A2 Milk Company Aktie

Good morning, everyone, and thank you for joining us today. My name is David Bortolussi. I'm the Managing Director and CEO of the a2 Milk Company.

Today, I'm joined on our call by our CFO, Dave Muscat; and our business unit leaders, Li Xiao, Yohan Senaratne and Eleanor Khor. The team and I will present the results and outlook. And as always, there will be time at the end for questions.

During the presentation, we will focus on continuing operations, which excludes MVM that we divested during the half and occasionally refer to underlying results, which exclude a2 Pokeno. We've excluded a2 Pokeno from underlying earnings 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've had a very positive first half of the year, reporting significant revenue and EBITDA growth and underlying EBITDA margin improvement. In our IMF business, we achieved revenue growth of 13.6%, which was well ahead of category growth.

We grew English label IMF by 21%, with strong performance in the CBEC and O2O channels, supported by growth in our new a2 Genesis product and from Vietnam. In China label, we delivered 6.5% revenue growth and achieved record market share in both the MBS and DOL channels.

Our Other Nutritionals revenue growth accelerated to 43% on a like-for-like basis, driven by our recent kids and seniors innovation, and we recently entered the pediatric supplements category and launched a new kid UHT product. Yohan and Xiao will speak to these new product innovations in more detail later.

Our Liquid Milk business continues to perform strongly with growth of 18.5%, driven by our core product range with much higher growth in our lactose free and grassfed product innovations.

We significantly advanced our supply chain transformation with the a2 Pokeno acquisition, MVM divestment and long-term milk supply agreement with Fonterra, which were all announced and completed during the half. And we've made a significant progress against key a2 Pokeno transformation streams, including advancing our China label registration amendment process, upgrading the facility and expanding our team. Our strong first half performance has enabled us to upgrade our full year guidance and declare an interim dividend at the high end of our policy range.

Moving to Slide 5, which summarizes our financial results. We delivered double-digit revenue and EBITDA growth of 18.8% and 18.4%, respectively, with our EBITDA margin consistent with prior year on a continuing basis. On an underlying basis, excluding a2 Pokeno, our EBITDA was up nearly 26% and our EBITDA margin was up 0.9 percentage points to 16.6%.

Net profit after tax and EPS were both up just over 19% on an underlying basis, and we are pleased to declare a dividend of NZD 0.115 per share.

Turning now to Slide 6. At a group level, our sales growth was driven by core products and recent innovation with some benefit from FX and the inclusion of a2 Pokeno sales, which are first half weighted.

Our growth continues to be driven by our China and Other Asia segment, led by English label IMF and Other Nutritionals supported by China label IMF growth. Our ANZ segment sales were up, primarily driven by growth in Australian Liquid Milk with stabilization of IMF sales in the Daigou channel.

Our U.S. business continued its strong performance, driven by growth in our core products and grassfed s. I've already covered our product performance upfront, so I'll move to the next page.

So turning to Slide 7. The China IMF market returned to growth in the half, up 3.6%, supported by a higher number of newborns during 2024, which was the Year of the Dragon. While the number of newborns in 2025 are lower than the Dragon year, there are positive indicators in 2026 with last year's marriage registrations up 11% and the China Central Government recently stating that birth rate stabilization is a national priority.

From a product perspective, the China label market has stabilized, supported by price recovery and stable volumes. English label growth continues to outperform China label, supported by product innovation and premiumization. And finally, the A2 protein and ultra-premium segments continue to outperform the category to our advantage.

Turning to market share on Slide 8. We remain a top 4 brand in the China IMF market and continue to gain market share to 8.2%. Within this, we achieved record high China label market share of 5.6%, and we remain well positioned in English label as the second largest player in the market with just under 20% market share.

Turning now to FY '26 and the company's outlook on Slide 9. I'm pleased to say that we've had a very good start to the financial year with revenue trending ahead of our previous expectations across all product categories and markets. As a result, we have increased our FY '26 guidance for revenue growth from low double-digit percent to mid-double-digit percentage growth versus FY '25 continuing operations.

We've also tightened our EBITDA margin range to approximately 15.5% to 16%, which is at the higher end of our previous guidance and expect our net profit after tax to be up on FY '25 reported.

As previously announced, the Board intends to declare a NZD 300 million special dividend, subject to regulatory approvals being received in connection with amendments to the 2 existing a2 Pokeno China label registrations for use under the a2 brand. The amendment process is currently underway and is progressing well.

Moving to Slide 10. We continue to execute against our growth strategy, which was recently updated after completing our supply chain transformation transactions. We adjusted our transform supply chain priority to focus on execution of our important transformation program at a2 Pokeno and on building capabilities to support future innovation and growth. And we've placed more emphasis on entering new markets, which is now called out as one of our key priorities.

We are tracking well towards our medium-term financial and non-financial goals and remain on track to achieve the majority of our targets, which are outlined on Slide 11.

Turning to Slide 12. Our strong first half result and upgraded FY '26 revenue guidance means that we now expect to achieve our medium-term revenue ambition of NZD 2 billion in FY '26. This is a year ahead of our amended plan and in line with our original 2021 Investor Day timing expectations.

Market and category growth drivers remain on track, and our emerging market strategy continues to advance with encouraging early performance in Vietnam as we continue to assess broader opportunities across Southeast Asia and the Middle East.

And from an EBITDA margin perspective, the a2 Pokeno acquisition is expected to support margin improvement going forward as we discussed at our full year results last year when we announced the transactions.

Moving now to Slide 13 and covering our supply chain transformation in a bit more detail. To recap, during the half, we successfully announced and completed the acquisition of a2 Pokeno facility and the sale of MVM as well as a long-term A1 protein-free milk supply agreement with Fonterra.

These transactions mark a key milestone in our supply chain transformation, which has been years in the making. Essentially, these transactions enable us to secure greater market access to the China label IMF market with strategic control over our registrations, growth in our core IMF business through portfolio expansion and innovation, accelerate the development of nutritional manufacturing capability and capture vertical margin and generate attractive overall financial returns.

Turning to the next slide, which provides a transformation program update. A dedicated transformation office led by our transformation expert was established prior to the a2 Pokeno acquisition to provide governance, planning and execution support to our Pokeno supply chain and wider a2 team.

Key transformation initiatives at a2 Pokeno are progressing as planned, including the China regulatory approval process, blending and canning trials, capital investment activities, ERP implementation and product development. And recruitment and manufacturing leadership and operations is well progressed to support execution of the plan. Overall, the program is tracking well with some areas ahead of expectation.

So that's the end of my introductory comments. And before I hand over to Dave to take you through the financials in more detail, I wanted to publicly thank our global a2 team for their outstanding contribution in delivering the results we've shared with the market today as well as for their exceptional work in our supply chain transformation. We're only a small team, but we've achieved a lot so far this year.

Over to you, Dave.

Thanks, David, and good morning, everyone. I'll start on Slide 16 with a summary of our group P&L. We delivered net sales revenue of NZD 992.6 million, up 18.8% on prior year.

Our gross margin of 48.9% was down 1.1 percentage points due to manufacturing losses at a2 Pokeno, which is currently underutilized ahead of our planned a2 Platinum transition from Synlait in the first half of '27, which will significantly increase production levels and improve a2 Pokeno's financial results.

Excluding these temporary a2 Pokeno losses, our gross margin percentage was slightly up, reflecting lower IMF ingredients costs and a net FX benefit.

Distribution costs were up due to higher freight rates and volumes related to Liquid Milk. Marketing investment increased in support of our China growth strategy, including awareness building campaigns to support our recently launched products, including a2 Genesis and kids and seniors fortified powders. Given the second half weighting of marketing expenses, our reinvestment rate was slightly down.

SG&A was higher due to investment in capability in support of growth in China and supply chain, including a2 Pokeno transformation costs.

Our effective tax rate improved due to reduced losses in our U.S. business and utilization of a2 Pokeno losses. Reported NPAT was NZD 8.4 million, including a loss from discontinued operations of NZD 103.7 million that was almost solely due to the MVM non-cash divestment loss of NZD 103 million.

As David mentioned earlier, we have declared an interim dividend of NZD 0.115 per share, totaling approximately NZD 83.4 million. This equates to a payout ratio of approximately 74% of NPAT and is towards the higher end of our policy range. The dividend will be fully franked and unimputed and will be paid on the 2nd of April.

Slides 17 and 18 summarize our segment and product performances with the key drivers covered throughout the presentation. It should be noted that a2 Pokeno is included in the China and Other Asia segment.

Moving on to Slide 19. Our closing cash balance at the end of the period was NZD 896.9 million, down NZD 164.3 million versus June '25, mainly due to the supply chain transaction net outflows of NZD 168.7 million associated with the a2 Pokeno acquisition and MVM divestment.

Operating cash inflows, excluding interest and tax, were NZD 140.7 million, representing operating cash conversion of 91%, which was in line with expectations and reflecting our inventory rebuild following Synlait manufacturing challenges late in FY '25, which temporarily reduced IMF inventory at June '25 and into the first half of FY '26.

Investing activity outflows included the previously mentioned supply chain transaction net outflows, capital expenditure and a reduction in term deposits. Cash flows from financing activities included the repayment of MVM's external banking facility prior to divestment.

Turning to Slide 20. Our balance sheet remains strong as we invest in our supply chain transformation and continue to execute against our growth strategy. Inventory was up approximately NZD 34 million, reflecting the inventory rebuild previously referenced with trade payables also increasing accordingly as we continue to progress towards target levels.

Intangible assets were NZD 105 million, primarily due -- were up NZD 105 million, primarily due to the goodwill associated with the a2 Pokeno acquisition. And the reduction in other liabilities primarily relates to the reduction in external MVM loans associated with the divestment that completed during the half.

That concludes the first half '26 financial overview. I'll now hand over to Xiao to take you through the performance of our China label business.

Thank you, Dave. Starting on Slide 22, we delivered China label MF revenue growth of 6.5%. This was supported by strong execution, China MF market stabilization and a favorable foreign exchange. This is a pleasing result given growth during the period was partially constrained by market shifts towards English label and the supply.

We achieved record China label MF market share, reflecting strong execution across both online and offline channels and supported by strong new user recruitment in FY '25, which is now graduating into later stages. Outside MF, Other Nutritionals also delivered growth, driven by recent senior and kids innovation that's resonating well with consumers.

Turning to the next slide. Overall, we continue to gain share in China label with total market share reaching a new high of 5.6% as well as brand health. Performance was strong across both our MBS and the DOL channels with each reaching record shares as we continue to execute well in our key channels.

Moving to Slide 24. New user recruitment remains a key focus. In mid-December, we launched a targeted marketing campaign in China, partnering with the well-known My Little Pony franchise. The campaign was designed to attract new users for the year of the whole.

We designed maternity gift pack and a fully integrated campaign across online and offline channels, including social media, which has generated strong consumer engagement and user-generated content.

Since launch, our brand has moved from ninth to first in search share on Little Red Book and Stage 1 new user recruitment has increased versus pre-campaign levels.

Turning to Slide 25 and taking a closer look at our kids and senior nutritional products, which are performing well. Our kids milk powder product has supported a turnaround in China label Stage 4 performance with the product now leading international brands in key channels. This reflects strong consumer acceptance, supported by a competitive formulation, good taste and appealing package.

