Full Year 2026 a2 Milk Co Ltd Earnings Call

August 16, 2026

Speaker #1: Good morning, everyone, and thank you for joining us today. My name is David Bortolici. I'm the Managing Director and CEO of The a2 Milk Company.

David Bortolussi: Good morning, everyone, and thank you for joining us today. My name is David Bortolussi, I am the Managing Director and CEO of The a2 Milk Company. Today, I am joined on the call by our CFO, Dave Muscat, and our business unit leaders, Li Zhao, Yohan Senaratne, Jaron McVicar, and Kevin Bush. The team and I will present the results and outlook, and there will be time at the end for questions. During the presentation, we will focus on continuing operations excluding MVM, which we divested in the H1, and occasionally refer to underlying results, which excludes both MVM and a2 Pokeno.

David Bortolussi: Good morning, everyone, and thank you for joining us today. My name is David Bortolussi, I am the Managing Director and CEO of The a2 Milk Company. Today, I am joined on the call by our CFO, Dave Muscat, and our business unit leaders, Li Xiao, Yohan Senaratne, Jaron McVicar, and Kevin Bush. The team and I will present the results and outlook, and there will be time at the end for questions. During the presentation, we will focus on continuing operations excluding MVM, which we divested in the H1, and occasionally refer to underlying results, which excludes both MVM and a2 Pokeno.

Speaker #1: Today I'm joined on the call by our CFO, Dave Musket, and our Business Unit Leaders: Lee Zhao, Yoan Senna Ratner, Jeremy McVicker, and Kevin Bush.

Speaker #1: The team and I will present the results and outlook, and there will be time at the end for questions. During the presentation, we'll focus on continuing operations, excluding MVM, which we divested in the first half, and occasionally refer to underlying results, which exclude both MVM and A2 Pocono.

Speaker #1: We've excluded A2 Pocono from the underlying results, given that the site is currently underutilized and incurring manufacturing losses and transformation costs, which are short-term in nature.

David Bortolussi: We have excluded a2 Pokeno from the underlying results, given that the site is currently underutilized and incurring manufacturing losses and transformation costs, which are short-term in nature. Starting on slide 4, we delivered FY2026 results in line with or slightly ahead of our updated April guidance with double-digit revenue growth.

Speaker #1: Starting on slide 4, we delivered FY26 results in line with, or slightly ahead of, our updated April guidance, with double-digit revenue growth. Infant milk formula, or IMF, grew 5% in a flat China market, supported by strong English label growth, with China label sales significantly impacted by temporary supply chain disruption in the fourth quarter.

David Bortolussi: Infant milk formula, or IMF, grew 5% in a flat China market, supported by strong English label growth, with China label sales significantly impacted by temporary supply chain disruption in the Q4. Supply chain disruption had a material impact on China IMF product availability, performance, and supply chain costs, which impacted our H2 group sales and earnings. As you would expect, we have a comprehensive recovery plan in place and we commenced execution, which I will come back to later in the presentation. Other Nutritionals grew significantly by 42% through innovation in kids, seniors, UHT, and supplements. In liquid milk, growth was well above market at 22% in Australia and the US. Our commitment to innovation has resulted in the launch of a series of new products over recent years, which are making meaningful contributions to our growth.

Speaker #1: Supply chain disruption had a material impact on China IMF product availability, performance, and supply chain costs, which impacted our second-half group sales and earnings.

Speaker #1: As you would expect, we have a comprehensive recovery plan in place, and we've commenced execution, which I'll come back to later in the presentation.

Speaker #1: Other nutritionals grew significantly by 42% through innovation in kids, seniors, UHT, and supplements. Liquid milk growth was well above market at 22% in Australia and the US.

Speaker #1: Our commitment to innovation has resulted in the launch of a series of new products over recent years, which are making meaningful contributions to our growth.

Speaker #1: These new products accounted for more than 50% of our sales growth in FY26, with further launches planned in the first half of '27. We also advanced our supply chain transformation through the divestment of MVM and the acquisition of A2 Pocono, with the transformation program on track or ahead of plan.

David Bortolussi: These new products accounted for more than 50% of our sales growth in FY2026, with further launches planned in the H1 of 2027. We also advanced our supply chain transformation through the divestment of MVM and the acquisition of a2 Pokeno, with the transformation program on track or ahead of plan. Finally, following regulatory approval of our two new China label registrations, we declared a NZD 300 million special dividend, and today announced an increase in our full-year ordinary dividends with improved payout ratio. In combination, we have declared a total of NZD 453 million of ordinary and special dividends in FY2026. Turning to our financial summary on Slide 5. Revenue was up 12.4% to NZD 1.95 billion. Reported EBITDA was down 2.5% to NZD 284 million, which was impacted by supply chain disruption and a2 Pokeno losses.

Speaker #1: Finally, from a regulatory approach, following regulatory approval of our two new China label registrations, we declared a $300 million special dividend and today announce an increase in our full-year ordinary dividends with an improved payout ratio.

Speaker #1: We've declared a total of $453 million of ordinary and special dividends in FY26. Turning to our financial summary on slide 5, revenue was up 12.4% to $1.95 billion. Reported EBITDA was down 2.5% to $284 million, which was impacted by supply chain disruption and a2 Pocono losses.

Speaker #1: On an underlying basis, excluding A2 Pocono, EBITDA was up 5.4%, and underlying EBITDA margin was 15.6%. From an earnings perspective, underlying net profit after tax and underlying EPS were up approximately 7%.

David Bortolussi: On an underlying basis, excluding a2 Pokeno, EBITDA was up 5.4% and underlying EBITDA margin was 15.6%. From earnings perspective, underlying net profit after tax and underlying EPS were up approximately 7%. Slide 6 shows that our growth was broad-based across all of our geographic markets and product categories. China and other Asia grew 11%, ANZ 10%, and the US over 28%. By product category, IMF was up around 5%, liquid milk up 22%, and other nutritionals up 42%, excluding a2 Pokeno sales. Moving to Slide 7. The China IMF market was relatively flat, with premiumization offsetting a low single-digit volume decline. The China label IMF market stabilized and English label growth slowed significantly in the H2 due to the impacts of industry recalls. Pleasingly, the a2 type protein and ultra-premium segments continued to grow ahead of the category, which plays to our strengths.

Speaker #1: Slide 6 shows that our growth was broad-based across all of our geographic markets and product categories. China and Other Asia grew 11%, ANZ 10%, and the US over 28%.

Speaker #1: Our product category, IMF, was up around 5%; liquid milk, up 22%; and other nutritionals, up 42%, excluding a2™ Pōkano sales. Moving to slide 7, the China IMF market was relatively flat, with premiumization offsetting a low single-digit volume decline.

Speaker #1: The China label IMF market stabilized, and English label growth slowed significantly in the second half due to the impacts of industry recalls. Pleasingly, the A2-type protein and ultra-premium segments continued to grow ahead of the category, which plays to our strengths.

David Bortolussi: Slide 8 addresses the supply chain disruption experienced in the Q4. As outlined in our market announcements in April and July, product availability was materially impacted by a number of factors, including strong demand in the preceding quarter, freight challenges, a production backlog at Synlait, extended product release time frames, and additional customs and testing requirements. These factors have been resolved and availability has significantly improved. However, the in-market product availability issues necessitated a large proportion of our existing users to switch to alternative brands, which as you can see, significantly impacted our China label market share during the Q4. The rate of recovery will depend on our ability to regain past users, new user recruitment momentum, and the performance of our new China label IMF products.

Speaker #1: Slide 8 addresses the supply chain disruption experienced in the fourth quarter. As outlined in our market announcements in April and July, product availability was materially impacted by a number of factors, including strong demand in the preceding quarter, freight challenges, a production backlog at Xinlei, extended product release timeframes, and additional customs and testing requirements.

Speaker #1: These factors have been resolved, and availability has significantly improved. However, the in-market product availability issues necessitated a large proportion of our existing users to switch to alternative brands, which, as you can see, significantly impacted our China label market share during the fourth quarter.

Speaker #1: The rate of recovery will depend on our ability to regain past users, build momentum in new user recruitment, and the performance of our new China label IMF products.

Speaker #1: Slide 9 sets out our recovery plan, built around rebuilding trust, driving past and new user recruitment, supporting our distributor and retailer ecosystem, and launching new products.

David Bortolussi: Slide 9 sets out our recovery plan, built around rebuilding trust, driving past and new user recruitment, supporting our distributor and retailer ecosystem, and launching new products. There has been positive early progress against our plan. A new traceability tool has been very well received by consumers. Brand sentiment is recovering, and new user recruitment conversion rates are back to or above historical levels. Moving to slide 10, the first wave of marketing behind our China IMF recovery is focused on reassuring consumers that a2 products are of the highest quality. This includes a market-leading traceability tool with batch-by-batch testing, an endorsement campaign from China State Media, Xinhua News Agency, with a leading food safety expert, and independent validation by a leading quality assurance influencer, Dailo. Together, these initiatives are rebuilding confidence in quality and supply and driving positive sentiment.

Speaker #1: There has been positive early progress against our plan. A new traceability tool has been very well received by consumers, brand sentiment is recovering, and new user recruitment conversion rates are back to or above historical levels.

Speaker #1: Moving to slide 10, the first wave of marketing behind our China IMF recovery is focused on reassuring consumers that a2 products are of the highest quality.

Speaker #1: This includes a market-leading traceability tool with batch-by-batch testing, an endorsement campaign from China state media, Xinhua News, as a leading food safety expert, and independent validation by a leading quality assurance influencer, Daddy Lo.

David Bortolussi: This includes a market-leading traceability tool with batch-by-batch testing, an endorsement campaign from China State Media, Xinhua News Agency, with a leading food safety expert, and independent validation by a leading quality assurance influencer, Dailo. Together, these initiatives are rebuilding confidence in quality and supply and driving positive sentiment.

Speaker #1: Together, these initiatives are rebuilding confidence in quality in supply and driving positive sentiment. The next slide measures how our social media and PR activity is helping to rebuild confidence in the a2 brand.

David Bortolussi: The next slide measures how our social media and PR activity is helping rebuild confidence in the a2 brand. Brand sentiment has recovered quickly towards prior levels, with the ratio of positive to negative sentiment improving significantly in July. Search interest in the a2 brand, a2 Zhichu and a2 Platinum on the major e-commerce platforms has been recovering each week, reaching around 80% of December to January peak levels by the end of July. From mid-August, our new user education and recruitment programs will ramp up, followed by a broader a2 brand superiority campaign in October. Getting to our outlook statement on Slide 12, we expect revenue and EBITDA to grow in FY27, supported by innovation and new markets, continued momentum in other nutritionals and liquid milk, and improved profitability at a2 Pokeno.

Speaker #1: Brand sentiment has recovered quickly toward prior levels, with the ratio of positive to negative sentiment improving significantly in July. Search interest in the a2 brand, A2 Zhe Qiu, and a2 Platinum on the major e-commerce platforms has been recovering each week, reaching around 80% of December to January peak levels by the end of July.

Speaker #1: From mid-August, our new user education and recruitment programs will ramp up, followed by a broader a2 brand superiority campaign in October. Turning to our outlook statement on Slide 12, we expect revenue and EBITDA to grow in FY27, supported by innovation and new markets, continued momentum in other nutritionals and liquid milk, and improved profitability at a2 Pocono.

Speaker #1: IMF sales are expected to be impacted by the flow-on effects of supply chain disruption in the fourth quarter, with a gradual recovery over the course of the year, supported by an increase in marketing investment, particularly in the first half.

David Bortolussi: IMF sales are expected to be impacted by the flow-on effects of supply chain disruption in the Q4, with a gradual recovery over the course of the year, supported by an increase in marketing investment, particularly in the H1. As a result, group revenue and EBITDA are expected to be materially weighted to the H2. Overall, we currently expect mid-single-digit revenue growth in FY27, with H1 revenue broadly in line with last year. EBITDA margin is expected to be approximately 15% with the H1 materially down on PCP before improving in the H2. Our full outlook statement, including key risks, is set out in our results commentary released today. Slide 13 outlines our strategy, which is unchanged and enduring.

Speaker #1: As a result, group revenue and EBITDA are expected to be materially weighted to the second half. Overall, we currently expect mid-single-digit revenue growth in FY27, with first-half revenue broadly in line with last year.

Speaker #1: EBITDA margin is expected to be approximately 15%, with the first half materially down on PCP, before improving in the second half. Our full outlook statement, including key risks, is set out in our results commentary released today.

Speaker #1: Slide 13 outlines our strategy, which is unchanged and enduring. We remain focused on capturing the full potential in China IMF, ramping up product innovation, entering new markets, and transforming our supply chain.

David Bortolussi: We remain focused on capturing the full potential in China IMF, ramping up product innovation, entering new markets, and transforming our supply chain, all underpinned by our brand strength and science and innovation capability. As Slide 14 shows, we continue to track well against our medium-term financial and non-financial goals and remain on track to deliver the majority of our targets despite the temporary supply chain disruptions during Q4. Turning to the next slide, we just fell short of achieving our medium-term revenue ambition of NZD 2 billion this year, but we will do so in FY27. Our market and category growth drivers remain on track, except for China label IMF, which has been impacted by supply chain disruption and is a key focus and work in progress currently.

Speaker #1: All underpinned by our brand strength and science and innovation capability. As slide 14 shows, we continue to track well against our medium-term financial and non-financial goals, and remain on track to deliver the majority of our targets despite the temporary supply chain disruption during the fourth quarter.

Speaker #1: Turning to the next slide, we just fell short of achieving our medium-term revenue ambition of $2 billion this year, but we will do so in FY27.

Speaker #1: Our market and category growth drivers remain on track, except for China label IMF, which has been impacted by supply chain disruption and is a key focus and work in progress currently.

Speaker #1: Moving to the next page—and beyond our FY27 goals—we have significant growth opportunities to capture in our core business, adjacent categories, and new markets over the years ahead.

David Bortolussi: Moving to the next page and beyond our FY27 goals, we have significant growth opportunities to capture in our core business, adjacent categories, and new markets over the years ahead. We have been addressing these opportunities over time and thought it would be helpful to lay out the markets and categories we are focused on, the estimated size of these markets at retail, the addressable component, our current share, and how our portfolio through innovation and new markets has evolved from FY21 to where we expect to be by the end of FY27. Interestingly, our portfolio of products and markets has expanded from eight in FY21 to a planned 36 by the end of this year, which is an indication of the focus on innovation and market expansion. In summary, we have a low share of a large TAM with plenty of growth opportunities to pursue over the long term.

Speaker #1: We've been addressing these opportunities over time, and thought it would be helpful to lay out the markets and categories we are focused on, the estimated size of these retail markets, the addressable component, our current share, and how our portfolio—through innovation and new markets—has evolved from FY21 to where we expect to be by the end of FY27.

Speaker #1: Interestingly, our portfolio of products and markets has expanded from 8 in FY21 to a planned 36 by the end of this year, which is an indication of our focus on innovation and market expansion.

Speaker #1: In summary, we have a low share of a large TAM, with plenty of growth opportunities to pursue over the long term. Over recent years, we have focused on expanding our product portfolio, supported by investment in innovation and product development capability, A2 Pocono, and building a network of strategic manufacturing partners.

David Bortolussi: Over recent years, we have focused on expanding our product portfolio supported by investment in innovation and product development capability, a2 Pokeno, and building a network of strategic manufacturing partners. Slide 17 highlights the many new innovations coming to market in FY27 and beyond. In H1 2027, we will launch two new China label products that will expand our China label portfolio from one to three. Significant updates to a2 Platinum and a2 Genesis, alongside continued expansion in other nutritionals, which Li and Yohan will cover later. Moving to Slide 18, which speaks to the science that underpins our a2 brand proposition and innovation. We have continued to invest in research for more than 25 years, building scientific evidence around milk that is A1 protein-free. A highlight this year was our US growth monitoring study, a key clinical requirement for the FDA infant formula approval process.

