Beston Global Food : Chairman's Letter

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Beston Global Food Company Limited

Level 9, 420 King William Street

Adelaide SA 5000

Tel: [phone]

Fax: [phone]

ABN 28 603 023 383

bestonglobalfoods.com.au

25 February 2022

LETTER FROM THE CHAIRMAN

Dear Fellow Shareholder

Back in May 2020, I provided shareholders with a comprehensive report on the progress of your Company, Beston Global Food Company Limited (BFC or "Beston"). A lot has happened since that time, all of which has been made available to shareholders in our various communication: ASX Releases, CEO Letters and Annual Reports. However, I thought that it would be useful, and timely, to pull all of the information from these various communications together so as to provide shareholders with a thorough understanding of where the Company stands at present, and how it is expected to progress in the coming months, and years.

A lot of strategic actions have been implemented, which will show positive, wealth building results for shareholders as we go forward, which I will explain hereunder. But first, it is important to recap on where we have come from, especially for those shareholders who are new to our register.

1. A re-cap on our journey so far……

The purpose of the Beston Global Food Company Limited from the time of its formation in 2012 (as previously explained in our Mission Statement) was to be a leading, Australian based supplier of safe, clean, healthy protein products to the worlds growing consumer markets, particularly in Asia, by building a reputation for quality, innovation and integrity. The Company started out with a core focus around dairy products but with interests in meat, seafood and

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health products in order to provide a wider offering of protein products to export markets.

BFC listed in 2015 and set out to achieve its objectives with a 10 year Business Plan consisting of three phases:

Phase 1: Fix, focus and build-out the assets acquired at the IPO (by end of Year 3)

Phase 2: Capitalise on the build-out in Phase 1 to grow earnings (years 4 to 5)

Phase 3: Accelerate the growth in earnings and realise the economic value of the investments made in Phases 1 and 2 (Years 6 to 10)

We noted, and advised shareholders, (as in our 2016 Annual Report) that we may need to refine our strategies for implementing the 10 year Business Plan as we went forward in response to changed conditions in our operating environment, but that our commitment to the Company's purpose would remain resolute.

As things have turned out, we have had to deal with a number of unexpected events and adverse occurrences since the time of our IPO, resulting in a number of tactical decisions being taken to address the problems and mitigate their impacts. These problems have been extensively documented in reports to shareholders but include:

• The non-performance of several strategic supply contracts in China, (which were addressed by accelerating our entry to the domestic Australian market and producing the best quality cheese products as quickly as possible to win awards and build a market presence, as explained in our 2018 Annual Report).
• Two years of drought in a row, in 2018 and 2019 (which was addressed by using the technology in our state-of-the art Italian built mozzarella plant to "stretch" our milk to provide different product offerings for different

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customers and working closely with farmers to help them through their difficult times, as explained in our 2019 Annual Report).

• The on-set of the COVID-19 pandemic in early 2020 which effectively closed off our restaurant and food service trade (which was addressed by switching focus to food manufacturing customers, such as by winning a supply contract with McCain Foods, and by bringing forward the second stage expansion of our Lactoferrin plant via a capital raising and a South Australian Government grant as explained in our 2020 and 2021 Annual Reports).

Through all of these challenges we have stayed the course to keep focussed on our end objectives and have done what we said we would do. Over the period of five years, from 2016 to 2020, we implemented a comprehensive restructuring of the BFC portfolios in response to the different set-backs and adversities experienced via a number of management and operational changes, moving to 100% ownership and control of some assets, divesting others and instituting various capital management strategies.

The progress achieved by the Company in a relatively short period of time has been significant. Since listing in late 2015, BFC has successfully taken two substantial dairy factories out of receivership, rebuilt the assets, restored the export accreditation, brought the assets back into commercial production with elevated operating standards (i.e., to world best practice SQF standards), while building solid relationships with key stakeholder groups and communities. BFC also successfully completed the acquisition and installation of a state-of-the art Italian built Mozzarella plant at its Jervois (SA) factory and restored the cream and butter plant as well as the dairy fractionation (lactoferrin) plant, (which has been substantially expanded during the past twelve months as mentioned above).