In senior nutrition, we are building share in the ultra-premium segment with a steady online growth, supported by targeted seasonal campaigns and new user recruitment through family gifting. Across both categories, we continue to leverage the strength of the a2 brand in MF to attract new users and expand our offering to other life stages.

Slide 26 provides an overview of our new kids fortified UHT product, which we have recently soft launched into Costco and select online platforms. This is our first locally sourced UHT product in China, which enable improved freshness and high support formulation addresses an area of strong consumer interest.

Moving to Slide 27. Our focus on innovation has seen us expand our Other Nutritional portfolio through entry into a new category. The pediatric supplement category is a rapidly growing market with approximately NZD 8 billion in retail sales value and is an attractive adjacency to our core infant formula business. It is a fragmented category where we believe the a2 brand can be successful.

Continuing to the next slide. Slide 28 provides an overview of our new China label pediatric supplements range known as a2 Zhi Yi, which will be progressively rolled out during the second half of the financial year. We have 4 products in the range, which are focused on high-growth areas and formulated to provide functional benefits aligned to what the a2 brand is known for by consumers.

The locally manufactured products have a new and innovative packaging to maximize consumer and trade appeal. Near-term sales are not expected to be material. However, the long-term potential of the category could be significant.

I will now hand over to Yohan to take you through the English label.

Thanks, Xiao, and good morning, everyone. Looking at Slide 29, English label IMF continues to grow with sales up nearly 21%. Growth was supported by overall market expansion, growth in our combined CBEC and O2O channels and growing contributions from our a2 Genesis product.

It is also pleasing to see our ANZ IMF sales in growth with the Daigou channel stabilizing and continued share and sales growth in retail. We continue to deliver solid momentum in Other Nutritionals across all channels, led by strong growth in our milk powders portfolio with additional support from a2 Smart Nutrition and a2 Nutrition for Mothers. We also saw increased UHT volumes, particularly in Vietnam.

Turning to Slide 30. Momentum in the English label market has continued with English label now accounting for 20% of the total IMF market. A2 remains well positioned to benefit from the growth in this segment as the second largest brand in the English label market with our market share just shy of 20% and our online channels continuing to grow.

A2 continues to perform well in the CBEC and O2O channels with significant sales growth. On an MAT basis, a2 was a leading share gainer on CBEC from June to December last year.

Continuing on to the next slide, the rapid growth of HMO and specialty product segments continues to be a growth driver of the English label market. Our a2 Genesis HMO formulation has now been in market for a year and is performing well. We have invested heavily to build awareness, consideration and trial with our sales building month-on-month.

In the first half, a2 Genesis represented 6% of all our CBEC channel consumer sales with more than 50% of sales being for early stages, which supports future potential.

Turning now to Slide 32. We continue to develop our Vietnam business with our distribution expanding significantly during the half. A2 IMF and Other Nutritionals products are now ranging over 1,000 MBS stores and initial listings have commenced across national key accounts and e-commerce platforms.

As we execute in Vietnam, we remain focused on our broader emerging market strategy, assessing opportunities to further expand into other markets with a particular focus on Southeast Asia and the Middle East.

I'll now hand over to Eleanor, who will take you through ANZ.

Thank you, Yohan. Turning to Slide 33. Our ANZ Liquid Milk business has continued to perform well. We delivered double-digit revenue growth driven by growth in both our core and lactose-free ranges. In terms of market share, we outperformed the category with overall share increasing to 11.5% and lactose-free achieving a record high MAT share of 20.6%.

During the period, we were also pleased to complete the final stages of upgrades at our Kyabram processing facility to strengthen our operational capability and capacity.

Moving to Slide 34. In 2026, a2 proudly became the Australian Open first-ever dairy milk partner in the tournament's 120-year history. We activated across our priority markets in Australia and China with the partnership delivering positive results. During the tournament, a2 Milk was the only dairy milk to be served on site, reaching more than 1 million attendees and our bespoke co-branded frappes became a viral sensation on social media, driving exceptional visibility and brand engagement.

And with that, I'll hand back to David.

Thanks, Eleanor. And before I move on, I wanted to acknowledge that this will be your last investor call with a2, and thank you publicly for your outstanding contribution to the company over the past 7 years and leading our strategy function and ANZ business, which you've done exceptionally well. So thank you very much.

I'll now cover our U.S. business on behalf of Kevin Bush, who is unable to join us today. Our U.S. business has had a very good start to the year with revenue growth of 29%, driven by our core range and grassfed innovation across all channels. Our revenue growth was supported by positive market trends during the half with premium and specialty Liquid Milk market value growth of 11%, which was higher than total category growth of around 4%.

Our market share continues to increase with growth in household penetration and consumption and our profitability improved with an EBITDA loss of NZD 3.4 million. And finally, from an IMF perspective, our FDA submission remains under review and is progressing.

That concludes today's formal presentation. I'll now hand over to the operator for Q&A. Thank you.

[Operator Instructions]

Your first question today comes from Thomas Kierath with Barrenjoey.

Obviously, a lot of focus on the birth rate and the weakness of it that's been reported more recently. Just be interested in your comments around how Stage 1, I guess, is growing versus Stage 2 and Stage 3 and whether you're seeing any initial signs of that weakening birth rate in your numbers? And then I've just got one on Genesis as well.

Thanks, Tom. I might ask Xiao to comment on the stage performance at the moment and outlook around that.

Yes. So in the first half of fiscal year '26, we see Stage 2 have a very strong growth. Stage 3 improved and Stage 4 dropping, but we were helped by the newly launched kids fortified powder, we have a very strong, I mean, growth combined Stage 4 and kids fortified powder.

For the Stage 1, due to the supply constraint, we did see Stage 1 is dropping as well losing share. But I mean, we have started, I mean, the -- what we call early-stage campaign. And as we show in the slides My Little Pony, since December, I mean, to boost back the early new user recruitment after the improved supply.

So now we see a pretty encouraging early signal of, I mean, improved new user recruitment comparing with the previous month. And also, I mean, if you look at China label track record in the history, like in the fiscal year '25, our -- I mean, Stage 1 share improved from 3.1% in the previous year, I mean, to the first half, 3.9% and the second half of more than 4.2%. So we are pretty confident that we are going to turn around the Stage 1 performance, I mean, with all the, I mean, focused efforts on the early new user recruitment.

That's great. And just secondly on Genesis. I know initially, you were investing pretty heavily in that brand. So the sales that you were generating, you weren't actually necessarily making much profit as you were reinvesting. But where about that is that at the moment? And when do you start to see, I guess, a profit contribution coming through from Genesis?

Yohan, would you like to talk to Genesis?

Yes. Look, I think you're right. In terms of the focus for the Genesis product, we're definitely looking to invest in driving awareness through to trial. But the product itself makes quite a strong gross margin, just slightly below our Platinum gross margin. And then over time, we expect, obviously, the net contribution post the marketing spend to improve. At the moment, yes, absolutely, we're investing behind the brand, but I expect the net contribution to improve over time.

So our percentage margins were lower, the dollar margins were similar.

Your next question comes from Josephine Forde with Bank of America.

Congratulations, David and team on the result. My question is also in a similar vein on the China label market. Can you talk through your expectations on the continued brand consolidation, just given it was stable in the half? And then also just a bit more color on the market returning to growth and pricing in closing too?

Josephine, I think the -- even though there was a sort of a temporary pause in the level of consolidation, the top 5 is 58%, top 10 is around 78%. There were some kind of winners and losers within that -- within the sort of top 5 and top 10 during the period. But we fundamentally believe that the brand concentration trend will continue in the market. And certainly, the top 5 will gain a disproportionate amount of share over time. And maybe in time, there might even be corporate consolidation as well, which we've seen some evidence of over the last 5 years or so.

In terms of the growth going forward, it's pleasing to see, like I've been here 5 years and in effect 10 half year -- full year and half year reports. And the first time we've seen the category in growth for the half at 3 and a bit percent. That's based on Kantar numbers, and I do sort of caveat that Kantar is reviewing their growth numbers in March. So just important to look out for that. But definitely, the English label category is in growth and China label is flat to up.

The outlook, we continue to believe there will be ups and downs in the newborns numbers. The Year of the Dragon was probably higher than market expectations, and last year, clearly lower than expectations. But there's good reason to believe that the newborns will be up next year or this calendar year.

We're seeing marriage rates are up 11%. The last 3 quarters are up 20%, as you would have seen. And we've also got insight in terms of maternal registrations as well, and we're seeing those being up high-single digit at the moment as well for the first calendar quarter -- for the March quarter of this year as well. So I think the newborns will be up this year. It's difficult to predict how much, but probably in the low- to mid-8s.

But there is long-term socio demographic pressure on the newborns rate over time. So we're still expecting that to decline by low-single digits, but a degree of premiumization in the market to support the category, hopefully around flat.

So as we've always said, this is a share gain for us. We've been very successful with the strong brand and our execution behind that and innovation fueling growth now, where we've managed to more than our double our share from just over 4% back in 2021 to over 8% now in the market, and we think we've still got significant market share growth opportunity, both in China label and English label.

English label is doing really well at the moment, and China label has been growing for many years, and we'll have the benefit of the 2 additional registrations that we obtained through the Pokeno acquisition shortly as well. So I think in essence, I think the market should be relatively flat, and we still have a significant share opportunity gain in infant and other category expansion opportunities. I think the pediatrics supplements market entry is a pretty significant milestone today. So plenty of growth opportunities for us in and outside the infant category in China and new markets.

Okay. And then just on the guidance upgrade, since November, what's driving such an improved outlook? Like is this driven by English label? Or is it a more positive backdrop for the China label's improvement? Or are you seeing early read-throughs on these new marketing campaigns in the China label?

All of the above and probably the only thing you're missing there, so -- I mean the infant category has been pretty robust for us, and the growth has been slightly higher than we expected. But certainly, the Liquid Milk and Other Nutritionals growth at the beginning of the year and even at the AGM, we didn't expect such high growth in those categories, which is really pleasing.

That will probably come off a bit in the second half, but you can tell from our guidance, we're still expecting pretty robust growth for the full year with mid double-digit sales growth. So I mean all of those are contributing and it's kind of very pleasing for us as a team to see that really all categories and all markets are performing really well at the moment. It's terrific to see. It's a real credit to the team and also the health of the a2 brand.

Your next question comes from Matt Montgomerie with Forsyth Barr.

I might just come to Pokeno to start. Clearly, things are tracking quite well there. Just within the EBITDA losses for the first half of NZD 9.8 million, I think, of that, what was related to the transformation costs?

And then secondly, I suppose your guidance for the second half implies quite a meaningful step up in losses. I appreciate it was a full 6-month period. But yes, just be interesting to understand that.

And then with Pokeno tracking ahead of expectations for this year, you haven't changed your FY '27 outlook for Pokeno. Yes, maybe if you could just sort of step through that as well and why sort of that couldn't be improved over time as well.

Dave, do you want to...

Yes, I'll take that Matt. In terms of the transformation, I assume it's about 5 in terms of the transformation. So that's going through SG&A and the residuals going through gross margin. In terms of the step-up in losses, I think the way you've got to think about it is that, we are significantly ramping up the capacity of that site over the course of this financial year in advance of the transition at the start of the next financial year. So our under-recoveries are going to get worse before they get better. So that's why we have the ramp in terms of the second half.