Speaker #1: Slide 17 highlights the many new innovations coming to market in FY27 and beyond. In the first half of '27, we'll launch two new China label products that will expand our China label portfolio from 1 to 3, significant updates to a2 Platinum and a2 Genesis, alongside continued expansion in other nutritionals, which Chow and Yohan will cover later.

Speaker #1: Moving to slide 18, which speaks to the science that underpins our a2 brand proposition and innovation. We have continued to invest in research for more than 25 years, building scientific evidence around milk that is A1 protein-free.

Speaker #1: I'll highlight that this year, our US growth monitoring study—a key clinical requirement for the FDA infant formula approval process—showed that infants consuming formula made with A2 milk demonstrated appropriate growth and had a comparable safety profile to infants consuming conventional formula, which is the primary purpose of the study.

David Bortolussi: The study showed that infants consuming formula made with a2 Milk demonstrated appropriate growth and had a comparable safety profile to infants consuming conventional formula, which is the primary purpose of the study. However, secondary analysis of the data showed a 6% greater length and weight gain versus conventional infant formula. These findings were presented at the American Society for Nutrition Annual Meeting in July and attracted significant interest. Slides 19 and 20 cover our supply chain transformation. During the year, we completed the acquisition of a2 Pokeno, a world-class nutritional facility, and the divestment of MVM. Since acquisition, we have more than doubled our Pokeno team, delivered the first phase of our multi-year capital investment program on time and on budget, and secured registration amendments for the two new China label products.

Speaker #1: However, secondary analysis of the data showed a 6% greater length and weight gain versus conventional infant formula. These findings were presented at the American Society for Nutrition annual meeting in July and attracted significant interest.

Speaker #1: Slides 19 and 20 cover our supply chain transformation. During the year, we completed the acquisition of A2 Pocono, a world-class nutritional facility, and the divestment of MVM.

Speaker #1: Since acquisition, we've more than doubled our Pocono team, delivered the first phase of our multi-year capital investment program on time and on budget, and secured registration amendments for the two new China label products.

Speaker #1: The site is on track for an EBITDA break-even result in FY27 as we insource a2 Platinum and capture vertical margin benefits. As per slide 20, all of our key milestones, with respect to English label transition, China label registrations, and facility upgrades through FY26, are complete—with our FY27 metrics on track, and production and financials in line with plans.

David Bortolussi: The site is on track for an EBITDA breakeven result in FY27 as we insource a2 Platinum and capture vertical margin benefits. As to slide 20, all of our key milestones with respect to English label transition, China label registrations, and facility upgrades through FY26 are all complete, with our FY27 metrics on track, with production and financials in line with plan. Finally, on slide 21, we continue to make good progress on sustainability, including commencing work to convert the a2 Pokeno gas-fired boiler to an electro boiler to progress towards our Scope 1 and 2 net zero target by 2030. We also established real on-farm data collection approaches to increase the accuracy of our Scope 3 emissions reporting and awarded 27 new projects through our farm sustainability farms. I will now hand over to Dave to take us through the financials in more detail.

David Bortolussi: The site is on track for an EBITDA breakeven result in FY27 as we insource a2 Platinum and capture vertical margin benefits. As to slide 20, all of our key milestones with respect to English label transition, China label registrations, and facility upgrades through FY 2026 are all complete, with our FY27 metrics on track, with production and financials in line with plan. Finally, on slide 21, we continue to make good progress on sustainability, including commencing work to convert the a2 Pokeno gas-fired boiler to an electro boiler to progress towards our Scope 1 and 2 net zero target by 2030. We also established real on-farm data collection approaches to increase the accuracy of our Scope 3 emissions reporting and awarded 27 new projects through our farm sustainability farms. I will now hand over to Dave to take us through the financials in more detail.

Speaker #1: Finally, on slide 21, we continue to make good progress on sustainability, including commencing work to convert the A2 Pocono gas-fired boiler to an electrode boiler, to progress towards our Scope 1 and 2 net-zero target by 2030.

Speaker #1: We also established real-time data collection approaches to increase the accuracy of our Scope 3 emissions reporting, and awarded 27 new projects through our Farm Sustainability Fund.

Speaker #1: I'll now hand over to Dave to take us through the financials in more detail.

Speaker #2: Thanks, David, and good morning, everyone. Starting on slide 23 with our group P&L, net sales revenue was up 12.4% to $1.972 billion, with growth across all product categories and segments.

Dave Muscat: Thanks, David, and good morning, everyone. Starting on slide 23 with our group P&L. Net sales revenue was up 12.4% to NZD 1.972 billion, with growth across all product categories and segments. Gross margin was 47.7%, down 3.4 percentage points, reflecting a2 Pokeno losses, which were in line with expectations, a lower share of China label sales, one-time costs related to the previously mentioned supply chain disruption, and higher COGS due to higher milk and other ingredients prices, particularly in the second half. Distribution costs were marginally higher as a percentage of net sales revenue at 3.5% due to higher freight rates, primarily related to the liquid milk businesses. Marketing investment of NZD 325 million was higher in support of the China growth strategy, innovation, and new user recruitment.

Speaker #2: Gross margin was 47.7%, down 3.4 percentage points, reflecting A2 Pocono losses—which were in line with expectations—a lower share of China label sales, one-time costs related to the previously mentioned supply chain disruption, and higher COGS due to higher milk and other ingredient prices, particularly in the second half.

Speaker #2: Distribution costs were marginally higher as a percentage of net sales revenue at 3.5%, due to higher freight rates, primarily related to the liquid milk businesses.

Speaker #2: Marketing investment of $325 million was higher in support of the China growth strategy, innovation, and user recruitment. SG&A was also higher this year, mainly reflecting investment in capability to support China growth and supply chain transformation, including planned A2 Pocono operating and transformation costs.

Dave Muscat: SG&A was also higher this year, mainly reflecting investment in capabilities to support China growth and supply chain transformation, including planned a2 Pokeno operating and transformation costs. However, if you exclude FX losses caused by the New Zealand dollar devaluation, SG&A as a percentage of sales was lower than last year. Reported EBITDA was NZD 284.4 million, with margin in line with our previous guidance. On an underlying basis, excluding a2 Pokeno losses and transformation costs, EBITDA increased to NZD 307.6 million, reflecting growth in the underlying business. Our effective tax rate improved to 30%, supported by improved profitability in New Zealand and partial utilization of our group tax losses. NPAT from continuing operations was NZD 208 million or NZD 235.8 million on an underlying basis. We also declared a final dividend of NZD 0.095 per share, representing a payout ratio of around 74%.

Speaker #2: However, if you exclude FX losses caused by the New Zealand dollar devaluation, SG&A as a percentage of sales was lower than last year. Reported EBITDA was $284.4 million, with margin in line with our previous guidance.

Speaker #2: On an underlying basis, excluding A2 Pocono losses and transformation costs, EBITDA increased to $307.6 million, reflecting growth in the underlying business. Our effective tax rate improved to 30%, supported by improved profitability in New Zealand and partial utilization of our group tax losses.

Dave Muscat: Our effective tax rate improved to 30%, supported by improved profitability in New Zealand and partial utilization of our group tax losses. NPAT from continuing operations was NZD 208 million or NZD 235.8 million on an underlying basis. We also declared a final dividend of NZD 0.095 per share, representing a payout ratio of around 74%.

Speaker #2: NPAT from continuing operations was $208 million, or $235.8 million on an underlying basis. We also declared a final dividend of 9.5 cents per share, representing a payout ratio of around 74%.

Speaker #2: The dividend will be fully franked and unimputed, and will be paid on the 2nd of October. Slides 24 and 25 set out our segment and product performance.

Dave Muscat: The dividend will be fully franked and un-imputed and will be paid on 2 October. Slides 24 and 25 set out our segment and product performance. On slide 24, China and other Asia revenue grew by 11.2%, with segment revenue and EBITDA impacted by a2 Pokeno losses and the Q4 supply chain disruption. ANZ and USA both achieved double-digit revenue growth, with USA EBITDA improving materially. Slide 25 shows revenue growth across all product categories at a group level, with liquid milk and other nutritionals growth partially offsetting China label IMF decline. Moving on to slide 26, operating cash flow was NZD 133.1 million, with cash conversion of 68%, in line with our updated guidance.

Speaker #2: On slide 24, China and Other Asia revenue grew by 11.2%, with segment revenue and EBITDA impacted by A2 Pocono losses and the fourth quarter supply chain disruption.

Speaker #2: ANZ and USA both achieved double-digit revenue growth, with USA EBITDA improving materially. Slide 25 shows revenue growth across all product categories and group level, with liquid milk and other nutritionals growth partially offsetting China label IMF decline.

Speaker #2: Moving on to slide 26, operating cash flow was $133.1 million, with cash conversion of 68% in line with our updated guidance. This reflects the planned inventory builds associated with the A2 Pocono ramp-up and normalization of China label IMF inventory, plus some timing impacts related to the fourth quarter supply chain disruption.

Dave Muscat: This reflects the planned inventory build associated with the a2 Pokeno ramp-up and normalization of China label IMF inventory, plus some timing impacts related to the Q4 supply chain disruption. Investing cash flows included net cash, net supply chain transaction outflows of around NZD 165 million associated with the a2 Pokeno acquisition and MVM divestment, with other investing activities, including a reduction in our term deposits and CapEx additions relating to our a2 Pokeno capital upgrades. Our closing cash balance at the end of the period was NZD 784.5 million, down NZD 276.7 million, reflecting the previously mentioned supply chain transactions, a2 Pokeno capital investment programs, and dividends paid throughout the period. Turning to slide 27, our balance sheet remains strong with cash and term deposits of NZD 784.5 million and no external debt. Inventory, as previously mentioned, increased and intangibles rose with the goodwill from the a2 Pokeno acquisition.

Speaker #2: Investing cash flows included net supply chain transaction outflows of around $165 million, associated with the A2 Pocono acquisition and MVM divestment, with other investing activities including a reduction in our term deposits and capex additions relating to our A2 Pocono capital upgrades.

Speaker #2: Our closing cash balance at the end of the period was $784.5 million, down $276.7 million, reflecting the previously mentioned supply chain transactions, A2 Pocono capital investment program, and dividends paid throughout the period.

Speaker #2: Turning to slide 27, our balance sheet remains strong, with cash and term deposits of $784.5 million and no external debt. Inventory, as previously mentioned, increased and intangibles rose with the goodwill from the A2 Pocono acquisition.

Dave Muscat: Turning to slide 27, our balance sheet remains strong with cash and term deposits of NZD 784.5 million and no external debt. Inventory, as previously mentioned, increased and intangibles rose with the goodwill from the a2 Pokeno acquisition. The balance sheet gives us capacity to support our growth strategy while balancing risk and maintaining flexibility for future investment. That concludes the financial overview. I will now hand over to Li to take you through the performance of our China label business.

Speaker #2: The balance sheet gives us the capacity to support our growth strategy while balancing risk and maintaining flexibility for future investment. That concludes the financial overview.

Dave Muscat: The balance sheet gives us capacity to support our growth strategy while balancing risk and maintaining flexibility for future investment. That concludes the financial overview. I will now hand over to Li to take you through the performance of our China label business.

Speaker #2: I'll now hand over to Zhao to take you through the performance of our China label business.

Speaker #1: Thank you, Dave. Starting on slide 29, China label IMF revenue declined 14% to $544 million for the year. This was very much a story of two halves.

Li Zhao: Thank you, Dave. Starting on slide 29, China label IMF revenue declined 14% to NZD 544 million for the year. This was very much a story of two halves, with revenue up 6.5% in the H1 and down 32% in the H2 as a result of the Q4 supply chain disruption. As previously mentioned, the contributing factors are now resolved. IMF availability has improved significantly. While it is too early to be conclusive, we are encouraged by some of the early data reads, with brand sentiment significantly improved since June and the conversion rate of new user recruitment activities is back to historical level. However, to be clear, the recovery is expected to be gradual in FY2027. Turning to the next slide and looking at market share. On the MAT basis, China label share increased to March before declining to 5.2% by year-end.

Xiao Li: Thank you, Dave. Starting on slide 29, China label IMF revenue declined 14% to NZD 544 million for the year. This was very much a story of two halves, with revenue up 6.5% in the H1 and down 32% in the H2 as a result of the Q4 supply chain disruption. As previously mentioned, the contributing factors are now resolved. IMF availability has improved significantly. While it is too early to be conclusive, we are encouraged by some of the early data reads, with brand sentiment significantly improved since June and the conversion rate of new user recruitment activities is back to historical level. However, to be clear, the recovery is expected to be gradual in FY2027. Turning to the next slide and looking at market share. On the MAT basis, China label share increased to March before declining to 5.2% by year-end.

Speaker #1: With revenue up 6.5% in the first half, and down 33% in the second half, as a result of the fourth quarter supply chain disruption.

Speaker #1: As previously mentioned, the contributing factors are now resolved. IMF availability has improved significantly. While it is too early to be conclusive, we are encouraged by some of the early data reads.

Speaker #1: With brand sentiment significantly improved since June, and the conversion rate of new user recruitment activities back to historical levels, however, to be clear, the recovery is expected to be gradual in FY27.

Speaker #1: Turning to the next slide, looking at market share, on a MAT basis, China label share increased through March before declining to 5.2% by year-end.

Speaker #1: However, on a quarterly basis, MBS and DOL both declined significantly, impacted by the fourth-quarter supply chain disruption. Stock levels have now significantly improved. We are focusing on our China IMF recovery and regaining past users, as well as accelerating new user recruitment.

Li Zhao: However, on a quarterly basis, MBS and Daigou both declined, significantly impacted by the Q4 supply chain disruption. As stock levels have now significantly improved, we are focusing on our China IMF recovery and regaining past users and accelerating new user recruitment. Moving to slide 31, which previews our two new China label products that are due to launch in the H1 of FY2027, both of which will be manufactured at a2 Pokeno. The first, a2 Zhichu Qi Run, targets the ultra-premium segment and share gains in lower tier cities. The second, a2 Zhichu Zhichun, is a new certificate organic product that is expected to build our brand in higher tier cities. Both products have innovative packaging, including scoop inside, and provide consumer with confidence in the safety and the quality of their purchase via our recently launched traceability APP.

Xiao Li: However, on a quarterly basis, MBS and Daigou both declined, significantly impacted by the Q4 supply chain disruption. As stock levels have now significantly improved, we are focusing on our China IMF recovery and regaining past users and accelerating new user recruitment. Moving to slide 31, which previews our two new China label products that are due to launch in the H1 of FY2027, both of which will be manufactured at a2 Pokeno. The first, a2 Zhichu Qi Run, targets the ultra-premium segment and share gains in lower tier cities. The second, a2 Zhichu Zhichun, is a new certificate organic product that is expected to build our brand in higher tier cities. Both products have innovative packaging, including scoop inside, and provide consumer with confidence in the safety and the quality of their purchase via our recently launched traceability APP.

Speaker #1: Moving to slide 31, which previews over two new China label products, data due to launch in the first half of FY27, both of which will be manufactured at A2 Pocono.

Speaker #1: The first A2 Zhichu Qiren targets the ultra-premium segment and share gains in lower-tier cities. The second, A2 Zhichu Zhichun, is a dual-certificate organic product that is expected to build our brand in higher-tier cities.

Speaker #1: Both products have innovative packaging, including a scoop-in lid, and provide consumers with confidence in the safety and quality of their purchase. We also have our recently launched traceability app.

Speaker #1: Together, these new IMF products expand our China label range and support our growth strategy in the China IMF market. Our retailers, distributors, and brand ambassadors are excited to welcome our new A2 IMF babies to the market very soon.

Li Zhao: Together, these new IMF products expand our China label range and support our growth strategy in the China IMF market. Our retailers, distributors, and brand ambassadors are excited to welcome our new a2 IMF babies to the market very soon. I will now hand over to Yohan to take you through the English label and the other nutritionals.

