Synlait Milk Ltd. · NZX:SML
Synlait Milk — Shareholder Meeting (November 2018)
50 slides from Synlait Milk's shareholder meeting presentation, Nov 28, 2018
Slide 1: Delivering on 2018
DELIVERING ON 2018 Annual Meeting of Shareholders 28 November 2018
Slide 2: Agenda
I PG 2 AGENDA - WELCOME AND INTRODUCTIONS - CHAIRMAN’S ADDRESS - CHIEF EXECUTIVE OFFICER’S ADDRESS - CHIEF FINANCIAL OFFICER’S ADDRESS - OUR FUTURE - OUR PURPOSE AND IDENTITY - QUESTIONS - FORMAL RESOLUTIONS - ANY OTHER BUSINESS - ANNUAL MEETING CONCLUDES
Slide 3: Chairman's Address
CHAIRMAN’S ADDRESS Graeme Milne CHAIRMAN
Slide 4: Board of Directors
I PG 4 BOARD OF DIRECTORS Graeme Milne John Penno Hon. Ruth Richardson Bill Roest Sam Knowles Sihang Yang Qikai (Albert) Lu Min Ben CHAIR (INDEPENDENT) MANAGING DIRECTOR NON-EXECUTIVE, BRIGHT DAIRY NON-EXECUTIVE DIRECTOR NON-EXECUTIVE DIRECTOR BRIGHT DAIRY APPOINTED DIRECTOR BRIGHT DAIRY APPOINTED D
Slide 5: FY18 Highlights
I PG 5 FY18 HIGHLIGHTS SML.NZ SHARE PRICE PERFORMANCE $15 A2 SUPPLY EXTENSION FY18 ANNUAL RESULTS ANNOUNCED - Celebrated Synlait’s first decade at our staff and supplier conferences $13 INTERIM RESULTS - Sales increased from $759.0 million to $879.0 million RELEASED $11 - Profit increased from $39.5
Slide 6: Strategic Update
I PG 6 STRATEGIC UPDATE - Strengthened relationship with The a2 Milk Company™ with extended supply agreement - Infant Nutrition strategy has created concentration risk, hence investment in Everyday Dairy - Manufacturing diversification begun with ground breaking on Synlait Pokeno - Future focus arou
Slide 7: Regulatory Update
I PG 7 REGULATORY UPDATE - The ASCIQ, CNCA, and CFDA have now been integrated into the China State Administered Market Authority (SAMR) - Dunsandel site inspected in September and expecting approval soon - SAMR is focused on renewal of existing sites, hence delay on Auckland site approval - Brand ap
Slide 8: Capital Projects
I PG 8 CAPITAL PROJECTS - $450 million of growth capital expenditure under construction to be funded through cash flow and existing debt facilities: - Pokeno site to be commissioned for 2019/2020 milk season - Advanced Liquid Dairy Facility on track for March 2019 commissioning - Lactoferrin expansi
Slide 9: CEO's Address
CEO’S ADDRESS Leon Clement CHIEF EXECUTIVE OFFICER
Slide 10: Our Categories: Sustainable Value Chain
I PG 10 INGREDIENTS INFANT NUTRITION EVERYDAY DAIRY ADULT NUTRITION OUR CATEGORIES WE WILL LEVERAGE OUR UNIQUE SUSTAINABLE VALUE CHAIN TO SUCCEED IN EACH CATEGORY TO BUILD SUCCESSFUL BUSINESSES THAT CONTRIBUTE TO OUR LONG-TERM SUCCESS SUSTAINABLE VALUE CHAIN ENVIRONMENT PEOPLE ENTERPRISE
Slide 11: Environment
I PG 11 ENVIRONMENT Our Ambition: Synlait’s net business impact is positive for the planet. Restorative and regenerative agriculture, manufacturing and supply chain - Sustainability commitments established, including: - On-farm GHG emissions down 35% per kgMS by 2028 - Off-farm GHG emissions down 50
Slide 12: People
I PG 12 PEOPLE Our Ambition: To build a better Synlait – a world class organisation aligned around a common purpose, executing with excellence, driven by innovation and creative thinking CULTURE AND ENGAGEMENT - Gallup Q12 Engagement Score continues to improve, from 31st to 60th percentile of peer g
Slide 13: Enterprise
