A2 Milk Company Limited · NZX:ATM
A2 Milk — The a2 Milk Company — UBS Australasia Conference 2016
32 slides from A2 Milk's conference presentation, Nov 8, 2016
Slide 1: UBS Australasia Conference
For personal use only UBS AUSTRALASIA CONFERENCE GEOFFREY BABIDGE MD & CEO 8 NOVEMBER 2016 a2 Milk™ a2 Platinum™ 1 and The a2 Milk Company™ are trademarks of The a2 Milk Company Limited
Slide 2: Contents
Contents Contents • Company overview For personal use only • FY16 result highlights • Science update • Q1 FY17 update • Summary • Appendix
Slide 3: Company Overview
For personal use only 3 COMPANY OVERVIEW
Slide 4: As the A2 protein pioneers, we are single-mindedly determined
For personal use only As the A2 protein pioneers, we are single-mindedly determined to help people enjoy a healthier life. 4
Slide 5: Our consumers tell us we are making a difference
Our consumers tell us we are making a difference to their lives For personal use only 5
Slide 6: 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 AU$ million1 NZ$ million Market Capitalisation2 ~1,285 ~1,340 • All a2MC brand
Slide 7: What is the a2 Milk brand difference?
What is the a2 Milk™ brand difference? • The a2 Milk™ brand is a naturally occurring cows’ milk and not a product of a technological process or genetic engineering • a2MC have accumulated significant proprietary know-how and quality processes to ensure a2MC products are A1 protein-free For personal
Slide 8: 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 9: Expanding portfolio within targeted regions
Expanding portfolio within targeted regions For personal use only UK China USA Australia and NZ 9
Slide 10: A history of significant growth and continual transformation
A history of significant growth and continual transformation 2016 onwards For personal use only 2012-2015 Dairy nutrition company 2007-2012 Dairy company profitably that also makes making a 2000-2007 Branded dairy infant formula difference to company people’s lives IP Company challenging licensing t
Slide 11: FY16 Result Highlights
For personal use only FY16 RESULT HIGHLIGHTS 11
Slide 12: 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 $49.8m on pcp Gross margin 151.0 54.4 +177.5% • Gross margin reflects change in product mix, with infant formula now Sale
Slide 13: Geographic financial performance
Geographic financial performance NZ$ 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 14: a2 Platinum infant formula, a significant product platform
a2 Platinum® infant formula, a significant product platform in our business Growth in Group Infant Formula Sales (NZ$m) • Group revenue for infant formula was NZ$214.4 million, compared For personal use only to NZ$41.7 million for FY15 140.5 • Infant formula accounted for 61% of group revenue, up fr
Slide 15: Segment performance
Segment performance • ANZ – Stand out performance for the ANZ business, in particular growth of a2 Platinum® in grocery and pharmacy which represented over For personal use only 300% growth on pcp – Stock shortages of infant formula in first half FY16 remedied with improved inventory cover by year e
Slide 16: Segment performance
Segment performance • USA For personal use only – Launched a2 Milk™ brand into California from April 2015, now extended to Pacific North West and Colorado – Sales behind original plan given slower distribution build, well positioned to move forward – Distribution achieved in Safeway in Northern Cali
Slide 17: Science Update
For personal use only 17 SCIENCE UPDATE
Slide 18: The difference occurs upon digestion
The difference occurs upon digestion • Studies highlight there are potential benefits of a2 Milk™ due to the complete exclusion of A1 protein type For personal use only – Conventional milk is a combination of A1 and A2 protein types • The A1 and A2 proteins are different in structure and hence break
Slide 19: 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 For personal use only clinical trial)
Slide 20: FY17 Q1 Update
For personal use only 20 FY17 Q1 UPDATE
Slide 21: FY17 Quarter update
FY17 Quarter 1 update • Total Group – Revenue for first 3 months consistent with Company expectations at NZ$112.5 million, reflecting continued growth in infant formula For personal use only and milk products • ANZ – Fresh milk performing well with solid growth (~7%) on pcp, in line with plan – Cont
Slide 22: FY17 Quarter update (cont.)
FY17 Quarter 1 update (cont.) • China – Demand growth in direct and cross border e-commerce (CBEC) trade, reflects increasing awareness in China of the a2 Platinum® and a2 For personal use only Milk™ brands supported by in-country marketing strategy – Strengthening Shanghai based management team wit
Slide 23: FY17 Quarter update (cont.)
FY17 Quarter 1 update (cont.) • USA – Improving rates of sale in key accounts: Whole Foods Northern California, Ralph's and Sprouts For personal use only – Strong build in new accounts: Target and Trader Joes in California – Earned media activity building: LA Times, Fox News (California), Fox 5 (San
Slide 24: Summary
For personal use only 24 SUMMARY
Slide 25: Summary
Summary • The Group continues to experience demand growth for a2 Platinum® infant formula For personal use only • The business is benefiting from increased brand awareness and growth in market share in China • Investment in brand continues across the Group to support business growth • Remaining agil
Slide 26: For personal use only
For personal use only
Slide 27: Appendix
For personal use only 27 APPENDIX
Slide 28: Brief company history
Brief company history Today (2016) Dairy nutrition company For personal use only 2012-2015 profitably making a Branded dairy company difference to people’s lives 2007-2012 that also makes Branded dairy infant formula a2 Platinum® infant formula accounts for 2000-2007 company challenging 61% of Group
Slide 29: 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 $3.4m • Working capital movement reflects an i
Slide 30: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures NZ$ 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 31: Disclaimer
Disclaimer This presentation dated 8 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 particul
Slide 32: For personal use only
For personal use only
The a2 Milk Company — UBS Australasia Conference 2016 on 6ix