A2 Milk Company Limited · NZX:ATM
A2 Milk — The a2 Milk Company — CLSA Investors' Forum 2018
31 slides from A2 Milk's conference presentation, Sep 12, 2018
Slide 1: CLSA Investors' Forum
CLSA Investors’ Forum Hong Kong | 11 & 12 September 2018
Slide 2: Contents
Contents ¢ The a2 Milk Company at a glance ¢ FY18 results highlights ¢ Strategic progress ¢ FY18 regional performance ¢ Outlook \ Appendix
Slide 3: The a2 Milk Company at a glance
The a2 Milk Company at a glance Our purpose Helping people enjoy a better life Our vision To be the most innovative and smart choice for dairy Our ambition To be the most admired and commercially attractive dairy-based brand globally a2 Milk™ Conventional milk A2 protein
Slide 4: The a2 Milk Company at a glance
The a2 Milk Company at a glance ¢ The a2 Milk Company (“a2MC") is in the business of producing, marketing and selling premium branded dairy nutritional products in targeted global markets e All a2MC branded products contain only A2 beta casein protein type rather than both A1 and A2 types found in c
Slide 5: What is the a2 Milk brand difference?
What is the a2 Milk® brand difference? ¢ The brand difference starts with specially selected cows ¢ The a2 Milk Company has significant years of knowledge and experience and takes great care in bringing our consumers the very best quality dairy nutritional products always free from the A1 protein e
Slide 6: FY18 - a transformative year
FY18 - a transformative year Branded domestic dairy focus ‘07- ‘12 Shift from licensing to IP creators ‘00 = ‘07 Emerging beta casein science, IP development and licensing model approach FY07 $7.6m model with regional business structure and Australia focus FY12 $62.5m Revenue NZ$ branded operating b
Slide 7: FY18 results highlights
FY18 results highlights
Slide 8: FY18 highlights
FY18 highlights ¢ Total revenue of $922.7 million! +68% over the prior corresponding period (pcp) ¢ EBITDA of $283.0 million +101% on pcp ¢ Net profit after tax of $195.7 million +116% on pcp ¢ Strong cash conversion - operating cash flow of $231.1 million +131% on pcp e EBITDA to sales margin of 31
Slide 9: Financial summary
Financial summary NZ$ million Revenue Gross margin Distribution Marketing! Employee costs Administration & other EBITDA EBIT NPAT NZ$ million Cash on hand Inventory FY18 922.7 464.3 (26.8) (73.6) (34.8) (46.1) 283.0 280.9 195.7 Jun-18 340.5 64.1 FY17 549.5 263.5 (20.2) (42.0) (23.0) (37.2) 141.2 138
Slide 10: Historic perspective
Historic perspective’ Group revenue (NZ$ million) 922.7 FYIS FYI6 FYI7 FY18 +40% — +127% += +56% 468% @H1 @H2 Group EBITDA? (NZ$ million) 283.0 48 FY15 FY16 FY17 FY18 +35% +1035% +159% +101% @H1 wH2 Basic Earnings Per Share (cents) 27.0 1 The Company‘s financial year ends 30 June; 1H refers to the f
Slide 11: Geographic and product segment performance
Geographic and product segment performance a Australia & China & Total Revenue NZ$ million New Zealand other Asia UK & USA” Corporate Group Liquid milk 656.6 233.6 32.4 = 922.7 $142.4m 262.2 81.3 (27.6) (32.8) 283.0 39.9% 34.8% NM - 30.7% +13.1% on pcp Infant nutrition Revenue 439.6 88.9 21.0 - 549.
