A2 Milk Company Limited · NZX:ATM
A2 Milk — The a2 Milk Company — Shareholder Meeting (November 2016)
35 slides from A2 Milk's shareholder meeting presentation, Nov 22, 2016
Slide 1: 2016 Annual Meeting Presentation and Trading Update
NZX Code: ATM ASX Code: A2M 22 November 2016 For personal use only NZX/ASX Market Release 2016 Annual Meeting Presentation and Trading Update Please find attached a presentation to be shared today by The a2 Milk Company Limited at its 2016 Annual Meeting in Sydney. This presentation includes a tradi
Slide 2: Annual Meeting 2016
For personal use only ANNUAL MEETING 2016 GEOFFREY BABIDGE MANAGING DIRECTOR & CEO 22 NOVEMBER 2016 a2 Milk™ a2 Platinum™ and The a2 Milk Company™ are trademarks of The a2 Milk Company Limited
Slide 3: Managing Director's Address
Managing Director’s Address • Company overview For personal use only • FY16 result highlights • Science and intellectual property update • FY17 July – October update • Conclusion
Slide 4: Company Overview
For personal use only COMPANY OVERVIEW
Slide 5: The a2 Milk Company at a glance
The a2 Milk Company at a glance • The a2 Milk Company (“a2MC”) is in the business of Key metrics producing, marketing and selling premium branded dairy For personal use only nutritional products in targeted global markets NZ$ million AU$ million1 Market Capitalisation2 ~1,500 ~1,410 • All a2MC brand
Slide 6: We're on an extraordinary growth and transformational journey
We’re on an extraordinary growth and transformational journey For personal use only 5
Slide 7: The a2 Milk Company proposition
The a2 Milk Company proposition For personal use only 1 Single-minded company focus 2 Compelling and growing 34. Integrated IP portfolio and on A1 protein-free products scientific evidence proprietary know-how (pioneers and experts) 46. Unique and effective 55. Clean and green Australia 63. Capital-
Slide 8: An evolving strategic roadmap
An evolving strategic roadmap For personal use only As the A2 protein pioneers we are single-mindedly determined to help our consumer’s enjoy a better life. Continue to build a substantial Build a global infant Establish an advanced premium milk business nutrition business adult nutrition busi
Slide 9: FY16 Result Highlights
For personal use only FY16 RESULT HIGHLIGHTS
Slide 10: Financial summary
Financial summary % NZ$ million FY16 FY15 change For personal use only • Revenue growth of 127.4% on pcp Revenue 352.8 155.1 +127.4% • EBITDA growth before non-recurring items of $49.8m on pcp Gross margin 151.0 54.4 +177.5% • Gross margin reflects change in product mix, with infant formula now Sale
Slide 11: FY13 – FY16 in charts
FY13 – FY16 in charts Group Revenue (NZ$ million) Group EBITDA1 (NZ$ million) For personal use only 352.8 54.6 155.1 94.7 110.8 10.6 3.6 4.8 FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16 H1 H2 H1 H2 Portfolio Composition (% Group Revenue) Net Operating Cash Flows (NZ$ million) 2% 10% 27% 21.5 61% 95% 88%
Slide 12: a2 Platinum infant formula, a significant product platform
a2 Platinum® infant formula, a significant product platform in our business • Group revenue for infant formula was NZ$214.4 million, compared Growth in Group Infant Formula Sales (NZ$m) to NZ$41.7 million for FY15 140.5 For personal use only • Infant formula accounted for 61% of group revenue, up fr
Slide 13: Segment performance
Segment performance ANZ CHINA • Stand out performance for the ANZ business, in particular • Strong sales growth delivered positive full year Operating For personal use only growth of a2 Platinum® in grocery and pharmacy EBITDA for the first time • Stock shortages of infant formula 1H16 remedied • De
Slide 14: Science & IP Update
For personal use only Q SCIENCE & IP UPDATE
Slide 15: Recent developments in the science
Recent developments in the science • The science continues to develop with published research over last two years demonstrating: – A1 beta casein protein can trigger inflammation of the gut, leading to digestive discomfort; does not occur with A2 protein (China human study)1 For personal use only –
Slide 16: Patent and trade mark coverage
Patent and trade mark coverage For personal use only Territories in which a2MC has applications and/or registrations for patents and/or trade marks as at November 21, 2016 15
Slide 17: Patent portfolio continues to evolve
Patent portfolio continues to evolve Type Patent Title(s)* Expiry Territories^ Genotyping, herd Animal Genotyping Method May 2023 Australia, Canada, China, Hong Kong, India, Japan, New Zealand, Singapore, South Korea, formation and use USA, Vietnam For personal use only Phenotyping Method Of Selecti
Slide 18: FY17 July – October Update
For personal use only FYI7 JULY — OCTOBER UPDATE
Slide 19: FY17 update: months to October
