Synlait Milk Ltd. · NZX:SML
Synlait Milk — Debt Investor Presentation (November 2019)
36 slides from Synlait Milk's debt investor presentation, Nov 29, 2019
Slide 1: Subordinated Bond Offer Roadshow Presentation
For personal use only SUBORDINATED BOND OFFER ROADSHOW PRESENTATION 29 November 2019 JOINT LEAD MANAGERS CO-MANAGER
Slide 2: Disclaimer and Important Notice
DISCLAIMER AND IMPORTANT NOTICE For personal use only This presentation has been prepared by Synlait Milk Limited (Synlait) in relation to the offer of unsecured, subordinated fixed rate bonds Past performance described in this presentation (Bonds). Synlait has lodged a Product Disclosure Statement
Slide 3: Overview of the Offer
For personal use only OVERVIEW OF THE OFFER Synlait Milk Limited Retail Bond Presentation 3
Slide 4: Overview of the Offer
OVERVIEW OF THE OFFER For personal use only Issuer Synlait Milk Limited (“Synlait”) Bonds Unsecured subordinated fixed rate bonds (“Bonds”) Issue size Up to $150 million (plus up to $50 million of oversubscriptions) Purpose of the Offer The Offer will provide Synlait with diversification of funding
Slide 5: Introduction to Synlait
For personal use only INTRODUCTION TO SYNLAIT Synlait Milk Limited Retail Bond Presentation 5
Slide 6: Our Purpose
For personal use only OUR PURPOSE $1,024m REVENUE EXCEEDED $1 BILLION FOR THE FIRST TIME IN FY19 DOING MILK DIFFERENTLY FOR A HEALTHIER WORLD $82.2m FY19 NPAT ↑ 10% ON FY18 $1.7b NZX MARKET CAPITALISATION All figures in NZ$, market capitalisation as at 27 November 2019. Synlait Milk Limited Retail B
Slide 7: We Are a Growth Company
WE ARE A GROWTH COMPANY For personal use only NZ$ millions Revenue and EBITDA 1,200 As we enter the next phase of Synlait’s evolution we retain our 1,000 1,024.3 ‘growth company’ mentality. Revenue growth CAGR: 25% 879.0 800 759.0 Synlait has grown from start-up to 146,000 metric tonnes (MT) of 600
Slide 8: We Are Investing for Growth
WE ARE INVESTING FOR GROWTH For personal use only NZ$ millions Net operating assets and gearing Net Debt / EBITDA After a period of consolidation 700 633.9 7.0x and reducing leverage, we have 600 6.0x undertaken a series of major 493.3 capital projects. 500 455.2 5.0x 423.5 400 4.0x We are nearing c
Slide 9: Our Geographic Footprint
AUCKLAND CANNING • Second infant formula blending and For personal use only canning facility acquired in 2017 OUR GEOGRAPHIC POKENO FOOTPRINT • Second infant formula and dairy ingredients processing facility commissioned in September 2019 PALMERSTON NORTH • Research and Development staff grew from 5
Slide 10: Leadership Team
LEADERSHIP TEAM For personal use only Our Leadership Team are highly skilled and committed to our vision and purpose. Leon Clement Chris France Nigel Greenwood Dr. Suzan Horst Martijn Jager Deborah Marris Hamish Reid Boyd Williams Chief Executive Officer Director, Strategy and Chief Financial Office
Slide 11: Board of Directors
BOARD OF DIRECTORS For personal use only Our board of directors are committed to building a world class nutritional business and the enhancement of shareholder value Graeme Milne ONZM Bill Roest Dr. John Penno Min Ben Qikai (Albert) Lu Hon. Ruth Richardson Sam Knowles Sihang Yang Independent directo
Slide 12: Business Overview
For personal use only BUSINESS OVERVIEW Synlait Milk Limited Retail Bond Presentation 12
Slide 13: Deliver. Invest. Clarify: FY19 in review
DELIVER. INVEST. CLARIFY For personal use only FY19 in review Delivering results Investing for the future Delivering results • Revenue exceeded $1 billion for the first time in FY19, • $18.9 million expansion to lactoferrin facility • Launched our new purpose and brand identity: Doing increasing 17%
Slide 14: What Makes Us Different
WHAT MAKES US DIFFERENT For personal use only Our unique capabilities underpin our sustainable competitive advantage ESTABLISHED BUILDING Differentiated Developed an integrated Navigated complex Built in quality testing Focus on research, Creating a sustainable milk supply manufacturing chain regula
Slide 15: Developing a World Class Value Chain
DEVELOPING A WORLD CLASS VALUE CHAIN For personal use only ‘World Class Value Chain’ programme of work running across Infant Nutrition WETMIX KITCHENS CONSUMER PACKAGING 130,000 Capacity 80,000 MT Capacity our differentiated and integrated value chain, HIGH SPECIFICATION SPRAY DRYERS 180,000 MT Capa
Slide 16: Doing Milk Differently for a Healthier World
For personal use only DOING MILK DIFFERENTLY FOR A HEALTHIER WORLD 2 + ZERO HEART HEAD HANDS OUR PURPOSE OUR AMBITION OUR STRATEGY Synlait Milk Limited Retail Bond Presentation 16
Slide 17: Our Strategy
OUR STRATEGY For personal use only OUR GROWTH STRATEGY DOING MILK DIFFERENTLY Sports Everyday Infant Foodservice Next Big Nutrition Dairy Nutrition Thing OUR ENABLING STRATEGY FOR A HEALTHIER Net Positive for Build a Healthier World Class WORLD the Planet Synlait Value Chain Synlait Milk Limited Ret
Slide 18: Delivering Against Our Growth Strategy
DELIVERING AGAINST OUR GROWTH STRATEGY For personal use only DOING MILK Foodservice DIFFERENTLY Sports Everyday Infant Foodservice Next Big Nutrition Dairy Nutrition Thing OUR GROWTH STRATEGY STRATEGY PROGRESSED DELIVERY ON TRACK STRATEGY DEVELOPING FY19 • Advanced liquid dairy packaging • 21% growt