I PG 13 ENTERPRISE Our Ambition: To establish a world class value chain. With our heart in New Zealand and our head in the world, we’re returning an economic glow for New Zealand - Lactoferrin expansion completed on schedule in November - Advanced Liquid Dairy Facility structure is near completion a
Slide 14: CFO's Address
CFO’S ADDRESS Nigel Greenwood CHIEF FINANCIAL OFFICER
Slide 15: Overview
I PG 15 OVERVIEW $ MILLIONS NET PROFIT AFTER TAX 80.0 74.6 70.0 60.0 - Full-year profit up 89% year-on-year to $74.6 million, 50.0 ahead of all previous results 39.5 40.0 35.7 - Profit growth primarily driven by 89% increase in 30.0 consumer packaged infant formula sales volumes 20.0 10.0 - Earnings
Slide 16: Sales Volume
I PG 16 SALES VOLUME MT SALES VOLUME 160,000 140,000 18,776 120,000 15,999 35,580 100,000 - Revenue increase of $120.0 million to $879.0 in FY18 is due to a 122,606 80,000 combination of higher value consumer packaged infant formula 100,393 93,042 sales and an uplift in dairy commodity prices 60,000
Slide 17: Production Volume
I PG 17 PRODUCTION VOLUME MT PRODUCTION VOLUME MILLIONS KGMS 160,000 70.0 140,000 36,651 60.0 19,403 - Milk purchases remain our most significant cost when 120,000 16,043 determining gross profit, with a final milk price paid in 50.0 FY18 of $6.65 per kgMS, compared to $6.16 per kgMS 100,000 115,991
Slide 18: Net Debt
I PG 18 NET DEBT $ MILLIONS NET DEBT 250.0 119.4 200.0 150.0 - Total net debt increased by $32.3 million to $114.9 at year 11.2 114.9 end from $82.6 million last year 100.0 82.6 (98.4) - $103.8 million was deployed into five growth initiative 50.0 projects financed through a combination of operating
Slide 19: Profitability
I PG 19 PROFITABILITY $ GROSS PROFIT PER MT 1,400 1,294 - Total gross profit per MT up $502 to $1,294, primarily due to 1,200 consumer packaged infant formula volumes as a percentage of 1,000 877 total product sales growing from 13% in FY17 to 28% in FY18 792 800 - We also achieved an improved gross
Slide 20: Our Future
OUR FUTURE
Slide 21: Today to Tomorrow
I PG 21 TO DAY TO DO TO MORROW INITIAL OBSERVATIONS WHAT ARE WE TRYING WHAT ARE OUR TO ACHIEVE CHALLENGES SYNLAIT IS FAST WHAT: - Concentration risk - Maintain growth and rapidly diversify - Focus and implementation risk SYNLAIT IS STRONG HOW: - Shore up our existing profit engine whilst - Need for
Slide 22: Outlook: Growth Deeper and Broader
I PG 22 OUTLOOK 4 GROWTH: DEEPER AND BROADER = CHASE PROFIT POOLS NEW 1 Deepen relationships with existing customers and build into new categories 3 Ex pa 1 ns 2 Broaden customer base in core categories io n En gi ne 3 Accelerate development of new profit pools with new customers Ad and categories C
Slide 23: FY19 Outlook
I PG 23 FY19 OUTLOOK MT CONSUMER PACKAGED INFANT FORMULA SALES 50,000 41,000 - 45,000 45,000 40,000 - Continued growth in a2MC volumes 35,580 35,000 - Brand approvals for Akara and Pure Canterbury hopeful of 30,000 being received in FY19 25,000 - Expect future growth in Munchkin’s Grass FedTM ANZ sa
Slide 24: Our Purpose and Identity
OUR PURPOSE AND IDENTITY
Slide 25: The power of purpose
The power of purpose
Slide 26: Corporate purpose quotes
“To be truly successful, companies need to have corporate mission that is bigger than making a profit.” Marc Benihoff, Salesforce “Make meaning, not money.” Brian Scudamore, O2E Brands “We have to bring this world back to sanity and put the greater good ahead of self-interest.” Paul Polman, Unilever
Slide 27: Doing milk differently for a healthier world
Doing milk differently for a healthier world.
