981 1,723 8,015 4,325 2,184 2,314 5,831 2,011 Total Total 1,736 (8,232) (2,618) (1,286) (882) (9,518) 1.276 6,457 (268) (1,356) 1,008 5.101 (197) 3,394 2.977 2.184 (834) (1,673) 1.946 3.904 4.759 3.196 (1,000) (672) 3,759 2,524 3,012 (1,775) 4,562 6,590 2,977 2,184 (4,720) (4,988) 2,011 (000's) Sales of goods to external customers Other revenue/income Total segment revenue Cost of goods sold Segment gross margin Selling and distribution expenses Other operating costs Impairment expense Segment EBITDA Depreciation and amortisation Segment result (EBIT) Net financing costs Zester Company Limited Group Australia Jun-21 Geographic segment report Jun-20 53,595 USA Corporate Total Jun-21 Jun-20 Jun-21 Jun-20 Jun-21 Jun-20 51,718 117,053 104,698 170,648 156,416 375 114 375 114 53,595 51,718 117,053 104,698 375 114 171,023 156,530 34,093 33,408 76.666 68,736 110.759 102,144 19,501 18,311 40,387 35.961 375 114 60,264 54,386 36.39% 35.40% 34.50% 34.35% 100.00% 100.00% 35.24% 34.74% 2,890 2,967 9,909 8,764 12,799 11,731 8,119 8,349 18,102 14,312 399 1,193 26,621 23,853 550 1.250 0 3,500 0 550 4.750 7.942 5,745 12,376 9,385 (24) (1,079) 20,294 14,051 3,805 3.216 6,343 4,497 150 290 10,298 8,003 4,136 2,529 6,034 4,888 (174) (1,369) 9,996 6,048 7.72% 4.89% 5.15 % 4.67% 5.86% 3.87% 155 180 1,826 1.543 1,981 1,723 Profit/(Loss before income tax) 3,981 2,349 6,034 4,888 (2,000) (2,912) 8,015 4,325 Income tax 1,194 1080 1,267 763 (277) 471 2,184 2,314 Net profit/(Loss after income tax) 2,787 1,269 4,767 4.125 (1,723) (3,383) 5,831 2,011 Zester 841 (2,635) (3,500) (1,723) (3,383) (882) (9,518) Calimond 1,008 5,101 1,008 5,101 Galangal 1,946 3.904 1,946 3,904 Gazing 3,759 2,524 3,759 2,524 2,787 1,269 4.767 4.125 (1,723) (3,383) 5,831 2,011 Finance facilities Bank During the first quarter of 2020, Zester negotiated a new 10-year facility with Biggest Bank Ltd. This facility provides Zester with access to a range of debt instruments including a bank overdraft, discounted bills, business loans and equipment finance. The facility is capped at $30 million and is secured by a fixed and floating charge over the company assets. Zester is required to provide the bank with quarterly financial statements and has agreed to the following debt covenants: Current ratio must be greater than 1.20. Times interest cover must be greater than 3.5. Retained earnings must be positive. Failure to meet all debt covenants for two consecutive quarters puts Zester in default and Biggest Bank can, at its discretion, withdraw Zester's bank facility. Convertible notes In order to raise finance for the purchase of GaZing Limited, Zester made available 10 million convertible notes. The convertible notes have a face value of $1, with an interest rate of 7.5% per annum. Interest is payable quarterly in arrears. The initial offering was in line with the shareholding as at 31 December 2019. Post this initial offering, Zester can issue additional notes (up to the approved 10 million) to existing and new investors. The convertible notes have a maturity date of 31 December 2024. On maturity, the holder can convert their holding into ordinary shares at a 10% discount to the average market share price for the month of December 2024. Convertible notes are exchange traded. Zester can issue notes up to 30 June 2022. Historical exchange rates Historical AUD:USD Exchange Rate 10500 0.9500 0.8500 0.7500 0.6500 0.5500 Key policies and procedures The following provides a brief summary of the key policies and procedures at Zester. Code of conduct Zester's Code of conduct outlines Zester' s values, ethical principles and expected workplace behaviours and it applies to all Zester employees. The Code of conduct outlines acceptable and unacceptable types of behaviours and implications for breaches of the Code of conduct. The Code of conduct is supplemented by people policies outlined below. Anti-discrimination policy All people are entitled to recruitment, promotion and selection based on merit. This should not be impacted by personal characteristics or personal preferences, including gender, disability, religion, age, sexual orientation, race, marital status, political opinion and culture. Staff must treat all other staff, customers, suppliers and stakeholders with dignity, courtesy and respect. Conflicts of interest All staff and directors must make every effort to avoid all conflicts of interest. Where a conflict is likely, the affected person must declare