A2 Milk Company Limited · NZX:ATM
A2 Milk — The a2 Milk Company — UBS Emerging Companies Series (June 2015)
24 slides from A2 Milk's conference presentation, June 2015
Slide 1: UBS Emerging Companies Series
UBS Emerging Companies Series June 2015
Slide 2: The a2 Milk Company (a2MC) at a glance
The a2 Milk Company (a2MC) at a glance • a2MC is in the business of producing, marketing • a2MC sees itself as different from many other dairy and selling branded dairy and infant formula businesses: products in targeted global markets 1 • Focussed on building a high margin and differentiated busine
Slide 3: Brief company history
Brief company history1 2000 2008 2014 The a2 Milk Company™ is Consumer and healthcare a2MC fully acquires UK JV. founded by scientist Dr. Corran professional advocacy in Australia New management team and McLachlan and his business accelerates brand growth consumer proposition put in place partner Ho
Slide 4: Investment highlights
Investment highlights a2MC is not a conventional dairy company 02 Profitable Australian 01 business has grown Premium brand and rapidly providing a product range platform for additional supported by an 03 growth integrated intellectual Differentiated product property portfolio portfolio has broad ap
Slide 5: What is a2 Milk branded milk?
What is a2 Milk™ branded milk? • A naturally occurring cows’ milk and not a product of genetic engineering or technological processes • Regular cows’ milk contains 2 main types of beta-casein protein: A2 protein and A1 protein. a2MC branded milk contains only the A2 protein. It is comparable to regu
Slide 6: The a2 Milk brand is focussed on digestive benefits
The a2 Milk™ brand is focussed on digestive benefits Positive consumer experiences and developing body of research • The a2MC brand proposition has evoked a strong response from consumers, in terms of both the health and digestive benefits, in addition to the appeal of taste and freshness ‒ Consumer
Slide 7: a2MC proposition aligns with growing consumer demand for health and well-being
a2MC proposition aligns with growing consumer demand for health and well-being General health and well-being growth trends1 Global health and wellness dairy market (US$ bn) • Global consumers are becoming increasingly focussed on their health and well-being leading to significant growth in health an
Slide 8: Targeted and differentiated consumer proposition
Targeted and differentiated consumer proposition Distinctive and premium product portfolio Based around the benefits of A1 protein free products LIQUID MILK INFANT FORMULA OTHER DAIRY PRODUCTS FRESH MILK LONG LIFE MILK INFANT FORMULA CREAM YOGHURT Australia, UK, Australia, China Australia, Australia
Slide 9: Integrated portfolio of intellectual property and proprietary know-how
Integrated portfolio of intellectual property and proprietary know-how • Developed and continuing to enhance the scope of its integrated intellectual property portfolio • Portfolio combined with wide geographical coverage means potential competitors have restricted ability to produce and sell compet
Slide 10: Scalable and flexible supply chain
Scalable and flexible supply chain 1. Milk supply 2. Processing 3. Distribution 4. Retail/consumer Milk sourced from Milk processed at a2MC Contractors distribute Products sold through a segregated dairy herds facilities or contracted 3rd products to outlets/ variety of channels party facilities who
Slide 11: Focussed and consistent strategic growth map
Focussed and consistent strategic growth map STRATEGIC INTENT STRATEGIC PRIORITIES Continue to build a 1. Australian growth in liquid milk and other dairy products substantial premium 2. Investigate NZ liquid milk opportunity in advance of Fresha dairy business in Valley’s license expiring in 2017 A
Slide 12: Australia and New Zealand
Australia and New Zealand Current position Growth strategy • Significant branded milk business with a reliable • Enhance brand strength supply chain, strong sales growth and premium pricing • Build core ANZ liquid milk businesses – Segment revenue grew by 39% in 1H15 vs PCP • Grow a2 Platinum™ infan
Slide 13: United Kingdom
United Kingdom Current position Growth strategy • Entered UK market in 2011 through a JV with • Build targeted premium brand Robert Wiseman Dairies • Reposition existing fresh milk business • Revised arrangements and business model in calendar 2014 • Build distribution • End-to-end supply chain and
Slide 14: USA entry plan underway
USA entry plan underway • Entry concentrated initially in West Coast region from April 2015, prior to extending distribution into further state markets – Progressive launch commenced from Southern California in April with distribution planned to build to ~70% of grocery weighted distribution by end
Slide 15: China
China Current position Infant formula supply chain • Launched a2 Platinum™ infant formula in Nov-13 with the intention of establishing a position in China before expanding into other Asian markets Milk Infant formula Imported Distributed by Focus on sale sourced from manufactured into a2MC via 3rd i
Slide 16: China market opportunity
China market opportunity • a2MC’s entry into the Chinese infant formula market represents a foothold in one of the fastest growing regions globally • Management expects that consumer and economic trends will continue to drive growth in the premium and ultra-premium infant formula segments • Growth i
Slide 17: Summary historical financial performance
Summary historical financial performance • Strong sales growth driven primarily by the Australian and New Zealand segment • a2MC business model is focussed on revenue growth in key markets through re-investment of Australia and New Zealand earnings • Generated positive EBITDA since FY11 – Reduction
Slide 18: 1H15 Financial highlights
1H15 Financial highlights % NZ$ million 1H14 1H15 change • Revenue growth of 38% on PCP Revenue 54.2 74.8 +38% • Gross margin reflects higher milk costs in Australia Gross margin 19.9 26.1 +31% and modest UK margin to date • EBITDA before non-recurring items growth of 27% EBITDA before non- 2.6 3.31
Slide 19: 1H15 Financial highlights (cont'd.)
1H15 Financial highlights (cont'd.) 1H15 Segment EBITDA (NZ$ million) Australia and New Zealand ($9.1) million $14.0 million $4.9 million ANZ Operating EBITDA Net intercompany charges* ANZ Segment EBITDA China ($2.2) million +$1.6 million ($0.6) million China Operating EBITDA Net intercompany charge
Slide 20: Conservative capital position
Conservative capital position • Current business plan has been financed from a combination of equity and operating cash flows • Conservative approach to debt given growth profile and orientation – Balance sheet net cash position of $9.9m at 31 December 2014 • Current strategy assumes growth funded i
Slide 21: ASX Listing March 2015
ASX Listing 31 March 2015 • a2MC was admitted to the Official List of the Australian Securities Exchange (ASX) on 31st March 2015 • No capital was raised during the listing, however the listing provides for broader investor participation and improved access to capital markets over time • We have see
Slide 22: Why is a2MC an attractive investment opportunity?
Why is a2MC an attractive investment opportunity? A proven, sustainable, profitable business model in ANZ delivering upper quartile returns on capital relative to the industry Business centred on continuing to build a differentiated premium international brand Continued significant growth oppo
Slide 23: Disclaimer
Disclaimer This presentation dated 03 June 2015 is provided for information purposes only. The information contained in this presentation is not intended to be relied upon as advice to investors and does not take into account the investment objectives, financial situation or needs of any particular
Slide 24: The a2 Milk Company
The a2 Milk Company www.thea2zmilkcompany.com
The a2 Milk Company — UBS Emerging Companies Series (June 2015) on 6ix