Xiao Li: Together, these new IMF products expand our China label range and support our growth strategy in the China IMF market. Our retailers, distributors, and brand ambassadors are excited to welcome our new a2 IMF babies to the market very soon. I will now hand over to Yohan to take you through the English label and the other nutritionals.

Speaker #1: I will now hand over to Yohan to take you through the English label and the other nutritionals.

Speaker #3: Thanks, Zhao, and good morning, everyone. Starting on slide 32, our English label IMF revenue grew 23% to $788 million, driven by strong growth in our CBEC and O2O channels, with a growing contribution from A2 Genesis, which now represents 6% of total English label sales.

Yohan Senaratne: Thanks, Li, and good morning, everyone. Starting on slide 32, our English label IMF revenue grew 23% to NZD 788 million, driven by our strong growth in our CBEC and O2O channels, with a growing contribution from a2 Genesis, which now represents 6% of the total English label sales and rapid expansion in new markets, particularly Vietnam. Q3 a2 Platinum sales were strong following industry recalls. However, offtake momentum slowed in Q4, indirectly impacted by the USA label IMF recall announced in May 2026, net of some modest switching benefits from China label. In ANZ, our English label IMF sales declined due to lower Daigou channel sales. While a2 Gentle Gold continues to drive growth in Australian retail channels. Moving to slide 33 and looking at market share. From a market perspective, English label now represents 20% of the total China IMF market.

Speaker #3: And rapid expansion in new markets, particularly Vietnam. Third-quarter a2 Platinum sales were strong following industry recalls. However, off-take momentum slowed in the fourth quarter, indirectly impacted by the USA-label IMF recall announced in May 2026, net of some modest switching benefits from China label.

Speaker #3: In ANZ, our English label IMF sales declined due to lower Daigou channel sales, while a2 Gentle Gold continues to drive growth in Australian retail channels.

Speaker #3: Moving to slide 33 and looking at market share, from a market perspective, English label now represents 20% of the total China IMF market. However, market growth slowed significantly in the second half following industry recalls.

Yohan Senaratne: However, market growth slowed significantly in H2 following industry recalls. The a2 Milk Company was the leading share gainer on CBEC, driven by a2 Platinum and a2 Genesis performance. A2 Genesis has now achieved a 1.8% share on CBEC, with over 60% of offtake coming from early-stage products. More recently, following the USA label IMF recall, offtake momentum has been indirectly impacted. However, we are focused on rebuilding momentum in H1. Slide 34 previews updates to our a2 Platinum and a2 Genesis formulations. A2 Platinum will receive its first major update since 2022, with an enhanced advanced nutrition formulation, premium packaging, and traceability. A2 Genesis will be up-rated with additional HMOs and a change to the probiotics to strengthen its super premium positioning.

Speaker #3: A2MC was the leading share gainer on CBEC, driven by A2 Platinum and A2 Genesis performance. A2 Genesis has now achieved a 1.8% share on CBEC, with over 60% of off-take coming from early-stage products.

Speaker #3: More recently, following the U.S. label IMF recall, off-take momentum has been indirectly impacted. However, we are focused on rebuilding momentum in the first half.

Speaker #3: Slide 34 previews updates to our a2 Platinum and a2 Genesis formulations. a2 Platinum will receive its first major update since 2022, with an enhanced advanced nutrition formulation, premium packaging, and traceability.

Speaker #3: A2 Genesis will be upgraded with additional HMOs and a change to the probiotics to strengthen its super premium positioning. Both of these products will be manufactured at our A2 Pocono facility, with the insourcing of A2 Platinum significantly increasing production volumes and bringing vertical margin capture benefits to the group.

Yohan Senaratne: Both of these products will be manufactured at our a2 Pokeno facility with the in-sourcing of a2 Platinum significantly increasing production volumes and bringing vertical margin capture benefits to the group. Continuing to the next slide. Our new market strategy continues to advance, with Vietnam starting to scale. Distribution has expanded to more than 3,500 stores, and English label sales grew strongly during the year. We are also continuing to assess and progress further opportunities across Southeast Asia and the Middle East. Turning now to other nutritionals on slide 36. Sales grew nearly 60% to NZD 216 million, led by our kids and seniors fortified milk powders. Our kids range continues to grow strongly, with the product also responding as a substitute for stage 3 and stage 4 China label IMF users during the Q4 supply chain disruption.

Speaker #3: Continuing to the next slide, our new market strategy continues to advance with Vietnam starting to scale. Distribution has expanded to more than 3,500 stores, and English label sales grew strongly during the year.

Speaker #3: We are also continuing to assess and progress further opportunities across Southeast Asia and the Middle East. Turning now to Other Nutritionals on slide 36, sales grew nearly 60% to $216 million, led by our kids' and seniors' fortified milk powders.

Speaker #3: Our kids range continues to grow strongly, with the product also responding as a substitute for stage three and stage four China label IMF users during the fourth-quarter supply chain disruption.

Speaker #3: Our Seniors and Adult Ranges hold leading category positions, and our new Fight Support Kids UHT has resonated well with consumers since launch. We also saw strong growth in emerging markets for our macro milk products.

Yohan Senaratne: Our seniors and adult ranges hold leading category positions, and our new Fight Support kids UHT has resonated well with consumers since launch. We saw strong growth in emerging markets for our macro milk products. Turning to slide 37, and taking a look at some of our individual products more closely. As previously mentioned, our China label kids milk powder is growing rapidly, with half-on-half sales up around 80% and retaining the number 1 ranking amongst international brands in MBS stores. We continue to build brand awareness and user recruitment for our broader kids portfolio through our Octonauts 2.0 campaign, including a customized episode featuring the a2 brand, character integration on pack, and a full suite of co-brand during the H2. The range is focused on immunity, gut health, brain and eye health, and anti-allergy.

Speaker #3: Turning to slide 37 and taking a look at some of our individual products more closely—as previously mentioned, our China label kids’ milk powder is growing rapidly, with half-on-half sales up around 80% and retaining the number one ranking amongst international brands in MBS stores.

Speaker #3: We continue to build brand awareness and user recruitment for our broader kids portfolio through our Octonauts 2.0 campaign, including a customized episode featuring the a2 brand, character integration on-pack, and a full suite of co-branding.

Speaker #3: During the second half, the range is focused on immunity, gut health, brain and eye health, and anti-allergy. Early consumer response has been encouraging, supported by professional endorsement.

Yohan Senaratne: Early consumer response has been encouraging, supported by professional endorsement, and we see significant potential to expand the platform over time, including expanding into English label. Turning now to slide 39, which previews our English label pediatric supplements range due to launch in the H1 of FY27. Our English label supplements range is manufactured in Australia to TGA standards and will be available for sale in Australia, New Zealand and China CBEC. We will be first to market with Australian-made liquid calcium sachets, one of the largest and fastest-growing categories. We intend to launch the range into Vietnam, subject to achieving registration. With that, I will now hand over to Jaron to take you through ANZ.

Speaker #3: And we see significant potential to expand the platform over time, including expanding into English label. Now, turning to slide 39, which previews our English label pediatric supplements range due to launch in the first half of FY27.

Speaker #3: Our English-label supplements range is manufactured in Australia to TGA standards and will be available for sale in Australia, New Zealand, and China CBEC.

Speaker #3: We'll be first to market with Australian-made liquid calcium sachets, one of the largest and fastest-growing categories. We intend to launch the range into Vietnam, subject to achieving registration.

Speaker #3: And with that, I'll now hand over to Zhao to take you through ANZ.

Speaker #1: Thank you, Yohan, and good morning, everyone. For those I haven't met, I'm Jaron McVicker. While I’ve been with a2 for some time, this is my first results presentation since stepping into the ANZ leadership role in April, and it is my pleasure to take you through the ANZ results today.

Jaron McVicar: Thank you, Yohan, and good morning, everyone. For those I have not met, I am Jaron McVicar. While I have been with a2 for some time, this is my first results presentation since stepping into the ANZ leadership role in April, and it is my pleasure to take you through the ANZ results today. Turning to slide 40. Our Australian liquid milk business delivered another strong year, with net sales revenue up 17% to NZD 245 million, driven by growth in both our a2 Milk core and a2 Milk Lactose Free ranges. We outperformed the category, growing overall share to 11.7%, and lactose-free reached a record share of 22.6%. We were also proud to be the first national lactose-free brand with the launch of a2 Milk Lactose Free in Coles WA.

Speaker #1: Turning to slide 40, our Australian liquid milk business delivered another strong year, with net sales revenue up 17% to $245 million, driven by growth in both our A2 Milk core and A2 Milk lactose-free ranges.

Speaker #1: We outperformed the category, growing overall share to 11.7%, and lactose-free reached a record share of 22.6%. We were also proud to be the first national lactose-free brand with the launch of a2 Milk lactose-free in Coles WA.

Speaker #1: We delivered premium brand exposure across our priority markets through our exclusive Australian Open partnership as the first dairy milk partner of the Australian Open in its 120-year history. Our bespoke co-branded frappes became viral sensations on social media, driving exceptional visibility and brand engagement, including through mass sampling.

Jaron McVicar: We delivered premium brand exposure across our priority markets through our exclusive Australian Open partnership as the first dairy milk partner of the Australian Open in its 120-year history. With our bespoke co-branded frappes becoming viral sensations on social media, driving exceptional visibility and brand engagement, including through mass sampling. Moving to slide 41. Slide 41 highlights the lactose-free opportunity, which has been a major driver of category growth. a2 Milk Lactose Free is the only product in the Australian market that is both A1 protein free and lactose free. Lactose free's retail sales value has grown over 6% in the last year and is approaching 10% of the total dairy milk category. The a2 Milk Company continues to gain share in this fast-growing category and is the number 2 brand in the segment.

Speaker #1: Moving to slide 41, slide 41 highlights the lactose-free opportunity, which has been a major driver of category growth. a2 Milk Lactose Free is the only product in the Australian market that is both A1 protein-free and lactose-free.

Speaker #1: Lactose-free retail sales value has grown over 6% in the last year and is approaching 10% of the total dairy milk category. The a2 Milk Company continues to gain share in this fast-growing category and is the number two brand in the segment.

Jaron McVicar: Lactose free's retail sales value has grown over 6% in the last year and is approaching 10% of the total dairy milk category. The a2 Milk Company continues to gain share in this fast-growing category and is the number 2 brand in the segment. This gives us confidence in the broader opportunity for A1 protein free and lactose free milk, including in markets such as the USA. On that note, I will hand over to Kevin to take you through the USA results.

Speaker #1: This gives us confidence in the broader opportunity for A1 protein-free and lactose-free milk, including in markets such as the USA. On that note, I'll hand over to Kevin to take you through the USA results.

Jaron McVicar: This gives us confidence in the broader opportunity for A1 protein free and lactose free milk, including in markets such as the USA. On that note, I will hand over to Kevin to take you through the USA results.

Speaker #2: Thanks, Jaron. Turning now to slide 42, the USA had an excellent year, with net sales revenue up 29% to $179 million and, importantly, achieved EBITDA break-even in the second half for the first time.

Kevin Bush: Thanks, Jaron. Turning now to slide 42. The USA had an excellent year, with net sales revenue up 29% to NZD 179 million, and importantly, achieved EBITDA breakeven in the H2 for the first time. Growth was underpinned by double-digit gains across our core and grass-fed ranges, increased household penetration and distribution, and a2 Milk is now a top 10 US liquid milk brand and is the fastest-growing. From an IMF perspective, we managed a small voluntary recall of discontinued USA label IMF batches as announced in May this year. This recall was isolated to the USA market and is completed and closed, with immaterial impacts on USA financials. Our long-term FDA approval for IMF continues to progress, with a final factory inspection completed recently. Moving to slide 43.

Speaker #2: Growth was underpinned by double-digit gains across our core and grass-fed ranges, increased household penetration and distribution, and a2 Milk is now a top 10 US liquid milk brand and is the fastest growing.

Speaker #2: From an IMF perspective, we managed a small, voluntary recall of discontinued USA label IMF batches as announced in May this year. This recall was isolated to the USA market and is completed and closed, with immaterial impacts on USA financials.

Speaker #2: Our long-term FDA approval for IMF continues to progress, with a final factory inspection completed recently. Moving to slide 43, we continue to strengthen the brand in the USA, with awareness and Net Promoter Score both improving, and a new food service partnership with State and SHAKE.

Kevin Bush: We continue to strengthen the brand in the USA, with awareness and Net Promoter Score both improving, and a new food service partnership with Steak 'n Shake. Looking ahead and building on the strong momentum we have seen in lactose free in Australia, we see an opportunity to bring the same differentiated proposition to the USA. In the H1 of FY27, we will launch a 2% lactose-free product with selected retail partners. In addition, we are also considering opportunities to enter the high-growth protein segments of the market with products currently under development. I will now hand back to David.

Speaker #2: Looking ahead, and building on the strong momentum we have seen in lactose-free in Australia, we see an opportunity to bring the same differentiated proposition to the USA.

Speaker #2: In the first half of FY27, we will launch a 2% lactose-free product with selected retail partners. In addition, we are also considering opportunities to enter the higher-growth protein segments of the market, with products currently under development.

Speaker #2: I will now hand back to David.

Speaker #1: Thanks, Kev. That concludes today's presentation. I'll now hand back to the operator for the Q&A.

David Bortolussi: Thanks, Kev. That concludes today's presentation. I will now hand back to the operator for the Q&A.

Speaker #4: Thank you. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad.

Operator: Thank you. If you wish to ask a question, you will need to press the star key, followed by the number one on your telephone keypad. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Peter Marks from Goldman Sachs. Please go ahead.

Speaker #4: If you wish to cancel your request, please press star two. And if you're on a speakerphone, please pick up the handset to ask your question.

Speaker #4: Your first question comes from Peter Marks at Goldman Sachs. Please go ahead.

Speaker #5: Good morning, guys. Thanks for taking my question. I was wondering if we can break down the EBITDA margin guidance a bit further. Is there anything in there that we should be thinking about regarding gross margins? And what are you thinking in terms of marketing and then the other cost line as well?

Peter Marks: Morning, guys. Thanks for taking my question. I am just wondering if we can break down the EBITDA margin guidance a bit further. Is there anything in there that we should be thinking about gross margins, and what are you thinking in terms of marketing and then the other cost line as well? I think that would be really helpful. Thanks.

Speaker #5: I think that would be really helpful. Thanks.

Speaker #1: Yeah, no problem. But I'll ask Dave to give you some color on that. Hey Peter, yeah, there’s a lot of noise in the FY26 results.

David Bortolussi: Yeah. No problem. I will ask Dave to give you some color on that.

Dave Muscat: Yeah, sure.

David Bortolussi: Yeah.

Dave Muscat: Hey, Peter. Yeah, there is a lot of noise in the 2026 results. Probably the best way to think about it is to start with the 2025 EBITDA margin, the 16.6%, which does not have any Pokeno in it, which is, I suppose, in line with the breakevens as what we are expecting in 2027. So it is probably the best, cleanest starting point. If you think about it at 16.6, we are guiding in 2027 to approximately 15%, so you are talking 1.6 percentage points. One thing that is very important to factor in is that most of the vast majority of that decline will actually be gross margin. I will come back to marketing in a second. It will mostly be gross margin and driven by probably two factors mainly. One is mix.

Speaker #1: So probably the best way to think about it is to start with the FY25 EBITDA margin—the 16.6%—which doesn't have any Pocono in it, which is, I suppose, in line with the break-even result we're expecting in FY27.

Speaker #1: So it's probably the best, cleanest starting point. So, if you're thinking about that 16.6, we're guiding in FY27 to approximately 15%. So, you're talking about 1.6 percentage points.

Speaker #1: One thing that's very important to factor in is that the vast majority of that decline will actually be gross margin. I'll come back to marketing in a second.

Speaker #1: It’ll mostly be gross margin and driven by probably two factors, mainly. So one is mix. So if you think about the fact that we’ve called IMF to be broadly flat for next year, and strong growth in the other nutritionals and liquid milk, there’s quite a reasonable amount of mix dilution coming through.