And in terms of FY -- in terms of why it's better, overall, in terms of our sort of estimates around Pokeno is that, we set our expectations for this year at the time of the full year announcement where we were outside the company. We hadn't bought it yet. We haven't guided. And it was all based on our estimations from due diligence, et cetera, et cetera. So now we're getting closer to the numbers, and we can give more refined sort of outcomes. And then also what helped us slightly is that we have been doing some of our Platinum canning, as we alluded to at the AGM, during the course of this year, which helps us a little bit as well. But none of that changes our expectations for next year.

Yes. Perfect. And then secondly, just on guidance on China label. I know you haven't given breakdowns by the pieces, but would it be fair to assume similar levels of growth in the second half year-on-year as experienced in the first half?

I know, Xiao, you mentioned earlier sort of there were some supply issues impacting the half you've reported now, and there's been some sort of numerous moving parts over the last couple of halves with supply shortages, but just expectations for China label growth in the second half.

Matt, we're not providing sort of individual business unit or label-related growth guidance for the second half. As you'd appreciate, it's still uncertain. There's a long way to go through the half. What I can say is that, in terms of the infant category, as you would expect, we're expecting double-digit growth in infant in the second half. And for Liquid Milk and Other Nutritionals, we're expecting that -- the rate of growth to come off a bit, which you sort of have to conclude based on the guidance.

We're confident in China label and English label growth in the second half. But as to the specifics around it, I'm reluctant to sort of provide guidance on the components.

Xiao mentioned the supply challenges in this half. It's more -- probably less of a sales impact in the half. It's more -- I think Xiao was referring to the impact on user recruitment, which we had to reduce our level of activity during that first quarter, but we certainly ramped that out subsequently. And that's the experience we had actually going back a year in FY '25 and the first quarter of '25, we had a similar experience. So that's where that comment comes from. And definitely with the lower newborns and the -- some of the pressure from the supply chain constraints we have, we're very focused on increasing our new user recruitment and our early-stage share.

Your next question comes from Julia de Sterke with Morgan Stanley.

I just wanted to ask first, back to the -- some color on the industry numbers. Just in terms of the English label category, I know now you're kind of cycling some stronger industry numbers in that category. Where do you expect that penetration number to get to over the next couple of years? Are you sort of expecting that strong cadence of growth until you get back to kind of that 28% peak penetration? Or is this kind of industry growth starting to tail off in your view?

We're not seeing it tail off at the moment. The category is for the label cross-border business is growing quite healthy. I mean, double-digit growth over the last 4 halves, which is terrific. But as you know, like we're only at 20% of the total category, and it was a peak of 2018. Well, actually, it was even higher prior to that, but 28% in FY 2019 just prior to COVID.

So we think it's still got some way to go. But I don't think anyone can be conclusive in terms of where it will get to, but we still think it's got some more category growth ahead of it because there is some advantage that English label has over China label at the moment, particularly on formulation.

And then from our point of view, from a share point of view, at just under 20% share, we had a sort of peak share in the category in the mid-20s. And we're definitely focused on over time, getting back to sort of the mid-20 share in the category as well. So that's probably all the color I can give on that at the moment, Julia.

Got it. And then just wanted to ask on global competitor recalls that have been going around over the last couple of months. Acknowledge that it's probably still pretty early on, so you might not have too much color around what the ultimate impact will be. But has this factored at all into your guidance changes or how you're thinking about the market over the next couple of years and your market share opportunities?

No, it hasn't, Julie. I mean it's a very unfortunate set of circumstances for consumers, trade and the brands that are involved. So -- and we're not -- we're definitely not sort of tactically trying to be opportunistic about this. And we wish all those involved the best, because it is -- I mean, the infant formula category is -- this happens from time to time, and it's a very difficult circumstances.

But that's not factoring into our guidance. We're not banking on a major shifts towards our brand, English label or China label in that regard. I mean if there was any shift, it would probably be more like English label because most of the recall activity has been in that space, but that's probably all I'd like to say on that at the moment.

Your next question comes from Sam Teeger with Citi.

David, earlier on, you made a comment about potential for corporate consolidation. I was keen to understand just the thinking behind that and how you see things playing out?

Sam, I think most important -- like in consumer goods, the most important thing is brand concentration, no matter what the corporate ownership structures are in the marketplace. So that's what we're primarily focused on, and that's sort of the category dynamics lead to that.

I was just mentioned in passing that there has been some corporate consolidation by Nestle and Yili over time in particular. I mean there is a possibility of that, but we're more focused on and how we present that market share information is by brand, which is the most relevant no matter who owns what brands in the marketplace. So it's just an in-passing comment. So I don't think any corporate consolidation is imminent in the market at the moment. I think most of the players in the industry are really focused on their own portfolios.

Okay. And just wondering, when you saw the birth rate for 2025 come out last month, how did you balance up whether you should upgrade your FY '26 guidance now or potentially hold off for a few more months to ensure that the strong momentum continues?

Well, we sort of undertake a regular forecasting rhythm to our business. And based on our year-to-date performance and outlook for the end of the -- for the year to go, it's pretty clear at the moment that we should be in a position to achieve mid double-digit growth.

And I don't think that's particularly influenced by the newborns number at the moment, because the impact on Stage 1 in the market is sort of -- it's not as severe as what the decline in the newborns is, because you've got -- what's going on in the market is you've got sort of breast-feeding rates have declined. That's not something that we would promote because breast feeding is obviously best. But that has declined in the market based on the evidence that we've seen by different reporting on that. And also the extent and use of early-stage product has increased as well.

And it has a -- so there's a prolonged use of early-stage product as well. So I don't think you should expect the impact to be as significant. And it's also -- it's less than 20% of the market and of our business as well. So I think it's not a huge driver of this year's outlook. And as Xiao said, we're very focused on ensuring that our early-stage recruitment is optimized, and we set ourselves up well for the future. So not a big factor at the moment, Sam.

And then on the decline in breastfeeding rates, what do you attribute that to?

I think some of it may well be economic from what we've heard. A lot of mothers for economic reasons are feeling that they need to get back to the workplace pretty quickly. So I think there's probably some of that going on, and there's some social sort of demographic trends around that as well, which I not to comment on the call. So I think it's -- yes, I think there's some underlying drivers there. It's actually stepped down quite a bit -- several points over the last year or 2. So it's quite significant.

Your next question comes from Adrian Allbon with Jarden.

Maybe this is one for David, first of all. Just looking on Slide 18 and just trying to just understand like the Other Nutritionals growth, like it sort of like when you back out the Pokeno contribution, like it's just sort of NZD 30 million in terms of the China and Other Asia category. Are you able to kind of give us a steer of how much of that is these new products?

I guess -- yes, it's pretty significant the growth in kids and seniors. And then outside of that category, you got Genesis contributing quite a lot of the growth. I'll come back to you a little bit later. But probably overall, when you look at our growth, I mean the investment we've made in innovation over recent years, it's really pleasing to see that come through.

So if you look at our total growth for the half of just under 19%, if you adjust for the sort of FX impact and sort of Pokeno in the period, you've got sort of 15-ish percent growth underlying. And over 1/3 of that in the period was driven by innovation, specifically Genesis, the kids advanced product in China label and the seniors range that we've introduced. Now those products weren't there in the comparative period. So that's really just 6 to 12 months of growth coming through, which is pretty outstanding. So it is making a meaningful difference is the answer.

So of the total growth which was 19%, you sort of said underlying 15% and the innovation was...

Yes, if you take out currency and the a2 Pokeno impact, the sales associated with those, they're about 2 percentage points each. So call it around 15%, yes. And I'm saying that over 1/3 of that underlying core growth is due to innovation with the rest being the core portfolio.

Okay. And within that, obviously, the fortified products and Genesis are the main lifters in that 1/3 of the 15%?

Yes, it's around -- probably 30%, let's say, 30% for the half.

Okay. That's cool. And just like staying on the revenue side, just in terms of the pediatric entry, is the sort of -- is the unit economics quite similar to infant? It's probably an outsourced manufacturer, but like it is quite high gross margin...

Yes, it's quite a high margin category, similar to infant, yes, which is great. And it allows us obviously to reinvest to establish our awareness and consideration and trial in the category. So yes, we're attracted to the margin structure associated with it relative to our Other Nutritionals, the rest of that category, which is lower margin, but improving with the new innovation we're bringing to market.

Okay. Just in terms of the guidance, I'm presuming -- does the upgrade to 15% or midpoint -- mid-double digits, does that assume returning to target inventory levels? Or is that a risk buffer within your upgrade?

It assumes -- I won't be specific about it. But it does assume that we receive adequate supply during the period from Synlait -- and there's no major issues or disruption associated with our a2 Pokeno facility and transition and all that, yes.

Okay. And then just on the marketing side, the marketing intensity for the half, like it seemed to sort of be at the low end of sort of 17% on a continuing basis because I think when we were talking about that reset at the last result, on a continuing basis, it was -- I guess, the track record have been more like 18% of late. Are we expecting quite a step-up in the second half to support these new programs?

Yes. So in the first half, we pulled back a little bit on our investment, principally related to what I highlighted in terms of the supply constraints. So we pulled back a little bit on our new user recruitment activity, and that's why it's lower in the first half. But we did invest behind our new innovation that we brought to market. So that's why it's at 17% in the first half. So the second half will step up as we invest more in new user recruitment and our innovation in the marketplace. So that will step up. So overall, our reinvestment rate will be around the 18% mark.

It's similar to actually in a way, Adrian, to what happened in FY '25 because we had supply constraints in the first quarter, then we pulled back a bit on marketing. So if you have to look at the marketing reinvestment rate in '25, that was 17.5% in the first half and 18.8% in the second half and overall 18.1%. So I'm not saying specifically what it's going to be in the second half, but it's kind of a similar profile for similar reasons in a way.

Okay. That's helpful. And just a clarification on those Pokeno losses, did you say that they were NZD 5 million? And I think originally, at the last result, you were expecting NZD 10 million. Is that correct? I just didn't quite hear the end of...

No, no. No, I was referring to the half numbers, so NZD 9.8 million EBITDA loss and NZD 5 million of that's in SG&A. So it's only to the end of December. So there will be more transformation costs in the second half.

Transformation costs in the first half?

Sorry, that was NZD 5 million for the first half for transformation costs in SG&A and we've guided to about NZD 10 million for the full year.

Your next question comes from Craig Woolford with MST Marquee.

Can I just ask a question around the market share performance -- your English label market share performance, which was steady. Just trying to get a sense on when you -- what triggers you see for an improvement in that market share? The reason for the question is the commentary on Genesis looks very strong and some of the other products look stronger. So is there an inference that something else is losing share?

Good question. I might let Yohan answer that.

Yes. So yes, if you look on Slide 8, it shows our market share, particularly, if we look at the CBEC market share, we're slightly up on an MAT basis. If you look at the December monthly number, we're up a bit more. So that's about 20.1%.

And part of the growth is, obviously, there's the Platinum, which has been the base product for many years. But what we're seeing is incremental market share upside from a2 Genesis. And the primary channel of sales for that product is CBEC. So that's why you can see the CBEC market share trending upwards.

The other parts of the business are there or thereabouts. But as we roll out Genesis, we'll also roll it out into more O2O channel store networks as well. And so if we look at the English label market share trajectory, we're hoping to get to 25%. But currently, overall less than 20%. So there's about 5% market share that we're looking to gain. Part of that will come from Platinum continuing to improve, but then products like a2 Genesis, of course, offer some upside opportunity incremental as well to get us to 25%.

