A2 Milk Company Limited · NZX:ATM
A2 Milk — A2 — Shareholder Meeting (November 2013)
36 slides from A2 Milk's shareholder meeting presentation, Nov 19, 2013
Slide 1: A2 Corporation Annual Meeting
A2 Corporation Annual Meeting 19 November 2013
Slide 2: Presentation to AM - Geoffrey Babidge
A2 Corporation Presentation to AM 19 November 2013 Geoffrey Babidge Managing Director & CEO
Slide 3: Presentation Agenda
Presentation Agenda 1. Introduction 2. Key financial results 3. Australian business 4. UK business 5. China business 6. Intellectual Property 7. Organisation structure 8. Outlook
Slide 4: Introduction
Introduction • A2 Corporation (“A2C”) is a fast growing differentiated dairy business listed on the NZX from December 2012 and within the NZX50 index • A2C is the only company engaged in the commercialisation of a2 TM brand dairy products globally • A2C is one of the fastest growing regional FMCG bu
Slide 5: Current Geographical and Product Overview
Current Geographical and Product Overview Geographical Overview KEY Australia: Sourcing, processing, marketing and sale of fresh milk, infant formula, and licensing of yoghurt to Jalna NZ: Infant nutrition processing agreement with Synlait Milk and sales of infant formula UK & Ireland: Sales and mar
Slide 6: A2C Today
Business Highlights A fast growing regional FMCG business in dairy Quality Partners: with growing market share Significant UK (Muller Wiseman) geographic and and China Infant product expansion Formula (China State opportunities Farm) Strong A2C Differentiated product and management team Today premiu
Slide 7: Key financial results
Key financial results NZ$’000 2013 2012 Variance Trading Revenue $94,304 $62,458 51% Gross Margin – excl dep’n $34,604 $21,297 62% EBITDA $10,640 $4,737 125% NPAT $4,120 $4,405 -6% Equity $59,930 $37,348 60% EPS (diluted) 0.66 0.74 -11% Current Ratio 3.85 2.03 ROE 6.9% 11.8% Shares on Issue at Augus
Slide 8: The Australian business performed ahead of plan
The Australian business performed ahead of plan • a2® Milk™ sales increased 48% on the prior year. Remained the fastest growing dairy brand in Australian grocery • Continued growth in Operational Profit and in Gross Margin % of Sales given volumes and efficiencies for Sydney processing facility ahea
Slide 9: a2 brand milk: fastest growing and largest segment in the grocery premium market
a2® brand milk: fastest growing and largest segment in the grocery premium market % Share of Retail Fresh Milk in Grocery (Latest Quarter – by value) % Market Share Oct '12 Oct '13 7.9 The Australian business continues to grow strongly. 6.8 For the 4 months ended October 2013, sales in AUD showed YO
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Slide 12: UK Business in 2013
UK Business in 2013 • The plan in 2013 - completing JV business establishment and launching fresh milk • UK management team comprises 6 full time or contract employees managing sales, marketing, HCP activities and farm services • Supportive farmer supplier base developed - included a 2 year incentiv
Slide 13: UK Business - the future
UK Business - the future • A2C commenced the business with a partner Robert Wiseman Dairies (“RWD”) focused primarily on commoditised fresh milk market in the UK • Soon after RWD was acquired by the Theo Müller Group, a diversified dairy group with interests spanning many markets and products • A2C’
Slide 14: UK Business - the future
UK Business - the future • Under A2C control, the company will assume responsibility for marketing strategy and bolster the sales function with additional UK experienced selling skills • These changes will provide A2C increased capability in building retail distribution and developing ongoing commun
Slide 15: Recent UK Advertising Campaign
Recent UK Advertising Campaign • 4 weeks commencing 4/11/13 • Outdoor/transit, press, PR and social media • London metro focus • Supported by distribution drive, in-store selling/promo programs 15
Slide 16: China Business: Infant formula model in place
China Business: Infant formula model in place • China State Farm Holding Shanghai Company (“CSF”) appointed exclusive distributor in Greater China October 2012 • Joint marketing structure in operation • With the Synlait Milk supply agreement, this provides an integrated model for supply of high qual