Dave Muscat: If you think about the fact that we have called IMF to be broadly flat for next year and strong growth in the other nutritionals and liquid milk, it is quite a reasonable amount of mix dilution coming through. It will improve through the year. But on average, through the year, there will be mix dilution. Also, there are some COGS pressures coming through milk, through lactose, and a little bit through whey as well. So that will be the two headwinds. Against that, we will have probably some FX tailwinds, and we are cycling a little bit of air freight. But most of that 1.6, call it gross margin.

Speaker #1: It'll improve through the year, but on average, there'll be mixed dilution throughout the year. Also, there are some COGS pressures coming through—through milk, through lactose, and a little bit still through whey as well.

Speaker #1: So, that'll be the two sort of headwinds. Against that, we'll have probably some FX tailwinds. And we're cycling a little bit of air freight, but most of that $1.6—call it gross margin.

Speaker #1: Marketing will be up, but in terms of reinvestment rate, it's more of a—probably more of a phasing story. In terms of the first half being up by quite a lot, and it's probably, from a full-year perspective, it probably normalizes, but it'll be up, probably more slightly than gross margin.

Dave Muscat: Marketing will be up in terms of reinvestment rate, but it is probably more of a phasing story in terms of the H1 being up by quite a lot and probably from a full-year perspective it probably normalized, but it will be up as probably more slightly than gross margin, or COGS, sorry. Then we will get a little bit of leverage on SG&A. So that is probably the way to think about the shape of the EBITDA for next year. Then probably I may as well cut it off now because I am sure I will get the question later, is around the phasing for next year. We have talked about, obviously, I mentioned before the 15% approximate EBITDA percentage for next year with H2 weighting.

Speaker #1: Sorry—or COGS, sorry. And then we'll get a little bit of leverage on SG&A. So that's probably the way to think about the shape of the EBITDA.

Speaker #1: For next year, and then probably I may as well cut it off now because I'm sure I'll get the question later is around the around the phasing around the phasing for next year.

Speaker #1: And we've talked about—obviously mentioned before—the 15% approximate EBITDA percentage for next year, with second half weighting. Probably the two callouts, if I'm thinking about the average, where you get to from an average for the full year: our marketing will probably be around 2, around probably 2 percentage points reinvestment rate higher than you'd get for the average for the full year.

Dave Muscat: Probably the two call-outs, if I am thinking about where you get to from an average for the full year, our marketing will probably be around probably two percentage points reinvestment rate higher than you will get for the average for the full year. Our gross margin is probably going to be 1% worse than where you will get to from a full-year perspective. Hopefully those building blocks give you enough to be able to build out your numbers for next year.

Speaker #1: And our gross margin is probably going to be a percent worse than where you'll get to from a full-year perspective. So, hopefully those building blocks give you enough to be able to sort of build out your numbers for next year.

Speaker #5: That's very helpful, thanks. Can I just follow up with the COGS pressures and everything that's going on with the business at the moment? How are you thinking about pricing?

Peter Marks: That's very helpful. Thanks. Can I just follow up? With the COGS pressures and everything that's going on with the business at the moment, how are you thinking about pricing? Do you think you can offset some of those with price increases, or is there just too much going on, or do the new products and the formulation refreshes and the packaging refreshes actually allow you to take a bit of price? Interested in how you think about that.

Speaker #5: Do you think you can offset some of those with price increases, or is there just too much going on? Or do the new products, the formulation refreshes, and the packaging refreshes actually allow you to take a bit of price?

Speaker #5: It's interesting how you think about that.

Speaker #1: So, it's David. We are taking price effectively in some of the categories and markets, but overall, it's not necessarily mitigating margins. For example, in our China label product, we've increased price a little bit, but a lot of that's going back to the trade to support margins and activation.

David Bortolussi: Sure. It's David. We are taking price effectively in some of the categories in markets, but overall it's not necessarily mitigating margin. For example, in our China label product, we've increased price a little bit, but a lot of that's going back to the trade to support margins and activation in our a2 Platinum product as we transition. In effect, pricing will be similar, but there'll be slightly smaller pack size. Price to kilogram, if you like, will go up a little bit. In milk, we've taken a bit of price as well, but reflecting the increases in farmgate milk prices as well. We are taking price, but it's not necessarily being accretive to margin overall.

Speaker #1: In our platinum product, as we transition, in effect, pricing will be similar, but there'll be a slightly smaller pack size, so price per kilogram, if you like, will go up a little bit.

Speaker #1: And then in milk, we've taken a bit of price as well, but reflecting the increases in Tim Gate milk prices as well. So we are taking price, but it's not necessarily being accretive to margin overall.

Speaker #5: Very helpful, thanks.

Peter Marks: Very helpful. Thanks.

Speaker #4: Thank you. Your next question comes from Sam Tega from Citi. Please go ahead.

Operator: Thank you. Your next question comes from Sam Teeger from Citi. Please go ahead.

Speaker #5: Good morning, guys. Thank you. What was your China label market share in July for the month, across all stages, and when do you think you'll get it all?

Sam Teeger: Morning, guys. Thank you. What was your China label market share in July for the month across all stages? When do you think you will get it all. Sorry, by the time of the AGM, do you think you will get back to where you were pre the supply shortages?

Speaker #5: Sorry, by the time of the AGM, do you think you'll get back to where you were before the previous supply shortages?

Speaker #1: Sam, we're not providing the China label share data for July. We don't necessarily have that at the moment. Suffice to say it's down quite a bit.

David Bortolussi: Sam, we are not providing the China label share data for July. We necessarily have that all at the moment. Suffice to say it is down quite a bit. We would probably estimate that our offtake at the moment is in the order of probably about 40% of what it might have been if you take the last reported results through to December. So it has come off quite a lot. It is rebuilding back now. We are not providing guidance specifically again for the AGM. We expect a gradual recovery over the course of the year. Probably get back to roughly the same run rate by the end of the year that it was pre the supply chain disruption, if that helps you. So progressively from where we are now back to 100% of that run rate.

Speaker #1: We would probably estimate that our offtake at the moment is sort of in the order of probably about 40% of what it might have been if you take the last reported results through to December.

Speaker #1: So it's come off quite a lot, but it's rebuilding back now. We're not providing guidance specifically, again, for the AGM. We expect a gradual recovery over the course of the year.

David Bortolussi: We expect a gradual recovery over the course of the year. Probably get back to roughly the same run rate by the end of the year that it was pre the supply chain disruption, if that helps you. So progressively from where we are now back to 100% of that run rate. From a reported sales point of view, that would then mean that it would not be until the H1 of FY28 that we would be at the same level of total sales that we were pre-crisis.

Speaker #1: Probably get back to roughly the same run rate by the end of the year that it was, sort of, pre the supply chain disruption.

Speaker #1: Has that helped you? So, progressively, from where we are now, back to sort of 100% of that run rate. And then, from a most reported sales point of view, that would then mean that it wouldn't be until the first half of FY28 that we'd be at the same level of total sales we were pre-crisis.

David Bortolussi: From a reported sales point of view, that would then mean that it would not be until the H1 of FY28 that we would be at the same level of total sales that we were pre-crisis.

Speaker #5: Makes sense. That's helpful. And then, which of the...

Sam Teeger: Makes sense. That is helpful. Which of the

Speaker #1: Sam, it could be better, it could be worse for that, but that's just sort of our expectations of what we're planning for at the moment.

David Bortolussi: It could be better and worse for that, but that is just our expectations, what we are planning for at the moment.

Speaker #5: Okay, no, that's great, thanks. And which of the user reacquisition initiatives that you have in place now in China have you found to be most impactful?

Sam Teeger: Okay. No, that is great. Thanks. Which of the user reacquisition initiatives that you have in place now in China have you found to be most impactful? Are you planning any tweaks to them going forward?

Speaker #5: And are you planning any tweaks to them going forward?

Speaker #1: Yeah, Sean, do you want to talk about our past and new user reactivation or recruitment initiatives we have at the moment?

David Bortolussi: Yeah. Li, do you want to talk about our past and new user reactivation or recruitment initiatives we have available?

Speaker #5: Yeah. So we have a I mean, a pretty good track record. I mean, to recruit new users, like what happened in the I mean, the past year, first quarter, and then we quickly turned around the new user recruitment.

Li Zhao: Yeah. We have a pretty good track record to recruit new user, like what happened in the past year, Q1, and then we quickly turned around the new user recruitment in Q2. The most effective activation mix for new user recruitment starts with what we call the mama class, targeting at a pregnant woman, which we are executing in thousands of activation per year as the number one priority. The second one, if you look at, we have several thousand of key promotion group, brand ambassador in the store. They are also the key driver to get a new user in the a2B store. Thirdly, we also have other activation, like road show, also partially contribute to the new user recruitment across all the early stage and the late stage.

Xiao Li: Yeah. We have a pretty good track record to recruit new user, like what happened in the past year, Q1, and then we quickly turned around the new user recruitment in Q2. The most effective activation mix for new user recruitment starts with what we call the mama class, targeting at a pregnant woman, which we are executing in thousands of activation per year as the number one priority. The second one, if you look at, we have several thousand of key promotion group, brand ambassador in the store.

Speaker #5: I mean, in the second quarter. So, I mean, the most effective activation mix for new user recruitment just starts with what we call the 'mama class,' targeting at pregnant women, which we are executing in thousands of activations per year.

Speaker #5: I mean, that's the, I mean, number one priority. Then the second one, I mean, if you look at it, we have several thousand of promotion growth, but the ambassador in the store, they're also the key driver to get new users in the MBS store.

Xiao Li: They are also the key driver to get a new user in the a2B store. Thirdly, we also have other activation, like road show, also partially contribute to the new user recruitment across all the early stage and the late stage. Plus, last but not the least, we have a medical marketing team who are targeting at special channel, like a maternity center or the hospital for the very stage new user recruitment.

Speaker #5: And certainly, we also have other activation, like, I mean, low show. I mean, also partially contributes to the new user recruitment, I mean, across all the early stage and late stage.

Speaker #5: Plus, I mean, last but not least, we have a medical marketing team who are targeting at, I mean, special channels. I mean, like maternity centers or the hospital.

Li Zhao: Plus, last but not the least, we have a medical marketing team who are targeting at special channel, like a maternity center or the hospital for the very stage new user recruitment.

Speaker #5: I mean, for the early-stage new user recruitment. Right.

Sam Teeger: Right.

Speaker #1: So, I think you and others in the market picked up that we've also sort of got gift-with-purchase, benefits of returning to the brand, and also an enhanced loyalty program.

David Bortolussi: I think you and other of the market have picked up that we have also sort of got good with purchase benefits of returning to the brand and also enhanced loyalty program. So overall, at the moment, our user recruitment conversion rates and activities we have got in place at the moment are at or above historic levels in terms of the conversion of the activity, not necessarily in aggregate, but as a conversion rate, so really encouraging at the moment.

Speaker #1: So overall, at the moment, our user recruitment conversion rates and activities we have in place are at or above historic levels in terms of the conversion of the activity; not necessarily in aggregate, but the conversion rates are really encouraging at the moment.

Speaker #5: Excellent. And last question: What are the biggest learnings from the supply chain challenges? I appreciate that quite a number of the factors were outside your control, but what tweaks might we make to the operating model going forward to avoid this happening again?

Sam Teeger: Excellent. Last question, what are the biggest learnings from the supply chain challenges? I appreciate that quite a number of the factors were outside your control, but what tweaks might we make to the operating model going forward to avoid this happening again? Thank you.

Speaker #5: Thank you.

Speaker #1: Oh, Sam, you're right. I mean, a lot of this was outside our control in terms of the industry factors that led to recalls, new standards, testing methodologies, and all that, both on the New Zealand side as well as the China side.

David Bortolussi: Oh, Sandy, you are right. A lot of this was outside our control in terms of the industry factors that led to recalls, new standards, testing methodologies, and all that, both in the New Zealand side as well as the China side. The underlying thing that we need to address is having more consistent level of inventory throughout the supply chain at the right stages of the supply chain. We have struggled with that, mainly due to some challenges we have had with Synlait supply over time. However, having said that, Synlait has recovered well in recent months, and we have no real concerns about supply going forward. We must work together with Synlait to ensure that we have more consistent supply going forward.

Speaker #1: But the underlying thing that we need to address is having a more consistent level of imagery throughout the supply chain, at the right stages of the supply chain.

Speaker #1: And we've struggled with that, mainly due to some challenges we've had with similar supply over time. However, having said that, Sinlai has recovered well in recent months, and we have no real concerns about supply going forward.

Speaker #1: But we must work together with Sinlai to ensure that we have a more consistent supply going forward. And indeed, from our Pocono facility going forward, as our English label product and our new China label products hopefully become more material over time.

David Bortolussi: Indeed, from our Pokeno facility going forward as our English label product and our new China label products hopefully become more material over time, we need to do the same ourselves. So we are not saying we are perfect, but we have got to ensure that we have more consistency in our production and inventory management throughout the system.

Speaker #1: We need to do the same ourselves. So we're not saying we're perfect, but we've got to ensure that we have more consistency in our production and inventory management throughout the system.

Speaker #5: Great. Thank you.

Sam Teeger: Great. Thank you.

Speaker #4: Thank you. Your next question comes from Tom Careth from Barren Jelly. Please go ahead.

Operator: Thank you. Your next question comes from Tom Kierath from Barrenjoey. Please go ahead.

Speaker #3: Yeah, morning, guys. Just to follow on from Pete's question there, just on marketing. So you're saying it'll be a lot higher in the first half, that 2 percentage points.

Tom Kierath: Yeah, morning, guys. Just to follow on from Peter's question there, just on marketing. You are saying it will be a lot higher in the H1, that 2 percentage points. Can you maybe just give us some color on how much of that relates to the Pokeno products? Just how should we think about, I guess, the marketing spend in relation to those, that launch that you are doing this half?

Speaker #3: Can you maybe just give us some color on how much of that relates to the Pocono products, and just how should we think about, I guess, the marketing spend in relation to that launch that you're doing this half?

Speaker #1: Tom, the support for new products coming to market—not only the China label products—is appropriate, but relatively modest compared to the total investment that we have in brand and new user acquisition overall for both the Jatsoe China label product and a2 Platinum.

David Bortolussi: Tom, the support for new products coming to market, not only the China label products is appropriate, but relatively modest compared to the total investment that we have in brand and new user acquisition overall for both the a2 Zhichu China label product and a2 Platinum. Obviously, a2 Platinum is a combination of both. We are phasing out a2 Platinum and bringing in a new upgrade. But we have a baseline level of investment in always-on digital and everything else. We have got significant investment in early-stage new user recruitment, and then we cycle in and out of new innovation coming to market, of which we have a fair amount coming to market in the next quarter, which we wanted to highlight to our investors.

Speaker #1: I mean, obviously, the A2 Platinum is a combination of both. We're phasing out A2 Platinum and bringing in our new upgrade. But, I mean, we have a baseline level of investment in always-on digital and everything else.

David Bortolussi: But we have a baseline level of investment in always-on digital and everything else. We have got significant investment in early-stage new user recruitment, and then we cycle in and out of new innovation coming to market, of which we have a fair amount coming to market in the next quarter, which we wanted to highlight to our investors. So there is an appropriate amount, but don't think that it is by any means the sort of majority of our investment on the new products and ignoring the base business.

Speaker #1: We've made a significant investment in early-stage new user recruitment, and then we cycle in and out of new innovation coming to market—of which we have a fair amount coming to market in the next quarter, which we wanted to highlight to our investors.

Speaker #1: So there's an appropriate amount, but don't think that it is by any means the sort of majority of our investment on the new products and ignoring the base business.

David Bortolussi: So there is an appropriate amount, but don't think that it is by any means the sort of majority of our investment on the new products and ignoring the base business.

Speaker #3: And maybe just talk through the incrementality of the Pocono products and how we should think about market share when we're talking about share in 12 months' time.