Share growth in that channel has been fantastic.

Yes. So we're the #1 on an MAT basis for the last 6 months. So -- and that's primarily driven by the success of a2 Genesis.

And in the half, the #1 as well.

Yes.

So what would drive Platinum share gains? Like, it's been a relatively steady a2 share of EL for a few half year periods now. What do you see as a step change in that Platinum products' share of the market?

Yes, you're right. It's been the workhorse for English label for many years and still is the biggest contributor to English label. Of course, as we go forward, we'll also look to upgrade our Platinum proposition. The last time we upgraded the proposition was back in 2022. And so as we move forward, we'll also look to upgrade the proposition and the packaging as well.

And Craig, as we transition from Synlait to our new facility, our Pokeno facility. So as you would expect, we're taking the opportunity to upgrade the formula on the packaging.

Great. That's clear. And just a quick one, just on the guidance, anything that sort of moved in the other direction was just the cash conversion. Apologies if I've misheard something, but I just wanted to -- it was 80% to 90%, now it's 80%. What's the reason for that shift in cash conversion?

Yes, Craig, probably the biggest change is the timing of the working capital build at Pokeno. So as we -- the transition that Yohan is just talking about in terms of the platinum moving in, we're going to have to start to produce base powder towards the end of the year and the start of the next financial year. So we just got better line of sight over the timing of that. So it's not worse than what it was. It's the same working capital build that we called out previously. It's just the timing of that working capital build.

Your next question comes from Richard Barwick with CLSA.

I've also got a question on English label because there's a couple of things here that don't quite add up, I don't think because if you look at the English label market, you're saying it was up 12% or I guess the Kantar numbers saying it was up 12% for the half, and you were growing your English label IMF revenue by 21%, but your share is holding about flat. Do we put down all that difference or the difference between the 21% growth in the market up 12%, is that Vietnam and other markets that sort of make up the difference? Or am I missing something here?

Yes. So part of it is Vietnam, and Vietnam has accelerated quite a bit. I think the key thing is that we've seen Genesis as well growing. So if you look at our PCP, we didn't have Genesis in it. And so that's a large contributor of our sales. But that's concentrating the CBEC channel. And then the last thing is we've been working on O2O channels. So you'll see our O2O share with Daigou is a little bit lower, and we've been making some operational upgrades to improve our consumer experience there. So yes, there's a few things going on there. I understand where you're coming from. But some of it is the Other Asia, if you like, outside of China. Some of it is a2 Genesis and some of it is some of the work we're doing in the O2O space.

I think, Richard, I'd also just Kantar data is helpful and looking at the longer-term trends, there's always anomalies in that. So if you look at the Kantar from a growth point of view rather than share. So Smart Path, the data for the total English category is up quite a lot, so over 20%.

Well, that's exactly what I was going to question. Do we -- I mean, you put the caveat at the bottom of that -- of the Kantar data. So do we take those share numbers with a grain of salt because that is a big difference. 21% plays the market at 12%.

Yes. I think Kantar is more relevant, the more aggregated you look at it. So total market, China label, English label. But when you get down into the below that, it becomes more challenging. They review their methodology from time to time. It's obviously a panel-based survey. It's the only full market survey that is available. So I wouldn't say take it with a grain of salt pinch of salt. It's really -- I mean, it is relevant, but I'd just look at it over time in terms of trends.

I mean if we take -- if we excluded it, then we'd probably be criticized for excluding it. So we're just including it to be honest.

No, no, I get that.

I know many analysts don't have access to it. Yes.

No, no, I get that. But I was just surprised that the difference between the 21% that you're growing, so that's a very clear number. And just really wanted to clarify, do we put the rest of it down to Vietnam and Co, it sounds like that's the biggest differential.

It helps, but we're still growing quite significantly in the core business in English label Genesis. Yes.

Your next question comes from Marcus Curley with UBS.

I just wondered if we could start with the slide that you're talking about the new pediatric supplements for the existing China label range. And maybe it's for Xiao, but just interested to know whether this is resulting in a substantial change in stocking by the mother and baby stores. Do they see this as now 4 products rather than one? Or is it a relatively small component of what's likely to roll out in the stores themselves?

Marcus, it's Yohan here. I can help to answer some of those questions. So firstly, the supplements market is quite fragmented. There's many different products looking at many different functional benefits. And often when consumers are looking to buy in the supplements category, they're buying for a specific functional benefit. So firstly, it's helpful to have a range of products because each product is targeted at a specific proposition and a specific consumer need. When sold into -- so these products are sold into both MBS stores and also online on DOL.

And so when we look at MBS stores, if you think of the way the key categories of sale, it's infant formula supplements and diapers. And supplements is a big driver of their business. And so having another set of supplements products in the market in their store that they can -- that is effectively companion to some of their a2 products in the early life nutrition space is obviously helpful for them as an additional sale.

And so it's probably best to think of each product as an individual product suited to a specific need. So you can see even the ones that we have on the page on Slide 28, they're very -- you can see they're focused on either immunity, allergy gut health or brain and eye health, areas that a2 are known for in the early life nutrition space. And so over time, we'd look to build on those depending on the success of these.

It's hard to say from the pictures. But in terms of -- are these individual infant formula products or just a container with supplements in them?

No, these are a container with supplements in them. So they're not infant formula, they're supplement products. And so you can see on the picture, it's a container with a set of supplements inside the sachets within each, with the exception of the Brain & Eye Health, which is a soft gel in blister.

And could you give us any perspective on how big the supplement market is as the share of infant formula in China label?

Got you. So if we look at the total supplements market, it's an NZD 8 billion market for pediatric supplements, represents 15% to 20% of the total supplements market in China, which is far bigger, of course. But...

I mean the last time we quantified that NZD 28 billion in our Annual Report. So NZD 8 billion versus NZD 28 billion. So it's quite significant. When we look at all the adjacencies that we're expanding into, this is the single biggest category. And most of it is addressable.

And the competitors there are sort of aligned with the infant formula brand. So like, for example, Danone would have the largest share? Or is it a different dynamic?

No, it's a different dynamic. On Slide 27, you can see the market shares by competitors in the online space. There's a lot of new brands entering the market. It's highly fragmented. And so there's an opportunity for a trusted brand to enter the market such as a2.

Okay. And then quickly, just on gross margin, David, you called out an improvement in the half. What are you seeing in terms of those trends? Are you seeing increasing benefits from lower ingredients costs? Or what should we be assuming?

I think for the second -- yes, we saw some of the lower milk and lactose costs coming through in the first half. But we're now seeing that reverse and some pressures coming through whey proteins. But then we've got some counters to that in terms of mix of business, should be more IMF weighted in the second half. So I wouldn't say overly too much change coming through in the near term.

The next question comes from Phil Kimber with E&P Capital.

Early stage, Stage 1 and Stage 2, I mean, previously, you've shown some market charts in prior reports of what Stage 1 and Stage 2 have been doing. And after the Year of the Dragon Stage 1 had grown rapidly and it started to come off. I couldn't see anything in this presentation. Is that -- has that now sort of moved to Stage 2 products at the market level? I know you guys are winning market share and got good growth, but I'm just trying to understand the market.

And then to put some context around that, I think you've said your China label sales are roughly half Stage 1, Stage 2 and the remainder is Stage 3, Stage 4. Is that the same across English label as well? So as a total infant formula business, are you roughly skewed half to early stage and half to Stage 3?

I'll hand to Xiao just on the Stage 1 trajectory in the market and our share. But so on the mix of stage share in the business, so we're roughly -- it's roughly sort of -- it's just under 50% across the total group, early-stage products, Stage 1 and 2 with China label being slightly higher and English label being slightly lower, if that helps, Phil. Xiao can you comment on stage -- I think Phil's question was around Stage 1 growth in the market and our share around that.

And Stage 3. Sorry.

Yes. And Stage 2.

So Stage 2 China label in the first half is strong growth. I mean the benefit from FY ' 25, we have a lot of Stage 1 new user recruitment, I mean, cycling into the Stage 2. But if you look forward it's going to be either flat or down due to -- now they are moving to the Stage 3. Stage 3 in the first half is improving, but you are going to see a stronger growth in the second half when they are Stage 2 consumer moving to the Stage 3.

Stage 1, as you can imagine, the whole segment is going on a downtrend, because of combination of less newborn baby. But hopefully, it can quickly bounce back into the new year, but also kind of help by this -- David mentioned the prolong usage and increased penetration. Those are all tailwinds for the Stage 1. But I think, for us it's more of a share gain in the new user recruitment because we have done extremely well in the past.

I mean demonstrate that we can almost grow the new user recruitment by 30%. [ Pity ] that we are constrained a little bit in this first half by the supply constraint. But now we have put all the focus, energy and money back, I mean, try to turn around and we are confident we are going to see an improving trend on Stage 1, no matter the market are going down or worse.

So Phil, just on the stage trend, I know most of you don't have access to Kantar, but -- so if you look at the stage, so in the half, the -- for China label, so the 2% growth is Stage 1 was still in growth, so high-single digit -- mid- to high-single digits. Stage 2 was low double digit. Stage 3 was down single digit, but the second quarter was flat as that sort of graduation comes through. And Stage 4 was down sort of high double-digit, if that helps in terms of the stage relative growth in the market at the moment.

There are no further questions at this time. I'll now hand back the conference to Mr. Bortolussi for closing remarks.

Thanks, everybody, for joining the call. I guess in closing, we continue to execute our growth strategy, focusing on maximizing our opportunities in China IMF, adjacent categories and new markets, which you've hopefully seen a lot of today. And we're pleased with our supply chain transformation progress following the acquisition of a2 Pokeno.

So I look forward to catching up with most of you during the course of the next couple of weeks, and thanks very much for joining the call. Cheers.

Good morning, everyone, and welcome to The a2 Milk Company's 2025 Annual General Meeting. My name is Pip Greenwood, and I'm honored to serve as the Chair of the Board. It's a pleasure to have so many shareholders joining us here in the room and online. I can confirm a quorum is present, and I now formally declare the meeting open.

Before I start -- before we start, I would like to introduce my fellow directors and management who are here with me today. To my right, we have David Bortolussi, our Managing Director and CEO; David Muscat, our CFO; Kate Mitchell, our Chair of Audit and Risk Management Committee; and Jaron, I hope to get this right. Jaron's got the longest title in the company, Chief Legal and Sustainability Officer and Company Secretary. And then to my left, we have Sandra Yu, the Chair of our People and Remuneration Committee, Lain Jager, Grant Dempsey and Antonio Rivera, who was known to us as Tonet.

Also present today, we have our auditors from Ernst & Young, our external legal advisers and our share registor MUFG Pension and Market Services.

Today, you will hear from me as Chair of the Board and from our Managing Director and CEO, David Bortolussi. After this, we will then put forward the resolutions as described in the Notice of Meeting and respond to questions put to us by shareholders.

With the formalities taken care of, it is now my pleasure on behalf of the Board to update our shareholders on The a2 Milk Company's progress over the last year. 2025 marks a significant milestone of the company's 25th anniversary. This is a moment to reflect on our journey, celebrate our achievements, and look ahead with ambition.

From pioneering the A2-type protein proposition to becoming a trusted brand across China, Australia, New Zealand, the U.S.A. and emerging international markets such as Vietnam, our commitment to quality, innovation and sustainable growth continues to define us.