Within this same time frame, BFC has built a reputation, both domestically and internationally, for producing premium quality dairy products, around a brand ("Beston Cheese" and "Edwards Crossing") which previously did not exist. We have also won 153 major industry awards to date for the quality of our cheese products since listing in 2015 (including the prestigious Christian

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Hansen Cup for the "Best Cheddar in Australia"). We are a young player in the dairy industry in Australia in comparison with our industry peers (most of whom have histories stretching back for more than 50 years) and have had to establish a position in the marketplace in competition with these well established, long time players by thinking strategically and working hard.

The milestones recorded in our dairy business during the journey thus far include:

• Year-onyear growth in revenues of some 111% per annum on average over the five years to June 2021 (i.e., well in excess of the 20% YOY growth target in our business plan). BFC was recognised as the fastest growing food and beverage company in Australia and the second fastest growing food company in the Asia Pacific Region over the period 2016-2019 in a survey undertaken by the prestigious Financial Times, in conjunction with Nikkei Asia and Germany's Statistica (April 2021).
• Despite a decline in total milk production across Australia, we have built our milk pool from 17 million litres (our own farms) in 2015 to circa 155 million litres currently (representing year-on-year growth of 135% per annum over the period).
• In response to a growing global demand for functional Dairy ingredients, we acquired a dairy nutraceutical "chassis" and have recently expanded it to fractionate whey protein streams and provide the capacity to produce more that 20 tonne of Lactoferrin per annum. Our Lactoferrin is recognised as one of the world's most pure Lactoferrin products with high levels of bio-availability. We are currently exporting to multiple markets, including China.
• Only one of 10 manufacturers of Lactoferrin in the world with now installed capacity to produce 5% of the world demand for Lactoferrin in 2021.
• We have continued to grow our Dairy Foods portfolio and built capability and capacity in the production of high quality Mozzarella, more than tripling the total production output since 2019 (ie from 4,400 tonnes pa in FY2019 to approximately 15,000 tonnes pa currently). BFC is now well positioned to continue to respond to the

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rapid growth of QSR (quick service restaurants) and Foodservices channel in a post COVID-19 world across the entire Asia Pacific region.

While the Company paid a dividend to shareholders in its first year of operations as a Public Company, the operational and other challenges experienced since this time have hampered bottom line performance and the ability to pay further dividends. Shareholders who have remained loyal to the Company through this time have been rewarded with Share Purchase Plans (SPP) and Entitlement Offers along the way at significant discounts to net asset values.

During its relatively short life as a Public Company, BFC has been progressively positioned so that it has a strong commercial outlook that can generate profitable sustainable returns as it goes forward. Our vision was not to be an "overnight success" but rather to grow sustainably with the view of producing reliable, consistent returns and creating wealth for our shareholders by having a clear sense of purpose with consistent values and by staying the course.

Much of the hard work has been done over the last six years, as in Phases 1 and 2 of our ten year business plan, and the foundations are in place for shareholders to reap the benefits. Substantial value-creation can be expected to occur over the next few years…for the reasons which I will explain below.

2. Management Changes

The Chief Executives who have led BFC since our listing in 2015 have served the Company, and its shareholders, well. All were appropriately skilled and experienced for the respective stage of development of the Company during their tenure.

Sean Ebert, our initial CEO (2014-2018), did a great job in taking BFC through the first phase (Phase 1) of our 10 year Business Plan. As acknowledged in the 2019 Annual Report, his professional engineering and project management skills were instrumental for the asset build-out work which had to be done to rebuild the dairy factories at Murray Bridge and Jervois and install and commission the new high technology Mozzarella Plant which we acquired from Italy.

Our second Chief Executive, Jonathan Hicks (2019-2021), came with a wealth of knowledge and global experience, in the technical aspects of operating dairy

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