A2 Milk Company Limited · NZX:ATM
A2 Milk — The a2 Milk Company — Shareholder Meeting (November 2017)
31 slides from A2 Milk's shareholder meeting presentation, Nov 21, 2017
Slide 1: Annual Meeting 2017
For personal use only Annual Meeting 2017 Geoffrey Babidge Managing Director & CEO 21 November 2017 a2 Milk™, a2 Platinum™ and The a2 Milk Company™ are trade marks of The a2 Milk Company Limited
Slide 2: Disclaimer
Disclaimer This presentation dated 21 November 2017 provides additional comment on the Annual Report 2016-2017 of The a2 Milk Company Limited (the “Company”) and For personal use only accompanying information released to the market on 23 August 2017. As such, it should be read in conjunction with th
Slide 3: Contents
Contents For personal use only • Company progress • Group strategy • FY17 result highlights • FY18 market update • Appendix 3
Slide 4: Company progress
For personal use only Company progress
Slide 5: A decade of significant progress (2007 – 2017)
A decade of significant progress (2007 – 2017) • A decade focused on targeted investment and strategic decisions to establish a strong foundation for future growth For personal use only • Building on the early development of the science and intellectual property (2000 to 2006) • Successful transitio
Slide 6: Evolving from pioneer to global leader
Evolving from pioneer to global leader For personal use only 2000 - 2006 2007 - 2017 2018 onwards Leaders IP Innovative Experts creators pioneers Innovators • Emerging beta-casein science • Move from licensing to operating business model • Building a global branded dairy nutritionals business • IP d
Slide 7: Leading the way in the A1 protein-free category
Leading the way in the A1 protein-free category For personal use only • a2MC is the creator and pioneer of the A1 protein-free category • The science in support of the A2 protein proposition continues to develop and consumer awareness is rapidly building in targeted markets • The Company expects bro
Slide 8: Group strategy
For personal use only Group strategy
Slide 9: Growth strategy
Growth strategy OUR PURPOSE For personal use only As the a2 Milk™ pioneers we are determined to help people enjoy a better life OUR VISION To be the innovative and smart choice for dairy nutrition OUR AMBITION To be the most admired and commercially attractive dairy nutritional company OUR STRATEGIC
Slide 10: Organisational renewal and shareholder information
Organisational renewal and shareholder information • Continued build of Board and senior management capability For personal use only – Appointment of Warwick Every-Burns & Jesse Wu as non-executive Directors during FY17 – Recent reorganisation of senior leadership team and new focus: Chief Executi
Slide 11: FY17 result highlights
For personal use only FY17 result highlights
Slide 12: Financial summary
Financial summary For personal use only NZ$ million FY17 FY16 % change Revenue 549.5 352.8 56% • Group revenue growth of +56% on pcp, a2 Platinum® infant formula revenue +84% • EBITDA to sales margin of 26% (up from 15% in pcp) Gross margin 263.5 151.0 75% • Gross margin primarily reflects increased
Slide 13: The year in charts
The year in charts For personal use only Group Revenue (NZ$ million) Group EBITDA1 (NZ$ million) Basic Earnings Per Share (Cents) 141.2 12.7 549.5 352.8 54.6 155.1 4.4 110.8 3.6 4.8 0.0 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 -0.3 H1 H2 H1 H2 EPS 1EBITDA is a non-GAAP measure and
Slide 14: Continued strong growth in sales and market share for a2 Platinum
Continued strong growth in sales and market share for a2 Platinum® • Group infant formula revenue of NZ$394.0 million, compared to For personal use only Group Infant Formula Net Revenue (NZ$m) NZ$214.4 million for FY16 • Infant formula accounts for 72% of Group revenue 209.5 184.5 • Significant grow
Slide 15: FY17 regional performance
FY17 regional performance ANZ China For personal use only • Exceptional ANZ business performance; revenue $439.6m (+48.3%) • Strong sales and earnings momentum; revenue $88.9m (+132.9%) • ~78% growth in a2 Platinum® infant formula • Infant formula consumption value share of 3.5%2 • a2 Milk™ fresh mi
Slide 16: FY18 market update
For personal use only FY18 market update
Slide 17: FY18 market update: regional performance
