PROBIOTEC ANNUAL REPORT 20222
Contents
Chairman’s Letter to Shareholders
CEO Update
Key Highlights
Results Summary
Strategy
Corporate Governance Statement
Financial Report
Other Information Required by ASX
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80
Registered office
83 Che
y Lane,
Laverton North,
Victoria 3026
Ph: XXXXXXXXXX
Probiotec Limited
ABN XXXXXXXXXX
Probiotec Limited
and its controlled entities
ACN XXXXXXXXXX
Annual Report
for the year ended
30 June 2022
PROBIOTEC ANNUAL REPORT 20223
Chairman’s Letter to
Shareholders
Dear Shareholders,
On behalf of your board of directors, it gives me great pleasure to present to you the 2022 Annual Report for Probiotec
Limited (PBP).
We are proud of what the group has achieved against a difficult operating backdrop. The performance over the past 12
months is testament to the defensible and resilient business model of Probiotec and to the commitment of the wider
Probiotec team.
The last 12 months have certainly tested us and thrown a number of challenges our way.
In the face of unprecedented supply chain disruption, labour shortages, inflation and a myriad of operating challenges the
company has continued to grow and deliver for shareholders.
Tailwinds merging
I believe as a result of the pandemic there has and will continue to be a fundamental shift in global supply chains. As such,
the outlook for domestic manufacturing, especially in specialist industries such as the pharmaceutical industry in which
Probiotec primarily operates, is materially improved.
The pandemic has
ought to the forefront the need for Australia to have increased sovereign manufacturing capability.
Along with this,
and owners need to
ing their supply chains closer to or within region to provide greater responsiveness
and flexibility to the market and world events.
We have seen widespread supply chain disruption and significant freight cost increases along with political and global
instability. All of these events have fundamentally shifted the pendulum in favour of local manufacturing and supply or at
least a diversification of supply chains resulting in more domestic supply.
This onshoring of manufacturing has certainly commenced and we see this as an industry tailwind that is likely to benefit
Probiotec for the foreseeable future.
Strong financial and operational performance
Record revenues of $182 million were accompanied by Earnings Before Interest, Tax, Depreciation and Amortisation
(EBITDA) of $32.8 million. These results demonstrate the robust and defensive nature of the PBP business. The results
are a testament to the leadership of the PBP management team and the dedication and skills of our employees.
Management remained agile in the operation of all PBP sites to ensure they remained safe and efficient as conditions
evolved. The health and safety of PBP’s employees remains at the forefront of our thinking.
Through the ongoing refinement of work practices, the flexibility of our work force, customer and supplier co-operation
and nimbleness in execution we believe we are emerging from the pandemic in a stronger position than we entered.
The pressures on management and the wider Probiotec team have remained at elevated levels and I wish to convey my
PROBIOTEC ANNUAL REPORT 20224
sincerest thanks to the entire team who showed tremendous commitment over the past year. Their professionalism has
prioritised safety, whilst we have seen delivery performance to our customers remain at the highest levels.
Outlook for the future
Whilst a level of uncertainty persists, the board and management expect to deliver growth in both sales and earnings
again in FY23.
In the short term, we see:
• The continuation of the recovery and full year effect of cough, cold and flu category sales. We also believe that the
category will sit above historical levels for the near future, given the ongoing nature of Covid-19 and the level of virus
and transmission in the community;
• New business wins which have been delayed during the pandemic have started to flow and will continue to flow into
FY23 and FY24; and
• Supply chain impacts, freight costs, and labour shortages continuing to provide operational and cost challenges albeit
with management continuing to navigate these well.
Looking to FY24 and beyond:
• We are confident that onshoring industry tailwinds will continue to gather momentum and result in increasing
opportunities for the group (across the
eadth of our business);
• We see significant
eadth and depth of opportunity given the blue-chip nature of our client base;
• We continue to win new business and build the future pipeline, and we expect further realisation and delivery of prior
new business wins;
• Realisation of synergies from site consolidation and further cost-out and rationalisation as the group comes together
and the acquisitions completed over the past 2 to 3 years are fully integrated.
Over the longer term, it continues to be our objective to become Australia’s leading manufacturer and packer of
pharmaceutical, consumer health and FMCG products. We will continue to pursue value-accretive acquisitions; to invest
in customer and site capabilities; to invest in and develop our people; to expand our relationships with Tier 1 customers;
and to maximise opportunities that arise from the onshoring of domestic manufacturing. The achievement of this goal
will require the continued support of all our stakeholders - customers, suppliers, employees and shareholders - and we
are grateful for the opportunity to work with all of you and for your support.
Conclusion
As I enter my second year as Chairman, I am more excited than ever about the prospects of the company and look forward
to contributing to the continuation of the growth journey we remain committed to.
I wish to thank my fellow directors for their guidance, counsel and steady hands over the past year and look forward to
continuing to take the company forward together.
The results achieved would not have been possible without the leadership, vision and dedication of our CEO Wes Stringer,
along with his entire executive team and all the staff at Probiotec. The entire team’s focus on excellence has again been
demonstrated in this year’s result and the positioning of the company for the future.
Yours sincerely,
Jonathan Wenig
Chairman of the board
PROBIOTEC ANNUAL REPORT 20225
CEO Update
Dear Shareholders,
In what has been another challenging but very successful
year I am immensely proud of the entire Probiotec team
for their dedication and commitment to excellence. Record
evenue and earnings were achieved again against the
ackdrop of the ongoing covid-19 pandemic, geopolitical
issues, supply chain disruptions and inflationary cost
pressures.
