A2 Milk Company Limited · NZX:ATM
A2 Milk — The a2 Milk Company — Non-Deal Roadshow (May 2018)
37 slides from A2 Milk's roadshow presentation, May 16, 2018
Slide 1: Investor Roadshow
Investor Roadshow CLSA| Singapore, Hong Kong| 16 -18 May 2018 a2 Milk™, a2 Platinum™ and The a2 Milk Company™ are trade marks of The a2 Milk Company Limited
Slide 2: Disclaimer
Disclaimer This presentation dated 16 May 2018 provides additional comment on the Interim Report for the six months ended 31 December 2017 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 read in conj
Slide 3: CEO quote on continued growth
“The Company’s continued growth reflects increasing consumer acceptance of our brand and the | benefits of dairy-based products free \\ from the A1 beta casein protein type” Geoffrey Babidge Managing Director & CEO a
Slide 4: Contents
Contents * Company overview * Group strategy update ¢ 1H18 results & regional highlights ¢ FY18 Q3 update & full year outlook ¢ Appendix
Slide 5: Company overview
Company overview
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 producing, marketing and selling premium branded dairy nutritional products in targeted global markets ¢ All a2MC branded products contain only A2 beta casein protein type rather than both A1 and A2 types found in c
Slide 7: The a2 Milk Company proposition
The a2 Milk Company proposition a2 Milk™ Single-minded company focus on A1 protein-free products (pioneers and experts) Unique and effective marketing approach = Compelling and growing scientific evidence Clean and green Australia and NZ sourcing profile (strength in Asia) vl, Integrated IP portfoli
Slide 8: Evolving from pioneer to global leader
Evolving from pioneer to global leader 2000 - 2006 2007 - 2017 am IP mus [| Innovative creators pioneers + Emerging beta-casein science + Move from licensing to operating business model + IP development + Develop brand, IP and know-how + Licensing approach to market entry + Australian a2 Milk™ brand
Slide 9: Leading the way in the A1 protein-free category
Leading the way in the A1 protein-free category * a2MC has anticipated broader interest in the A1 protein-free category given positive developments in the science and the strong growth being achieved by the Company ¢ The Company considers it is uniquely positioned to benefit from expansion of the ca
Slide 10: Group strategy update
Group strategy update J
Slide 11: Progress made on strategic priorities
Progress made on strategic priorities & © oe BROAD DAIRY TARGETED PROPRIETARY NUTRITIONAL ATTRACTIVE KNOW-HOW, PRODUCT PORTFOLIO REGIONS A2 PROTEIN EXPERTISE Across a continuum from the purity of fresh Asia Pacific focus Integrated intellectual property portfolio a2 Milk® to customised A1 protein-fr
Slide 12: Dairy nutrition innovation continuum
Dairy nutrition innovation continuum Pow Preg rit der. Bay unt on S ‘S ng Further scope for innovation in existing & adjacent & = product segments oe 2 ) ¢ g level of product customisation Milk drinks and — Protein powders Pa ? 2 4 O 4 é = % AS co P Gy - 3 ae Tiquig oo* ‘Dutritiov® oe
Slide 13: New unifying brand identity rolling out across regions and innovation
New unifying brand identity rolling out across regions and innovation CHOCOLATE! REDUCED FAT MILK 2H18 launch Pregnancy, infant and toddler nutrition _—— 2H18 launch 13
Slide 14: Global strategic supply partnerships
Global strategic supply partnerships Multi-site, multi-prod geograph Synlait Milk Limited Fonterra Co-operative Group Limited * Foundation infant nutrition partnership + Emerging markets, multi-product partnership * Multiple New Zealand manufacturing sites + Australia and New Zealand manufacturing s
Slide 15: Strategic relationship with Fonterra
Strategic relationship with Fonterra a2MC has entered into a comprehensive strategic relationship with Fonterra Co-operative Group Limited (Fonterra): Nutritional products manufacturing and supply agreement * Provides a2MC with a highly credentialed second manufacturing partner * Fonterra to supply
Slide 16: Strategic relationship with Fonterra
Strategic relationship with Fonterra New Zealand fresh milk licence ¢ Fonterra granted an exclusive licencing agreement: = Launch of a2 Milk™ branded fresh milk for end sale in New Zealand covering production, distribution, sale and marketing — Fonterra to access a2MC's systems and know-how relating
Slide 17: 1H18 results & regional highlights
1H18 results & v= regional highlights ==
Slide 18: 1H18 highlights
1H18 highlights ¢ Group revenue $434.7 million’ and Operating EBITDA? $143.0 million * Group a2 Platinum® infant formula revenue of $341.0 million, up 85% on pcp (prior corresponding period) ¢ ANZ segment revenue +47% and EBITDA +65% ¢ China revenue and EBITDA more than trebled vs pcp ¢ Infant formu
Slide 19: Key financial charts
Key financial charts’ Group Revenue (NZ$ million) Group EBITDA2 (NZ$ million) Basic Earnings Per Share (Cents) 549.5 141.2 143.0 FY1S FY16 FYI7 1H18 FY15 FY16 FY17 1H18 FY15 FY16 FY17 1H18 @1H @2H miH m2H Full Year mHalf Year "The Company's financial year ends 30 June; 1H refers to the first half pe
