Synlait Milk Ltd. · NZX:SML
Synlait Milk — Corporate Update (February 2015)
27 slides from Synlait Milk's corporate update, Feb 2, 2015
Slide 1: Investor Update
Slide 2: Agenda
AGENDA — Milk Price and Supply — Capital Investment — Working Capital Financing — Results Guidance © Synlait 2015
Slide 3: Milk Price and Supply
MILK PRICE AND SUPPLY
Slide 4: GDT Price USD
$5,000 $4,500 $4,000 $4.70 GDT Price USD $3,500 $3,000 $4.40 $2,500 $2,000 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 1
Slide 5: Milk supply and GDT price change
1600 1200 800 000 tonnes 400 0 -400 -800 -1200 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Southern Hemisphere Northern Hemisphere -2% 100% -1% 80% 0% 60% % change y/y % change y/y 1% 40% 2% 20% 3% 0% 4% -20% 5% -40% 6% -60% Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Main exporter productio
Slide 6: Milk production and USD:NZD exchange rate
MT (000's) 140 120 100 80 60 40 20 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 2013 2014 USD:NZD 0.88 0.86 0.84 0.82 0.80 0.78 0.76 0.74 0.72 0.70 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15
Slide 7: Dry weather and milk supply outlook
— Dry weather likely to have minimal impact on our supply base at this stage. — Any further reduction in market milk price and corresponding advance rates will add further pressures on farm. — Most of Synlait farm suppliers have irrigated farms (Opua and Mayfield water schemes likely to be more affe
Slide 8: Capital Investment
CAPITAL INVESTMENT
Slide 9: © Synlait 2015
© Synlait 2015
Slide 10: Growth Initiative Projects
GROWTH INITIATIVE PROJECTS $m Blending and consumer packaging facility. Lactoferrin facility Dry store 31 SUBTOTAL (Completed growth projects) Dryer 3 Quality testing laboratory and administration building Butter plant SUBTOTAL (Uncompleted growth projects) TOTAL GROWTH PROJECTS Forecast / Actual 29
Slide 11: Blending and Consumer Packaging Facility
Slide 12: Blending and Consumer Packaging
BLENDING AND CONSUMER PACKAGING Commissioned in July 2014 - Scope of plant increased from 18,000 MT per annum as stated in prospectus to potentially as much as 30,000 MT per annum. - Forecasting to have approximately 6,000 MT’s of canned product in the first year of operations (exceeds original busi
Slide 13: Lactoferrin
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Slide 14: Lactoferrin Extraction and Purification
LACTOFERRIN EXTRACTION AND PURIFICATION Commissioned in April 2014 - Higher capital cost related to increased scope and complexity of plant. - Has unique intellectual property within development. - Currently on track to manufacture a minimum of 15 MT of product this financial year. - Contracted sale
Slide 15: Dry Store
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Slide 16: 22,500m2 Drystore
22,500M* DRYSTORE Commissioned in April 2014 - Combined build of 10,000m? drystore, D3 drystore and blending and canning drystore into single build. - Resulted in savings of $2.5 million. © Synlait 2015 16
Slide 17: Dryer 3
DRYER 3
Slide 18: Dryer 3
DRYER 3 - Increased size of plant and capability of plant due to customer demand and more flexibility. - Plant size increased to 10.5 MT / hour which is an approx. 25% increase in volume capacity compared to original business case. - Business case suggested an IRR in excess of 20%. - Bank approved i
Slide 19: Quality Testing Laboratory and Administration Building
QUALITY TESTING LABORATORY AND ADMINISTRATION BUILDING
Slide 20: Quality Testing Laboratory and Administration Building
QUALITY TESTING LABORATORY AND ADMINISTRATION BUILDING — Significant increased in the scope of the laboratory, primarily driving increased spend — Tier 1 customers expectations of on-site lab. — Increased savings in third party costs. — Will undertake at least 80% of testing, currently done by third
Slide 21: General
GENERAL - Butter plant decision has been deferred to FY2016 to keep capital spend down in FY2015. - While increased capital spend does increase net debt in FY2015, we are forecasting to remain comfortably within our banking covenants. © Synlait 2015 21
Slide 22: Working Capital Financing
WORKING CAPITAL FINANCING
Slide 23: Inventory Financing Through Mitsui
INVENTORY FINANCING THROUGH MITSUI — USD financing of product as produced at contract sales value related to our tier 1 customers: - Represents approximately 40% - 45% of sales by volume. - Funding sales contract value therefore includes the margin element in addition to stock cost. - Based on a fix
Slide 24: Receivables Assignment Process
RECEIVABLES ASSIGNMENT PROCESS - Receivables assignment negotiated with our primary bank — ANZ. — Enables us to assign certain receivables associated with our Tier 1 customers on a non recourse basis. Major benefit is that it will allow us to improve our net debt position and our working capital rat
Slide 25: Results Guidance
RESULTS GUIDANCE
Slide 26: Maintaining full year results guidance, interim result lower
Maintaining full year results guidance, however expect interim result to be substantially lower than last year. — Majority of higher margin nutritional and lactoferrin product sales are planned to be in second half of this financial year. - Asaresult of these timing differences we expect our interim
Slide 27: Thank You
THANK YOU Media or investor queries can be directed to: Daniel Walraven Communications Advisor Synlait Milk Limited P: +64 3 373 3069 E: daniel.walraven@synlait.com www.synlait.com Michael Wan Marketing and Communications Manager Synlait Milk Limited P: +64 27 2888 253 E: michael.wan@synlait.com www