Slide 19: Delivering Against Our Enabling Strategy
DELIVERING AGAINST OUR ENABLING STRATEGY For personal use only DOING MILK DIFFERENTLY Sports Everyday Infant Foodservice Next Big Nutrition Dairy Nutrition Thing OUR GROWTH STRATEGY FOR A HEALTHIER WORLD Net Positive for the Planet Build a Healthier Synlait World Class Value Chain OUR ENABLING STRAT
Slide 20: Challenges We Are Working On
CHALLENGES WE ARE WORKING ON For personal use only Challenges presented at our FY19 results and how we are approaching them CHALLENGES APPROACH / UPDATE 1. Uncertainty remains regarding the covenants over the land • Supreme Court hearing set for April 2020 at Synlait Pokeno • Maintain discussions wi
Slide 21: Financial Performance
For personal use only FINANCIAL PERFORMANCE Synlait Milk Limited Retail Bond Presentation 21
Slide 22: 5-Year Performance
5-YEAR PERFORMANCE For personal use only Production Volumes (MT) 160,000 Synlait has a track record of delivering 140,000 120,746 135,395 139,485 146,299 earnings growth by investing in our 120,000 101,669 100,000 differentiated value chain to meet 80,000 60,000 customer needs 40,000 20,000 - FY15 F
Slide 23: Operating Cash Flow
OPERATING CASH FLOW For personal use only $ millions Operating cashflow 160.0 Net cash inflow from operating activities 140.0 136.7 increased by $38.3 million to $136.7 120.0 104.4 115.2 98.4 million from $98.4 million last year 100.0 80.0 60.0 • Cashflow generation driven by an increase in 40.0 ope
Slide 24: Net Debt
NET DEBT Synlait is targeting investment grade financial metrics and For personal use only total leverage ratio below 2.5x over the long term $ millions Net debt 400 4.0x Synlait’s asset base has been built through large capital 333.6 350 3.5x projects, where leverage increases and then reduces as c
Slide 25: Project Updates
PROJECT UPDATES Outside the major growth projects, Synlait has several strategic projects For personal use only which may result in associated capital expenditure: Potential customers Synlait is regularly in discussions with a range of potential customers. These currently include discussions with mu
Slide 26: Structure
For personal use only STRUCTURE Synlait Milk Limited Retail Bond Presentation 26
Slide 27: Interest Deferral and Events of Default
INTEREST DEFERRAL AND EVENTS OF DEFAULT For personal use only The Bonds have an Interest Event of Default Synlait has four key bank Deferral Term covenants in place within its The Events of Default in the Trust Deed include: Bank Facility Agreement: 1. The payment of interest on the Bonds on an Inte
Slide 28: Purpose of the Offer
PURPOSE OF THE OFFER For personal use only Synlait is seeking to raise up to $150 Synlait Guaranteeing Group’s debt maturity profile (pre-Offer) Synlait Group's available debt facilities (pre-Offer) million, with oversubscriptions of up to $$ millions millions 800 $50 million 700 600 120 500 60 • Th
Slide 29: Issuer and Guaranteeing Group
ISSUER AND GUARANTEEING GROUP For personal use only The Bonds will be guaranteed by the Guarantors Synlait Group on issue of the Bonds • On the issue date of the Bonds the Guarantors will be Main operating Synlait Milk Finance Limited, The New Zealand Dairy Synlait Milk Limited company, including Co
Slide 30: Offer Terms and Timetable
For personal use only OFFER TERMS AND TIMETABLE Synlait Milk Limited Retail Bond Presentation 30
Slide 31: Key Terms of the Offer
KEY TERMS OF THE OFFER For personal use only Issuer Synlait Milk Limited (“Synlait”) Bonds Unsecured subordinated fixed rate bonds (“Bonds”) Issue size Up to $150 million (plus up to $50 million of oversubscriptions) Guarantee Guaranteed by Synlait Milk Finance Limited and the guarantors under Synla
Slide 32: Key Dates of the Offer
KEY DATES OF THE OFFER For personal use only PDS Lodgement 29 November 2019 Firm bids due 6 December 2019, 12.00pm Rate set date 6 December 2019 Opening date 9 December 2019 Closing date 13 December 2019 Issue date 17 December 2019 Expected date of quotation on NZX Debt Market 18 December 2019 Inter
Slide 33: Synlait Credit Highlights
SYNLAIT CREDIT HIGHLIGHTS For personal use only 1. Synlait is a NZX and ASX listed company with an NZX market capitalisation of NZ$1.7b(1) that produces a range of nutritional milk products for global customers, including The a2 Milk CompanyTM 2. Synlait has built a track record of delivering earnin
Slide 34: Appendix
For personal use only APPENDIX Synlait Milk Limited Retail Bond Presentation 34
Slide 35: Pokeno Update
POKENO UPDATE Timeline of the process to date For personal use only February 2018 Synlait announced the conditional purchase of 28 hectares of land in Pokeno to establish our second nutritional powder manufacturing site. It was the vendor’s responsibility to have the covenants removed November 2018
Slide 36: Investors Media
For personal use only INVESTORS MEDIA Hannah Lynch Linda Chalmers Corporate Affairs Manager Senior Communications Advisor – External +64 21 252 8990 +64 21 951 347 hannah.lynch@Synlait.com linda.chalmers@synlait.com Synlait Milk Limited Retail Bond Presentation 36
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