Slide 20: Financial summary
Financial summary NZ$ million 1H18 1H17. % change Revenue 434.7 256.1 +70% Gross margin 216.5 119.0 +82% Distribution (13.0) (9.5) 437% Marketing (26.0) (16.0) +62% Employee costs (16.4) (9.9) +65% Administration & other (18.0) (19.5) 8% * EBITDA 143.0 64.1 +123% EBIT 141.9 62.5 +127% NPAT 98.5 39.4
Slide 21: Segment financial performance
Segment financial performance an Australia & New | China & other 2 Total NZS million Zealand ‘Asia Corporate UK & USA’ Group Infant Formula tute Revenue 304.2 114.4 - 16.1 434.7 341.0 EBITDA! 116.4 48.3 (13.3) (8.4) 143.0 4417 Revenue 206.6 37.7 - 11.8 256.1 184.5 EBITDA 70.4 13.7 (12.3) (7.7) 64.1
Slide 22: 1H18 regional performance overview
1H18 regional performance overview' ANZ Revenue (NZ$ million) China & other Asia Revenue (NZ$ million) IK & USA Revenue (NZ$ mi 439.6 21.0 FY15 FY16 FY17 1H18 FY1S FY16 FYI7 1H18 FY1S FY16 FY17 1H18 m1H =2H m1Hm@2H m1H @2H * Revenue: $304.3 + Revenue: $114.4 + Revenue: $16.1 * EBITDA: $116.4 * EBITD
Slide 23: 1H18 regional performance highlights
1H18 regional performance highlights ANZ * Strong growth in a2 Platinum®, value share up from ~26% to 30%! * a2 Milk™ branded fresh milk market share growth to ~9.5% * Sales of a2 Milk™ branded milk powder significantly higher on pcp * a2 Platinum® Stage 4 performed above expectations + Active suppo
Slide 24: Science developments
Science developments ¢ Animal and human studies! highlight there are potential benefits of a2 Milk® due to the complete exclusion of the A1 protein2 = Conventional milk is a combination of A1 and A2 protein — Aland A2 proteins are different in structure and hence digest differently — Consumption of
Slide 25: FY18 Q3 update & full year outlook
FY18 Q3 update & full year outlook 25
Slide 26: Regional performance update to March 2018
Regional performance update to March 2018 ANZ China and other Asia ¢ Continuing strong sales performance for the ANZ business ¢ China and other Asia business performing to plan ¢ Sales of a2 Platinum® infant formula consistent with plan: ¢ No noticeable impact on IF sales from recent competitor entr
Slide 27: Regional performance update to March 2018
Regional performance update to March 2018 USA UK * Continuing positive progress in building sales per store and ¢ Volume sales of a2 Milk™ branded fresh milk increased by more distribution footprint than 50% against pcp ¢ Progressive improvement in gross margin and distribution costs ¢ Sales growth
Slide 28: Quarter update and FY18 outlook
Quarter 3 update and FY18 outlook Q318 trading performance (9 months to 31 March 2018) ~900- * Group revenue of NZ$660 million, up ~70% on pcp 920 —— — Reflects continued sales growth in both nutritional products and liquid milk — Includes impact of seasonal sales from key China selling events weigh
Slide 29: thea2milkcompany.com
thea2milkcompany.com
Slide 30: Appendix
Appendix O) 30
Slide 31: What is the a2 Milk brand difference?
What is the a2 Milk™ brand difference? * The a2 Milk™ brand is a naturally occurring cows’ milk and not a product of a technological process or genetic engineering * a2MC have accumulated significant proprietary know-how and quality processes to ensure a2MC products are A1 protein-free Al and A2 pro
Slide 32: Fundamentally the product works
Fundamentally the product works Siobhan (Australia) “I wish this had been around with my first born. Ithas been amazing for my son who had an upset tummy on 3 other brands we tried first then within 5 days on a2 he was the happiest baby. no constipation, no wind, a different kid. Hands down the best
Slide 33: USA: distribution expanded to Northeast from January
USA: distribution expanded to Northeast from January Northeast * Entered market Jan 2018 + Initially Whole Foods Northeast * Major Rollout to over 1400 stores in Jan 2018 including ShopRite, Wegmans, Fairway, H-Mart, Market Basket, Giant and Stop & Shop Legend HE Broad distribution IB Limited distri
Slide 34: USA: advertising and media exposure increasing brand awareness
USA: advertising and media exposure increasing brand awareness - .»** The TT “*=* 7 — 7 ¥ | ) { AN UDDER OPTION [A MILK EARNS ENDORSEMENTS & DAIRY INDUSTRY SKEPTICISM NY ENDORSEMENTS & DARY NDUSTRY XEPTICSM View advertising clip here: View news clip here: (https:/a2milk.com/love-milk-again-tvo/) (at
Slide 35: Cash position
Cash position Group Cash Movement: 1H18 (NZ$ million) 423 43.2 ss 052) es “ Cash on hand Group NPAT Inventory build Other working capital__ Investments in Depreciation, FX and other Cash on hand (un-17) PPE & intangibles amortisation & other (Dec-17) non-cash * Inventory build reflects increase in i
Slide 36: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures NZ$ million 1H18 FY17 1H17 Australia & New Zealand Segment EBITDA 116.4 155.3 70.4 China & other Asia Segment EBITDA 48.3 32.8 13.7 UK & USA Segment EBITDA (8.4) (22.5) (7.7) Corporate EBITDA (13.4) (24.4) (12.3) EBITDA' 143.0 141.2 64.1 Depreciation/Amortisation
Slide 37: thea2milkcompany.com
thea2milkcompany.com