Australian Dairy Nutritionals Limited · ASX:AHF
Australian Dairy Nutritionals — Australian Dairy Farms Group — Investor Presentation (May 2015)
29 slides from Australian Dairy Nutritionals's investor presentation, May 13, 2015
Slide 1: Capital Raising Presentation
AUSTRALIAN DAIRY FARMS GROUP For personal use only ASX’s Only Listed Milk Producer 13th MAY 2015 CAPITAL RAISING PRESENTATION
Slide 2: Disclaimer
Disclaimer For personal use only General Information This Presentation contains general information only. This document is not an invitation, offer or recommendation (express or implied) to apply for or purchase or take any other action in respect of securities and is not a prospectus, product discl
Slide 3: Transaction Highlights
Transaction Highlights For personal use only • Australian Dairy Farms (“AHF” or “Group”) has entered into conditional option agreements to acquire 3 producing dairy farms in SW Victoria (Target Farms), Australia for a total consideration of A$16.0m • Funded by a A$17.7m capital raising at A$0.20 per
Slide 4: Target Farm Locations
Target Farm Locations For personal use only SW VIC DAIRY REGION Elingamite Ignatios Brucknell 1,2 & 3 Brucknell 4 AHF Current Farms Nirranda Target Farms Page 4
Slide 5: Transformational Acquisition
Transformational Acquisition For personal use only PRO-FORMA 12 MONTH PERIOD OF PRODUCTION Existing Target Farms Post % Change Farm Hectares (ha) 885 706 1,591 79% Milking herd (no. cows) 1,332 1,390 2,722 104% Milk produced pa. ('000L) 10,250,000 10,166,000 20,417,500 99% Farmgate price received
Slide 6: Pro-Forma Financial Metrics
Pro-Forma Financial Metrics For personal use only PRO-FORMA 12 MONTH PERIOD OF PRODUCTION3 Existing Farms Target Farms Post1 % Change Farmgate price received $6.20 $6.442 3.9% (A$/Kg milk solids) Revenue $4.98m $5.05m $10.03m 101% EBITDA $1.69m $2.44m $4.13m 144% NPAT $1.05m $2.81m 167% EPS1 $0.
Slide 7: Milk Price Expectations
Milk Price Expectations For personal use only • Anticipating a FY16 base farmgate milk price similar to FY15 of A$6.00/kgms (before bonuses) • Murray Goulburn have a base forecast FY16 farmgate price at $6.051 • Based on expected production volume of over 20 million litres post acquisitions under a
Slide 8: Farm Selection Process
Farm Selection Process For personal use only • AHF adheres to a strict farm selection criteria – see slide 23 • Prior to entering into conditional option agreements to acquire the Target Farms, the Company will have assessed and/or conducted due diligence on over 20 farms over last 12 months • Other
Slide 9: Staff Appointments
Staff Appointments For personal use only • Each farm is run by an experienced live-on farm manager with support staff • AHF has recently secured Jared Boshier as its Operations Manager for South West Victoria • Oversees all Group farms in SW Victoria, oversees individual farm managers • Ex AustAsia
Slide 10: Guidance & Dividends
Guidance & Dividends For personal use only • Recently confirmed milk price guidance of A$6.10 to A$6.30 for the FY15 year after bonuses • FY15 EBITDA indicated to be approximately A$0.7m (excluding non-recurring items) • Subject to ongoing performance, Group intends to begin paying dividends and dis
Slide 11: The Offer and the Target Farms
The Offer and the Target Farms For personal use only • A$15.7m Placement to professional and sophisticated investors at A$0.20 per stapled security subject to security holder approval at an EGM expected on or around 15 June 2015 • Offer price is a 20% discount to the last closing price of A$0.25 • I
Slide 12: Terms of conditional option agreements
Terms of conditional option agreements For personal use only • Conditional option agreements have been executed • Conditional option agreements give AHF ability to acquire a Target Farm on exercise of option • Exercise of option is subject to conditions including satisfactory completion of due dilig
Slide 13: Capital Structure
Capital Structure For personal use only CAPITAL STRUCTURE1 Stapled Securities Current 71.4m Placement 78.5m Post 149.9m Post Offer Market Cap @ 25c $37.7m 1) • This assumes approximately 23.5m Loyalty Options have not been exercised • Does not include any allowance for a A$2.0m SPP • Calculated at t
Slide 14: Timetable
Timetable For personal use only Group enters voluntary suspension 28 April 2015 Share Purchase Plan record date 12 May 2015 Offer announced and Group resumes trading 13 May 2015 Share Purchase Plan material and Notice of EGM sent to security holders 15 May 2015 Share Purchase Plan opens 15 May 2015
Slide 15: Key Risks
Key Risks For personal use only This section discusses some of the key risks associated with an investment in the Group together with the acquisition of the 3 farms and participation in the Offer. The risks set out below are not set out in any particular order and are not an exhaustive list of all r
Slide 16: Key Risks (cont.)
