Synlait Milk Ltd. · NZX:SML
Synlait Milk — Shareholder Meeting (December 2014)
35 slides from Synlait Milk's shareholder meeting presentation, Dec 2, 2014
Slide 1: Synlait Milk Limited Annual Meeting of Shareholders
synlait Synlait Milk Limited Annual Meeting of Shareholders 2 December 2014
Slide 2: Welcome
WELCOME FY14 Annual Report. Released 22.09.2014 Digital Edition. synlait.com/investors © Synlait 2014
Slide 3: Agenda
AGENDA — Welcome and Introductions. — Chairman's Message. — Managing Director's Message. — Chief Financial Officer’s Message. — Formal Resolutions. — Auditor Remuneration. — Election of Director (Bill Roest). — Directors’ Remuneration (increase). — Director Remuneration (review period). — Other Busi
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Slide 6: Key Messages
KEY MESSAGES Operating — FY2014 delivered on prospectus forecast. — Significant improvement in financial performance over FY2013. — Anumber of significant issues impacted on our FY2014 result. Growth — On-going FY2015 focus is to deliver on the execution of our growth initiatives, particularly Dryer
Slide 7: Operating Explanation
OPERATING EXPLANATION Positives - World market prices for our major products stayed firm for the first seven months of FY2014 and firmer than other dairy based products. Negatives - Market uncertainties in China due to changing regulations impacted on infant formula sales. - Some customers were forc
Slide 8: Market Overview
MARKET OVERVIEW Market Weighted Average Pricing Aug 13 Oct 13 Dec 13 Feb 14 Apr 14 Jun 14 Source: Global Dairy Trade™ © Synlait 2014
Slide 9: Market Overview
MARKET OVERVIEW — High volatility in commodity prices. — Increasing production from the European Union and United States of America has put downward pressure on prices. — Russian import ban on European Union imports increasing global powder supply. — China reduced purchasing due to overstocking last
Slide 10: Market Overview
MARKET OVERVIEW USD/MT eS = S S 3,500 3,000 2,500 2,000 - NG Ng ve wy eS © Synlait 2014 10
Slide 11: Future Focus
FUTURE FOCUS — Continuing focus on growing business with targeted customers. — Development of China and other Asian market opportunities in nutritionals. — Targeted spray dried lactoferrin sales of at least 15 MT. — Execution of growth initiatives: — Dryer 3 — Quality Testing Laboratory and Administ
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Slide 13: Margin Growth Key to Success
MARGIN GROWTH KEY TO SUCCESS Gross Profit per MT (NZD) 594 $NZD/MT FY2010 FY2011 FY2012 FY2013 © Synlait 2014 824 FY2014 13
Slide 14: Customer and Market Development Strategy
CUSTOMER AND MARKET DEVELOPMENT STRATEGY Breakdown of Sales Strategy 70 % Multinationals 2 5 % Regional Market Leaders fe) 5 O Unique Positioned Companies © Synlait 2014
Slide 15: Milk Supply
MILK SUPPLY 60.0 50.0 40.0 n S 30.0 264 20.0 10.0 FY10 © Synlait 2014 29.5 FY12 = Contracted ™ Other 46.8 49.9 FY14 15
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Slide 18: Blending and Consumer Packaging Facility
Slide 19: FY2015 Industry Outlook
FY2015 INDUSTRY OUTLOOK — S§trong global milk growth driving declining prices (particularly Europe). — Considerable uncertainty of China and Russia demand (low milk price). — Regulatory changes stabilising in China. — Significant investment in new production within New Zealand over next five years.
Slide 20: FY2015 Synlait Milk Outlook
FY2015 SYNLAIT MILK OUTLOOK - Increase milk powder business committed to infant formula and nutritional market approaching 50% of total business. - 45% of sales committed to four multinationals. - Completion of growth initiatives: — Dryer 3. — Quality Testing Laboratory and Administration Building.
