Australian Dairy Nutritionals Limited · ASX:AHF
Australian Dairy Nutritionals — Investor Presentation (June 2019)
22 slides from Australian Dairy Nutritionals's investor presentation, Jun 18, 2019
Slide 1: Australian Dairy Nutritionals Group Investor Presentation
For personal use only Australian Dairy Nutritionals Group Growing Local, Going Global Investor Presentation June 2019
Slide 2: AHF at a Glance
AHF at a Glance For personal use only Well positioned A vertically Focused on to capitalise on integrated developing higher the growing business model margin owned shortfall of guarantees ability brands and products organic milk to supply versus including organic Australian Dairy supply competitors
Slide 3: Transformation to a high value producer
Transformation to a high value producer For personal use only Non-Organic NOW TRANSFORMING END GAME Organic certified 5 farms producing and A vertically integrated portfolio processing milk mainly for third of high margin organic milk parties Organic brands accreditation Dairy Farms 5 Dairy Farms 20
Slide 4: Australian Dairy Industry
Australian Dairy Industry Key Statistics Large Australian Dairy Export Markets For personal use only Tonnes exported per Country Value of Australian dairy Australian farm herd is 1.56m gate production cows $4.27b CHINA 230,364 JAPAN 107,271 Dairy is Total annual milk Australia’s 3rd production large
Slide 5: Average Australian Dairy Prices
Average Australian Dairy Prices For personal use only Indicative Average Pricing (per litre of milk equivalent) Related cents per ltr uplift Ordinary Milk (farm gate price) 45 Ordinary Skim Milk Powder and butter 50 – 60 Organic Milk (farm gate price) 65 Organic Skim Milk Powder and organic butter 1
Slide 6: Organic Formula Market
Organic Formula Market For personal use only 10 yrs of history showing increased growth Forecast to continue to grow significantly – rates – 15.6% CAGR1 15.4% CAGR2 Australia and New Zealand Global Organic Baby Formula Premium Organic Infant Formula Market Retail Sales Value 400 900 800 350 700 300
Slide 7: Why are we Transforming?
Why are we Transforming? For personal use only AHF is transitioning from a contracted packer to a vertically integrated manufacturer and producer of premium organic products and brands, with a large focus on organic infant formula Why move to Organic? Why vertical integration and own branded product
Slide 8: Product Diversification
Product Diversification 2017 2018 Product Target gross product Margins FY2021 For personal use only ▪ Milk ▪ Milk Formula 35% - 45% ▪ Butter ▪ Butter ▪ Yoghurt ▪ Yoghurt Butter 10% - 15% New Additions ▪ Kefir Yoghurt / Kefir 15% - 30% ▪ Premium Milk Range ▪ Paediatric Formula Bottled Milk 10% - 25%
Slide 9: Our Dairy Farms
Our Dairy Farms Golden Triangle of the South West Victoria Dairy Region For personal use only ▪ 5 dairy farms in South West Victoria producing Vertical Integration ~17m litres of milk pa AHF Farms – Transitioning to organic ▪ 4,184 livestock with 2,118 cows which produce AHF Processing facility AHF
Slide 10: Snapshot of our Dairy Farms
Snapshot of our Dairy Farms For personal use only Carrying Size Avg Cows FY2016 FY2017 FY2018 Organic Organic Milk Value Hectares Milked Litres Litres Litres Conversion Produced Upon (twice daily per (non organic) (non organic) (non organic) Date Conversion year) Brucknell No. 1 $4.1m 275 374 3.3m 4
Slide 11: Our Processing Business – Camperdown Dairy
Our Processing Business – Camperdown Dairy For personal use only ▪ Fully certified organic processor ▪ Signed 6 year agreement with New Zealand based “The Collective” to process and package 17 yoghurt products ▪ Currently operating at less than 50% utilisation ▪ Actively engaged in distribution disc
Slide 12: Contract Manufacturing
Contract Manufacturing The Collective Australia – 6 year contract & Packing business 16 nationally distributed products For personal use only Sales of up to $80m expected over contracted period ▪ 5 food and beverage retailing clients ▪ Premium yoghurts, milks and butters ▪ Margins of 10% to 15% Macr
Slide 13: Formula Plant
Formula Plan STAGE 1 – INTRODUCTORY FORMULA PLANT STAGE 2 – LARGE FORMULA PLANT & CANNING For personal use only CAPEX ~$5.0m CAPEX ~$45.0m Inputs Milk plus IF ingredients Inputs Milk plus IF ingredients Capacity 2,000 Kg – 2,800 Kg/ day Capacity Dryer 12,000 – 20,000 Kg/ day Blending and tinning >10
Slide 14: Infant Formula Distribution Strategy
Infant Formula Distribution Strategy ▪ Negotiating an exclusive distribution deal with a major For personal use only Australian retailer ▪ Exclusivity encourages retailer support with respect to: ✓ Access to a higher number of stores; ✓ Better shelf positioning; and ✓ Web / catalogue support ▪ Follo
Slide 15: Where does AHF fit?