Tom Kierath: Can you maybe just talk through the incrementality of the Pokeno products, and how we should think about maybe market share when we are talking about share in 12 months time? Where should we be in share then, maybe versus now if the plans play out?

Speaker #3: Where should we be in share then? Maybe versus now, if the plan's going to play out?

Speaker #1: So, back a year ago, we sort of mapped out, in connection with the acquisition, what we expected the new China label products to contribute in sales, and also gave some earnings, sort of margin, perspectives.

David Bortolussi: Back a year ago, we mapped out in connection with the acquisition, what we expected the new China label products to contribute in sales. We also gave some earnings margin perspective as well. It was over NZD 100 million of incremental sales over the next few years at close to our average China segment EBITDA margins. Where we are at the moment is, our thinking is that with the launch, which is slightly ahead of plan, being able to launch these products in October, having just commenced the manufacturing and that, which is great to be in market earlier. We are hoping that they might contribute. If you look at the phasing there, I think there is a phasing chart in the earlier presentation 12 months ago. I think hopefully they will make a stronger contribution earlier. I will not be specific about it.

Speaker #1: And as well, but it was over $100 million of incremental sales over the next few years, at close to our average China segment EBITDA margins.

Speaker #1: Where we are at the moment is our thinking is that. With the launch, which is slightly ahead of plan—being able to launch these products in October, having just commenced the manufacturing of that, which is great to be in market earlier—we're hoping that they might contribute. If you look at the phasing there, I think there's a phasing chart in the earlier presentation, 12 months ago.

Speaker #1: I think, hopefully, they'll make a stronger contribution earlier. I won't be specific about that. And one of the reasons I say that, Tom, is that through the supply chain disruption that we've experienced in our recovery program, we've deliberately constrained the distribution or the way to distribution of our Jadzi product.

David Bortolussi: One of the reasons I say that, Tom, is that through the supply chain disruption that we have experienced in our recovery program, we have deliberately constrained the distribution or the weight of distribution of our a2 Zhichu product. We are at about two-thirds of what we were pre-supply chain disruption, which actually opens up a bit more available distribution for one of those products, which will play a more discrete or incremental role. If you put that all together, I think earlier launch taps a little bit more white space in distribution. I think we are hopeful that we will get a greater contribution earlier, but we will not provide any specific guidance on that at the moment.

Speaker #1: So we're at about two-thirds of what we were pre-supply chain disruption, which actually opens up a bit more sort of available distribution for one of those products, which will play a more discrete or incremental role.

Speaker #1: So, if you put that all together, I think earlier launch, perhaps a little bit more white space in distribution. I think we are hopeful that we'll get a greater contribution earlier, but we won't provide any specific guidance on that at the moment.

Speaker #3: Okay. Great. Thanks, Dave.

Tom Kierath: Okay, great. Thanks, Dave.

Speaker #4: Thank you. Your next question comes from Craig Woolford from MSG Marquee. Please go ahead.

Operator: Thank you. Your next question comes from Craig Woolford from MST Marquee. Please go ahead.

Speaker #5: Good morning. Morning, team. Firstly, I just want to clarify what your guidance inferred about the second half, and if that's an indication of more normal margins.

Craig Woolford: Morning team. Firstly, just want to clarify what your guidance infers about the H2 and if that is an indication of more normal margins. If I have interpreted your commentary right, it is more like a 12% EBITDA margin in the H1, and I guess by inference, closer to 18% in the H2 of 2027. Is that H2 relatively clean? Is that a guide of how margins look once all the supply chain noise settles down?

Speaker #5: If I've interpreted your commentary correctly, it's more like a 12% EBITDA margin in the first half, and I guess by inference, closer to 18% in the second half of '27.

Speaker #5: Is that second half relatively clean? Is that a guide of how margins look once all the supply chain noise settles down?

Speaker #1: Craig, yeah, I won't comment on your percentages you called out, but what I will say is just be wary of the marketing. Because we're basically saying that the first half will be reasonably up in terms of percentage points, it sort of implies the second half will probably be down relative to sort of normal run rate.

Dave Muscat: Craig, yeah, I will not comment on the percentages you called out, but what I will say is just be wary of the marketing because we are basically saying that the H1 will be reasonably up in terms of percentage points, sort of implies H2 will be probably down relative to the normal run rate. So there is probably a little bit to come back on that margin from a marketing perspective. But I think the H2 should be a better indication of what we will see in the future.

Speaker #1: So that's probably a little bit to come back on that margin from a marketing perspective. But I think the second half should be a better indication of what we'll see in the future.

Speaker #2: Directionally. Directionally, right.

David Bortolussi: Directionally.

Dave Muscat: Directionally.

David Bortolussi: Directionally, right.

Dave Muscat: Yeah.

Speaker #1: Yeah.

Speaker #5: Okay. Can I read the English label performance in FY26? Is there any way to tease out—I'll see, very difficult—any way to tease out underlying performance versus some of the customers that might have shifted to the CBEC channel because of the shortages?

Craig Woolford: Okay. With the English label performance in FY 2026, is there any way to tease out, I am sure it is not very difficult anyway, to tease out underlying performance versus some of the customers that might have shifted to that channel, the CBEC channel, because of the shortages?

Speaker #1: From the 'From China' label, Craig, going across to 'English label,' is that what you're saying?

David Bortolussi: From China label, Craig, going across to English label, is that what you are saying?

Craig Woolford: Yeah. You went from, I think it was 19.1%

Speaker #5: Yeah, you're going from, I think it was 19.1%.

David Bortolussi: Yeah

Speaker #1: Yeah.

Speaker #5: A year ago to 19.5. Is that organic or switch?

Craig Woolford: a year ago to 19.5%. Is that organic or switch?

Speaker #1: So, just in terms of—I might want to add to this—but just in terms of the switching, we did mention in our update to the market that there was some switching from Jetsu to Platinum.

David Bortolussi: Yoann might want to add to this, but just in terms of the switching, like we did mention in our update to the market, there was some switching from a2 Zhichu to a2 Platinum. And there was some, but I think perhaps that has been amplified by the market. So I think there has been probably expectation that is greater than what it was. So in essence, it was relatively small, the switching from China label to a2 Platinum. Most of the users unfortunately have gone to other brands which some have retained with us and our job is to get them back. So I do not know if that helps.

Speaker #1: And there was some, but I think perhaps that's been amplified by the market. So I think there's probably been expectation that's greater than what it was.

Speaker #1: So in essence, it was relatively small, the switching from China label to Platinum. Most of the users, unfortunately, have gone to other brands, but some have retained with us, and their job is to get them back, so.

Speaker #1: I don't know if that helps.

Speaker #5: Well, I guess the natural follow-on is, it's quite a good result on English label because it was fairly static over the last 18 months at 19.1%, and it's up to 19.5%.

Craig Woolford: Well, I guess the natural follow-on, it is quite a good result on English label because it was fairly static over the last 18 months at 19.1% and it is up to 19.5%. So what would you attribute that to?

Speaker #5: So, what would you attribute that to?

Yohan Senaratne: Yeah. So market share growth is I guess two factors. One is, of course, continued investment in a2 Platinum and in particular in new user recruitment. So we have seen particularly, over the last 12 months, an improvement in our stage 1, stage 2 share. The second thing is the introduction of a2 Genesis as well. So that adds a greater addressable market for us because it gives us exposure to the faster-growing HMO segment within English label. We have been able to capture, on an MAT basis in CBEC, now a 1.8% share. So those two together then, if you look at it over an 18-month period, have contributed to the EL share gains.

Speaker #2: Yeah, so I think, yeah, the market share growth is, I guess, two factors. One is, of course, continued investment in a2 Platinum and, in particular, new user recruitment.

Speaker #2: So, we've seen, particularly over the last 12 months, an improvement in our Stage 1 and Stage 2 share. And the second thing is the introduction of Genesis as well.

Speaker #2: So that adds a greater addressable market for us because it gives us exposure to the faster-growing HMO segment within English label. And we've been able to capture, on our MAT basis in CBEC, now a 1.8% share.

Speaker #2: So, those two together—then, if you look at it over an 18-month period—have contributed to the EL share gains.

Speaker #5: Right. Thanks, yeah.

Craig Woolford: Right. Thanks.

Speaker #4: Thank you. Your next question comes from Richard Bowick from CLSA. Please go ahead.

Operator: Thank you. Your next question comes from Richard Barwick from CLSA. Please go ahead.

Speaker #6: Good morning, all. David, I just want to talk specifically about winning back some of the lost China label share. How much can you target, or can you identify, those A2 customers that have switched away?

Richard Barwick: Good morning all. David, just want to talk specifically about winning back some of the lost China label share. How much can you target or can you identify those a2 customers that have switched away? I was also curious to think through, is there a point when it is too late to get them to switch back? The other dimension to that question is, does the transition from stage 1 to 2 and 2 to 3, does that present opportunities to win those customers back? Just like to talk through those points if you could, please.

Speaker #6: And I was also curious, just to sort of think through, is there a point when it's too late to get them to switch back? And then, the other sort of dimension to that question is, does the transition from stage one to two, and two to three, does that present opportunities to win those customers back?

Speaker #6: I'd just like to sort of talk through those points, if you could, please.

Speaker #1: Yeah, sure, Richard. So in terms of targeting those users that may have lapsed, we can do that in certain areas, but by no means do we have a comprehensive CRM tool that tracks everything across all channels.

David Bortolussi: Yeah, sure, Richard. In terms of targeting those users that may have lapsed, we can do that in certain areas, but by no means do we have a comprehensive CRM tool that tracks everything across all channels. It is just because of the nature of the China market, as consumers buy offline and online through different platforms and things, and it is hard to capture a lot of that information. We would say, for example, in offline, in the national key accounts and some of the regional key accounts, we have our promotional ambassadors in-store who keep quite close contact with our consumers that regularly purchase from those stores and through WeChat channels and everything else. We have good line of sight over that. Through our loyalty program overall, there is a portion of consumers that do subscribe to our total loyalty program.

Speaker #1: And it's just because of the nature of the China market—there's consumers buying offline and online through different platforms and things. That's hard to keep, that's all hard to capture, a lot of that information.

Speaker #1: So with, say, for example, an offline in the key, in the sort of national key accounts and some of the regional key accounts, we have our promotional ambassadors in store who keep quite close contact with the consumers who regularly purchase from those stores.

Speaker #1: And through WeChat channels and everything else. So, we have good line of sight over that. But through our loyalty program overall, there's a portion of consumers that do subscribe to our total loyalty program.

David Bortolussi: We have good line of sight over that. Through our loyalty program overall, there is a portion of consumers that do subscribe to our total loyalty program. Within the e-commerce platforms, there are loyalty programs there as well. We have some line of sight over our users that we can target and re-target. Your second part of that was, is it too late? For some of our-

Speaker #1: And then, within the e-commerce platforms, there are loyalty programs there as well. So we have some line of sight over our users that we can target and retarget.

David Bortolussi: Within the e-commerce platforms, there are loyalty programs there as well. We have some line of sight over our users that we can target and re-target. Your second part of that was, is it too late? For some of our-

Speaker #1: Your second part of that was, is it too late? For some of ours, it’s probably what’s important.

Richard Barwick: Well, sorry, what point is it too late, man?

Speaker #6: Is it too late, Richard?

Speaker #1: Yeah. So just in terms of the timing. So for early stage users, if they have switched to another brand, most mothers with a young infant would be not inclined to generally not inclined to switch back unless they've had problems with those with the new product that they are using.

David Bortolussi: Yeah. So just in terms of the timing, for early-stage users, if they have switched to another brand, most mothers with a young infant would be generally not inclined to switch back unless they have had problems with the new product that they are using. Some will. Some may wait till the next stage of transition, which is the second part of your question, which is, when you transition from 1 to 2 to 2 to 3, that provides another opportunity to regain those consumers. As those consumers did change to other brands, the competition could not help but offer them attractive deals on full case or one or two cases, which means that some of them have significant pantry inventory to consume as well before they would contemplate switching back to us.

Speaker #1: Some will. Some may wait till the next stage of transition, which is the second part of your question — when you transition from one to two, to two to three — that provides another opportunity to regain those consumers.

Speaker #1: And of course, as those consumers did change to other brands, the competition couldn't help but offer them attractive deals on a full case, or one or two cases, which means that some of them have significant pantry inventory to consume as well before they would contemplate switching back to us.

Speaker #1: So that's why there are several other reasons why it's going to take some time for those consumers to come back to us. And we're also refocused on ramping up the momentum of our new user recruitment.

David Bortolussi: There are several other reasons why it is going to take some time for those consumers to come back to us. We are also refocused on ramping up the momentum of our new user recruitment. For later-stage users, I would just highlight that Stage 3 users, the infant or toddler is obviously more robust and consumers that have got greater flexibility in modifying feeding patterns or potentially using alternative nutrition or other products, then switching back is much more convenient for the consumer. On Stage 4, in particular, whilst we are out of stock in Stage 4 for a long period of time due to Synlait supply, we did have our Kids Nutrition, Kids Advanced product that we refer to, which has been incredibly successful and also supported some of those consumers or users that were using Stage 3 and 4 product as a substitute product. It is complicated.

Speaker #1: And then for later stage users—or just to highlight, stage three users—the infant or toddler is obviously more robust, and consumers have greater flexibility in modifying feeding patterns or potentially using alternative nutrition or other products, and then switching back is much more convenient for the consumer.

Speaker #1: And on stage four in particular, whilst we were out of stock in stage four for a long period of time due to similar supply, we did have our Kids Nutrition Kids Advanced product that we refer to, which has been incredibly successful and also supported some of those consumers that were using, or users that were using, stage three and four product as a substitute product.

Speaker #1: So, it's complicated. We don't have full line of sight on everything at the moment. The plan that Sharon and the team have put in place is being executed well.

David Bortolussi: We do not have full line of sight over everything at the moment. The plan that Chow and the team have put in place is being executed well, and there are some encouraging signs, but it is too early to be quite definitive. We will give updates to the market as we go next at the AGM and again at the H1 or in between if we need to.

Speaker #1: And there are some encouraging signs, but it's too early to be quite definitive. We'll give updates to the market as we go—next at the AGM, and again at the half-year, or in between if we need to.

Speaker #6: And just timing-wise, though, David, if—is it sort of—it's to win these back, will you—presumably, the sooner the better, and so, therefore, the AGM update—that will give you the best insight?

Richard Barwick: Just timing-wise, David, to win these back, you are presumably the sooner the better, and therefore the AGM update, that will give you the best insight? That seems like it is unlikely to be a H2 weighted winning Chinese label customers back. That is going to be a H1 story.

Speaker #6: I mean, it seems unlikely that we'll see a second half-way point to winning Chinese label customers back. That's going to be a first half story.

Speaker #1: Yeah, there'll be some well, we're hoping that there'll be a significant proportion that will come back. And some are already come back because we're a largely out of largely out of stock, Richard.

David Bortolussi: Well, we're hoping that there'll be a significant proportion that will come back, and some have already come back because we were largely out of stock, Richard, and so a great proportion had left. To even be at 40% off take at the moment or thereabout, that's already a significant return to the brand and that's improving every week. We'll see where we're at the AGM. We'll certainly provide an update then. If it's materially different up or down, we'll obviously let the market know if that's critical. But overall, at the moment, we're expecting, as I said earlier, if we're around 40% now to be back to 100% or thereabout run rate by the end of the financial year, so progressive recovery throughout the year. We're very careful about how we're going about this.

Speaker #1: And so a great proportion had left. And so to even be at 40% off-take at the moment, or thereabouts, that's already a significant percentage of the brand and that's improving every week.

Speaker #1: So, we'll see where we're at at the AGM. We'll certainly provide an update then. If it's materially different—up or down—we'll obviously let the market know if that's critical.

Speaker #1: But overall, at the moment, we're expecting, as I said earlier, if we're around 40% now, to be back to 100% or thereabouts run rate by the end of the financial year.

