A2M General Banter, page-2

Paying a dividend would reduce spare cashflow, reducing potential for:

- Marketing - stinting future growth
- This would reduce future market share for A2
- This would allow competitors to spend less to gain their own market share with their own "almost-as-good" products, some have deep pockets and we know they can easily sustain losses longer than A2M can.

- Future acquisitions
- If they market changed and suddenly demand increased from other suppliers or farmers with A2 herds started moving away from secure supply deals with Synlait, A2 may need to acquire either Synlait or farms directly to secure supply else suffer reduced profit margins. A dividend would reduce capacity to make this happen in the event markets turn.
- If a serious competitor came to town with patents it may be easier for A2 to take over the company - reduced cash holdings may make this impossible if the company is not nipped in the bud early enough.

When the grass is green the cows eat a plenty, but when summer drought come and wolves are at the gates, the cows wonder where the grass has gone - it is in the pockets of the farmers and the wolves are left alone.

We, being the farmers, the cows, being the company, the wolves, being the likes of Nestle and others.


Paying a dividend reduces market growth potential which is fine in a mature established market, but in growth phases you are simply limiting future share price growth and as such limiting future dividend payout maximum potential. It is a shot in the foot of each shareholder.

Just my initial thoughts.