FY '25 has been another year of strong execution. Despite ongoing macroeconomic challenges and evolving market dynamics, we remain focused on delivering against our growth strategy and our results continue to reaffirm the strength of our brand, the quality of our execution and the dedication of our very talented team.

Our financial performance was outstanding with group revenue up 13.5% and earnings per share up 20.9% in FY '25. We continue to make meaningful progress against our medium-term financial and non-financial goals and remain on track to achieve the vast majority of our targets.

This year, we saw the introduction of a dividend policy. Total dividends of $0.20 per share were announced in FY '25, representing a payout ratio of 71% and equating to approximately $145 million being returned to our shareholders.

In sustainability, we continue to advance our goals of protecting the planet, caring for our cows, rethinking packaging, progressing towards net zero and contributing to a nature positive future. We are committed to supporting the planet and the communities in which we operate.

Our people are the heart of our success. We continue to foster a safe, diverse and inclusive environment where our teams feel valued and supported. On behalf of the Board, I'd like to thank our incredible team across Australia, China, New Zealand and the U.S.A. for their dedication and hard work and contributing to our strong FY '25 results.

Since the end of the financial year, we have made significant progress in our supply chain transformation strategy with the acquisition of a world-class nutritional manufacturing facility in Pokeno and the divestment of our interest in MVM. The Board actually had the privilege of visiting Pokeno yesterday, which was a really exciting time for us all. David Bortolussi will speak about these transactions in more detail in his address shortly.

These transactions strengthen our strategic position and provide us greater certainty over future capital needs. As a result, the Board was pleased to announce its intention to declare a special dividend of $300 million, subject to regulatory approvals and connection with Pokeno's two existing China IMF products. We expect to provide further details on the special dividend within the next 12 months.

Turning to governance, Board renewal and succession planning have been a key focus since I commenced my role as Chair. Last year, we welcomed Tonet and Lain to the Board, bringing deep expertise and global IMF supply chain and international agribusiness leadership. More recently, Grant joined the Board, bringing extensive strategic and financial leadership experience. Lain and Grant will be standing for election today, and you will hear from them later in the meeting.

These changes reflect our commitment to ensuring the Board has the diverse perspectives and capabilities needed to support the company's strategic execution. My fellow Directors and I remain focused on growing shareholder value and serving our shareholders with purpose.

Before I close, I'd like to address my own reelection as a director, as I am standing for reelection today. I've had the privilege of serving on the Board since 2019 and has chaired since November 2023. I'm proud of the progress we've made and excited about the opportunities ahead.

I bring extensive commercial and governance experience including my current role is Chair of Westpac New Zealand and Director of Westpac Banking Corporation. I've previously served on the Boards of Spark New Zealand, Fisher & Paykel Healthcare, Vulcan Steel, and Russell McVeagh, where I also served as Chair and Interim CEO. I remain committed to realizing the company's strategic ambitions and representing the interest of our shareholders.

Thank you for your continued support and the investment in The a2 Milk Company. I now invite David to address the meeting. Thank you.

Good morning, everyone, and thank you for joining us today at our annual meeting. My name is David Bortolussi. I'm the Managing Director and CEO of The a2 Milk Company.

Over the past year, we've continued to deliver strong financial results and made substantial progress on transforming our supply chain. These outcomes are driven by execution of our growth strategy and the exceptional work of our talented teams around the world.

Today, I will share with you our operational and financial highlights from the past year, a slight adjustment to our strategy following the recent transactions, progress on our supply chain transformation, and an update to our FY '26 outlook.

Before I do that, let me recap on a2's journey to date. From humble beginnings in the year 2000, when the company was formed in New Zealand by scientist, Dr. Corrie McLachlan, and his business partner Howard Paterson to focus on the A2 Protein difference. We've grown into a global business operating in Australia, China, New Zealand, North America, South Korea and Vietnam. And we have a product portfolio that spans all life stages from infant and kids through to adults and now seniors.

It is therefore fitting that we celebrate our 25th year since formation by: acknowledging the achievements of our team, past and present, that have built The a2 Milk Company into what it is today; reporting record sales with sales growth across all of our markets; and categories and recently announcing a major step forward in our supply chain transformation that I'll speak to later.

It's been a remarkable journey to date, which all of us should be proud of, and I want to thank our shareholders that have supported the company along the way, including those here today with us.

More recently, we reported a strong FY '25 results to the market in August. We continue to execute our growth strategy, which saw us deliver record sales of $1.9 billion and double-digit growth in revenue, EBITDA and EPS.

We moved from a top 5, to a top 4 brand position in the China infant milk formula, or IMF market, driven by strong performance in both English and China label. We launched new products for infants, kids and seniors and we expanded into new markets.

As shareholders, you will be aware that last year at our annual meeting, we introduced a dividend policy for the first time in our company's history. Since then, we declared and paid dividends totaling $0.20 per share with a payout ratio of 71%. This marked an important milestone in our journey to deliver sustainable returns to our shareholders.

Moving to our FY '25 financial results. We delivered full year revenue growth of 13.5%. And importantly, earnings grew at a faster rate. So EBITDA was up 17% and net profit after tax and EPS were up 21% with strong cash conversion.

On the right-hand side of the slide, you can see that we have driven significant growth since FY '21 when we refreshed our growth strategy, achieving a compound annual growth rate in revenue, EBITDA and EPS of 12%, 22% and 27%, respectively.

Looking at our geographic segment and product category performance on the next page. Our growth continues to be driven by our China and other Asia segment, led by English label IMF and Other Nutritionals. Since FY '21, we've grown our other -- China and other Asia segment sales by a compound annual growth rate of 22%.

Our ANZ segment sales were flat with growth in our Australian liquid milk business, offsetting declines in the Daigou channel. Our U.S. business continued its strong growth and MVM experienced significant increase in external ingredient sales, mainly driven by higher GDT pricing and milk volumes.

From a category perspective, our total IMF sales grew by 10%, with English label the standout performer, up 17%, driven by growth in our CBEC and O2O channels. and a shift towards the English label category. China label was up 3.3% with record market share, which was actually a very good result in a market that declined by 5.6% and also having to manage significant supply constraints.

Liquid milk sales grew by 14% in total, with ANZ up 10% and the U.S. up 22%. Other Nutritionals continued to grow at a fast rate of 23% and supported by our new kids and seniors milk powder products launched during the year.

Turning to market share. Our overall China IMF market share continued to reach record levels, resulting in a2 rising to the #4 brand position in the world's largest IMF market with 8% overall market share. This is a major milestone for our company, which launched its first IMF product only 12 years ago, competing against the global leaders in the category and very capable strong domestic players.

We continue to ramp up our innovation with key new product launches during the year in the infant, kids and seniors nutrition segment. Our early results are encouraging, and we are hopeful that a2 Genesis, Kids Advance and our Seniors range features on this page here will continue to drive key growth drivers in our FY '26 results and beyond.

As we look ahead, we remain committed to investing in product innovation as a core pillar of our growth strategy to deliver benefits to our consumers at every life stage from the infant and toddler years, to healthy aging. We progressed our emerging market strategy, expanding the reach of our English label products into Vietnam through the launch of a2 Platinum in the first half and a2 Gentle Gold in the second half. The launches are showing positive early signs driven by our focus on building brand awareness, expanding our distribution across mother and baby stores, and activating and trade to remote trial and adoption.

As we continue to expand our footprint in emerging markets, we're also deepening our relationships in the most established and strategically important market being China. I'm pleased to share that recently, we expanded our long-standing strategic partnership with China State Farm, to now include English label IMF products in the cross-border e-commerce channel, starting with a2 Genesis from early next year.

This marks a significant milestone in our relationship with China State Farm, which began in 2013. Over the past 12 years, we have worked closely with China State Farm to build our China label IMF business, helping us to grow to over 100 distributors, and reach around 30,000 mother and baby stores across China as well as key online platforms. China State Farm's expertise and operational capability have been critical to our success in China.

This expansion has been well over 12 months in the making, and was formally recognized with a signing ceremony at China International Import Expo, a couple of weeks ago in Shanghai. It reflects not only the strength of our partnership with China State Farm, but also the strong relationship between China and New Zealand.

Moving now to our investment in the A1 protein free science, which is central to our a2 Milk brand proposition. Over the past year, we have continued to build on that foundation with the results of three new studies released in relation to maternal and infant nutrition and seniors cognition, further expanding knowledge of the unique benefits of a2 Milk.

We actually have our Chief Scientific Officer -- adviser, Dr. Andrew Clarke, here with us today. So if any of you have any further questions around those studies or the A2 protein difference, feel free to catch them after the meeting closes.

Shifting focus to sustainability on the next page. We have a clear road map in place to guide us towards achieving planet positive outcomes and net zero by 2040. Over the year, we've reduced emissions significantly supported on-farm initiatives and improved packaging performance.

Moving now to a brief strategy update. We have updated our growth strategy after completing our supply chain transformation transactions. Firstly, we have adjusted our Transform Supply Chain priority, to focus on execution of our important transformation program at a2 Pokeno, and on building capability to support our innovation and growth. Secondly, we placed more emphasis on entering new markets and called this out as one of our key strategic priorities.

Moving to the next slide. We are tracking well towards our medium-term financial and non-financial goals, and remain on track to achieve the majority of our targets. Our strong FY '25 performance has brought us much closer to our medium-term revenue ambition of $2 billion, and our supply chain transformation will support a more significant increase in EBITDA margins in FY '26.

Our English label IMF and ANZ liquid milk businesses are back on track, and our emerging market outlook has improved following the launch of IMF in Vietnam this year, which we're excited about.

I'll now turn to the progress we've made in transforming our supply chain, which is a key enabler of our future growth. In August, we announced two transactions that will transform our supply chain and market access, enabling us to build a better, higher growth, lower risk end-to-end business with significant value creation potential.

The first transaction relates to the acquisition of a fully integrated nutritional manufacturing facility, located in Pokeno, here in New Zealand that I'll refer to as a2 Pokeno. Importantly, as two existing China label IMF registrations and already produces two of our English label IMF products.

The second transaction we announced related to the divestment of MVM to Open Country Dairy to optimize our asset footprint following the acquisition of a2 Pokeno.

There is a clear strategic rationale for these transactions. In essence, the combined transactions: enable growth and share gains in China through market access and innovation; accelerate the development of a world-class nutritional manufacturing capability; and they capture attractive financial returns through vertical margin capture and incremental brand contribution.

In terms of financial returns, by FY '30, the combined transactions will deliver over $100 million of incremental brand sales and over $60 million of additional EBITDA through incremental brand contribution and vertical margin capture. We've been working on this strategy for several years and considered many options. Without doubt, the transactions we've completed are our preferred strategic, operational and financial outcome.

Turning to our newly acquired a2 Pokeno facility, which is strategically located in the Waikato region. This world-class site, which has proven capability in IMF manufacturing and is already producing two of our English label products. Importantly, we have secured a long-term agreement with Fonterra, for A1 protein-free milk ensuring supply flexibility and supporting our long-term growth ambitions. We will be investing significantly in the facility and expanding our team to enable the growth.

The next page highlights a key aspect of the strategic rationale for the acquisition of a2 Pokeno. Of the top 10 players in the China IMF market, a2 is the only brand in the top 10 with a single China label product, with the competition having between 5 and 21 registrations. It's obviously challenging to capture the full potential of the market -- in a market in China that's so large and complicated with only one product available to us.

