Ann: HALFYR: ATM: Half Year results for the period ending 31 December 2014

• Release Date: 25/02/15 08:30
• Summary: HALFYR: ATM: Half Year results for the period ending 31 December 2014
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					ATM
25/02/2015 08:30
HALFYR
PRICE SENSITIVE
REL: 0830 HRS The a2 Milk Company Limited

HALFYR: ATM: Half Year results for the period ending 31 December 2014

25 February 2015
The a2 Milk Company Limited

Chairman's Report

Dear Shareholder

I am pleased to report on the continuing progress of The a2 Milk Company
Limited ("the Company" or "a2MC") during the six months to 31 December 2014.

The Company and its subsidiaries ("the Group") achieved Group revenue of
$74.79 million and Group profit after tax of $0.13 million, reflecting the
strong growth in the Australian business and continued investment in our
strategic growth initiatives as we fund expansion into international markets.
The balance sheet position remained strong with cash on hand at the balance
sheet date of $9.86 million.

During the period, the Australian business performed exceptionally well as it
continued along its growth trend with sales and profit well ahead of the
corresponding period last year. In the UK, progress is being made on the
implementation of the revised business model, having received broad product
acceptance with a growing retail distribution base. We have recommenced sales
to China and continue to work on the establishment of strong distribution
networks in the region. The USA market entry plan is near complete, with a
launch expected in fourth quarter of FY15.

On 18 November 2014, the Company announced plans to seek a listing on the
Australian Securities Exchange ("ASX") in addition to its New Zealand
Exchange ("NZX") Listing. It is expected the listing will enable more
Australian investors to participate in the Company's growth, will improve the
liquidity of the Company's shares and will closer align the Company's capital
markets profile and business operations. This process is well progressed and
the application for the listing of the Company's securities on the ASX is
imminent. The CEO's report contains further detail on the Group's operational
performance. I wish to thank our management, staff and my fellow Directors
for their significant efforts and also our customers, business partners and
shareholders for their continued support.

Best regards
CJ Cook
Chairman
24 February 2015

CEO's Report

Overview

The Group performed ahead of plan during the period and its strategic growth
initiatives continued to gain momentum. The Company's strategic plan is based
on funding growth in priority international markets from increasing
Australian profits. The Australian business achieved a record revenue and
earnings result and the UK business achieved milestones consistent with the
revised plan. The China infant formula business has been repositioned in
response to the changes in regulation of imports during 2014, and the
planning for the launch of a2 Milk(TM) into the United States in coming
months has been progressed. As foreshadowed at the general meeting in
November 2014, the Company is finalising an application for the listing of
its securities on the Australian Securities Exchange ("ASX") in addition to
its existing NZX listing.

The unaudited Group profit after tax for the 6 months
ended 31 December 2014 was $125,000 and included:
- Total revenue of $74.79 million, an increase of 38%
over the prior corresponding period ("PCP");
- Group EBITDA of $3.27 million before non-recurring
items, an increase of 27% over the PCP;
- EBITDA after inter-company charges for the
Australian and New Zealand operations of $4.88
million, an increase of 113% on the PCP;
- EBITDA associated with establishing the UK business
of ($1.92) million after inter-company charges;
- EBITDA associated with establishing the China
business of ($0.61) million after inter-company charges;
- Corporate EBITDA after inter-company charges
of $0.92 million (before non-recurring items
of $0.76 million); and
- Income tax charge of $1.56 million.
The higher income tax charge represents higher nondeductible expenses (mainly
related to development and ASX listing costs), and UK losses not tax
effected.

The balance sheet at 31 December 2014 includes cash on hand of $9.86 million.
The operating cash outflow for the half primarily reflects an increase in
working capital associated with the growth in infant formula and milk sales.

Management believes that the 2016 revenue projection of $230 million advised
in the 2014 annual report remains appropriate. Whilst meaningful revenue from
China and the UK is yet to emerge, these businesses are gaining traction and
the Australian business continues to outperform expectations. In addition,
sales in the USA market are expected to compensate for any shortfall in other
markets.

Australian growth continues strongly

The Australian and New Zealand business continued to perform strongly with
sales growth and operating earnings in Australia well ahead of the PCP. Total
revenue growth for the Australian and New Zealand business relative to the
PCP was ~39%. EBITDA before intercompany charges was $13.96 million.
(Please see attachment for the remainder of CEO's report)

Geoffrey Babidge
Chief Executive Officer
24 February 2015
End CA:00261068 For:ATM    Type:HALFYR     Time:2015-02-25 08:30:03