A2 Milk Company Limited · NZX:ATM
A2 Milk — The a2 Milk Company — Investor Presentation (March 2016)
36 slides from A2 Milk's investor presentation, Mar 10, 2016
Slide 1: Investor Presentation New York
For personal use only New York Investor Presentation 10 / 11 March, 2016 PRIVATE AND CONFIDENTIAL a2 Milk®, a2 Platinum® and The a2 Milk Company™ are trade marks of The a2 Milk Company Limited
Slide 2: Agenda
Agenda For personal use only • Company overview • Financial information • Regional overview – Australia and New Zealand – China and other Asia – UK – USA • Trade mark and intellectual property • Summary • Appendix 2
Slide 3: Company overview
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Slide 4: 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, marketing and selling premium branded dairy and infant For personal use only formula products in targeted global markets • a2MC branded products contain only A2 beta-casein protein rather than both A1 pr
Slide 5: Distinctive and premium product portfolio is expanding
Distinctive and premium product portfolio is expanding For personal use only Australia China UK USA 5
Slide 6: Brief company history
Brief company history1 2000 2008 2014 For personal use only The a2 Milk Company™ is founded Consumer and healthcare a2MC fully acquires UK JV. by scientist Dr. Corran McLachlan professional advocacy in Australia New management team and consumer and his business partner Howard accelerates brand growt
Slide 7: What is the a2 Milk difference?
What is the a2 Milk® difference? • The a2 Milk® brand is a naturally occurring cows’ milk and not a product of a technological process or genetic engineering For personal use only A1/A1 A2/A2 protein protein → → All regular milk ~70% mix of A2/A2 protein A1 and A2 proteins A1/A2 protein Genetic vari
Slide 8: What is the USA opportunity?
What is the USA opportunity? For personal use only However Americans are drinking milk less often 2008 2014 71% Always 58% 17% Regularly 22% 6% Occasionally 10% 4% Rarely 6% 2% Never 4% 1 billion milk Digestive issues occasions each week… are the #1 cause (excluding tea & coffee) of the decline Sour
Slide 9: Consumer experiences are fundamental to success
Consumer experiences are fundamental to success “Well we have had a2 Milk for nearly 2 weeks and I “What a difference this milk For personal use only have to say I have been pleasantly surprised. My kids are not complaining of tummy aches any more. They makes! It tastes the same and are actually ask
Slide 10: Investment highlights
Investment highlights a2MC is not a conventional dairy company For personal use only Premium brand and product range supported by an integrated intellectual property portfolio and growing 01 scientific evidence 02 Proven and profitable Australian business remains on a strong growth trajectory Outsta
Slide 11: Scalable and flexible supply chain
Scalable and flexible supply chain For personal use only 1. Milk supply 2. Processing 3. Distribution 4. Retail/consumer Milk sourced from Milk processed at a2MC Contractors distribute Products sold through a segregated dairy herds facilities or contracted 3rd products to outlets/ variety of channel
Slide 12: Leveraging a2MC's fresh milk platform in Australia
Leveraging a2MC’s fresh milk platform in Australia • a2 Milk® branded fresh milk has achieved ~9.3% market share by value (grocery weighted scan 20 December 2015 MAT) For personal use only • a2 Milk® brand is bigger than the fresh organic, lactose free and plant based milk segments combined • a2 Mil
Slide 13: a2 Platinum overview
a2 Platinum® overview Current position Infant formula supply chain For personal use only • Infant formula accounts for ~53% of total group revenue • Compelling and unique point of difference Milk sourced Infant formula Imported into Distributed in ANZ sales focus on – The only infant formula natural
Slide 14: Focussed and consistent strategic growth map
Focussed and consistent strategic growth map STRATEGIC INTENT STRATEGIC PRIORITIES PORTFOLIO COMPOSITION¹ For personal use only FY14 7% Continue to build a 1. Australian growth in liquid milk and other substantial premium dairy products dairy business in 2. Investigate NZ liquid milk opportunity 93%
Slide 15: Financial overview
For personal use only Financial overview
Slide 16: Key consolidated financial results
Key consolidated financial results Movement • Gross margin increase reflects ongoing growth in For personal use only NZ$ million FY14 FY15 FY14 – FY15 1H16 Australian fresh milk business and significant Revenue 110.8 155.1 +40% 139.2 acceleration of infant formula. Trend has continued strongly into
Slide 17: Operating results by segment
Operating results by segment Movement Movement NZ$ million FY14 FY15 FY14 - FY15% 1H15 1H16 1H15 - 1H16% For personal use only Revenue ANZ 106.9 149.1 40% 72.8 127.9 76% China and Other Asia 2.8 4.1 46% 1.1 8.4 681% UK and US 1.0 1.9 90% 0.9 2.9 222% Corporate and Other 0.1 0.0 NM 0.0 0.0 NM Group R
