A2 Milk Company Limited · NZX:ATM
A2 Milk — The a2 Milk Company — H1 2016 Earnings Presentation
20 slides from A2 Milk's earnings presentation, Feb 17, 2016
Slide 1: The a2 Milk Company 1H16 Results
For personal use only a2 Milk, a2 Platinum and The a2 Milk Company are trade marks of The a2 Milk Company Limited
Slide 2: Agenda
Agenda 1. Result highlights For personal use only 2. Group Infant Formula update 3. Regional update 4. Research and development 5. Financial update 6. Close 2
Slide 3: Managing Director statement on strategic agenda
“The Company’s strategic agenda has been focused on growing For personal use only and broadening the ANZ milk business and developing growth opportunities in select international markets. Following a period of development, a2 Platinum® infant formula has become the significant contributor to growth
Slide 4: 1H16 result highlights
1H16 result highlights • Total revenue of $139.1 million, an increase of 86% on pcp • For personal use only Group a2 Platinum® infant formula revenue of $73.9 million, up 340% on pcp • Net profit after tax of $10.1 million • Group operating EBITDA1 of $18.7 million, up 472%2 on pcp • Group operating
Slide 5: Financial overview
Financial overview NZ$ million 1H16 1H15 Movement % For personal use only Segment Operating Segment Operating Segment Operating Operating Segment Revenue EBITDA1 Revenue EBITDA Revenue EBITDA ANZ 127.9 34.5 72.8 14.0 76% 146% China and other Asia 8.4 1.2 1.1 (2.2) 681% (155%) Corporate and other - (
Slide 6: Financial summary
Financial summary NZ$ million 1H16 1H15 % change For personal use only Revenue 139.2 74.8 +86% • Revenue growth of 86% on pcp Gross margin 57.0 26.1 +118% • Gross margin reflects increased contribution from infant formula sales Administration (13.3) (6.8) +96% • Increases to administration, marketin
Slide 7: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures NZ$ million 1H16 1H15 For personal use only Australia & New Zealand Segment EBITDA 9.3 4.9 China & other Asia Segment EBITDA 1.0 (0.6) UK & USA Segment EBITDA (5.5) (1.9) Corporate & other Segment EBITDA 13.9 0.1 EBITDA1 18.7 2.5 EBITDA before non-recurring items
Slide 8: Cash position
Cash position For personal use only • Working capital movement driven largely by an increase in inventories and prepayments relating to infant formula • FX and other includes losses on foreign currency cash holdings due to strengthening of NZD through the period • Forecasting a significantly improve
Slide 9: Other corporate initiatives
Other corporate initiatives • Oversubscribed equity raising to fund increase in infant formula working capital and maintain conservative capital position: For personal use only – $40 million raised from institutional investors – $3 million share purchase plan • Admission to ASX in March 2015 success
Slide 10: a2 Platinum demand is growing exponentially
a2 Platinum® demand is growing exponentially • 1H16 Group revenue for infant formula was ~NZ$73.9 million, compared to NZ$16.8 million for 1H15 For personal use only • Infant formula now accounts for ~53% of total group revenue • Demand continues to grow amongst Australian and Chinese customers – Co
Slide 11: Australia and New Zealand
Australia and New Zealand • ANZ business continues to perform extremely well • For personal use only Segment revenue grew by 76% on pcp to NZ$127.9 million • Operating EBITDA before intercompany charges totalled $34.5 million (an increase of 146% on pcp) • Encouraging 5% growth on pcp in fresh milk
Slide 12: China
China • The China business performed well ahead of plan and returned positive operating EBITDA of $1.2 million • For personal use only a2MC now directly manages sales and distribution with a growing team based in Shanghai and Auckland • Multi product, multi channel strategy to build both local China
Slide 13: United Kingdom
United Kingdom • The UK business on track to achieve monthly breakeven ahead of plan, by year end • For personal use only Improved EBITDA forecast in FY16 compared to prior year • Continuing to explore opportunities to build scale more quickly • a2 Milk™ fresh milk unit sales continue to grow from m
Slide 14: United States of America
United States of America • Initial launch of a2 Milk™ brand into the West Coast region extending into further states • For personal use only a2MC pleased with progress in building distribution in Southern and Northen California • Sales behind original plan given slower build in store numbers than pr
Slide 15: New USA advertising campaign kicked off February 2016
New USA advertising campaign kicked off February 2016 • TV and radio campaign For personal use only launched February 11 across major Los Angeles broadcast networks • Supported by heavy social digital campaign across total California 15
Slide 16: R&D
R&D • Continuing to develop and enhance portfolio of brand assets, intellectual property and participate in R&D associated with the benefits of the A2 beta-casein protein and the absence of A1 For personal use only • Research findings from recent completed studies: – Explains at the human cell level
Slide 17: FY16 Financial update
FY16 Financial update • An update on the Group’s revenue and operating earnings forecast was provided on 18 December 2015 For personal use only • The Company has since delivered a strong first half and an exceptional performance in January 2016 • Based on this, and our assessment of the reasonable r
Slide 18: The a2 Milk Company is a unique business and brand
The a2 Milk Company is a unique business and brand • A fast growing, high margin, differentiated business based on branded products that are all A1 protein free, supported by an integrated portfolio of intellectual property For personal use only • A unique asset light business model which optimises
Slide 19: For personal use only
a www.thea2milkcompany.com —
Slide 20: Disclaimer
Disclaimer This presentation dated 17 February 2016 is provided for information purposes only. The information contained in this presentation is not intended to be relied upon as For personal use only advice to investors and does not take into account the investment objectives, financial situation o