Speaker #1: So, progressive recovery throughout the year. We're going to be very careful about how we're going about this. The number one priority for us is to ensure that we maintain the really strong brand health that we have for the a2 brand.

David Bortolussi: The number one priority for us is to ensure that we maintain our really strong brand health that we have for the a2 brand. The last thing we want to do is to rush into this and not preserve the distribution and the great sort of trade support that we have in the market, as well as looking after our consumers. That's why we have constrained our distribution at the moment, and we're progressively going to expand that over time. We're not discounting product and pushing it into consumers or expanding our distribution rapidly, which could run the risk of ending up with a lot of slow-moving inventory in the trade and create freshness issues and pricing and impact the whole ecosystem, which is really important to the a2 business model.

Speaker #1: And the last thing we want to do is rush into this and not preserve the distribution and the great sort of trade support that we have in the market, as well as looking after our consumers.

Speaker #1: And that's why we have constrained our distribution at the moment. We're progressively going to expand that over time. We're not discounting product and pushing it into consumers or expanding our distribution rapidly, which could run the risk of ending up with a lot of slow-moving inventory in the trade. That could create freshness issues and pricing impacts, and impact the whole ecosystem, which is really important to the a2 business model.

David Bortolussi: We're not discounting product and pushing it into consumers or expanding our distribution rapidly, which could run the risk of ending up with a lot of slow-moving inventory in the trade and create freshness issues and pricing and impact the whole ecosystem, which is really important to the a2 business model. In essence, we're going about this in a really measured, careful way, mindful of what our consumers need and the health of the a2 brand for the interest of the long term.

Speaker #1: So, in essence, we're going about this in a really measured, careful way, mindful of what our consumers need and of the health of the a2 brand in the interest of the long term.

David Bortolussi: In essence, we're going about this in a really measured, careful way, mindful of what our consumers need and the health of the a2 brand for the interest of the long term.

Speaker #6: Yep. Okay, that all makes sense. Thanks, David.

Richard Barwick: Yep. Okay. It all makes sense. Thanks, David.

Speaker #7: Thank you. Your next question comes from Adrian Auburn from Jardin. Please go ahead.

Operator: Thank you. Your next question comes from Adrian O'Brien from Jarden. Please go ahead.

Speaker #8: Oh, good morning, team. Just, David, just keen to understand when you talk about constraining if you like the distribution for Zito in particular. Is that when you provided you a sort of July update, and you were sort of thereabouts at target inventories, is that against the constrained construct?

Adrian O'Brien: Oh, good morning, team. David, just keen to understand, when you talk about constraining, if you like, the distribution for a2 Zhichu in particular, when you provided your July update and you were thereabout at target inventory, is that against the constrained construct? I am just trying to reconcile where we might have been forecasting to where you are at now with a new view on the distribution in terms of releasing it slowly as you got confidence.

Adrian Allbon: Oh, good morning, team. David, just keen to understand, when you talk about constraining, if you like, the distribution for a2 Zhichu in particular, when you provided your July update and you were thereabout at target inventory, is that against the constrained construct? I am just trying to reconcile where we might have been forecasting to where you are at now with a new view on the distribution in terms of releasing it slowly as you got confidence.

Speaker #8: I'm just trying to sort of reconcile where we might have been forecasting to where you're sort of at now, with a new view on the distribution in terms of releasing it slowly as you got confidence.

Speaker #1: Yeah, that's correct, Adrian. So it's against a constrained distribution that we're at target. And obviously, we factor in a certain number of weeks cover, and that's a forward-looking month cover or weeks cover measure that we have.

David Bortolussi: Yeah, that is correct, Adrian. So it is against a constrained distribution that we are at target. Obviously, we factor in a certain number of weeks cover, and that is a forward-looking months cover or weeks cover measure that we have. Obviously, the offtake was uncertain at that point. Generally, you are correct that we were referring to us being at roughly a target inventory on a constrained basis for the offline channels. Obviously, that is not relevant for online.

Speaker #1: And obviously, the off-take was uncertain at that point. But generally, you're correct that we were referring to us being at roughly target inventory, on a constrained basis, for the offline channels.

Speaker #1: Obviously, that's not relevant for online.

Speaker #8: Okay. And then, as you sort of—I think as you talked about—sort of 40% offtake to 100, would you expect that that distribution would go back to where it is?

Adrian O'Brien: Okay. As you talked about 40% offtake to 100, would you expect that that distribution would go back to where it is? I know you talked about possibly seeding some of the constrained people with the new products initially, but is that a reasonable assumption as well?

Adrian Allbon: Okay. As you talked about 40% offtake to 100, would you expect that that distribution would go back to where it is? I know you talked about possibly seeding some of the constrained people with the new products initially, but is that a reasonable assumption as well?

Speaker #8: I know you talked about possibly seeding some of the constrained people with the new products initially, but is that a reasonable assumption as well?

Speaker #1: Yeah, I think that we'll head back towards, in the order of, sort of, 25,000 to 30,000 deals that we had previously. I can't be specific.

David Bortolussi: Yeah, I think that that will head back towards in the order of 25,000 to 30,000 doors that we had previously. I cannot be specific on exactly when that is going to happen, but I think we will head towards that by the end of the year. So if you factor in that, there will be a little bit of trade inventory level expansion as we move from weighted distribution of around two-thirds now to closer to 100% over time, if that is where you are coming from.

Speaker #1: I'm not exactly sure when that's going to happen, but I think we'll head towards that by the end of the year. So, if you sort of factor in that there will be a little bit of trade inventory level expansion as we move from weighted distribution of around two-thirds now to closer to 100% over time, if that's where you're coming from.

Speaker #8: Yep. Okay. No, that's fine. Just in terms of the English label, it seemed to slow quite a bit in the second half, as you've sort of talked about in the market commentary.

Adrian O'Brien: Yep. Okay. No, that is fine. Just in terms of the English label seemed to slow quite a bit in the H2 as you have talked about the market commentary, and I guess your market share dipped a little bit in that Q4 relative to the Kantar stuff, if you indicatively look at the SmartPath. Can you talk a little bit more about what is happening right now relative to that exit rate?

Adrian Allbon: Yep. Okay. No, that is fine. Just in terms of the English label seemed to slow quite a bit in the H2 as you have talked about the market commentary, and I guess your market share dipped a little bit in that Q4 relative to the Kantar stuff, if you indicatively look at the SmartPath. Can you talk a little bit more about what is happening right now relative to that exit rate?

Speaker #8: And I guess your market share dipped a little bit in that fourth quarter relative to the Kantar stuff, if you sort of indicatively look at the Smart Path.

Speaker #8: Can you sort of talk a little bit more about what's happening right now, relative to that exit rate?

Speaker #1: Yeah, I might hand over to you, but we did definitely see a decline in off-take following the US recall announcement. So, I mean, again, that product is a different product.

David Bortolussi: Yeah, I might hand over to Yohan, but we did definitely see a decline in offtake following the US recall announcement. So again, that product is a different product. There is no physical issue with the product. It was just obviously the unfortunate similar name, et cetera, and then being picked up in China. Anyway, I will hand over to Yohan.

Speaker #1: There's no physical issue with the product. It was just, obviously, the unfortunate similar name, etc., and being picked up in China. So anyway, I'll hand over to you.

Speaker #8: Yeah, so as David said, if we look at the second half, the third quarter was growing strongly. It was a continuation of the trend in the first half.

Yohan Senaratne: Yeah. So as David said, if you look at the H2, the Q3 was growing strongly, and it was a continuation of the trend in the H1. Where I guess it was the biggest challenge was in May and June when the US label recall came out, there was an indirect impact. Yes, you can see in the Q4, probably SmartPath is the best indicator of the impact, where you can see it is effectively up 10% down for May and June. What we expect is, of course, that to rebuild in the H1. But you can see it on the data on slide 33. Q4 2026 is 17.9 versus the MAT of 19.6.

Speaker #8: I guess the biggest challenge was in May and June, when the US label recall came out. There was an indirect impact.

Speaker #8: And yes, you can see in the fourth quarter, probably Smart Path is the best indicator of the impact, where you can see it is effectively 10% down for May and June.

Speaker #8: What we expect is, of course, that to rebuild in the first half. But you can see it in the data on slide 33: Q4 2026 is 17.9 versus the MAC of 19.6.

Speaker #8: Okay. And so the expectation is that that would be—that dent would be—sorted over the first half, is what you're sort of saying.

Adrian O'Brien: Okay. The expectation is that that dent would be sorted over the H1 is what you are saying. You are already seeing progress

Adrian Allbon: Okay. The expectation is that that dent would be sorted over the H1 is what you are saying. You are already seeing progress

Speaker #8: You're already seeing progress that that's coming. Yeah, correct. Correct. Yeah. So that's happening. Yeah. Just a final question from me. Just in terms of the whole obviously, the whole serialized and testing was a big priority for the company over particularly over the period since you reported the February result.

Yohan Senaratne: Yeah

Adrian O'Brien: that is coming.

Adrian Allbon: that is coming.

Yohan Senaratne: Yeah, correct.

Adrian O'Brien: Okay.

Adrian Allbon: Okay.

Yohan Senaratne: Yeah. So that. Yeah.

Adrian O'Brien: Just a final question from me. Just in terms of obviously the whole Phenylpropanolamine and testing was a big priority for the company over, well, it took over the period since you reported the February result. Can you just update us on where you are at with that? Is it back to normal now against the new testing regimes that are required, or are there any outstandings required on that work program?

Adrian Allbon: Just a final question from me. Just in terms of obviously the whole Phenylpropanolamine and testing was a big priority for the company over, well, it took over the period since you reported the February result. Can you just update us on where you are at with that? Is it back to normal now against the new testing regimes that are required, or are there any outstandings required on that work program?

Speaker #8: Can you just sort of update us on where you're at with that? Is it—sort of—is it back to normal now, against the new testing regimes that are required, or is there any outstanding work required on that work program?

Speaker #1: Adrian, we've—so I think the testing methodologies and levels have been reasonably well established internationally. However, I do note that New Zealand is really the only country that has introduced very definitive standards or requirements.

David Bortolussi: Adrian, I think the testing methodologies and levels have been reasonably well established internationally. However, I do note that New Zealand is really the only country that has introduced very definitive standards and requirements at some of the tightest levels, which is great. We have no problem with that at all. It is just that it did evolve a lot quickly over time for both regulators and company participants. We have gone through testing of all of our product. We have made adjustments to our supply chain. There is no concern around the safety of our product in relation to. They are right, as an infant company, you cannot promise there is never going to be any quality or safety issues. But we have a really solid certificates of analysis from suppliers. We do testing on Phenylpropanolamine throughout the supply chain as part of our release processes.

Speaker #1: At some of the tightest levels, which is great. We have no problem with that at all. It's just that it did evolve a lot, quickly, over time for both regulators and company participants.

Speaker #1: So we have gone through testing of all of our products. We've made adjustments to our supply chain. There is no concern around the safety of our product in relation to—so they're right.

Speaker #1: I can't—as an infant company, you can't promise there's never going to be any quality or safety issues. But we have really solid certificates of analysis from suppliers.

Speaker #1: We do testing on celluloid throughout the supply chain as part of our release processes. We make those test results available to our consumers. I mentioned earlier in the call about the batch-by-batch testing results.

David Bortolussi: We make those test results available to our consumers. I mentioned earlier in the call about the batch-by-batch testing results. You can see nil detect on all of our products, every batch. So it is a very thorough process that we have in place now, so no concerns whatsoever. And most of the industry has adapted rapidly as well, but we are being very transparent about that.

Speaker #1: You can see 'Nil Detect' on all of our products, every batch. So, it's a very thorough process that we have in place now. So, no concerns whatsoever.

Speaker #1: And most of the industry has adapted rapidly as well, but we've been very transparent about that.

Speaker #8: Okay. Thank you. That's great.

Adrian O'Brien: Okay. Thank you. That is great.

Adrian Allbon: Okay. Thank you. That is great.

Speaker #2: Thank you. Your next question comes from Marcus Kelly from UBS. Please go ahead.

Operator: Thank you. Your next question comes from Marcus Currey from UBS. Please go ahead.

Speaker #8: Good morning, team. I just wondered if we could revert back to the high level of the guidance. Is it right in assuming that, in terms of the infant formula guide, you're talking about growth in English label and a decline in China label at a high level?

Marcus Currey: Good morning, team. I just wondered if we could revert back to the high level of the guidance. Is it right in assuming that in terms of the infant formula guide, you are talking about growth in English label and a decline in China label at a high level?

Marcus Curley: Good morning, team. I just wondered if we could revert back to the high level of the guidance. Is it right in assuming that in terms of the infant formula guide, you are talking about growth in English label and a decline in China label at a high level?

Speaker #1: We haven't been explicit about that, Marcus, but I mean, certainly in the first half, that would be the case. Over the full year, it probably remains to be seen.

David Bortolussi: We have not been explicit about that, Marcus, but certainly in H1, that would be the case. Over the full year, it remains to be seen. It is probably closer than you may expect. We will just have to wait to see how that plays out. We have not provided specific guidance on that. But yeah, certainly in H1, English label will outperform China label on a reported sales basis. Yeah.

Speaker #1: It's probably closer than you may expect. We'll just have to wait to see how that plays out. We haven't provided specific guidance on that.

Speaker #1: But yeah, certainly in the first half, its English label will outperform the China label on a reported sales basis. Yeah.

Speaker #8: Okay. I suppose then, just on English label, are you anticipating growth in English label for the year?

Marcus Currey: Okay. I suppose then just on English label. Are you anticipating growth in English label for the year?

Marcus Curley: Okay. I suppose then just on English label. Are you anticipating growth in English label for the year?

Speaker #1: Yeah, I mean, at this stage, we would expect that, if anything, English label is likely to be ahead of China label. But it depends.

David Bortolussi: Yeah, at this stage, we would expect that if anything, English label is likely to be ahead of China label. But it depends on how the new products perform and everything. So, it is early in the year, but yes, that would be our sort of expectation at the moment. But the difference between the two, if you are expecting English label to way outperform China label, given what has happened to China label, that is not necessarily going to be the case. It is probably a bit more nuanced than that.

Speaker #1: It depends on how the new products perform and everything. So, I mean, it's early in the year. But yes, that would be our sort of expectation at the moment.

Speaker #1: But the difference between the two—if you're expecting English label to way outperform China label, given what's happened to China label—that's not necessarily going to be the case.

Speaker #1: It's probably a bit more nuanced than that.

Speaker #8: Yes. I suppose when you think about English label, I appreciate the comments around your market share in the fourth quarter. You don't necessarily see that in the second half revenue performance.

Marcus Currey: Yes. I suppose when you think about English label, I appreciate the comments around your market share in Q4. You do not necessarily see that in the H2 revenue performance. You have obviously got Vietnam going well, you have got new products coming. Well, you are getting back into stock on new products. So just sort of trying to gauge what I am missing in terms of the English label performance potentially in the next 12 months.

Marcus Curley: Yes. I suppose when you think about English label, I appreciate the comments around your market share in Q4. You do not necessarily see that in the H2 revenue performance. You have obviously got Vietnam going well, you have got new products coming. Well, you are getting back into stock on new products. So just sort of trying to gauge what I am missing in terms of the English label performance potentially in the next 12 months.

Speaker #8: And so, you obviously have Vietnam going well, you've got new products coming in well, and you're getting back into stock on those new products. I'm just trying to gauge what I might be missing in terms of English label performance, potentially in the next 12 months.

Speaker #1: Well, in the second—maybe not in the next 12 months—but when you're looking at it, there’s a little bit of movement in trade inventory as well that you might want to factor in as well in the second half, because we finished the year, we finished the December half, slightly low in English label trade inventory.

David Bortolussi: Well, maybe not in the next 12 months, but when you are looking at there is a little bit of movement in trade inventory as well that you might want to factor in as well in H2, because we finished the December half slightly low in English label trade inventory and then at the end of the year, slightly higher because of the late Q4 drop-off in offtake. So that explains a little bit of the higher, if you are trying to sort of understand the relativity of the reported sales growth versus the market share numbers, that explains a little bit of that.