Slide 17: Roll-out of a2 Platinum in China
Roll-out of a2® Platinum™ in China CSF plans to progressively roll-out a2® Platinum™ infant formula across Tier 1 and 2 cities initially targeting Baby Maternity stores and on-line in the Greater China region China – Indicative Roll-out of Distribution Heilongjiang Harbin Jilin Liaoning Xinjiang She
Slide 18: a2 brand infant formula in China
a2® brand infant formula in China Joint launch in the Great Hall of the People, Beijing (October 29, 2013) 18
Slide 19: A2C Intellectual Property (IP)
A2C Intellectual Property (IP) • A2C IP comprises a suite of global patents, trade marks, proprietary commercial processes and know how • Collectively A2C IP provides on-going exclusivity to the manufacture and sale of a2® branded milk products A2C continued to reinforce and expand its IP portfolio
Slide 20: Research & Development
Research & Development A2C & Independent Research 2013 A2C in collaboration with third parties An Indian group reports increased intestinal completed a rodent study examining A2 benefits to inflammation in A1 fed mice (Sep 2013 Euro J. Nutr.) digestive function • Consistent with A2 hypothesis •
Slide 21: The Organisation Structure has been strengthened
The Organisation Structure has been strengthened As at October 2013 Managing Director/CEO Geoff Babidge Chief GM Chief Marketing Chief Scientific GM GM GM CEO Financial International Officer Officer Asia UK New Market ANZ Officer Operations Susan Massasso Andrew Clarke Sarah Kolkman Simon Hennessy P
Slide 22: Outlook
Outlook • A2C will continue to develop the business consistent with its strategic plan: • Further develop the strong suite of IP and uniqueness of a2® brand products • Further grow the Australian fresh milk business and increase activities in NZ • Accelerate investment in the UK fresh milk business
Slide 23: Outlook - Launch costs for a2 Platinum infant formula in ANZ and China
Outlook • First Half FY2014 forecast currently reflects: - Australian business continuing to show growth in sales and earnings - Australian sales and earnings YOY impacted by stronger NZD - Launch costs for a2® Platinum™ infant formula in ANZ and China of circa $3m - Share of associate earnings for
Slide 24: Thank You
Thank You ® ; f j = j
Slide 25: Presentation to AM - Susan Massasso
A2 Corporation Presentation to AM 19 November 2013 Susan Massasso Chief Marketing Officer
Slide 26: a2 is a rare gem…
a2 is a rare gem… ® opportunity that will change the game significantly… manage the extraordinary growth potential in a way that builds on the current momentum of the business
Slide 27: we are on a journey...
we are on a journey...
Slide 28: what is a2? "relief" for a few
what is a2®? “relief” for a few
Slide 29: Consumer testimonials
“since switching to a2 Milk®, “our baby son is super sensitive…He's now 18 months and enjoy all I'm able to the Jalna A2 yoghurt is his favourite dairy products food - “…there are no scientific again.” no tummy pain at all!” studies… However, it is my www.fedup.com.au experience that so many of my w
Slide 30: a2 can be more
a2 can be more ®
Slide 31: "relief" for a few
“relief” Ly for a few
Slide 32: physical product values evolve from… to…
evolve from… to… physical compelling & product ownable brand values values for a few for many
Slide 33: ip know how global power brand
ip know how (a2®system) global power brand
Slide 34: Something extraordinary touches consumers and tells a story
“something extraordinary is something that touches consumers and tells a story, it's not just technology alone that builds a brand” The future of branding - Rita J King http://www.fastcoexist.com/3021539/futurist-forum/the-future-of-branding-is-creating-real-connections-between-consumers-and-pro
Slide 35: a2 is dairy as it should be
We’re in the process of developing our long term global brand territory. This is a draft preview of our story… a2 is dairy as it should be. ® Like it used to be in purer simpler times. We select better cows, purer cows without any genetic mutation. They produce the real deal, milk that is 100% good,
Slide 36: Thank You
Thank You ® ; f j = j