Slide 28: The market in which we operate
The market in which we operate: We are the 21st century milk nutrition company
Slide 29: Our approach: born disruptive
ng milk differently yor a he \ Our approach: We were born disruptive, it’s in our DNA
Slide 30: It's our attitude
Doing milk differently fo \ It's our attitude
Slide 31: The benefit our products bring
itly for Khealthier yor \ The benefit our products bring: essential nutrition
Slide 32: It's our belief
for a healthier world. \ It's our belief: Net positive for the planet Opportunities for all to thrive
Slide 33: Our focus: Heart in NZ, head in the world
healt world. » \ Our focus: Heart in NZ, head in the world
Slide 34: Doing milk differently for a healthier world
Doing milk differently for a healthier world.
Slide 35: Who we are, what we stand for, what we do
WHO WE ARE WHAT WE WHAT STAND FOR WE DO
Slide 36: Who we are
WHO WE ARE Down to earth Authentic Straightforward WHAT WE Disruptive WHAT STAND FOR _ innovative Nutrition WE DO Health Modern . Sustainable Partnership
Slide 37: >: Abas
>: Abas | — ny > Font = Food, Milk Word Mark = Straightforward no nonsense
Slide 38: Slide 38
Slide 39: Annual Report 2018
ANNUAL REPORT 2018
Slide 40: Slide 40
Slide 41: Synlait
Synlait
Slide 42: Questions?
QUESTIONS?
Slide 43: Formal Resolutions
FORMAL RESOLUTIONS Graeme Milne CHAIRMAN
Slide 44: Resolution 1: Auditor's Remuneration
I PG 44 FORMAL RESOLUTIONS RESOLUTION 1 To consider and, if thought fit, pass the following as an ordinary resolution: AUDITOR’S “That the Board be authorised to determine the auditor’s fees and expenses REMUNERATION for the 2019 financial year.”
Slide 45: Resolution 2: Re-election of Director
I PG 45 FORMAL RESOLUTIONS RESOLUTION 2 To consider and, if thought fit, pass the following as an ordinary resolution: RE-ELECTION OF “That Graeme Milne be re-elected as a Director.” DIRECTOR
Slide 46: Resolution 3: Directors' Remuneration
I PG 46 FORMAL RESOLUTIONS RESOLUTION 3 To consider and, if thought fit, pass the following as an ordinary resolution: DIRECTORS’ “That the annual fee for each Director be $85,000, except for the annual fees of each of the two Committee Chairs, which will be $97,000 and the REMUNERATION Chairman of
Slide 47: Resolution 4: Constitution Amendment
I PG 47 FORMAL RESOLUTIONS RESOLUTION 4 To consider and, if thought fit, pass the following as an ordinary resolution: CONSTITUTION “That Synlait Milk Limited’s Constitution be amended, with effect from the close of the Annual Meeting, as set out in Appendix 1 to the Notice of the AMENDMENT Annual M
Slide 48: Resolution 5: John Penno's Board Appointment
I PG 48 FORMAL RESOLUTIONS RESOLUTION 5 To consider and, if thought fit, pass the following as an ordinary resolution: JOHN PENNO’S “That John Penno be re-elected as a Director, and, if Resolution 4 is passed, that John Penno is elected as the Board Appointed Director.” BOARD APPOINTMENT
Slide 49: Any Other Business
ANY OTHER BUSINESS LEADING WITH ”
Slide 50: Investor and media contacts
INVESTORS MEDIA Clayton Cleek, CFA, Investor Relations Officer Jessica Thorn, Communications Advisor +64 21 916 070 +64 3 373 3353 Clayton.Cleek@synlait.com Jessica.Thorn@synlait.com