Fonterra Shareholders' Fund (NS) Analysis

Overview

The Fonterra Shareholders' Fund (FSF) is a registered managed investment scheme under the Financial Markets Conduct Act 2013. The FSF provides investors an opportunity to invest in the performance of Fonterra Co-operative Group Limited (Fonterra). Outside investors who are not allowed to hold shares in Fonterra can invest in units in the FSF which gives them access to economic rights (such as distributions and capital movements), similar to those of a share. The Manager of the FSF is FSF Management Company Limited.

Fonterra is a dairy co-operative, owned and supplied by nearly 9,000 farming families in Aotearoa, New Zealand. Through the spirit of co-operation and a can-do attitude, Fonterra’s farmers, along with 20,000 employees around the world, share the goodness of our milk through innovative consumer, foodservice and ingredient brands. Sustainability is at the heart of everything we do, and we’re committed to leaving things in a better way than we found them. Everyday people working hard to be Good Together in the community.

The FSF has been granted Listing with a 'Non-Standard' ("NS") designation. This designation was granted because of the unique governance arrangements and unit holder restrictions. For further information, please see a copy of the waiver under Documents on FSF's homepage on nzx.com.

Performance

The following information was extracted from Fonterra Shareholders’ Fund annual report, released on 25 September 2025:

2025 was a record year for Fonterra, with $16.2 billion in cash payments generated.

Financial Statements Statutory Information Corporate Governance Statement The business proposed to be divested, Mainland Group, benefited from sales volume growth in the Consumer business and the Australia business having a stable milk price against higher global commodity prices. It consisted of the highest milk price payment to its supplying farmers at $10.16 per kgMS or $15.3 billion in milk payments, and the highest dividend at 57 cents per share or $916 million distributed to shareholders and unit holders.

The fully imputed dividend of 57 cents per share consists of the 22 cent interim dividend received on 8 April 2025, and a final dividend of 35 cents to be paid on 15 October 2025. As a unit holder in the Fonterra Shareholders’ Fund you receive the same economic rights as a Fonterra Co-operative Group share, such as dividends and capital returns.

Fonterra’s business performance

The Fund, and the Board of FSF Management Company Limited (the Manager) that oversees it, have no direct involvement in Fonterra’s operations. However, as a holder of economic rights in Fonterra, the performance of the Fund is tied directly to Fonterra’s performance.

It is pleasing to see Fonterra’s strong operating performance continue in 2025, with operating profit up $205 million, or 13%, to $1,732 million mainly due to higher operating profit in the Ingredients business. Meanwhile, Foodservice sales volumes continued to grow off the back of continued strong demand in Greater China and key Asia markets for products including UHT cream, butter and mozzarella.