Key Achievements
 Record revenue: $182.3m
 Record EBITDA: Underlying¹ $32.8m
 Net Debt / EBITDA <0.8 times²
 Business shown to be highly resilient with an exciting
platform in place
The commitment, effort and professionalism of our
management team has delivered an outstanding set of
esults for FY22 and the platform is set for the future:
 Covid management was again strong with all sites
operating continuously throughout the entire yea
 Strong new business wins have begun to flow and the
growth of the future pipeline is expected to accelerate
 Onshoring tailwinds continue to gain momentum with
global supply chains re-aligning due to freight, political
issues and ongoing disruption
 Strong cost control has been exhibited against an
inflationary environment
Operational Summary
Despite a range of challenges thrown at us including
supply chain disruptions, inflationary pressures and labour
shortages to name a few, the group has delivered an
outstanding result.
Record revenues were converted into record earnings.
Strong cash flows were also delivered, which saw net debt
educe over the year.
Late in the year, we saw the return in demand for cold &
flu products as restrictions were lifted, and I am proud of
our operational performance to meet this rapid increase
in volumes and our ability to continue to maintain the
high level of delivery performance to our customers that
Probiotec has become known for.
Whilst the financial results were pleasing, we have also
kept an eye to the future with significant investment in
new equipment to improve both capacity and capabilities,
which we forecast will be needed to meet the businesses
trajectory. We have also invested in a range of cost-out,
efficiency programs and upgrades across our operating and
information systems, which we continue to focus upon and
invest in.
Sales and New Business Development
We have invested heavily in additional sales resources over
the past year, and this is reaping benefits with our future
sales funnel showing promise. We have also invested
in a stand-alone resource to further accelerate the ESG
objectives of the group as we see sustainability as a key
esponsibility and a pillar of our future success.
As a group we now have access to the majority of global
and local pharmaceutical and FMCG companies with the
goal being to continue to grow our overall business with
this
oader customer base. This cross fertilisation as we
efer to it internally, has begun to deliver a myriad of new
usiness wins, with a range of further discussions on foot.
Global supply chains have seen considerable disruption
coupled with material increases in global freight costs.
Whilst Probiotec has navigated this backdrop, it has caused
a shift in supply chain planning and long-term strategic
sourcing with many of our customers. This thematic is a
key focal point for our team and our customers, where we
expect to see continued interest from our clients looking
at securing their supply lines and localising more of their
supply within Australia.
Cost Out and Consolidation
The past 12 months have seen a range of cost out initiatives
delivered. The focus has been ramped up on automation, IT
systems and efficiency programs. This will be a persistent
short, mid, and long term initiative of the group.
The cu
ent footprint of the group results in significant
duplication in operating costs, especially across NSW, with
four operating sites. We are well progressed in our plans
to consolidate our NSW sites into a state-of-the-art new
custom-built facility that is forecast to deliver material
savings to the group. This is an incredibly exciting project
for the group and will
ing a range of efficiency gains,
“A record year with the platform set for
sustained growth."
1 Underlying Results exclude amortisation of acquisition related intangibles
($2.5 million), fair value gains ($2.8 million) and non-recu
ing / transaction
costs ($0.9 million).
2 Based on Underlying EBITDA above.
PROBIOTEC ANNUAL REPORT 20226
capacity increases and a world class, ultra-competitive site
to fruition.
In addition to this, we expect to see continued margin and
efficiency improvements from sharing and implementing
the best systems and processes from each of the sites
and leveraging the differing skill sets and experience we
possess across the group's sites.
Future
My confidence in the future of Probiotec has never been
higher. The platform we have built and the high performing
team we have assembled is being supported by a number
of macroeconomic tailwinds.
Whilst uncertainty remains the norm, we are confident of
delivering growth in sales and earnings in both the short
and long term.
We believe we are well positioned for the future with a
focus on our key strategic pillars:
 Organic growth
 Maximizing opportunities from onshoring and domestic
manufacturing tailwinds
 Cost out and site consolidation synergies
 Acquisitions
In addition to this, we have seen the return of our cough,
cold and flu revenues after they were suppressed primarily
due to covid related restrictions, and we forecast these to
emain strong for the foreseeable future.
All the above provides me with a great sense of purpose
and confidence to take the business forward and continue
to deliver on our strategy for our shareholders.
Closing
I would like to extend my sincere thanks to our shareholders
again for your continued support.
On behalf of the leadership team, I once again would like to
extend my gratitude to each and every staff member of the
Probiotec group. Your dedication, efforts and professionalism
over the past 12 months continues to take the business
forward and allows us to deliver into the future.
In closing I would also like to thank the board of Probiotec
whose support, guidance, leadership and watchful eye
is greatly appreciated in these volatile times, and I look
forward to continuing to work closely with the board to
deliver upon our future aspirations.
Wesley Stringe
CEO
PROBIOTEC ANNUAL REPORT 20227
Company Overview
Probiotec is a leading national manufacturer, packer and distributor of client goods
Probiotec provides 200+ clients with a full-service contract manufacturing & packing offering
across key categories including:
 Prescription and OTC Pharmaceuticals
 Vitamins and Supplements
 Veterinary Products
 Cosmetics
 Food & Beverage
 Pet Food & Ingredients
The company operates 6 manufacturing facilities and distributes its products both domestically
and internationally on behalf of its clients.
Facilities
Sydney
Seven Hills
Eastern Creek
Yagoona
Ki
awee
Laverton
(Head Office)
Dandenong
Melbourne
PROBIOTEC ANNUAL REPORT 20228
Key Highlights
FY22
Record revenue of $182.3m, +14%
on FY21 Proforma and above
$175m - $180m guidance
EBITDA of $32.8m, +34% on FY21
Proforma and at the upper end of
$32m - $33m guidance
Underlying Earnings Per Share of
16.8 cents, +38% on FY21 Proforma
Fully franked final dividend of