Tegel IPO

[hardt]

Good afternoon

Tegel currently exports approximately NZD 100 million product to Australia, the UAE, Hong Kong, the Philippines, and the Pacific Region.
We source our feed from farms globally – from the likes of North and South America, Europe and Australia. So we are able to respond to rising prices in the event of a drought in Australia say, to source it from elsewhere at a lower price. We are also able to adjust the feed mix, eg replace corn with sorghum or adjust the amount of wheat etc. We don’t specify what the total feed costs are.

From our latest annual report:
“To secure input costs, the Company hedges its exposure to certain commodities and foreign exchange risks denominated in US dollars. The Company also uses foreign exchange contracts to hedge revenue from export sales denominated in Australian dollars. All foreign exchange forward contracts and commodity contracts are executed in accordance with the Board-approved FX Hedging and Commodity Risk Treasury Policies. As at 30 April 2017, 89% of US dollar raw material purchase requirements and 77% of forecast Australian dollar receipts were hedged for FY18.”

Hope this helps.

- Take away from this is Tegel have very limited exposure to the negatives that could arise out of a weakening NZD.