A2 Milk Company Limited · NZX:ATM
A2 Milk — The a2 Milk Company — ASX Spotlight Asia 2015
24 slides from A2 Milk's conference presentation, May 26, 2015
Slide 1: ASX Spotlight Asia May 2015
For personal use only ASX Spotlight Asia May 2015
Slide 2: The a2 Milk Company (a2MC) at a glance
The a2 Milk Company (a2MC) at a glance • a2MC is in the business of producing, marketing • a2MC sees itself as different from many other dairy For personal use only and selling branded dairy and infant formula businesses: products in targeted global markets 1 • Focussed on building a high margin and
Slide 3: Brief company history
Brief company history1 2000 2008 2014 The a2 Milk Company™ is Consumer and healthcare a2MC fully acquires UK JV. For personal use only founded by scientist Dr. Corran professional advocacy in Australia New management team and McLachlan and his business accelerates brand growth consumer proposition p
Slide 4: Investment highlights
Investment highlights a2MC is not a conventional dairy company 02 For personal use only Profitable Australian 01 business has grown Premium brand and rapidly providing a product range platform for additional supported by an 03 growth integrated intellectual Differentiated product property portfolio
Slide 5: What is a2 Milk branded milk?
What is a2 Milk™ branded milk? • A naturally occurring cows’ milk and not a product of genetic engineering or technological processes For personal use only • Regular cows’ milk contains 2 main types of beta-casein protein: A2 protein and A1 protein. a2MC branded milk contains only the A2 protein. It
Slide 6: The a2 Milk brand is focussed on digestive benefits
The a2 Milk™ brand is focussed on digestive benefits Positive consumer experiences and developing body of research For personal use only • The a2MC brand proposition has evoked a strong response from consumers, in terms of both the health and digestive benefits, in addition to the appeal of taste an
Slide 7: a2MC proposition aligns with growing consumer demand for health and well-being
a2MC proposition aligns with growing consumer demand for health and well-being For personal use only General health and well-being growth trends1 Global health and wellness dairy market (US$ bn) • Global consumers are becoming increasingly focussed on their health and well-being leading to significa
Slide 8: Targeted and differentiated consumer proposition
Targeted and differentiated consumer proposition For personal use only Distinctive and premium product portfolio Based around the benefits of A1 protein free products LIQUID MILK INFANT FORMULA OTHER DAIRY PRODUCTS FRESH MILK LONG LIFE MILK INFANT FORMULA CREAM YOGHURT Australia, UK, Australia, Chin
Slide 9: Integrated portfolio of intellectual property and proprietary know-how
Integrated portfolio of intellectual property and proprietary know-how For personal use only • Developed and continuing to enhance the scope of its integrated intellectual property portfolio • Portfolio combined with wide geographical coverage means potential competitors have restricted ability to p
Slide 10: 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 11: Focussed and consistent strategic growth map
Focussed and consistent strategic growth map STRATEGIC INTENT STRATEGIC PRIORITIES For personal use only Continue to build a 1. Australian growth in liquid milk and other dairy products substantial premium 2. Investigate NZ liquid milk opportunity in advance of Fresha dairy business in Valley’s lice
Slide 12: Australia and New Zealand
Australia and New Zealand Current position Growth strategy For personal use only • Significant branded milk business with a reliable • Enhance brand strength supply chain, strong sales growth and premium pricing • Build core ANZ liquid milk businesses – Segment revenue grew by 39% in 1H15 vs PCP • G
Slide 13: United Kingdom
United Kingdom Current position Growth strategy For personal use only • Entered UK market in 2011 through a JV with • Build targeted premium brand Robert Wiseman Dairies • Reposition existing fresh milk business • Revised arrangements and business model in calendar 2014 • Build distribution • End-to
Slide 14: USA entry plan underway
USA entry plan underway • Entry concentrated initially in West Coast region from April 2015, prior to extending distribution into further For personal use only state markets – Progressive launch commenced from Southern California in April with distribution planned to build to ~70% of grocery weighte
Slide 15: China
China Current position For personal use only • Launched a2 Platinum™ infant formula in Nov-13 with the intention of establishing a position in China before expanding into other Asian markets • Infant formula processed and packaged by Synlait who has an integrated facility that allows full manufactur
Slide 16: China market opportunity
China market opportunity • a2MC’s entry into the Chinese infant formula market represents a For personal use only foothold in one of the fastest growing regions globally • Management expects that consumer and economic trends will continue to drive growth in the premium and ultra-premium infant formu
Slide 17: China growth strategy
China growth strategy STRATEGIC INTENT STRATEGIC PRIORITIES For personal use only Build a recognised • Education of target consumer groups, healthcare professionals, and local key influencers to build brand awareness premium brand in • Stewardship of the marketing of a2MC branded products to remain
Slide 18: Summary historical financial performance
Summary historical financial performance • Strong sales growth driven primarily by the Australian and New Zealand segment For personal use only • a2MC business model is focussed on revenue growth in key markets through re-investment of Australia and New Zealand earnings • Generated positive EBITDA s
Slide 19: 1H15 Financial highlights
1H15 Financial highlights % NZ$ million 1H14 1H15 change For personal use only • Revenue growth of 38% on PCP Revenue 54.2 74.8 +38% • Gross margin reflects higher milk costs in Australia Gross margin 19.9 26.1 +31% and modest UK margin to date • EBITDA before non-recurring items growth of 27% EBITD
Slide 20: 1H15 Financial highlights (cont'd.)
1H15 Financial highlights (cont'd.) 1H15 Segment EBITDA (NZ$ million) For personal use only Australia and New Zealand ($9.1) million $14.0 million $4.9 million ANZ Operating EBITDA Net intercompany charges* ANZ Segment EBITDA China ($2.2) million +$1.6 million ($0.6) million China Operating EBITDA N
Slide 21: Conservative capital position
Conservative capital position For personal use only • Current business plan has been financed from a combination of equity and operating cash flows • Conservative approach to debt given growth profile and orientation – Balance sheet net cash position of $9.9m at 31 December 2014 • Current strategy a
Slide 22: Why is a2MC an attractive investment opportunity?
Why is a2MC an attractive investment opportunity? A proven, sustainable, profitable business model in ANZ delivering upper For personal use only quartile returns on capital relative to the industry Business centred on continuing to build a differentiated premium international brand Continued s
Slide 23: Disclaimer
Disclaimer This presentation dated 21 May 2015 is provided for information purposes only. The information contained in this presentation is For personal use only not intended to be relied upon as advice to investors and does not take into account the investment objectives, financial situation or nee
Slide 24: The a2 Milk Company
The a2 Milk Company www.thea2milkcompany.com