Slide 18: Conservative cash position
Conservative cash position Group Cash Movement: Jun-15 to Dec-15 (NZ$ million) For personal use only • Working capital movement driven largely by an increase in inventories (in transit) and prepayments relating to infant formula • FX and other includes losses on foreign currency cash holdings due to
Slide 19: Regional overview
For personal use only Regional overview
Slide 20: Australia and New Zealand business overview
Australia and New Zealand business overview Current position Growth strategy For personal use only • Significant branded milk business with a reliable supply • Continue to enhance premium brand strength chain, continued sales growth and premium pricing • Build on core ANZ liquid milk business • Segm
Slide 21: China and Other Asia business overview
China and Other Asia business overview Current position Growth strategy For personal use only • Launched a2 Platinum® in Nov 2013 with the intention • Build a high profile premium brand in China of establishing a position in China before expanding into • Educate consumers and health professionals ab
Slide 22: UK business overview
UK business overview Current position Growth strategy For personal use only • Commenced sales in the UK in Nov 2012 through a JV • Continue to build targeted premium brand with Robert Wiseman Dairies which was then subject to a • Grow distribution in existing supermarkets (in-store and takeover by t
Slide 23: USA business launch
USA business launch Current position For personal use only • Initial launch commenced in Southern California region from April 2015, extended to Northern California • a2MC pleased with progress in building distribution in Southern and Northern California • Product format in ½ gallon carton, consiste
Slide 24: IP
For personal use only IP DRAFT 24
Slide 25: Integrated portfolio of IP and proprietary know-how
Integrated portfolio of IP and proprietary know-how • a2MC IP comprises Patents, Brands (incl. registered trade marks), proprietary processes and know how which collectively For personal use only allow the successful commercialization of A1 protein free products • Under continual enhancement these c
Slide 26: R&D
R&D • Continuing to develop and enhance portfolio of brand assets, intellectual property and participate in R&D associated For personal use only with the benefits of the A2 beta-casein protein and the absence of A1 • Research findings from recent completed studies: – Explains at the human cell level
Slide 27: For personal use only
For personal use only 27
Slide 28: Summary
Summary A proven, sustainable, profitable business model in ANZ delivering upper quartile returns on capital relative For personal use only to the industry Establishing a premium infant formula brand and business synonymous with quality - targeting growth across multiple markets Business cente
Slide 29: Disclaimer
Disclaimer For personal use only This presentation dated 10 and 11 March 2016 is provided for information purposes only. The information contained in this presentation is not intended to be relied upon as advice to investors and does not take into account the investment objectives, financial situati
Slide 30: www.thea2milkcompany.com
For personal use only 30 www.thea2milkcompany.com
Slide 31: Appendix
y, Appendix Ajuo esn feuosied JOS
Slide 32: 1H16 result highlights
Excerpt from 1H16 results presentation 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 $18.7 mil
Slide 33: Financial summary
Excerpt from 1H16 results presentation Financial summary For personal use only NZ$ million 1H15 1H16 % change Revenue 74.8 139.2 +86% • Revenue growth of 86% on pcp • Gross margin reflects increased contribution from infant Gross margin 26.1 57.0 +118% formula sales • Increases to administration, ma
Slide 34: Reconciliation of non GAAP measures
Excerpt from 1H16 results presentation Reconciliation of non GAAP measures For personal use only NZ$ million 1H15 1H16 Australia & New Zealand Segment EBITDA 4.9 9.3 China & other Asia Segment EBITDA (0.6) 1.0 UK & USA Segment EBITDA (1.9) (5.5) Corporate & other Segment EBITDA 0.1 13.9 EBITDA1 2.5
Slide 35: Other corporate initiatives
Excerpt from 1H16 results presentation 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 •
Slide 36: The Milk You've Never Heard of That's Rocking the Dairy World
225 The Milk You’ve Never Heard of That’s Rocking the Dairy World For personal use only “Since its debut in 2003, a2 Milk has challenged the common wisdom in dairy retailing, grabbing almost 10% of the fresh milk market in Australia with a product that sells for 175 about A$2.80 a liter ($2 a quart)
The a2 Milk Company — Investor Presentation (March 2016) on 6ix