The acquisition of a2 Pokeno is expected to increase our China label IMF product registrations from one to three in the near term, which will enable us to expand our product portfolio, develop differentiated consumer and trade propositions to increase market share, including in lower-tier cities.

An expanded China label portfolio will help us maximize our IMF opportunity in China by providing greater access to the largest segment of the China IMF market, with the China label segment of the market accounting for approximately 80% of the total market.

In the short term, we'll transition existing products to our A1 protein-free milk base, and we're in the process of seeking regulatory approval to bring them under the a2 brand, while planning for future innovation and a third registration slot.

Since announcing these transactions, we've made significant progress. We successfully completed the acquisition of a2 Pokeno facility and the divestment of MVM. We're advancing the regulatory processes to bring the existing China label registrations under the a2 brand. And more specifically, we have achieved MPI's approval of our updated RMP and have applied for GACC approval, that's customs approval in China. The next step beyond that is applying for SAMR approval of the amendments to the registrations.

We've already completed some blending and counting batches for a2 Platinum at the Pokeno side in collaboration with Synlait ahead of transition in the first quarter of '27 and have commenced short-term and long-term product development trials. We have made strong progress in our capital investment program at Pokeno and awarded several key contracts and have commenced our IT integration and ERP upgrade projects.

We've been hiring people and manufacturing leadership and operational roles over time. We'll add more than 100 new roles to the facility, providing significant development opportunities to our existing and future team members. And at the same time, we've ensured a smooth operational separation of MVM.

So to conclude this section, we are excited to secure a world-class asset to help us build our supply chain of the future. And at this early stage, our transformation program is tracking in line and in some cases, ahead of plan.

Turning now to FY '26 and the company's outlook. I'm pleased to say that we've started the year strongly with IMF, Other Nutritionals and Liquid Milk product categories, all trading ahead of expectations.

In addition, changes to actual and forecast currency rates reflecting depreciation in the New Zealand dollar expected to inflate sales and expenses with the impact on EBITDA not expected to be material. Having regard to both of these factors today, we have increased our FY '26 guidance for revenue growth from high single-digit percent to low double-digit percent.

We have also reconfirmed our EBITDA margin guidance to be approximately 15% to 16% and increased our net profit after tax guidance to now be slightly up on FY '25 reported.

Lastly, we increased our guidance for capital expenditures to reflect the accelerated progress of our a2 Pokeno capital investment program.

Finally, turning to capital management. The transactions discussed today provide us with clarity in relation to our future capital needs. As noted by our Chair in her address, the Board intends to declare a special dividend of $300 million, subject to obtaining regulatory approvals to bring the new China label registered products under the a2 brand, which is expected to take up to 12 months from when we announced the transactions back in August. Special dividend is expected to be unimputed and fully franked.

So that brings me to the end of my presentation. In closing, we've delivered a strong FY '25 result, executed two transactions and a milk supply agreement that substantially supports our growth strategy and have demonstrated disciplined capital management.

It's been a massive year for our team, and I do want to thank them all publicly for their exceptional contribution and impact. We're only a small team at a2 of just over 500 people and the teams achieved remarkable things this year, and I really want to thank them for that.

So for our shareholders, I look forward to answering any questions you may have after the formal business section of the meeting or afterwards after the meeting closes, whatever suits you.

So anyway, thank you very much for your time. I'll now hand back to our Chair.

Thank you, David. We now turn to the measures that require resolution, as outlined in the notice of meeting with a poll to be conducted for each resolution. The poll will be conducted at the end of each resolution and your ballot papers and online voting cards will be collated by our share registry.

The resolution set out in the Notice of Meeting are considered as ordinary resolutions. To be passed, that requires the majority of a simple -- sorry, that requires the approval of a simple majority of votes by the shareholders entitled to vote and voting on the resolution. Shareholders here in Auckland will be able to cast your votes by filling out the ballot form that you received at the registration desk, and they -- and which will be collected at the end of the formal part of the meeting.

Those attending the meeting online will be able to vote by clicking the, get a voting card, box on the online portal. If you require further information and guidance on the voting process please refer to the Notice of Meeting.

There will be an opportunity for shareholders to ask questions both on the resolutions being put to the meeting today and more generally at the end of formal business.

When I call for questions, for those of you who are attending in the room, please raise your hand and wait for a microphone to be delivered to you. Please clearly state your name prior to asking your question.

We will also be responding to questions from shareholders attending virtually via the online portal. [Operator Instructions]

I would like to take this opportunity to remind everyone that this meeting is being webcast, so you will also be heard by an audience outside of this room.

If we are unable to get through all the questions today within the time allocated, we will respond individually after the meeting.

We will now move to the resolutions.

Resolution 1 relates to the auditors' fees and expenses. Pursuant to the Companies Act, the company wishes to authorize the directors of the company to fix the fees and expenses of the company's auditor, Ernst & Young, for the ensuring year.

Are there any questions with respect to this resolution? Do we have any questions in the room? No? Do we have any questions online?

There are no questions online at this time.

I now propose that the directors of the company be authorized to fix the fees and expenses of the company's auditor, Ernst & Young, for the ensuring year and I put the motion to vote. Thank you.

The next resolution concerns my reelection as a director. I've asked Kate Mitchell, the Chair of our Audit and Risk Committee to chair this part of the meeting. Thank you, Kate.

Thank you, Pip. Pip is retiring by rotation in accordance with the company's constitution and the NZX listing rules and offers herself for reelection. The Board recommends Pip to you as a nonexecutive independent director and unanimously supports her reelection. You have already heard from Pip as our Chair earlier in the meeting where she also addressed her reelection. I now propose that Pip Greenwood be reelected as a Director of the company. Are there any questions from shareholders concerning this resolution? Do we have any questions in the room? No? Do we have any questions online?

We do not have any questions online at this time.

Thank you. I now propose that Pip Greenwood be reelected as a Director of the company, and I put the motion to vote. Thank you.

Thanks, Kate. The next resolution concerns the reelection of Sandra Yu as a Director, Sandra is retiring by rotation in accordance with the company's constitution and NZX listing roles and offers herself for reelection. The Board recommends Sandra to you as a non-executive independent director and unanimously supports her reelection.

I will now invite Sandra to address the meeting.

Good morning. I'm honored today to stand for reelection to the Board. Over the past 3 years, have heavy opportunity to contribute to the company's journey through a period of strategical evolution, particularly in strengthening our position in China and progressing the company's supply chain transformation. As Chair of the People and Remuneration Committee, I've worked closely with my fellow directors to ensure executive remuneration frameworks are fair, performance linked and aligned with shareholder interests, as well as supporting the company's focus on diversity, inclusion and talent management.

As an experienced company Director and Global Executive I bring over 2 decades of experiences in consumer goods and infant nutrition, including the leadership roles in Johnson and Unilever, where I focused on global brand transformation, innovation and modernizing go-to-market strategies through digital platforms. I believe my experience in China and across Asia continues to be highly relevant to the company's ambition. And I look forward to continuing to support the Board and management in the years ahead. Thank you, [Foreign Language]

Thank you, Sandra. I now propose that Sandra Yu be elected as a Director of the company. Are there any questions from shareholders concerning this resolution? Do we have any questions in the room? No? Chante, do we have any questions online?

There are no questions online at this time.

I now propose that Sandra Yu be elected as a Director of the company, and I put the motion to vote. Thank you.

The next resolution concerns the election of Lain Jager as a director. Lain joined the Board in December last year and is retiring in accordance with the company's constitution and the NZX listing rules and offers himself for election. The Board recommends Lain to you as a non-executive independent director and unanimously supports his election.

I now invite Lain to address the meeting.

Thank you, Pip. Good morning, and thank you for the opportunity to introduce myself as I stand for the -- for election to the Board. My background is an international agribusiness, most notably as CEO of Zespri International, where I led the company through a decade of global growth, innovation and strong financial performance. Since stepping down from Zespri, I've remained active in the sector through private investments and governance roles, and I'm excited by the opportunity to bring that perspective to The a2 Milk Company.

I believe the company is uniquely positioned in the global infant formula business, particularly in China. And I'm passionate about contributing to the company's continued success. I look forward to working with the Board and management team to support company growth and value creation for all shareholders. Thank you for your support.

Thank you, Lain. Are there any questions from shareholders concerning this resolution? Any in the room? No? Any online?

We have no questions online at this time.

I now propose that Lain Jager be elected as a director of the company. I put the motion to vote. Thank you.

The next resolution concerns selection of Grant Dempsey as a Director. Grant joined the Board in September this year and is retiring in accordance with the company's constitution and NZX listing rules and offers himself for election. The Board recommends Grant to you as a Nonexecutive Independent Director and unanimously supports his election.

I now invite Grant to address the meeting.

Thank you, Pip. Good morning. It's a privilege to be standing here for election following my recent appointment to the Board. My career spanned senior roles in finance, strategy and governance, including investment banking and most recently as CFO of 2 ASX companies. I've worked closely with Boards and executive team throughout my career on complex transactions, capital management and strategic transformation.

Since retiring from my executive roles last year, I focused on governance. I currently serve as Chair of Firmus Technologies and a small number of other ASX and private nonexecutive directorships across infrastructure, industrials and technology. I'm focused on ensuring strong financial discipline and transparency. I bring a deep understanding of strategic oversight and risk management. I believe my experience will complement there are already significant skills on the Board. And I look forward to contributing to the company's next phase of growth. Thank you.

Thank you, Grant. Are there any questions from shareholders concerning this resolution? Are there any in the room? Looking around, No? Chante, any online?

We have no online questions.

Thank you. I now propose that Grant Dempsey be elected as a director of the company. I put the motion to vote. Thank you.

Resolution 3 seeks shareholder approval to increase the Nonexecutive Director fee pool by $310,000 from $1,365,000 to $1,675,000. This adjustment reflects the increased scope and complexity of government responsibilities, the expansion of the size of the Board and benchmarking against peer comparators. The proposed increase will provide flexibility to fairly compensate current and future nonexecutive directors over time, while maintaining alignment with shareholder interests.

Further details in relation to this resolution have been outlined in the notice of meeting and the PwC benchmarking report, has also been made available to shareholders on the company website. As noted in the Notice of Meeting, a voting exclusion applies to this resolution.

Are there any questions from shareholders concerning this resolution? Is there any in the room? No? Are there any online Chante?

We have no online questions.

I now propose that the Nonexecutive Director fee pool be increased by $310,000 from $1,365,000 to $1,675,000 and I put the motion to vote. Thank you.

On to our next resolution, Resolution 4, to align with recent practices for New Zealand and Australian executive remuneration. The Board has committed to submitting the CEO's long-term incentive plan grant as a resolution on an advisory basis for the purposes of the NZX listing rules to the annual meeting, which is subject to this resolution today.

The company's LTI plan is designed to reward performance in support of the achievement of the company's growth strategy by targeting profitable long-term revenue and EPS growth. which requires appropriate investment. An overview of the key terms of the proposed grant rights to David is set out in the notice of meeting.

The Board considers the performance hurdles of the LTI plan sufficiently challenging and aligns with shareholder value creation. The Board recommends you vote in favor of this resolution, and we unanimously support this grant of performance rights to David Bortolussi. As noted in the Notice of Meeting, a voting exclusion applies to this resolution.

Are there any questions from shareholders concerning this resolution? Any in the room? No? Right? Chante, any online?

We have an online question from [indiscernible]. Can you please explain what on an advisory basis means in this resolution?

