A2 Milk Company Limited · NZX:ATM
A2 Milk — A2 — Shareholder Meeting (November 2012)
18 slides from A2 Milk's shareholder meeting presentation, Nov 20, 2012
Slide 1: A2 Corporation Presentation to AGM
A2 Corporation Presentation to AGM 20 November 2012 Geoffrey Babidge Managing Director & CEO
Slide 2: Presentation Agenda
Presentation Agenda 1. Introduction 2. Strategic review outcomes Introduction Australian and NZ business A2 Milk (UK JV) A2 Infant Nutrition New markets and products 3. Key financial results 4. Australian business 5. Summary 2
Slide 3: Introduction
Introduction • A2 Corporation Limited (“A2C”) is a differentiated, premium price dairy Company which is building a global business based on unique intellectual property applying to a2™ brand milk and related dairy products • a2™ brand milk has a unique proposition that delivers a tangible consumer b
Slide 4: Delivering on the strategic agenda
Delivering on the strategic agenda July 2010 October 2010 June 2011 November 2011 March 2012 September 2012 Acquired the Developed the new Formally developed Formed 50 / 50 Commissioned Reported record FY12 revenue of remaining 50% it did strategic agenda the ‘The A2 System’ marketing and milk A$62.
Slide 5: Strategic review outcomes
Strategic review outcomes • There is an increasing consumer focus on heath and wellbeing which strongly favours a2TM brand dairy products • Large global drinking milk markets exceed US$120bn with scope for innovation in mature, commoditised markets • A2C can directly access high growth Asian dairy m
Slide 6: Consumer and industry trends strongly favour growth of a2 brand products
Consumer and industry trends strongly favour growth of a2™ brand products a2™ brand products respond a2™ brand niche shares can Consumer Global milk directly to the increasing global deliver significant revenues given focus on market focus on digestive health, the large size of the markets healt
Slide 7: a2 brand milk is the fastest growing and largest brand in the Australian premium segment
a2™ brand milk is the fastest growing and largest brand in the Australian premium segment % Share of Fresh Milk in the Grocery Channel (Latest Quarter—by value) % Market Share Sep-2011 Sep-2012 % Growth 46.3% 7.0 6.4 6.0 5.0 4.3 15.0% (5.3%) 4.0 15.4% (16.7%) 25.0% 3.0 2.3 2.0 1.9 2.0 1.8 0.9 1.0 1.
Slide 8: Australia Growth Strategy
Current trends and strategy suggest value share of at least 10% of the fresh milk category in the Australian grocery channel is achievable Australia Growth Strategy Media and Marketing Distribution Health Care • Increased investment in • Plan launch in the “route • Health Care Professional Priority
Slide 9: UK Creative Direction
UK Creative Direction • The UK launch is now underway, with three major supermarket chains listing a2™ brand milk in approximately 700 outlets nationwide (Tesco, Morrisons and Budgens) • Performance expected to follow Australian experience—a ‘slow build’ driven by PR and consumer marketing, engageme
Slide 10: China business model
China business model • A2C will source shelf-ready packaged, 100% New Zealand a2™ brand infant formula and sell FOB to its distribution partner in China, who will then on-sell to 3rd party distributors and retailers – A2C has secured New Zealand supply through a manufacturing agreement with Synlait
Slide 11: Expected roll-out of a2 infant formula in China
Expected roll-out of a2™ infant formula in China • A2C, together with its distribution partner, plans to progressively roll-out the a2™ infant formula product across c.45 Tier 1 and 2 cities in the Greater China region (including Hong Kong and Macau) China—Indicative Roll-out of Distribution Tier 1
Slide 12: New markets for the a2 brand
New markets for the a2™ brand A2C’s Key Market Selection Criteria White milk market Per capita milk Existing top end in Health conscious / size consumption the market intolerances Perceived Likely entry cost / Cost effective A2C IP registered regulatory speed of return distribution options environme
Slide 13: New categories for the a2 brand
New categories for the a2™ brand • The high growth UHT and Yoghurt categories have been identified as attractive opportunities for the a2™ brand • Other potential products include dietary supplements, cheese and milk powders Target Markets Global growth opportunity with a number of potential targe
Slide 14: Key financial results
Key financial results NZ$’000 2012 2011 Variance Trading Revenue $62,458 $42,206 48% Gross Margin – excl dep’n $21,297 $15,271 40% EBITDA $4,737 $2,683 77% NPAT $4,405 $2,116 108% Equity $37,348 $25,183 48% EPS 0.74 0.40 85% Current Ratio 2.03 2.66 ROE 11.8% 8.4% Shares on Issue at August 31, 2012 –
Slide 15: The Australian business performed strongly in 2012
The Australian business performed strongly in 2012 • a2 Milk™ sales increased 48% on the prior year • Significant growth in 2012 Operational Profit compared to last year • Increase in marketing and communication including successful “Thank-you A2” campaign, public relations and health care professio
Slide 16: The a2 milk brand exceeds c.A$50m in Australia
The a2™ milk brand exceeds c.A$50m in Australia • The Australian business has generated significant and sustained growth over the last three years with effectively no change in wholesale price Ex-Factory Gross Sales Fresh Milk A2DPA (A$m) 34.0 27.7 22.9 A$m 18.6 16.8 14.3 12.9 9.5 8.4 6.5 4.5 1H08 2
Slide 17: Summary
Summary • A2C will continue to develop the business consistent with its strategic plan: • Further grow the Australian fresh milk business and increase activities in NZ • Support the development of the UK fresh milk business • Progress A2 infant nutrition business in China • Prioritise product and ma
Slide 18: Thank You
@ Thank You fins) man il