Speaker #1: And then at the end of the year, slightly higher because of the late fourth-quarter drop-off in offtake. So that explains a little bit of the higher numbers, if you're trying to sort of understand the relativity of the reported sales growth versus the market share numbers. That explains a little bit of that.

Speaker #8: Right. Okay. So that drop-off.

Marcus Currey: Right. Okay. So that drop-off-

Marcus Curley: Right. Okay. So that drop-off-

Speaker #1: Then you've got underlying growth, you've got new emerging markets, and then you've got a little bit of trade inventory level movement as well.

David Bortolussi: Like you've got underlying growth, you've got new emerging markets, and then you've got a little bit of trade inventory level movement as well.

Speaker #8: Okay, thank you. And then it looks like the two new China label products are both in the ultra-premium category. Is that different from what you were initially thinking?

Marcus Currey: Okay. Thank you. It looks like the two new China label products are both in the ultra-premium category. Is that different to what you were initially thinking? Maybe you can just give us a little bit more color in terms of maybe the price points of those two products and how you plan to roll them out from a store perspective.

Marcus Curley: Okay. Thank you. It looks like the two new China label products are both in the ultra-premium category. Is that different to what you were initially thinking? Maybe you can just give us a little bit more color in terms of maybe the price points of those two products and how you plan to roll them out from a store perspective.

Speaker #8: And maybe you can just give us a little bit more color in terms of the price points of those two products and how you plan to roll them out from a store perspective?

Speaker #1: Sure. Do you want to talk to that? Yeah. So both of the products are positioned as ultra-premium products. Because, I mean, A2, Q2—so, I mean, the heritage is like both are perceived by the consumer under the hill as the ultra-premium product.

David Bortolussi: Charlie, you want to talk to the-

Li Zhao: Yeah.

Xiao Li: Yeah.

David Bortolussi: To that? Yeah.

Li Zhao: Both of the product is positioned as an ultra-premium product. Because a2 Zhichu, the heritage is both perceived by the consumer and the retailer as the ultra-premium product and we also represent the ultra-premium segment. For the digestion, it is going to be a lower tier city expansion, because this patent MLCT plus OPO, plus full nutrition benefits really appeal to the lower tier mom who wants basically everything. Also, if you can see from the market, even in the lower tier cities, there are still 40% above ultra-premium contribution in the lower tier city with mom inspired to buy the best product for their baby. So, this product going to the lower tier city with an ultra-premium positioning, digestion, full nutrition benefits, and plus a higher trade margin, which is also very effective in the lower tier city.

Xiao Li: Both of the product is positioned as an ultra-premium product. Because a2 Zhichu, the heritage is both perceived by the consumer and the retailer as the ultra-premium product and we also represent the ultra-premium segment. For the digestion, it is going to be a lower tier city expansion, because this patent MLCT plus OPO, plus full nutrition benefits really appeal to the lower tier mom who wants basically everything. Also, if you can see from the market, even in the lower tier cities, there are still 40% above ultra-premium contribution in the lower tier city with mom inspired to buy the best product for their baby. So, this product going to the lower tier city with an ultra-premium positioning, digestion, full nutrition benefits, and plus a higher trade margin, which is also very effective in the lower tier city.

Speaker #1: And we also represent, I mean, ultra-premium segments. So for the digestion, it's going to be, I mean, like, a lower-tier city expansion.

Speaker #1: Because I mean, this I mean, patent MLCT and plus OPO plus full nutrition benefit really I mean, appeal to the lower tier mom who wants basically everything.

Speaker #1: And also, I mean, you can see from the market, even in the lower-tier cities, there is still about 40% or above ultra-premium contribution in the lower-tier cities, with moms expecting to buy the best product for their baby.

Speaker #1: Yeah. So, I mean, this product is going to the lower-tier city with ultra-premium positioning, full nutrition benefits, and the plus higher treat margin, which is also very effective in the lower-tier city.

Speaker #1: Because typically, in the lower-tier city, you rely more on the retailer's recommendation. Yeah. Then the A2 H1, which is the A2 organic, is serving as—I mean, ultra-premium product. Typically, organic is a very unique segment in the China market.

Li Zhao: Because typically in the lower tier city, rely more on the retailer's recommendation. The a2 H brand, which is a2 Organic, are serving as the ultra-premium product. Typically, organic is a very unique segment in China market, only appealing to certain consumer in the higher tier city. So this product has to be a higher price and also represent the best source of milk, a2 New Zealand. Probably that is the best, most valuable, precious source of milk to make this product. So it is going to dispute around Zhichu in the higher tier city and pop star tier accounts. Hopefully generate incremental volume appealing to this segment.

Xiao Li: Because typically in the lower tier city, rely more on the retailer's recommendation. The a2 H brand, which is a2 Organic, are serving as the ultra-premium product. Typically, organic is a very unique segment in China market, only appealing to certain consumer in the higher tier city. So this product has to be a higher price and also represent the best source of milk, a2 New Zealand. Probably that is the best, most valuable, precious source of milk to make this product. So it is going to dispute around Zhichu in the higher tier city and pop star tier accounts. Hopefully generate incremental volume appealing to this segment.

Speaker #1: Only appealing to certain consumers in the higher-tier cities. So, this product has to be at a higher price and also represent the best source of milk—A2 New Zealand.

Speaker #1: Yeah, probably that's the best, most valuable, and precious source of milk to make this product. So it's going to distribute along Q2 in the higher-tier city.

Speaker #1: It tops off key account, hopefully generating incremental volume and appealing to this segment.

Speaker #2: You're right, Marcus. We— a year ago, as we were developing our plans, we thought this would either play in the super premium to ultra-premium space, and we have leaned towards the ultra-premium as we've done more work on our go-to-market strategy.

David Bortolussi: You are right, Marcus. A year ago, as we were developing our plans, we thought this would either play in the super premium to ultra-premium space, and we have leaned towards the ultra-premium as we have done more work on our go-to-market strategy, taking into account distributor and trade feedback on it as well. So we think this is the right positioning and the full nutrition formulation that the Qi Run product has, we think supports that as well. If it does not-

Speaker #2: Taking into account distributor and trade feedback on it as well, we think this is the right positioning. The full nutrition formulation that the two-run product has, we think, supports that as well.

Speaker #2: If it doesn't, whatever matters. If it doesn't, whatever purpose holds that price point, we can always wind that back a little bit. It's very difficult, as you know, to take a product up after you've launched it at a certain price point.

Marcus Currey: And price again.

Marcus Curley: And price again.

David Bortolussi: If it doesn't have a purpose, hold that price point. We can always wind that back a little bit, but it is very difficult, as you know, to take a product up after you have launched at a certain price point.

Speaker #8: And so both products are priced at a premium to the existing product?

Marcus Currey: Both products priced at a premium to the existing product?

Marcus Curley: Both products priced at a premium to the existing product?

Speaker #1: The organic product will be at a premium to Joju, but we're not being specific about the Chiron product pricing relative to Joju at this stage.

David Bortolussi: The organic product will be at a premium to a2 Zhichu, but we are not being specific about the Qi Run product pricing relative to a2 Zhichu at this stage.

Speaker #8: Okay.

Marcus Currey: Okay.

Marcus Curley: Okay.

Speaker #1: It'll be close. I'm just not saying it's going to be above or below. It'll be close, but in the ultra-premium segment.

David Bortolussi: It will be close. I am not saying it is going to be above or below, but it will be close, but in the ultra-premium segment.

Speaker #5: Thank you. Your next question comes from Phil Kimber from E&P Capital. Please go ahead.

Operator: Thank you. Your next question comes from Phil Kimber from E&P Capital. Please go ahead.

Speaker #7: Hey, guys. I just had a question. On the market growth you expect—I think you've given that the total China infant formula market grew at 0.7%, but that was over the whole year.

Phil Kimber: Hey guys, I just had a question on the market growth you expect. I think you've given the total China infant formula market grew at 0.7%, but that was over the whole year, and at the H1 it grew 3.6% for just the first 25 or 26 weeks. It looks like it's gone backwards about 3% now and China label, and English label looks like maybe flat and China label down. What's your expectation for the market to grow or decline in FY27? When you look at the various stages, should we anticipate that that momentum increases as in it declines faster? Am I missing something in that?

Speaker #7: And at the half, it grew 3.6% for just the first 25 or 26 weeks. So it looks like it's gone backwards about 3% now.

Speaker #7: And China label, and, well, English label looks like maybe flat, and China label down. What's your expectation for the market to grow or decline in FY27?

Speaker #7: And when you look at the various stages—I mean, should we anticipate that that momentum increases as it declines faster, or am I sort of missing something in that?

David Bortolussi: No, it's always hard to be definitive about the China infant market. At the moment, our thinking is that the number of newborns will probably be up this, supported by the marriage rate, which increased last year. You've got the impact of the Year of the Dragon still working its way through the system in the later stages. Then you've got birth rate, obviously declined a lot last year but will probably be up marginally this year. Overall, we would expect Phil, we'd expect the market to be down low single digits, only down slightly next year, low single digits. Probably early stage, reasonably robust, sort of flat to marginally up. Later stage should be down because of the tail end of the Year of the Dragon working its way through the system, if that makes sense.

Speaker #2: No, it's always hard to defend you about the China infant market, but we think at the moment, our thinking is that the number of newborns will probably be up. This is supported by the marriage rate, which increased last year.

Speaker #2: So you've got the impact of the Dragon Year still working its way through the system and the later stages. And then you've got the birth rate—which obviously declined a lot last year—but will probably be up marginally this year.

Speaker #2: So overall, we would expect, Phil, we’d expect the market to be down low single digits, only down slightly next year—low single digits, probably. Early stage, reasonably robust, sort of flat to marginally up.

Speaker #2: And later stage to be down because of the tail end of the Dragon Year working its way through the system, if that makes sense.

Speaker #7: Yeah. And when you say that, are you talking fiscal '27 there or calendar '27?

Phil Kimber: Yeah. When you say, are you talking fiscal 2027 there or calendar 2027?

David Bortolussi: Yeah. FY27. Yeah.

Speaker #2: Yeah, yeah. FY27, yeah. But the birth and newborn numbers I'm referring to are calendar year because that's the basis on which they reported.

Phil Kimber: Yeah.

David Bortolussi: The birth newborn numbers, I am referring to calendar year because that is the basis which they are reported.

Speaker #7: Yeah. And then my second question, just around Sinlai—you mentioned you're having to work with them to improve supply. In terms of, are there any—I mean, there's been rumors on the wires around ownership changes there.

Phil Kimber: Yeah. My second question, just around Synlait, and you mentioned, you are having to work with them to improve supply. In terms of, there has been rumors on the wires around ownership changes there. I do not know if there is anything you can talk to on that or where you think that might end up, that business.

Speaker #7: I don't know if there's anything you can speak to on that, or where you think that business might end up.

Speaker #2: I think there's.

David Bortolussi: I think there has been-

Speaker #7: From your point of view.

Phil Kimber: From your point of view,

David Bortolussi: every six months there seems to be rumors about us doing something in relation to Synlait. I will not comment on speculation. All I will say is that we have had a long and strong relationship with Bright and Synlait, despite some of the supply challenges that we have had. We have worked day-to-day really closely with Synlait. The a2 Zhichu China label registration is very strategically important to us, and we intend to partner with them in the long term. The only other thing I would say is that the acquisition of Pokeno and the hundreds of millions of NZD that we have invested in that and the upgrade is probably indicative of our supply chain strategy. So, got nothing more to say on that, Phil.

Speaker #2: Every six months there seem to be rumors about us doing something in relation to Sinlai. But look, I won't comment on speculation. All I'll say is that we've had a long and strong relationship with Bright and Sinlai.

Speaker #2: Despite some of the supply challenges that we've had, we work day-to-day really closely with Sinlai. The Joju China label registration is very strategically important to us.

Speaker #2: We intend to partner with them in the long term. And the only other thing I would say is that the acquisition of Pocono, and the hundreds of millions of dollars that we've invested in that and the upgrade, is probably indicative of our supply chain strategy.

Speaker #2: So nothing more to say on that, Phil.

Phil Kimber: Cool. Thank you.

Speaker #7: Phil. Thank you.

Speaker #5: Thank you. Your next question comes from Steven Ridgewell from Craigs Investment Partners. Please go ahead.

Operator: Thank you. Your next question comes from Stephen Ridgewell from Craigs Investment Partners. Please go ahead.

Speaker #6: Yeah. Good afternoon. David, first question from me is just on the new China label products. Just wondering if you could please give us a broad implication as to the revenue contribution that's baked into the guidance for flat overall formula sales from those new products.

Stephen Ridgewell: Yeah, good afternoon. David, first question from me is just on the new China label products. Just wondering if you could please give us a broad indication as to the revenue contribution that is baked into the guidance for flat overall infant formula sales from those new products. Then just related to that, would you be expecting these new products to have a positive contribution at the EBITDA level in FY27 or, given launch cost, is that perhaps more of an expectation for FY28, please?

Speaker #6: And then this relates to that. Would you be expecting these new products to have a positive contribution at the EBITDA level in FY27, or given launch costs, is that perhaps more of an expectation for FY28, please?

Speaker #2: I'll go back to the comments I made earlier in the call, Steven, in the Q&A session. I forget who it was to, but last year, if you take a look, when we announced the acquisition, we said that the two labels were contributing incremental, over $100 million of sales.

David Bortolussi: I will go back to the comments I made earlier in the call, Steven, in the Q&A session. I forget who it was to, but last year, if you have a look, when we announced the acquisition, we said that the two labels would contribute incremental over NZD 100 million of sales, and there is a chart in there which shows the sort of expected ramp-up of that. For the reasons I said before, I would expect that to be like earlier than what that chart would indicate. The chart would indicate we probably expect NZD 10 million or less this year, which is not quite right. So it will be more than that, but it is certainly not going to be the majority. So it will be a reasonable number, but we are not providing specific guidance on that.

Speaker #2: And there's a chart in there which shows the sort of expected ramp-up of that. For the reasons I said before, I'd expect that to be great.

Speaker #2: Like earlier, then, what that chart would indicate. We definitely, I mean, the chart would indicate we’d probably expect $10 million or less this year, which is not quite right.

David Bortolussi: The chart would indicate we probably expect NZD 10 million or less this year, which is not quite right. So it will be more than that, but it is certainly not going to be the majority. So it will be a reasonable number, but we are not providing specific guidance on that. In terms of the contribution, probably dilutive in the second quarter when they are launched, but accretive in the second half.

Speaker #2: So, it'd be more than that, but it's certainly not going to be the majority. So, it'll be a reasonable number, but I'm not providing specific guidance on that.

Speaker #2: In terms of the contribution, it was probably diluted in the second quarter when they launched, but it created value in the second half.

David Bortolussi: In terms of the contribution, probably dilutive in the second quarter when they are launched, but accretive in the second half.

Speaker #6: Cool. Thank you. And then just going back to the broad brush sort of recovery plan for China label sales, I guess at a high level, just given we're seeing social media sentiment improve through the data you've provided, search rates are improving, and stock is broadly available for China label, I guess a high level, why are we not seeing a stronger pickup in sales already?

Stephen Ridgewell: Cool. Thank you. Then just going back to the broad brush sort of recovery plan for China label sales. I guess at a high level, just given we are seeing social media sentiment improve per the data you have provided, search rates are improving and stock is broadly available for China label, I guess a high level, why are we not seeing a stronger pickup in sales already? I mean, I think the down 60% does seem pretty steep. There is quite a big mountain to climb to get back to the 100% of pre-crisis levels. I mean, when you look at the recovery plan, in the detail you will be looking at it, do you sort of assume a large number of those customers are gone for good and that you are really relying on over-indexing market share gains for new mothers to get back to that pre-crisis level of sales?