That means that it's nonbinding on the company that will be taken into account in any future consideration.

Any other -- are there any other questions?

We have no other online questions.

I now propose that the acquisition of 324,606 performance rights by the company's Managing Director and CEO, David Bortolussi, by grant under the company's long-term incentive plan be approved, and I put the motion to vote. Thank you.

That concludes the resolutions and there were a few of them presented to the shareholders for vote. Please now submit your vote for each resolution. Please select for, against, or abstain. For those attending in person, representatives from our share registor will now collect your voting cards. For those attending the meeting online, voting will close shortly. The results of the polls will be released to the NZX and ASX following the meeting.

[Voting]

Okay. I think the voting is complete. We'll now move to general business. I'd like to offer you the opportunity to raise any general questions. Please make your questions concise so that everyone who wants to raise a question has the opportunity to do so. If we're unable to get through all the questions today, as I mentioned earlier, within the time allocated, we will respond individually after the meeting.

I'd now like to open the floor for any questions from shareholders.

Do we have any questions in the room? We've got one up here.

John Clearwater, a shareholder. I'm very excited to see the results from the scientific study of the improvement in cognition for seniors, and with the big increase in numbers of seniors around the world, I feel that this should be the base for a really determined push in this region expanding to other countries and building further research. And please, I have a request. Please, please, when you have publications and good research to report, please give them at least space for an abstract or better a whole page for each of these studies, because I think they are very important for the understanding of the shareholders in the wider world.

Thank you, John. Yes, we're excited about the research. And for Andrew. Andrew, our Head of Scientific Research, which David introduced earlier. Do you want to just talk to the study very briefly, and then I'll comment on that.

It's good to see you here again, John. I see you on a regular basis. And so thanks for your attendance.

Look, 2025 has been a great year for a2 Milk Company's research, not only have we had 3 clinical publications that have been supported by the company, but a number of other groups around the world independently been publishing studies as well. So on top of our three, there have been another three that talk towards the benefits -- digestive benefits and lower inflammation that A1 protein-free milk and parts compared to conventional milk.

But talking to the three studies that were presented earlier, the maternal nutrition was very much a breakthrough study. It demonstrated that a mother consuming a2 Milk transferred the benefits through to infant, which was breast feeding. Now what was very comforting about this was, we first got reports anecdotally, with testimonials received from parents. And so it was a great pleasure to be able to explain to people. We now have the underpinning science for this benefit that's been reported over the years.

Looking at the Stage I infant formula study. Once again, it was a case of scientifically demonstrating something that was witnessed by consumers that a number of infants who consume A1 protein-free milk based infant formula, have better digestive comfort which is reflected in their crying, sleeping and -- which is great for the parents.

And the final study, which was presented, the MCI or mild cognitive impairment, demonstrated that removing A1 protein from milk enhance the benefits that the elderly enjoy from dairy owing to improved cognition as measured by the Montreal Cognitive Assessment, which is a gold standard measurement of cognition in the elderly as well as audio verbal learning tests. But I'd be happy to talk to you further afterwards.

Thanks, John. But as you pointed out, we do see the senior nutritionals as an opportunity for growth. And there are actually the three products we've launched over the year. So you can have a look at the product packaging. There's three different types of products. I don't know, David, if there's anything you want to add.

I think Andrew covered it.

[indiscernible]

I don't think it's actually available in New Zealand but hopefully, in the future, yes. Any other questions? So we have one over here. Just wait for a microphone.

I've been a shareholder for quite a long time in a2 and have appreciated all the works being done with over a few traumas that we've had. But one of the things is -- and to support a2 other than the dividends that you give me, I drink your milk. And I'm just -- and I've found it increasingly difficult to buy a2 Milk. It used to be in limited numbers in all the supermarkets. But today, there is -- it's not there. So I'm forced to drink another one, which my wife doesn't appreciate because she says it's much too creamy than one I do. But I want to know where -- when is it going to be available if at all?

That's a great question. Sorry, what was your name.

Sorry, Walter Smile.

Thank you. David will tell you, I'm a bit of a dog with the bone about the fact that we're not supplying a2 Milk in New Zealand. The Fonterra arrangement had come to an end and Fonterra didn't want to renew it. So we have been exploring other options. And I think we have found a supplier. So hopefully, in the future, we will have a2 Milk in our supermarkets. I don't know if you want to add anything, David?

It's still work in progress, but we hope to be able to update the market shortly. It's hard to tell when you're negotiating those sort of arrangements. And we hope that it's positioned differently and more available in the market as well. So we're very keen to restore our distribution of a2 Milk in New Zealand.

And we have launched in Australia very successfully lactose-free a2 Milk. So hopefully, in the future, we'll have a broader range here in New Zealand.

We have one question at the back.

I'm a shareholder. No, that's not the reason. You just don't want them to buy the product so that they will want it. End of the day, if you don't have the product, you'll have people go, where is a2, where's a2? My daughter-in-law is always saying, where's a2? So it's a good idea not to supply enough. But no, I just want to say thank you for this today. Very incredible what your people have done and how you've -- well, given so much positive news, it's just incredible. And especially also, you're doing the whole milk business in America. How is that going, by the way? And does Trump have anything to do with it? Or is it just that you just go on as usual and hope you'll leave in 3 years' time.

Do you want to answer that?

I'm sorry, I missed your name, but...

Small shareholder.

Small shareholder. No problem. There's no sign of any impact from the Trump administration of business there. It's a domestic business. Our whole milk business there, our core range of whole milk and 2% is growing very well -- particularly in the grocery and mass channel. On top of that, we have our grass-fed innovation, which for New Zealand shareholders will seem like that's not that significant. But in the U.S. market, grass-fed is a rare form of milk because of the farming practices there. It's been well received by the market in the natural channel, which is growing very well. And in the club channel on top of that, we've gained additional distribution over the last year as well.

So it's going very well the liquid milk business in the U.S. in terms of growth. So we're up 22% last year. Our challenge has been to improve the profitability of that business, which we've made real progress on over the last few years. So it wasn't long ago, we were losing over $30 million in the U.S. And last year, we lost $9 million, and we hope to improve on that this year, again, with a view of getting to breakeven by FY '27. And in addition to that, we're exploring the possibility of long-term approval for our infant milk formula in the U.S. as well. So still work in progress, still a challenge on profitability, but we're getting there.

[indiscernible]

In the U.S. or -- I mean we obviously have to go through the FDA approval to get our formula approved for our long-term sale in the U.S., but no particular issues.

Any other questions in the room? One over here.

I'm a shareholder from Australia. Just a thing I've noticed over time, there seems to be in supermarkets a focus on UHT milk rather than fresh. I've noticed fridge space has declined in a lot of supermarkets. And I'm just wondering, is a2 Milk seeing that happen? Has there been any push towards non-refrigerated, like non-fresh milk from the marketplace that might change how a2 Milk might direct things in the future?

Are you talking about New Zealand or Australia, in particular?

Well, I'm from Australia, and that's what I've noticed in Australia, and I don't know if that's particularly happening here. But I have noticed a large reduction of fridge space in many supermarkets. And the shelves for the UHT is growing. It's phenomenal.

Do you want to talk to that? I mean we have seen an improvement in our growth in liquid milk in Australia, but we do offer UHT products. Do you want to...

Maybe what you're observing is perhaps over the years, there's been an increase in plant-based alternatives, which are offering UHT at ambient temperature rather than being in the chiller space. So that sort of happened a bit over time, and that growth has moderated where it's relatively a low single-digit growth in plant at the moment. In fact, in the U.S., the plant category is in decline.

And then in relation to the chiller space of fresh milk in Australia, it's been relatively steady over recent years. We -- for our business, we've increased our number of facings and distribution across the trade as well because it's not only what stores you're in, it's actually the depth of distribution as well, which we've increased as well. And then you layer on top of that our lactose-free product. So we've actually gained a lot of distribution and facings.

Yes. So okay. So you may be replacing some of the practices, which is good...

Yes. Our market share is up like we're over -- we're sort of 11% market share overall. And our lactose-free business is over 20% market share now of the category, which is the fastest-growing category in the dairy market, yes.

Thank you for your question. Any further questions in the room? I'll just move to ask whether we have any online questions.

We have an online question from James Noble, in regards to the increasing chatter about artificial intelligence driven share market bubble and possible burst. What defensive steps or other will -- has a2 Milk take to mitigate this risk?

Do you want to answer that?

Sure. I think whether or not the AI-related companies valuation is above or below fundamental value. I don't think that's particularly concern for a2. We're more thinking as most companies are that the AI is around for the long term. It's quite a discontinuity in the transformation for most businesses. And individuals globally. So we're thinking more about how do we adopt and leverage that going forward in the front end of our business, in our sales and marketing activities, particularly in China.

And also how -- not only in terms of how we execute, it is how we actually influence the AI-related searches, which is different to previous web searches. So that's a challenge for us. And then in the back end of our business, we're thinking about adoption in various areas. We use it for cybersecurity and other aspects of our business, including supply chain and that. So we're thinking more about adoption.

In terms of steps to protect against that, I mean, we do use it, obviously, in our cybersecurity protection mechanisms to make sure we protect our data and information and have policies in place in respect to that as well. So I don't think it's a direct concern for us at the moment.

Next question from online.

We have the question from [indiscernible], what will the company's strategy be if your market share in China drops significantly? Will you stay in China, trying to turn things around or try to explore new markets in Europe?

I think as David mentioned, our performance in China has continued to grow, and it's a real focus for us as a company. In terms of Europe, I think there are some real constraints for New Zealand to be supplying into Europe. So it's not something that we're focused on at the moment. Is there anything you want to add to that?

No, just by way of context, the China infant market, why we and many other companies focus on that. It's over half the world's infant market in total in terms of value and an even greater share in terms of the profit pools associated with it. So it's a very -- the second biggest market is the U.S. So we've got a great position like we're #4 brand in the market now. So if the China market or our share within it, has concerns in the future, I mean, our first reaction is to double down and make sure that we address that and improve that situation because it's such a fundamental part of our business.

And beyond China infant milk formula, our strategy is to expand into adjacent categories in China and then also into new markets. And Pip's comment about Europe is absolutely right. I mean we're more focused on Asia, Southeast Asia and potentially in the Middle East in time as opportunities for us because the level of A1 protein-free intolerance in those markets is much higher and there's certain reasons why they are attractive markets to us as well.

Thanks, David. Is there any further questions online?

We have had a couple of questions on this topic, so we will ask a representative question. Is there any update on the Australasian class action against a2 Milk?

There is no current update for the market at this time. We're continuing to work through that with our lawyers. We've got an update as a Board coming up in early December, but there's nothing to update the market on at this time.

We have another online question from Susan [indiscernible]. Can you tell us how a2 Milk products are being received in Vietnam? Which products are resonating with the mothers and consumers?

We had a board visit to Vietnam just a few weeks ago, which was a really exciting opportunity for us to see the products in market. Do you want to talk about that more broadly, David?

Yes. It's a really exciting market for us. It's probably the most exciting market in Asia outside of China. There's just over 100 million people in Vietnam. There's about 1.4 million -- it's very hard to get precise information. It's about 1.4 million births per year, and there are various aspects about the Vietnamese market that make it attractive to us. The total value of the market is in the order of $2 billion and probably about half of that, $1 billion New Zealand is addressable to us. And so we recently launched our Platinum product and our Gentle Gold product.

