SM1 Result, page-60

Hi Cotton,

Please don't see this as an attack but in response to your post I would just like to clarify a few things.

The success of a2MC in China has been faster than many would have predicted a few years ago and although everyone acknowledges that there is a supply issue, management are certainly not sitting on their hands. Yes it would have been great to know how much demand there is now about three years ago, but you can't blame management for that.

Synlait who have an exclusive agreement to supply a2MC IF to ANZ and China are building a new site with 45k MT capacity. Once completed it will still take time to reach full capacity of our share but both Synlait and the a2MC are working hard to meet the growing demand. Unfortunately this takes time to build the facility, get the farmers on board and grow the A2 herds. We all wish we had the supply now but unless Hrdlicka has contacts at Hogwarts that I don't know about, I'm pretty sure we will have to do it the old fashioned way and wait it out. I think you can rest assured that the a2MC are well aware that they are missing sales right now and they are doing everything they can to rectify the problem.


As far as a strategic plan I think a2MC are a little more restricted here in what they can release to the shareholders than you think. The dairy industry is very competitive so they still need to keep some details quite so they do not alert larger competitors until the deals are done, this means only giving the shareholders the broad strokes. They also need to be factual in their forecasts and whilst it may be easy for a company like CBA to forecast five years in advance, it is a lot harder for a growth company like A2. There are a lot more variables in it's future and therefore they can only supply limited information, hence being a more speculative stock. Anything else would be irresponsible of the a2MC as a listed company.

So for the reasons above I have to disagree with you about holding management to account when really they have been victims of their own success. Everything is 20/20 in hindsight but nobody could have guaranteed this massive growth in demand years ago and it is unfair to expect a2MC to have made such an unrealistic move in supply without having that information. Management have to balance aggressive growth without overextending which would put the company and shareholders at risk, so I think they have done an amazing job.

If you disagree that is your opinion but any management team that can grow a company like this so quickly and is setting up so much future growth has my full support, I think it would be completely unrealistic to expect anything more. We all know what the future will hold for the SP once that supply kicks in for ANZ and China, not to mention the continued growth in the USA so I am more than happy with the direction they are taking a2MC.