A2 Milk Company Limited · NZX:ATM
A2 Milk — The a2 Milk Company — UBS Australasia Conference 2017
28 slides from A2 Milk's conference presentation, Nov 13, 2017
Slide 1: UBS Australasia Conference
For personal use only UBS Australasia Conference Sydney 13 November 2017 a2 Milk™, a2 Platinum™ and The a2 Milk Company™ are trademarks of The a2 Milk Company Limited
Slide 2: Disclaimer
Disclaimer This presentation dated 13 November 2017 provides additional comment on the Annual Report 2016-2017 of The a2 Milk Company Limited (the “Company”) and For personal use only accompanying information released to the market on 23 August 2017. As such, it should be read in conjunction with th
Slide 3: Contents
Contents For personal use only • Company overview • Group strategy • FY17 result highlights • FY18 update • Appendix 3
Slide 4: CEO quote on continued growth
For personal use only “The Company’s continued growth reflects increasing consumer acceptance of the a2™ brand and the benefits of dairy-based products free from the A1 beta casein protein type”. Geoffrey Babidge Managing Director & CEO 4
Slide 5: Company overview
For personal use only Company overview 5
Slide 6: The a2 Milk Company at a glance
The a2 Milk Company at a glance • The a2 Milk Company (“a2MC”) is in the business of producing, For personal use only Key metrics FY17 marketing and selling premium branded dairy nutritional products in targeted global markets NZD million AUD million1 • All a2MC branded products contain only A2 beta
Slide 7: The a2 Milk Company proposition
The a2 Milk Company proposition For personal use only Single-minded company focus Compelling and growing Integrated IP portfolio and on A1 protein-free products scientific evidence proprietary know-how (pioneers and experts) Clean and green Australia and Capital-smart investment Unique and effective
Slide 8: Group strategy
For personal use only Group strategy 8
Slide 9: Growth strategy
Growth strategy OUR PURPOSE For personal use only As the a2 Milk™ pioneers we are determined to help people enjoy a better life OUR VISION To be the innovative and smart choice for dairy nutrition OUR AMBITION To be the most admired and commercially attractive dairy nutritional company OUR STRATEGIC
Slide 10: Dairy nutrition innovation continuum
Dairy nutrition innovation continuum For personal use only Further scope for innovation in existing & adjacent product segments Increasing level of product customisation 10
Slide 11: Strategic progress & agenda
Strategic progress & agenda • Continued build of Board and senior management capability For personal use only – Appointment of Warwick Every-Burns & Jesse Wu as non-executive Directors – Reorganisation of senior leadership team and new focus: Chief Executive Asia Pacific Executive Vice President
Slide 12: FY17 result highlights
For personal use only FY17 result highlights 12
Slide 13: Financial summary
Financial summary For personal use only NZ$ million FY17 FY16 % change Revenue 549.5 352.8 56% • Group revenue growth of +56% on pcp, a2 Platinum® infant formula revenue +84% • EBITDA to sales margin of 26% (up from 15% in pcp) Gross margin 263.5 151.0 75% • Gross margin primarily reflects increased
Slide 14: The year in charts
The year in charts For personal use only Group Revenue (NZ$ million) Group EBITDA1 (NZ$ million) Basic Earnings Per Share (Cents) 141.2 12.7 549.5 352.8 54.6 155.1 4.4 110.8 3.6 4.8 0.0 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 -0.3 H1 H2 H1 H2 EPS 1EBITDA is a non-GAAP measure and
Slide 15: Continued strong growth in sales and market share for a2 Platinum
Continued strong growth in sales and market share for a2 Platinum® • Group infant formula revenue of NZ$394.0 million, compared to For personal use only Group Infant Formula Net Revenue (NZ$m) NZ$214.4 million for FY16 • Infant formula accounts for 72% of Group revenue 209.5 184.5 • Significant grow
Slide 16: FY17 regional performance
FY17 regional performance ANZ China For personal use only • Exceptional ANZ business performance; revenue $439.6m (+48.3%) • Strong sales and earnings momentum; revenue $88.9m (+132.9%) • ~78% growth in a2 Platinum® infant formula • Infant formula consumption value share of 3.5%2 • a2 Milk™ fresh mi
Slide 17: Intellectual property and R&D
Intellectual property and R&D For personal use only • The Company recognises increased interest in A1 protein-free products – Focus on patents, trade marks and proprietary know-how across chosen markets, building on first mover advantage – a2MC will continue to actively enforce its intellectual prop
Slide 18: FY18 update
For personal use only FY18 update 18
Slide 19: FY18 regional performance
FY18 regional performance1 ANZ China and other Asia For personal use only • a2 Milk™ fresh milk performing well, pleasing 1Q182 growth on pcp • Building local team to support ongoing sales growth • a2 Platinum® infant formula continues to be significant contributor • Remain focussed on distribution
Slide 20: China infant formula regulatory environment
China infant formula regulatory environment For personal use only English label product sold through CBEC platforms • Recent commentary from China State Council suggests: CBEC – Further 1 year extension to grace period of China CBEC policy to end of December 2018 – Establishment of new experimental
Slide 21: Momentum has continued to build in the US since launch
Momentum has continued to build in the US since launch For personal use only a2 Milk™ brand Launch into King Dairy supply Significant PR hits South East launch Ranging in Whole launches in the US, Soopers (Denver), agreement with (LA Times, KTLA TV, in Publix supported Foods Rocky initially Southern
Slide 22: Public relations coverage USA
Public relations coverage USA For personal use only (https://www.cbsnews.com/videos/a2-milk-draws-consumer-praise-dairy-industry-skepticism/) 22
Slide 23: thea2milkcompany.com
For personal use only thea2milkcompany.com
Slide 24: Appendix
For personal use only Appendix 24
Slide 25: Geographic financial performance
Geographic financial performance For personal use only NZ$ million FY17 FY16 Movement % Segment Operating Segment Operating Segment Operating Operating Segment Revenue EBITDA1 Revenue EBITDA1 Revenue EBITDA1 Australia & New Zealand 439.6 155.3 296.3 84.7 48.3% 83.4% China & other Asia 88.9 32.8 38.2
Slide 26: Cash position
Cash position For personal use only Group Cash Movement (NZ$ million) +24.1 (22.8) (2.5) (48.7) +3.1 121.0 +7.8 +90.6 69.4 Cash on hand Group NPAT Inventory Other working Investments in Investment in Depreciation, FX and other Cash on hand (Jun-16) reduction capital PPE & Synlait amortisation & (Jun
Slide 27: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures For personal use only NZ$ million FY17 FY16 ANZ segment EBITDA 155.3 84.7 China & other Asia segment EBITDA 32.8 9.2 US & UK segment EBITDA (22.5) (20.5) Corporate & other segment EBITDA (24.4) (18.8) EBITDA1 141.2 54.6 Depreciation & amortisation (2.7) (2.8) EBIT
Slide 28: thea2milkcompany.com
For personal use only thea2milkcompany.com
The a2 Milk Company — UBS Australasia Conference 2017 on 6ix