their potential conflict in writing to the Head of People and Culture, and not take part in any decisions relating to their potential conflict. Failure to declare a potential conflict of interest in a timely manner may result in disciplinary action. Confidentiality All staff are required to keep any information or knowledge obtained as a result of their employment with Zester confidential. Such information can only be used for the benefit of Zester. Information includes but is not limited to: customer/supplier/employee details, business affairs, secrets, intellectual property, financial information and strategies. This policy is applicable even after a person leaves the employ of Zester. Zester will enforce its legal rights with regard to any breaches of confidentiality. Drug and alcohol policy People affected by drugs and/or alcohol are considered a potential safety hazard to themselves and others in the workplace. Any staff suffering from addiction to drugs or alcohol are encouraged to seek assistance in helping them deal with their addiction. Zester will offer assistance, where possible, to support staff in these circumstances. Staff are encouraged to speak up, where they believe a fellow staff member may be suffering from drug and/or alcohol addiction. Zester prohibits the use, sale, transfer or possession of illegal drugs and/or alcohol on company premises, or in a company vehicle during work hours. All staff may be subject to drug and/or alcohol testing during work hours. Any staff member testing positive to drugs and/or alcohol during work hours may face disciplinary action. Media contacts Only designated employees are authorised to talk to any media in relation to Zester, its business and operations. Remuneration Zester is committed to ensuring that all its employees and the employees of its suppliers are paid fairly and provided with appropriate working conditions. Zester supports the abolition of modern slavery. All suppliers are required to provide an annual written statement that they are not in breach of any modern slavery laws. Any supplier found to be in breach of modern slavery laws and unwilling to change their practices, will have their contract(s) with Zester terminated. Employee remuneration is to be based on a person s performance, experience and level of competency relevant to the jurisdiction within which they are employed. All staff are to receive an annual performance review, including a review of their remuneration, in line with that performance. Smoke-free workplace Zester is a smoke-free workplace. Smoking is not be tolerated on any company property or within a company vehicle. Employees found to be in breach of this policy will be subject to disciplinary action. Social media The use of social media during working hours is not permitted, unless prior permission has been granted by the employee's manager or it is an integral component of the employee's normal employment requirements. Company property and equipment (including mobile devices) are not permitted to be used for social media purposes at any time unless it forms part of an employee' s normal employment requirements. Employees must not share any information on social media that would enable a third party to identify Zester. Volunteer work All employees are entitled to two paid days per annum working for a registered charity of their choice. Approval by the employee's manager is required before undertaking paid volunteer work. Whistleblower policy Zester is committed to a high standard of corporate behaviour and supports a culture of honest and ethical behaviour, linked to good corporate governance. All staff are encouraged to raise any concerns they may have relating to any perceived potentially unlawful or inappropriate conduct within or by Zester. Zester is committed to the protection of individuals who appropriately disclose information about potentially unlawful or inappropriate conduct within or by Zester. A whistleblower must report any perceived potentially unlawful or inappropriate conduct to either their manager or the Head of People and Culture, as deemed most appropriate. Provided this reporting is in good faith and not based on false, malicious or unreasonable grounds, the whistleblower will be protected from any reprisals or repercussions resulting from their reporting. If it is found that a whistleblower has acted based on false, malicious or unreasonable grounds, they may be held