Slide 12: Strategic progress
Slide 13: Macro consumer trends support our momentum
Macro consumer trends support our momentum Growing consumer Food safety, naturalness Growing middle demand for health and and provenance class in Asia wellness products 13
Slide 14: How we are unique
How we are unique e e XN ! 7 . . . . -~7\_) Focussed investment in Single-minded focus () brand, IP and growth e e e e e e Unique, modern and r Capital-smart premium brand J approach e e e e Australia and New Zealand sourcing for Asia Pacific . ° Innovative and mo . oAo agile approach ‘A A 14
Slide 15: Strategic priorities
Strategic priorities vl, 4 BRANDED DAIRY NUTRITIONAL PRODUCT PORTFOLIO Across a continuum from the purity of fresh a2 Milk™ to customised A1 protein-free products Targeting the whole family from infants to adults to satisfy their growing digestive health needs O INVESTING IN ATTRACTIVE MARKETS Asia
Slide 16: New products & markets
New products & markets a2 Milk™ powder into a2 Milk™ a2 Platinum® Stage 4 a2 Platinum® Pregnancy a2 Milk™ into NZ China and Vietnam into Singapore into ANZ and China! into ANZ and China! (July FY19) MESH a2 Platinum® into Hong Kong a2 Milk™ into SE and NE USA a2 Milk™ blended with Manuka honey into
Slide 17: Enhanced strategic partnerships
Enhanced strategic partnerships ° Syn lait Milk Foundation infant nutrition partner Multiple NZ manufacturing sites Exclusive supply partnership for infant and pregnancy powdered nutrition in ANZ and China New product innovation capability Enhanced supply agreement (announced July FY19) Increased sh
Slide 18: FY18 regional performance
e - FY18 regional performance
Slide 19: FY18 regional performance overview (NZ$ million)
FY18 regional performance overview (NZ$ million) ANZ revenue China & Other Asia revenue UK & US revenue? 656.6 233.6 32.4 88.9 18.3 21.0 38.2 4.0 19 FY15 FY16 FYI7 FY18 FYI5 FYI6 FYI7 FYI8 FY15 FY16 FYI7 FY18 m1H m2H @1H@2H @1H 2H * Revenue: $656.6 million * Revenue: — $233.6 million * Revenue: $32.
Slide 20: Australia and New Zealand
Australia and New Zealand * Continued outstanding ANZ revenue and earnings performance ¢ a2 Milk™ branded fresh milk achieved record value market share of ~9.8% from ~9.3%' in pcp — Further share growth to ~10% in the latest quarter — Revenue grew ~4% on pcp ¢ Strong growth in a2 Platinum® infant fo
Slide 21: China and other Asia
China and other Asia * Exceptional performance for the China and other Asia business e Flexible multi-product, multi-channel infant formula strategy: — Kantar consumption market share by value increased from ~2.8% to ~5.1%! — Distribution in China Mother Baby Stores (MBS) increased to ~10,000 stores
Slide 22: China infant formula regulatory environment
China infant formula regulatory environment Key regulatory milestones continue to be actively managed and achieved: * CFDA! registration achieved by Synlait Milk for the Company's China label infant formula in September 2017 — Newly-registered China label packaging launched to the market June 2018;
Slide 23: UK & USA
UK & USA UK ¢ a2 Milk™ branded fresh milk volume increased more than 50% on pcp; continues to be a challenging market to deliver scale * Company will transition between suppliers early in FY19; not anticipated to create any disruption to stock availability USA ¢ Sales more than doubled year on year
Slide 24: US distribution footprint
US distribution footprint Northeast * Entered market Jan 2018 + Improved speed of distribution build * Whole Foods Northeast and major roll-out to over 1,400+ stores including ShopRite, Ahold Banners (Giant and Stop & Shop) Wegmans, and Market Basket £2 @ StopsShop: MagsrrZasmer. [{/MART @lANT GEA w
Slide 25: Outlook
Outlook
Slide 26: Outlook
Outlook + Anticipate further growth in revenue particularly in respect of nutritional products in ANZ and China, and liquid milk in the US Focus on growth initiatives in targeted emerging markets and new product development will continue Marketing expenditure as a percentage of sales expected to be
Slide 27: Appendix
Appendix
Slide 28: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures NZ$ million FY18 FY17 Australia & New Zealand segment EBITDA 262.2 155.3 China & other Asia segment EBITDA 81.3 32.7 UK & USA segment EBITDA! (27.6) (22.5) Corporate EBITDA (32.8) (24.4) EBITDA? 283.0 141.2 Depreciation/amortisation (2.2) (2.7) EBIT? 280.9 138.5 N
Slide 29: Continued strong cash conversion
Continued strong cash conversion Group cash movement: FY18 (NZ$ million) +4.8 $3.8 340.5 436.1 WSS EE ee (4.8) (16.1) 121.0 Cash on hand Group NPAT — Working capital Investment in Investment in Depreciation, | FX and other Cash on hand (June-17) PPE & Synlait amortisation & (June-18) intangibles oth
Slide 30: thea2milkcompany.com
thea2milkcompany.com
Slide 31: Disclaimer
Disclaimer This presentation dated 11 and 12 September 2018 provides additional comment on the Annual Report for the twelve months ended 30 June 2018 of The a2 Milk Company Limited (the “Company” or “a2MC") and accompanying information released to the market on the same date. As such, it should be r