FY18 market update: regional performance ANZ For personal use only • a2 Milk™ branded fresh milk performing well with continued pleasing growth on pcp (4 months to October) • a2 Platinum® infant formula continues to be a significant contributor to the ANZ segment • The a2 Platinum® brand was the lar
Slide 18: China infant formula regulatory environment
China infant formula regulatory environment For personal use only English label product sold through CBEC platforms • Recent commentary from China State Council suggests: CBEC – Further 1 year extension to grace period of China CBEC policy to end of December 2018 – Establishment of new experimental
Slide 19: China focus on MBS expansion
China focus on MBS expansion For personal use only October 2017: Distributors: ~65 Stores: >5,800 Heilongjiang Building in-store support personnel Jilin Beijing Liaoning Xinjiang Gansu Inner Mongolia Tianjin Hebei Qinghai Ningxia Shanxi Shandong Tibet Shaanxi Henan Jiangsu Anhui Shanghai Hubei Sichu
Slide 20: Stepped up investment in China marketing
Stepped up investment in China marketing For personal use only
Slide 21: FY18 market update: regional performance
FY18 market update: regional performance UK For personal use only • Pleasing progress in rate of sale for fresh milk (>50% revenue growth on pcp1) • Continued growth in distribution footprint, total stores now exceeding 2,000 (up from ~1,600 at June 2017) • Results include a2 Platinum® infant formul
Slide 22: Current and near term distribution
Current and near term distribution For personal use only Legend Broad Distribution Limited Distribution No Current Distribution Processing and Milk Supply US office, Boulder, Colorado California • Launched April 2015 • High levels of acceptance from retailers including Sprouts, Whole Foods, Kroger &
Slide 23: Building brand awareness and expanding footprint region-by-region
Building brand awareness and expanding footprint on a region-by-region basis For personal use only South East expansion Florida, Northeast, 4,000 Southwest & Rocky Mountains 3,500 Velocity growth focus and select distribution build a2 Milk™ US distribution number of outlets 3,000 2,500 California la
Slide 24: The science continues to develop
The science continues to develop For personal use only • Newly published human clinical research reports A1 protein1 found in conventional milk may trigger symptoms associated with milk intolerance2 – Study involved 600 adult Han Chinese participants with self-reported lactose intolerance – Particip
Slide 25: FY18 YTD results: months to October 2017
FY18 YTD results: 4 months to October 2017 For personal use only NZ$ million 4M181 4M17 % change Group Revenue Group EBITDA (4 month) (4 month) 262.2 78.4 Revenue 262.2 155.2 +68.9% EBITDA 78.4 35.5 +120.8% 155.2 35.5 79.3 PBT 78.0 35.0 +122.9% 47.6 6.2 1.0 NPAT 52.3 22.0 +137.7% 4M15 4M16 4M17 4M18
Slide 26: FY18 trading performance and outlook
FY18 trading performance and outlook For personal use only 4M18 trading • Group revenue of NZ$262.2 million: – Reflects continued strong growth in nutritional products (ANZ, China) and positive momentum in USA, UK – Includes some seasonal build ahead of key China e-commerce sales events, 11/11 Singl
Slide 27: thea2milkcompany.com
For personal use only thea2milkcompany.com
Slide 28: Appendix
For personal use only Appendix
Slide 29: Geographic financial performance
Geographic financial performance For personal use only NZ$ million FY17 FY16 Movement % Segment Operating Segment Operating Segment Operating Operating Segment Revenue EBITDA1 Revenue EBITDA1 Revenue EBITDA1 Australia & New Zealand 439.6 155.3 296.3 84.7 48.3% 83.4% China & other Asia 88.9 32.8 38.2
Slide 30: Cash position
Cash position For personal use only Group Cash Movement (NZ$ million) +24.1 (22.8) (2.5) (48.7) +3.1 121.0 +7.8 +90.6 69.4 Cash on hand Group NPAT Inventory Other working Investments in Investment in Depreciation, FX and other Cash on hand (Jun-16) reduction capital PPE & Synlait amortisation & (Jun
Slide 31: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures For personal use only NZ$ million FY17 FY16 ANZ segment EBITDA 155.3 84.7 China & other Asia segment EBITDA 32.8 9.2 US & UK segment EBITDA (22.5) (20.5) Corporate & other segment EBITDA (24.4) (18.8) EBITDA1 141.2 54.6 Depreciation & amortisation (2.7) (2.8) EBIT
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