FY17 update: 4 months to October NZ$ million 4M17 4M16 % change Group Revenue Group EBITDA (4 month) (4 month) For personal use only Revenue 155.2 79.3 96% EBITDA 35.5 6.2 473% 155.2 35.5 PBT 35.0 5.5 536% NPAT 22.0 3.2 NM Management results are unaudited NM = not meaningful 79.3 • 4M17 revenue (4 m
Slide 20: FY17 update: months to October (ANZ)
FY17 update: 4 months to October • ANZ – Fresh milk performing well with solid growth on pcp, in line with plan For personal use only – Continued and consistent growth in consumer demand for a2 Platinum® infant formula – Remaining flexible to meet changing distribution trends with growing proportion
Slide 21: FY17 update: months to October (China)
FY17 update: 4 months to October • China – Demand growth in direct and cross border e-commerce (CBEC) trade, reflects increasing awareness in China of the a2 Platinum® and a2 Milk™ For personal use only brands supported by in-country marketing strategy – Strengthening Shanghai based team with priori
Slide 22: Number of babies born should continue to increase
Our review indicates the number of babies born should continue to increase China’s Child Population For personal use only (0-36 Months, Million People) Source: National Bureau Of Statistics, National Census 2000 & 2010, China-based consultancy analysis 21
Slide 23: a2 Platinum performance in China continues to strengthen
a2 Platinum® performance in China continues to strengthen • a2 Platinum’s value share continues to climb within Tmall/Taobao e-commerce platforms • Growing relative strength in Stage 1 and Stage 2 indicating increased trust and brand credibility amongst Chinese parents For personal use only a2 Plati
Slide 24: Growing investment in marketing across Australia and China
Growing investment in marketing across Australia and China • Continuing to grow investment in building brand equity year on year • China in-market marketing building brand awareness For personal use only – China/Australian ‘Feel The Difference’ testimonial film achieved ~25 million views and the web
Slide 25: FY17 update: months to October (USA, UK)
FY17 update: 4 months to October • USA – Improving rates of sale in key accounts: Whole Foods Northern California, Ralph's and Sprouts For personal use only – Strong build in Trader Joes in California – Earned media activity building: LA Times, Fox News (California), Fox 5 (San Diego), New Nutrition
Slide 26: Increasing brand awareness of a2 Milk in USA
Increasing brand awareness of a2 Milk™ in USA especially in California For personal use only • Increased media interest and exposure on key news outlets • New marketing campaign “#feelgoods” launched with a “Spring Dance” brand film – Over 2.5 million views – Website visits are up 10 times and organ
Slide 27: Conclusion
CONCLUSION Ajuo osn feuosied 105
Slide 28: Conclusion
Conclusion • Year to date revenue reflects significant seasonal build for key China sales event 11/11 Singles Day For personal use only • 4M17 Group EBITDA/Sales increased to 22.9%, reflecting continued growth in infant formula sales • Investment in brand continues across the Group to support busine
Slide 29: Appendix
For personal use only 28 APPENDIX
Slide 30: Geographic financial performance
Geographic financial performance NZ$ million FY16 FY15 Movement % For personal use only Segment Operating Segment Operating Segment Operating Operating Segment Revenue EBITDA1 Revenue EBITDA1 Revenue EBITDA1 Australia & New Zealand (ANZ) 296.3 84.7 149.1 30.0 99% 182% China & other Asia 38.2 9.2 4.1
Slide 31: Cash position
Cash position For personal use only • Significant improvement in net operating cash flow, increasing to $21.5m, up from ($8.1m) in pcp • Issue of equity comprises net funds from FY16 capital raising of $40.8m and amounts paid up on partly paid shares of $3.4m • Working capital movement reflects an i
Slide 32: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures NZ$ million FY16 FY15 For personal use only ANZ Segment EBITDA 84.7 30.0 China & other Asia Segment EBITDA 9.2 (3.1) USA & UK Segment EBITDA (20.5) (12.1) Corporate & other Segment EBITDA (18.8) (11.7) EBITDA1 54.6 3.1 EBITDA before non-recurring items 54.6 4.8 De
Slide 33: Board renewal and shareholder information
Board renewal and shareholder information • Further progress with board renewal program For personal use only – Appointment of independent non-executive directors Peter Hinton (17 February 2016) and Warwick Every-Burns (23 August 2016) – Retirement of non-executive director, Melvyn Miles (23 August
Slide 34: Disclaimer
Disclaimer This presentation dated 22 November 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 situation or needs of any particu
Slide 35: For personal use only
For personal use only
The a2 Milk Company — Shareholder Meeting (November 2016) on 6ix