personally liable for the impact of their actions. The identity of a whistleblower is to be kept confidential, unless the whistleblower consents to the disclosure of their identity. Work health and safety Zester considers the health and safety of its employees, customers and suppliers to be of paramount importance. All employees must take every reasonable action to prevent the potential injury of themselves, other employees, customers and suppliers while employed by Zester. Zester is committed to ensuring that all of its staff and the staff of its suppliers are remunerated fairly, not required to work an excessive number of hours, aged over 15, and provided with appropriate working conditions. Zester is committed to complying with Australia's Modern Slavery Act 2018. Distribution channels. Zester sells its products via five key distribution channels. Retail shop network The Zester retail shop network (Healthy Us) comprises 15 shops, located in high-foot traffic areas. Stores are located either in the central business districts or major shopping centres throughout Australia (store details are provided on the website). Stores stock the full range of Zester' S products (excluding products exclusive to major retailers). They also stock selected third-party products that are complimentary to Zester' s products. Online sales Online sales are considered the future of direct-to-consumer sales. The current version of Zester's online store was launched in 2018. Consumers can order the full range of Zester's products (excluding products exclusive to major retailers). The online shop also includes recipes for making the most of each ingredient. All prices are quoted in Australian dollars, with free shipping for local orders over $100. Customers have the option of paying via direct bank debit, PayPal or Stripe. Future work planned for the online shop includes an automated customer order tracking system and multi-currency purchasing. Major retailers Zester has developed a range of speciality products for the retail market. These products are distributed to specific large retailers in Australia and the US. Key customers include Koles, Big X, CMart, Oldie and DoorMart. Speciality retailers This channel comprises health food and other retail outlets not aligned with major retail networks. These stores are provided with a selected range of Zester' s products. The products made available to each retailer are dependent on their size and market focus. Wholesale This channel represents sales of unprocessed or semi-processed raw materials. These customers generally use Zester products within their own supply chain to produce products for third parties. This is a global channel and includes New Zealand, China, South Korea, Japan and a number of European based companies. This channel represents more than 50% of Zester' s sales based on volume. Overview of world almond market1 In 2019 20, there were 53,014 hectares of almond orchards in the world, an increase of 9.4% on the previous year. Almond trees provide a high return per megalitre of water, reach maturity in five years and have an average life of 30 years. Global production of almonds doubled between 2006 and 2019. Increases in production have been driven by demand due to the positive health benefits of eating almonds as well as their use in Mediterranean and plant-based diets. Australia currently exports approximately 75% of its production, with major markets in the Asia-Pacific and Oceania region. Australia is the second largest producer of almonds (104,000 tonnes or 7% of the world market in 2019), behind the United States (1,127,000 tonnes or 79%). Other major producers include Spain (78,000 tonnes), Turkey (20,000 tonnes) and Italy (18,000 tonnes). Given the US dominance of the world market, global prices are quoted in US dollars per pound. Major consumer markets (based on revenue) for almonds are China (54.8%), India (11.0%), Germany (6.7%), New Zealand (3.5%), Vietnam (3.5%) and Spain (3.4%), with the Asia-Pacific and Oceania region comprising 78% of global demand. Almonds are sold within five categories - snacks, cereal, confectionery, dairy and bakery. 