Key Risks (cont.) For personal use only Environmental Agricultural businesses are often exposed to various environmental risks such as fire, flood, drought and unseasonal rain, wind and storms and similar risks events of nature, which can have adverse or positive impacts on the operation of the busi
Slide 17: Key Risks (cont.)
Key Risks (cont.) For personal use only Additional The Group’s capital requirements depend on numerous factors. Depending on the Group’s ability to generate income from its operations, the Group requirements may require further financing in the future. Any additional equity financing will dilute sec
Slide 18: Key Contacts
Key Contacts For personal use only Company enquiries: Investor/Media Enquiries: Broker Enquiries: Adrian Rowley Simon Hinsley Darren Craike Director Investor Relations Corporate Finance Australian Dairy Farms Group NWR Communications Bell Potter Securities adrianrowley@adfl.com.au simon@nwrcommunica
Slide 19: About Australian Dairy Farms
For personal use only ABOUT AUSTRALIAN DAIRY FARMS Page 19
Slide 20: Corporate Overview
Corporate Overview For personal use only Capital Structure Share Price Chart Since Listing Ticker AHF 0.40 0.36 Share Price A$0.25 0.32 Shares on Issue Post Transaction1 149.9m 0.28 Loyalty Options 23.5m 0.24 Post Transaction Market Capitalisation1 A$37.5m 0.20 1 Assumes Placement is approved at EGM
Slide 21: Rationale for Consolidation of Milk Sector
Rationale for Consolidation of Milk Sector For personal use only Processors have excess capacity and actively seek security of milk supply Scale Will pay significant premiums / incentives for high volume and reliability of production (Revenue e.g. 1 owner producing 37.5 million litres pa. rece
Slide 22: Corporatisation Strategy Rationale
Corporatisation Strategy Rationale For personal use only • Previous aggregations of farming operations have had mixed success in Australia – listed and unlisted. • AHF recognises key mistakes other aggregation entities have made: Mistake Australian Dairy Farms Response Acquisition Pricing Purchasi
Slide 23: Farm Selection Criteria
Farm Selection Criteria For personal use only AHF has a strict selection criteria for dairy farm acquisitions: REGIONS of VICTORIA Existing production - with immediate cashflow benefits Location – Proximity to regional centres and existing processing facilities Premier Regions – Invest only in
Slide 24: Initial Focus – South West Victoria
Initial Focus – South West Victoria For personal use only AHF's first dairy farms are located in “The Golden Triangle”, Australia’s premier dairy producing region in South West Victoria near Warrnambool. Largest Australian producing state by volume Consistent and favourable rainfall Close to m
Slide 25: Group’s Initial Strategy
Group’s Initial Strategy For personal use only Establish initial production foothold in one of Australia’s premier dairy regions Step 1 – Acquisition Retain existing experienced operational and farm management and consultants Raise capital and list on ASX Improve existing production and live
Slide 26: Board & Management
Board & Management For personal use only • AHF has assembled an experienced board with ASX and NZX experience • Initially all roles will be non-executive, with board members overseeing all management responsibilities in order to keep costs down and maximise shareholder returns Board & Management Mic
Slide 27: Farm Management
Farm Management For personal use only • Operations manager to oversee and support farm managers • Each farm has a manager living on site – overseeing day to day operations and milking - on-site management have clear KPI’s • AHF has assembled a “best of breed” team of consultants to ensure maximum pr
Slide 28: China & Australia Free Trade Agreement
China & Australia Free Trade Agreement For personal use only Dairy Farmers set to become the main beneficiaries of the FTA All Tariffs to be phased out by 2025 – New Zealand benefited from a similar agreement with its exports growing by A$2.2Bn since 2007 Australian exports of liquid milk grow
Slide 29: Corporate Structure
Corporate Structure For personal use only Australian Dairy Farms Limited (Operating Company) • Operates the farms – owns the livestock • Revenue from milk sales and livestock trading • Leases farms from the stapled property trust • Potential participation in surplus live heifer exports Australian Da
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