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i = akara —CANTERBURY $5) LDU © Synlait 2014 21
Slide 22: Message
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Slide 23: Results Overview
RESULTS OVERVIEW © Synlait 2014 Revenue $600.5 million t 43.0% Gross Profit per MT $823 t 9.7% Net Profit After Tax $19.6 milliont 70.5% Retum of Capital Employed 11.5% 41.6% Gross Profit $77.1 million 418.4% EBITDA $43.8 million 413.8% Shareholders Funds $183.1 million 411.6% Total Shareholder Retu
Slide 24: Significant Impacts on FY2014 Margin
SIGNIFICANT IMPACTS ON FY2014 MARGIN! - While FY2014 margin at $77.1m was in line with PFI forecast, there were a number of significant impacts. — Including a one off product mix benefit estimated to be $24.5m. - However there have been some challenging issues: — Anticipated margin on infant formula
Slide 25: Balance Sheet and Cash Flows
BALANCE SHEET AND CASH FLOWS 2014 2013 Change 2014 Change Actual Actual % PFI Forecast % 281,117 Gearing 45.4% 39.2% 15.9% 32.0% 417% ' ROCE calculated after adjusting down FY2013 capital employed for the impact of $34.6m of one off cash flowitems that will unwind in FY2014. © Synlait 2014 25
Slide 26: Strategic Growth Initiatives
STRATEGIC GROWTH INITIATIVES $m Forecast / Actual PFI Variance to PFI Commissioned "22,500m2 Drystore 17.0 19.5 (2.5) ‘April 2014 31.9 16.1 68 ‘April 2014 39.2 275 17 July 2014 21.0 84 12.6 Scheduled June 2015 Quality Testing Laboratory and Administration Building 135.0 103.5 31.5 Scheduled Septembe
Slide 27: Bank Covenants and Working Capital Financing
BANK COVENANTS AND WORKING CAPITAL FINANCING Bank Covenants - Replaced TTA/TSF covenant with Minimum Shareholder Funds covenant. - Renegotiated Working Capital Ratio covenant. - Interest Cover Rate covenant remained unchanged. © Synlait 2014 27
Slide 28: Bank Covenants and Working Capital Financing
BANK COVENANTS AND WORKING CAPITAL FINANCING Working Capital Financing — Extended EAA with Mitsui to July 2017, with two significant benefits: 1. Lower fixed fee for export documentation services 2. Introduction of Inventory Financing at lower financing cost — Implementing Receivables Assignment pro
Slide 29: Formal Resolutions
FORMAL RESOLUTIONS
Slide 30: Formal Resolutions: Auditor's Remuneration
FORMAL RESOLUTIONS Auditor's Remuneration —- Resolution 1: To consider and, if thought fit, pass the following as an ordinary resolution: “That the Board be authorised to determine the auditor’s fees and expenses for the 2015 financial year.” © Synlait 2014 30
Slide 31: Formal Resolutions: Election of Director
FORMAL RESOLUTIONS Election of Director - Resolution 2: To consider and, if thought fit, pass the following as an ordinary resolution: “That Bill Roest be re-elected as a Director.” © Synlait 2014 31
Slide 32: Formal Resolutions: Directors' Remuneration
FORMAL RESOLUTIONS Directors’ Remuneration - Resolution 3: To consider and, if thought fit, pass the following as an ordinary resolutions: “That the annual fee for the Chairman of the Board be $108,000”; “That the annual fees of $66,000 be paid to each of the two Committee Chairs”; “The annual fees
Slide 33: Formal Resolutions: Directors' Remuneration Policy Review Period
FORMAL RESOLUTIONS Directors’ Remuneration Policy Review Period —- Resolution 4: To consider and, if thought fit, pass the following as an ordinary resolution: “That the Directors’ Remuneration Review Policy be changed to an annual review of Director Fees from 1 April 2015 onwards.” © Synlait 2014 3
Slide 34: Any Other Business
ANY OTHER BUSINESS © Synlait 2014 34
Slide 35: 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: [email protected] www.synlait.com © Synlait 2014 35