Where does AHF fit? For personal use only Turnover Vertical Market Cap* ASX listed Comps Organic Branded Infant Formula FY18 Integration (A$m) (A$m) Bellamy’s Australia ✓ ✓ ✓ × 891 320.0 The A2 Milk Company × ✓ ✓ × 10,186 922.7 Wattle Health ✓ ✓ ✓ × 109 1.6 Bubs Australia ✓ ✓ ✓ × 535 18.4 Keytone Da
Slide 16: Barriers to Entry
Barriers to Entry ▪ A vertically integrated business model is difficult For personal use only to replicate ▪ Converting a conventional farm to organic includes a 3 year transition ▪ Difficulty in securing a team with the requisite knowledge and experience 5 ▪ Security of supply with upstream owned f
Slide 17: Historical Financial Performance
Historical Financial Performance For personal use only ▪ Historical sales highly concentrated to low value milk customer/retailer Aussie Farmers Direct (administration in March 2018), 30% of FY17 revenue ▪ Since 2018, focus has been on building a more diversified customer base and developing Own Bra
Slide 18: Balance Sheet December 2018
Balance Sheet 31 December 2018 Assets A$ million Cash 3.1 Asset Commentary For personal use only Other Current Assets 6.2 ▪ Biological assets / livestock of $5.2m with Total Current Assets 9.3 > 3,000 dairy cows Biological Assets 5.0 ▪ Significant hard asset base of $28.9m Intangible Assets 7.7 with
Slide 19: Use of Funds
Use of Funds For personal use only AHF is seeking A$12 million via a share placement (Offer) Use of Funds: ▪ To fund the acquisition and relocation of an infant formula plant including mixing plant, dryer and evaporator, all of which have been used to produce all stages of infant formula in the past
Slide 20: Board and Management Team
Board and Management Team For personal use only Michael Hackett Peter Skene Adrian Rowley Paul Morrell Chris Flahey Non-Executive Chairman CEO and Director Non-Executive Director Non-Executive Director Sales & Marketing Director ▪ Michael has been a director since ▪ Appointed CEO and Managing ▪ Adri
Slide 21: Corporate Overview
Corporate Overview For personal use only Item Volume / Value Share Price Performance Share price 15 Day VWAP (as at 17 June 2019) ~17.5 c $0.30 5,000,000 4,500,000 Market Capitalisation $42.8m $0.25 4,000,000 Total Stapled Securities on Issue 267.3m $0.20 3,500,000 3,000,000 Total options on issue 1
Slide 22: Contact
Contact For additional information or media For personal use only enquiry matters please contact: Peter Skene Group CEO / Director Australian Dairy Nutritionals Limited Email: shareholders@adfl.com.au Disclaimer – Forward Looking Statements This announcement may include “forward looking statements”
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