1 Based on information in Almond Board of Australia 2020, 2019/20 Almond Insights, viewed 25 November 2020. Overview of world ginger market2 Australian ginger production in 2020 was approximately 8,000 tonnes, with a total farm gate value of $32 million. Australian exports of ginger-based products are valued at $40 million. Australian production of ginger is static, with the main growing areas in south-east Queensland. The majority of the ginger crop is harvested in February to April each year. Major ginger-producing countries are India (1,109,000 tonnes or 33.6%), Nigeria (523,000 tonnes or 15.8%), China (493,000 tonnes or 14.9%), Indonesia (340,000 tonnes or 10.3%) and Nepal (272,000 tonnes or 8.2%). Australia does not rank within the top 35 ginger-producing nations. Major ginger-importing countries are the United States, Japan and the Netherlands. Ginger is sold within a range of products, including sauces and seasoning, meals, alcoholic and non-alcoholic beverages, confectionery and spreads. 2 Based on information sourced from Australian Ginger, viewed 25 November 2020 and Atlas Big. Health benefits Almonds Lowers LDL (bad) cholesterol. Good source of vitamin E, magnesium and potassium. Assists with control of blood sugar. Aids in weight loss. Ginger Helps prevent cold and flu.. Helps relieve migraine. Increases antioxidant levels. Antiemetic effective against vomiting and nausea. Aids in reducing morning sickness. Aids in reducing motion sickness. Anti-inflammatory. Helps with menstrual cramp. Improves blood circulation. Strategic summary Vision An Australian-based, worldwide provider of quality, health focused products. Purpose Zester is focused on the provision of high quality almond and ginger based products to world markets. Zester controls the quality of its products through ownership and rigorous selection criterion of third-party farms. Our range of commercial products are based on a flavour palate that appeals to a diverse range of cultures. Key values Treat all staff, customers and suppliers with respect. Provide an open and inclusive environment where differences are celebrated. Promote open and honest communication, where everyone has a voice. Welcome all ideas - they benefit the company and its stakeholders. Deliver a return to shareholders and staff for their investment of time and resources. Key challenges Zester is currently facing a number of challenges in its business operations, including: Sourcing enough staff to harvest almond and ginger crops in Australia. Covid-19 impact on staff located in the United States. Limited online sales to overseas locations. Significant damage to one South Australian almond farms during the 2019 - 20 fire seasons. Minor damage to one Californian almond farms during the 2020 fire season. Fall in international price of almonds in 2020 - 21 financial year (down 5.5% on average). Phytophthora impacting almond plantations, following prolonged rainy periods. Minor bacterial outbreak in a ginger farm in Hawaii. Variable crop yields due to changing climatic conditions. Data breach following a computer hacking incident in 2019. Significant pressure on pricing from major Australian and United States retailers requesting rebates. Some retailers have suggested if Zester does not agree to their requests, they may either de-range certain lines or reduce the shelf prominence of Zester products. Share price $0.950 $0.850 $0.750 50.650 Caimond acquisition $0.550 Initial listing $0.450 8888888822285 Major shareholders Zester Company Limited Historical Share Price Galangal acquisition Gazing acquisition pandemic Names Asian Big Dev Fund Ltd. Jasmin Winchester Harvey Winchester Zester Company Limited Big Bank Nominees Pty Limited Hawaii Dev Ltd Top 20 Shareholders Ordinary shares Percentage 17,368,950 10,365,000 Country 17.36% China 10.36% Australia 10,365,000 10.36% 7,896,740 7.89% Australia Australia 6,987,369 6.99% United States PE Equity Investments (USA) Lt 4,358,987 4.36% United States Almond Farms Australia Pty Ltc 4,258,988 Healthy Aust Investments Ltd Sing Investments Ltd Little Farms SA Pty Ltd Jasmin's Super Fund Joseph Higginbottom Make It Up Pty Ltd 4.26% 3,987,255 3.99% Australia Australia 3,698,702 3.70% Singapore 2,698,736 2.70% Australia 2,689,354 2.69% Australia 2,174,578 2.17% Australia 1,987,689 1.99% Australia Investor Mistakes Pty Ltd 1,687,920 1.69% Australia Lees Super Fund Flash Super Fund Bonds Super Fund Annie Hartz 897,841 0.90% Australia 759,863 0.76% Australia Maxwell O'Reilly Donna Milne Total Remainder Grand Total 698,300 0.70% Australia 635,874 0.64% Australia 569,885 0.57% Australia 568,954 0.57% Australia 84,655,985 84.63% 15,369,875 100,025,860 15.37% 100.00% Market capitalisation $ 94,024,308 P/E Ratio 18.51