Speaker #6: I mean, I think a decline of 60% does seem pretty steep. There's quite a big mountain to climb to get back to 100% of pre-crisis levels.

Speaker #6: Levels. I mean, when you look at the recovery plan in detail, as you'll be looking at it, do you sort of assume a large number of those customers are gone for good, and that you're really relying on over-indexing market share gains for new mothers to get back to that pre-crisis level of sales?

Stephen Ridgewell: I mean, when you look at the recovery plan, in the detail you will be looking at it, do you sort of assume a large number of those customers are gone for good and that you are really relying on over-indexing market share gains for new mothers to get back to that pre-crisis level of sales? If that's the case, I'm just wondering if you're able to share more data points with us to perhaps provide comfort on that recovery plan. Thank you.

Speaker #6: And if that's the case, I'm just wondering if you'll be able to share more data points with us to perhaps provide comfort on that recovery plan.

Stephen Ridgewell: If that's the case, I'm just wondering if you're able to share more data points with us to perhaps provide comfort on that recovery plan. Thank you.

Speaker #6: Thank you.

Speaker #2: Well, I think, David, being out of stock for most of the four quarters, as I said, has had a pretty significant impact on our user base, particularly early stage.

David Bortolussi: Well, thanks, Steven, for that. Being out of stock for most of the Q4, as I said, has had a pretty significant impact on our user base, particularly early stage. Now at about 40% offtake run rate, we've lost the majority of our early stage customers through forced product switching to other brands. We've probably maintained the majority of our later-stage users. As I said before, it's challenging to get those early-stage users back quickly. There will be opportunities as they consume the pantry stock that they have and as they change stage going forward into stage 2 and stage 3, there'll be other opportunities to acquire them. Overall, I guess by definition, given what we're saying, we are assuming that we will over-index in terms of our new user acquisition going forward.

Speaker #2: So now, at about a 40% off-take run rate, we've lost the majority of our early-stage customers through forced product switching to other brands. We're probably maintaining the majority of our later-stage users. As I said before, it's challenging to get those early-stage users back quickly, but there will be opportunities as they consume the pantry stock they have and as they progress into stage two and stage three. There will be other opportunities to acquire them moving forward.

Speaker #2: Overall, I guess by definition, given what we're saying, we are assuming that we will over-index in terms of our new user acquisition going forward.

Speaker #2: And in terms of data points, the best thing I can offer you is that the conversion rates on the activity we have in place at the moment, by the different channels and mechanisms that we go about, are either at or above where we were pre–supply chain disruption.

David Bortolussi: In terms of data point, the best thing I can offer you is that the conversion rates on the activity that we have in place at the moment, by the different channels and mechanisms that we go about are either at or above where we were pre-supply chain disruption. We're investing more in marketing this year. In absolute terms, if you run the math on it's a significant increase in marketing weighted to the H1 as well. We've got the full support of our retailers and distributors. For example, some of these types of things, it's one of the most critical things in the trade is to hang on to the shelf space that you have. Overall, we've got the same, if not greater shelf space, despite being without product for a considerable period of time.

Speaker #2: And we're investing more in marketing this year. In absolute terms, if you run the math on it, it's a significant increase in marketing, weighted to the first half as well.

Speaker #2: And we've got the full support of our retailers as well, and distributors. So, for example, in these types of things, one of the most critical things in the trade is to hang on to the shelf space that you have.

David Bortolussi: For example, some of these types of things, it's one of the most critical things in the trade is to hang on to the shelf space that you have. Overall, we've got the same, if not greater shelf space, despite being without product for a considerable period of time. Some of our retailers have actually given us an extra bay as well, which is incredible support. Anyway, Li and the team are doing a terrific job in China to, one, to manage the Q4, but now in executing our recovery program and so far so good. It's early days.

Speaker #2: And overall, we've got the same, if not greater, shelf space as piping with our product for a considerable period of time. Some of our retailers have actually given us an extra bay as well, which is incredible support.

David Bortolussi: Some of our retailers have actually given us an extra bay as well, which is incredible support. Anyway, Li and the team are doing a terrific job in China to, one, to manage the Q4, but now in executing our recovery program and so far so good. It's early days.

Speaker #2: So anyway, Sharon and the team are doing a terrific job in China—one, to manage the fourth quarter; but now, in executing our recovery program, and so far, so good.

Speaker #2: But it's early days.

Speaker #6: Cool. Thank you.

Stephen Ridgewell: Cool. Thank you.

Speaker #5: Thank you. Your next question comes from Julia Destuck from Morgan Stanley. Please go ahead.

Operator: Thank you. Your next question comes from Julia Dystant from Morgan Stanley. Please go ahead.

Speaker #7: Hi, everyone. Just

Julia Dystant: Hi, everyone. Just wanted to come back to your comments around the outlook for the English label category into FY27. Given you noted in the release around competitor recall impacts in the H2. Given they seem to be normalizing now, could you just speak to maybe in more detail, your outlook for the next 12 months on both the competition side and therefore prospects for customer acquisition as well?

Julia de Sterke: Hi, everyone. Just wanted to come back to your comments around the outlook for the English label category into FY27. Given you noted in the release around competitor recall impacts in the H2. Given they seem to be normalizing now, could you just speak to maybe in more detail, your outlook for the next 12 months on both the competition side and therefore prospects for customer acquisition as well?

Speaker #4: I wanted to come back to your comments around the outlook for the English label category into FY27. Given you noted in the release about competitor recall impacts in the second half, and given they seem to be normalizing now, could you speak in more detail about your outlook for the next 12 months on both the competition side and, therefore, prospects for customer acquisition as well?

Speaker #2: Yeah, yeah. How do you want to do that? Like, by category and...

David Bortolussi: Yeah. Do you want to do that?

Yohan Senaratne: Yeah.

David Bortolussi: Like category.

Speaker #6: Yeah. So I think, obviously, if we look at the English label market overall, and you look at the first half, it was growing strongly.

Yohan Senaratne: Yes. I think obviously if we look at the English label market overall and you look at the H1, it was growing strongly. Obviously, the H2 was impacted by the competitor recalls. So although English label now makes up 20% of the total China IMF market, obviously the H2 has been impacted by all of that. So of course, the major brands within the EL segment have had challenges in this space. For ourselves, of course, May, June, we had our own challenges. What we observe from competitors is that it does take a few months for that to rebuild, and we would expect the same from ourselves. I guess if we look at the English label market, the underlying demand for the product coming from overseas is still there, notwithstanding the challenges that the sector has had with those recalls.

Speaker #6: Obviously, the second half was impacted by the competitor recalls around. So although English label now makes up 20% of the total China IMF market, obviously the second half has been impacted by all of that.

Speaker #6: So, of course, the major brands within the EL segment have had challenges in this space. For ourselves, of course, in May and June, we had our own challenges.

Speaker #6: What we observe from competitors is that it does take a few months for that to rebuild, and so we would expect the same from ourselves.

Yohan Senaratne: What we observe from competitors is that it does take a few months for that to rebuild, and we would expect the same from ourselves. I guess if we look at the English label market, the underlying demand for the product coming from overseas is still there, notwithstanding the challenges that the sector has had with those recalls. We would expect that Platinum and Genesis will support our growth and rebuild into FY27.

Speaker #6: So I guess if we look at the English label market, the underlying demand for the product coming from overseas is still there, notwithstanding the challenges that the sector has had with those recalls.

Speaker #6: And we would expect that Horizon and Genesis—so, our Platinum and Genesis—will support our growth and rebuild into FY27.

Yohan Senaratne: We would expect that Platinum and Genesis will support our growth and rebuild into FY27.

Speaker #4: Got it. And then just on the reformulation of the Genesis product, I think you mentioned earlier that it was to kind of reinforce the premium positioning of the product—maybe not in those specific words.

Julia Dystant: Got it. Just on the reformulation of the Genesis product, I think you mentioned earlier that it was to reinforce the premium positioning of the product, maybe not in those specific words. Could you just speak to why the upgrade of that product now and what you are seeing in the market that might potentially be a catalyst for improving that premium positioning?

Julia de Sterke: Got it. Just on the reformulation of the Genesis product, I think you mentioned earlier that it was to reinforce the premium positioning of the product, maybe not in those specific words. Could you just speak to why the upgrade of that product now and what you are seeing in the market that might potentially be a catalyst for improving that premium positioning?

Speaker #4: But could you just speak to kind of why the upgrade of that product now, and what you're seeing in the market that might potentially be a catalyst for improving that kind of premium positioning?

Speaker #6: Yeah. So if we look at Platinum, the product has been in the market for a number of years, but we haven't really upgraded the formulation meaningfully since 2022.

Yohan Senaratne: Yeah. If we look at Platinum, the product has been in market for a number of years, but we haven't really upgraded the formulation meaningfully since 2022. Of course, consumer expectations along ingredient profiles such as HMO have changed in that period. What we want to do is make sure that we improve the formulation of the product, plus also improve the usability of the product. A good example of that is the new Platinum product has the scoop in the lid. But historically, we have had the scoop in the powder, which we know can be a bit annoying for consumers. We've improved both the formulation and the usability to keep in line with consumer expectations. Then also on the Genesis product, we've upgraded the formulation to have six HMOs.

Speaker #6: And of course, consumer expectations regarding ingredient profiles, such as HMO, have changed in that period. So, what we want to do is make sure that we improve the formulation of the product, and also improve the usability of the product.

Speaker #6: A good example of that is the new Platinum product, which has the scoop in the lid. Historically, we have had the scoop in the powder, which we know can be a bit annoying for consumers.

Speaker #6: So, we've improved both the formulation and the usability to keep in line with consumer expectations. And then, also on the Genesis product, we've upgraded the formulation to have six HMOs.

Speaker #6: We know consumers are looking for a variety of HMOs within their formulation. And of course, once we launched, we had three HMOs, and we've upgraded to six HMOs, plus upgraded the probiotic itself to a human-resonant bacteria.

Yohan Senaratne: We know consumers are looking for a variety of HMOs within that formulation. Of course, once we launched we had three HMOs and we've upgraded to six HMOs, plus upgraded the probiotic itself to a human resident bacteria. That also improves the positioning of the product. Both the upgrades for the English label products are to keep in line with the consumer expectations.

Speaker #6: So that also improves the positioning of the product. So, yeah, both the upgrades for the English label products are to keep in line with consumer expectations.

Speaker #4: Thanks.

Julia Dystant: Thanks.

Julia de Sterke: Thanks.

Speaker #5: Thank you. Your next question comes from Will Twist from Forces Bar. Please go ahead.

Operator: Thank you. Your next question comes from Will Twiss from Forsyth Barr. Please go ahead.

Speaker #7: Morning, guys. If you look at kind of the initial recovery campaign that's underway, a lot of it is quite heavily focused on product quality and testing.

Will Twiss: Morning, guys. If you look at the initial recovery campaign that's underway, a lot of it is quite heavily focused on product quality and testing. Is that actually in response to anything you're seeing from consumers in terms of being concerned about the quality of the product and not just the product availability over Q4?

Speaker #7: Is that actually in response to anything you're seeing from consumers in terms of being concerned about the quality of the product, and not just the product availability over the fourth quarter?

Speaker #2: Well, no, not specifically for our product, but there has been a lot of concern among Chinese consumers in the infant and toddler category, given what's happened in the market in the first quarter.

David Bortolussi: Will, not specifically for our product, but there has been a lot of concern amongst Chinese consumers in the infant and toddler category, given what has happened in the market in the Q1 of this year, and also in other categories like nappies or diapers have had issues as well. There has been another recent infant formula with another brand. I will not comment on it specifically, but another concern recently as well. I think generally, Chinese consumers, mothers, are very conscious about the importance of quality in our category, and they are very sensitive to it. We are just doubling down on that and making sure they have got 100% confidence in our brand in the category. The other part of the confidence is not the quality, it is the supply, which is the main issue that we had, which is we did not have product in market.

Speaker #2: ...of this year. And also in other categories, like nappies or diapers, have had issues as well. And there's been another recent sort of infant formula issue, but with another brand—I won't comment on it specifically, but there was another concern recently as well.

Speaker #2: So, I think generally, Chinese consumers—mothers—are very conscious about the importance of quality in our category, and they're very sensitive to it. So we're just doubling down on that and making sure they've got 100% confidence in our brand, in the category.

Speaker #2: And the other part of the confidence is not the quality—it's the supply, which is the main issue that we had, which is we didn't have product in market.

Speaker #2: So we're giving them confidence around the availability of product and the distribution at retail, and being back in all the national tier accounts, with some accounts having additional shelf space—really positive.

David Bortolussi: We are giving them confidence around the availability of product and the distribution of retail and being back in all the national key accounts with, in some accounts, with additional shelf space is really positive. We will be refreshing our point of sale and everything going forward. There is a lot of work around that, just providing our consumers with trust on quality and supply, which is the most important thing in our category.

Speaker #2: And we were refreshing our point of sale and everything going forward. So there's a lot of work around that—just providing our consumers with trust on quality and supply, which is the most important thing in our category.

Speaker #7: Okay, that's helpful. Thank you. And then, if we think about supply chain costs, we know there were some additional costs kind of embedded in the cost base for FY26.

Will Twiss: Okay. That is helpful. Thank you. If we think about supply chain costs, we know there were some additional costs embedded in the cost base for FY26. Can you just talk to or provide some more color around how much cost is in there relative to a normal baseline and then what the outlook is for some of those items into FY27?

Will Twiss: Okay. That is helpful. Thank you. If we think about supply chain costs, we know there were some additional costs embedded in the cost base for FY 2026. Can you just talk to or provide some more color around how much cost is in there relative to a normal baseline and then what the outlook is for some of those items into FY27?

Speaker #7: Can you just talk to or provide some more color around how much cost is in there relative to a normal baseline, and then what the outlook is for some of those items since FY27?

Speaker #2: Hi, Will. It's Dave. We're not really getting into the ins and outs of the second half supply chain costs or gross margin. There are significant additional costs.

David Bortolussi: Hi, Will, it is Dave. We are not really getting into the ins and outs of the H2 supply chain costs, gross margin. There are significant additional costs. There are some mitigating factors and some going the other way. I think the best way to think about it, like I said before, is start with the clean year, which is FY25, and build it from there. I sort of gave you the building blocks a little bit earlier.

Dave Muscat: Hi, Will, it is Dave. We are not really getting into the ins and outs of the H2 supply chain costs, gross margin. There are significant additional costs. There are some mitigating factors and some going the other way. I think the best way to think about it, like I said before, is start with the clean year, which is FY 2025, and build it from there. I sort of gave you the building blocks a little bit earlier.

Speaker #2: There are some mitigating factors and some going the other way. I think the best way to think about it, like I said before, is to start with your FY—start with a clean year, which is FY25—and build it from there.

Speaker #2: And I sort of gave you the building blocks a little bit earlier.

Speaker #5: Thank you. There are no further questions at this time. I'll now hand back to David Bortolussi for closing remarks.

Operator: Thank you. There are no further questions at this time. I will now hand back to David Bortolussi for closing remarks.

Speaker #2: Thanks, everyone, for joining the call. Before I finish, I'd like to thank our A2 team for their incredible effort and impact during the year.

David Bortolussi: Thanks, everyone, for joining the call. Before I finish, I would like to thank our a2 team for their incredible effort and impact during the year. It has been a challenging end to the year, and I think our teams, particularly our China team and supply chain team, have done a wonderful job mitigating that impact and are now focused on our recovery plan going forward and all the other growth opportunities we have in the business. So thank you to our team and to our investors and analysts. Look forward to catching up with you shortly over the next week or two. Thanks for joining the call. Cheers.

Speaker #2: It's been a challenging end to the year, and I think our teams—particularly our China team and supply chain team—have done a wonderful job mitigating that impact.

Speaker #2: And now, we'll focus on our recovery plan going forward and all the other growth opportunities we have in the business. So, thank you to our team, and to our investors and analysts.

Speaker #2: I look forward to catching up with you shortly, over the next week or two. Thanks for joining the call. Cheers.

Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.

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