So Platinum has had longer in the market. It's been really well received by consumers. The feedback and the reviews that we're getting terrific. Gentle Gold, it's early days yet, but there's actually a bigger segment available to us with Gentle Gold entering the market as well because Platinum is a more premium product.

And in addition to the infant category. We're also making available our Other Nutritionals products, so whether they be adult fortified milk powders or our UHT product or fortified UHT products for kids and adults as well. So we're really excited about the Vietnamese market and look forward to that developing over time.

Thanks. Chante, do we have any further questions online?

We have no online questions.

Thank you. So ladies and gentlemen, on behalf of the Board, I'd like to once again thank you for joining us today. It's great to see so many of you here and for engaging on the important measures of business and also for your support over the year. For those attending the meeting here in Auckland, we will have some refreshments just outside the doors. So please stay and join us for those.

I now formally declare the meeting closed. Thank you so much.

Good morning, everyone, and thank you for joining us today. My name is David Bortolussi. I'm the Managing Director and CEO of The a2 Milk Company. Today, I'm joined on the call by our CFO, Dave Muscat; and our business unit leaders, Kevin Bush, Eleanor Khor, Li Xiao and Yohan Senaratne.

As you will have seen from this morning's announcement, we have a lot to cover on today's call. In terms of format, Dave and I will provide an overview of the company's FY '25 results. We will then move on to our supply chain transformation update and finish with our FY '26 outlook and capital management update, incorporating the transaction impacts.

In the interest of time, we won't present our regional and product performance as we normally do, which is a shame as there are so many great achievements during the year that the team would like to share with you, but our business unit leaders are on the call to discuss any questions you may have in Q&A at the end.

Starting on Slide 4. We reported an exceptionally strong FY '25 result today. We continue to execute our growth strategy, which has seen us deliver record sales of $1.9 billion and double-digit growth in revenue, EBITDA and EPS. We moved from a top 5 to a top 4 brand position in the China IMF market with strong growth in both English label and China label, driven by successful early-stage new user recruitment.

We continue to ramp up innovation with a range of new products launched, targeting growth opportunities in the infant, kids and seniors nutrition segments as well as expanding our English label reach further into emerging markets, launching IMF in Vietnam.

And lastly, as you know, we introduced a dividend policy for the first time in November, and we've now declared dividends totaling $0.20 per share for FY '25 with a payout ratio of 71%.

Turning to the next slide. From humble beginnings in the year 2000 when the company was first formed in New Zealand by Corrie McLachlan, who is a scientist and his business partner, Howard Paterson, we've now grown into an international business operating in Australia, China, New Zealand, North America, South Korea and Vietnam and have a product portfolio that spans all life stages from infants to kids through to adult and now seniors. It's therefore fitting that we celebrate our 25th year since formation by acknowledging the achievements of our team today and all of those before us that have built The a2 Milk Company [ into ] what it is today, reporting record sales with growth across all of our markets and categories and announcing a major step forward in our supply chain transformation.

Moving to Slide 6, which summarizes our financial results for FY '25. We delivered full year revenue growth of 13.5% with higher growth in the second half, up 16.8%. Importantly, earnings grew at a faster rate. EBITDA was up 17% and net profit after tax and EPS were up 21% with strong cash conversion.

Slide 7 outlines our segment and product category performance. Our growth continues to be driven by our China and Other Asia segment, led this year by English label IMF and other nutritionals. Our ANZ segment sales were flat with growth in our Australian liquid milk business offsetting declines in the Daigou channel. Our U.S. business continued its strong growth and MVM experienced a significant increase in external ingredient sales, mainly due to higher GDT pricing and milk volumes.

From a category perspective, our total IMF sales grew by 10% with English label, the standout performer, up 17%, driven by growth in our CBEC and O2O channels and a shift in the market towards English label. China label was up 3.3% with record market share, which is a very good result in a market that declined by 5.6% and having to manage supply constraints during the year. Other nutritionals continued to grow at a faster rate, up 23%, supported by new kids and seniors milk powder products launched during the year.

Slide 8 lists many of the key operational highlights our team achieved during the year that supported our financial results, which are covered in more detail throughout the presentation, which unfortunately, I won't have time to go through today.

Turning to Slide 9. We continue to progress our sustainability agenda with a clear road map now in place to guide us towards planet positive outcomes and net zero by 2040. Our MVM boiler conversion was almost -- has almost eliminated our Scope 1 emissions with the MVM plant now operating on 100% certified renewable energy. We've also reduced our Scope 3 emissions intensity by 1/3 since our 2021 baseline year and are proud to be part of AgriZero in New Zealand. We continue to support on-farm initiatives for the a2 Sustainability Fund, funding 19 on-farm projects to advance outcomes aligned to our sustainability goals. And packaging performance continues to improve, and we achieved a Beyond Best Practice rating by APCO this year, which we are proud of. All of these actions reflect our purpose of pioneering the future of dairy for good.

Moving now to Slide 10. Pleasingly, the China IMF market has shown signs of stabilization, supported by the higher number of newborns during the Year of the Dragon last year and increased early-stage IMF demand. English label growth is outperforming China label, gaining momentum through a shift in consumer preference, product innovation, premiumization and growth in online channels. The a2 type protein category continues to grow ahead of market and brand concentration continues with the top 5 brands gaining share.

Lastly, as most of you know, the China central government recently announced a subsidy program to support the cost of childcare in China. This is a positive initiative for families and the industry, which is encouraging. However, at this stage, it's too early to assess the potential impact.

Turning to market share on Slide 11. Our overall China IMF market share continued to reach record levels, resulting in a2 rising to the #4 brand position in the world's largest IMF market with 8% overall market share. This is a major milestone for our company, which launched its first IMF product only 12 years ago, competing against the global leaders in the category and strong domestic players.

Moving to the next slide. Today's result reflects the momentum we have built by staying disciplined in executing our growth strategy. And there remains so much opportunity for us to capture in the China IMF market and through expanding into adjacent categories in China and into new markets. Our supply chain transformation will play a critical role in enabling us to realize this opportunity, which I'll cover shortly.

As you can see on Slide 13, we're tracking well towards our medium-term financial and nonfinancial goals and remain on track to achieve the majority of our targets.

Moving to Slide 14. Our strong FY '25 performance has brought us much closer to our medium-term revenue ambition of $2 billion, and we have delivered a revenue CAGR of 12% since FY '21 over the past 4 years. Our English label IMF and ANZ liquid milk businesses are back on track, and our emerging market outlook has improved following the launch of IMF into Vietnam this year, which we're excited about.

I'll pause there and hand over to Dave to take you through the financials in more detail.

Thanks, David. Good morning, everyone. I'll start on Slide 16 with a summary of our group P&L. As David has already mentioned, we delivered net sales revenue of $1.9 billion, up 13.5% on prior year. Our gross margin of 46.1% was up slightly, driven by lower IMF ingredients costs, favorable FX and the cycling of MVM accelerated depreciation, partly offset by the cost of air freight used to mitigate IMF supply constraints net of Synlait support.

We continue to invest in marketing with spend up 13.7%, while maintaining a similar reinvestment rate of 17% of sales. The focus remained firmly on China, supporting new user recruitment during the Year of the Dragon and the launch of new products, including a2 Genesis. China continues to represent the majority of our marketing spend, accounting for over 90% of total marketing expenses.

SG&A declined as a percentage of sales, reflecting improved operating leverage. However, it increased in absolute terms as we continue to invest in supply chain and China capability, science and innovation. This was partly offset by reduced FX losses and cost reduction initiatives. We declared a final FY '25 dividend of $0.115 per share, totaling approximately $83 million. This equates to a payout ratio of 75% of NPAT, which is to be fully franked and partially imputed. The dividend will be paid on the 3rd of October, 2025.

Slide 17 and 18 summarize our segment and product performances with the key drivers covered throughout the presentation.

Moving on to Slide 19. Operating cash inflows, excluding interest and tax, were $259 million, representing operating cash conversion of 95%, which was in line with guidance, but lower than FY '24. FY '25 cash conversion was lower due to one-off working capital impacts, namely: China label stock build associated with FY '25 China label GB product transition, which inflated FY '24 cash conversion; withheld payments from Synlait in FY '24 that were subsequently paid in FY '25; and more recently, a reduction in Synlait purchase order deposit payment terms that commenced in FY '25.

Investing activity outflows included our additional investment in Synlait to support their recapitalization and cash flows from financing activities, including the payment of our inaugural dividend. Our closing net cash at the end of the period was $1.061 billion, up $92.2 million on 30th of June, 2024.

Turning to Slide 20. Our balance sheet continued to strengthen during the year, driven by growth in our cash balance, as just outlined. Our inventory was down approximately $40 million on last year, reflecting lower IMF stock levels following stronger early-stage demand and compounded by supply constraints at Synlait in the fourth quarter.

It's important to note that while a2's own stock levels dropped at the end of the last quarter, we focused on maintaining stock levels at distributors and retailers to ensure that consumer demand was met. We expect that our own stock levels will recover progressively during the year. We closed the year with higher prepayments, reflecting changes to Synlait supply terms following the dispute resolution, delays in Synlait IMF stock deliveries and increased inventory deposits as we expanded our product portfolio and strategic partner network.

That concludes the FY '25 results overview. I'll hand back to David.

Thanks, Dave. We'll now move forward in the presentation to Slide 34 and our supply chain transformation update. I'm pleased to announce today 2 transactions that will transform our supply chain and market access, enabling us to build a better, higher-growth, lower-risk end-to-end business with significant value creation.

The first transaction is the acquisition of 100% of the shares in Yashili, New Zealand, from Mengniu Group, which has a fully integrated nutritional manufacturing facility located in Pokeno, New Zealand that I'll refer to as a2 Pokeno. Importantly, it has 2 existing China label registrations and already produces 2 of our English label IMF products.

The second transaction we announced today relates to the divestment of a2's 75% shareholding in China Animal Husbandry Group's 25% shareholding in MVM to Open Country. We've been working on this strategy for several years and have considered many options. I can confirm that we have -- what we have announced today is without doubt our preferred strategic and operational outcome.

And before I get into the details of our transformation update, I wanted to publicly thank our a2 team, our advisers and counterparties involved in the various projects for what we have collectively achieved today. Only they know how much effort has gone into delivering this outcome, which I hope will be a positive for all of those involved.

Turning to the next slide. There is a clear strategic rationale for the combined transaction. The acquisition of a2 Pokeno, firstly, provides a pathway to greater China label market access and enables strategic and operational control of product registrations and supply chain. Secondly, it supports growth in our core IMF business through access to 2 to 3 product registrations over time, enabling innovation to capture more market share than we currently can today with only China label product.

Thirdly, it accelerates the development of a world-class integrated drying, blending and canning nutritional manufacturing capability, utilizing an A1 protein-free milk pool developed by Fonterra and a2 over recent years in the Waikato.

Fourthly, it optimizes our asset footprint and capacity utilization through the divestment of MVM, where a2 will continue to be a commercial partner of A1 protein-free ingredients from MVM.

And finally, it generates attractive financial returns through minimizing the net investment required to achieve our objectives and through accelerating vertical margin capture and China label brand contribution.

On the next page, we have illustrated how the transactions deliver on various aspects of our growth strategy. We have referred to this strategic initiative as our supply chain transformation, but it is a much broader enabler of our growth strategy through market access, portfolio expansion and innovation.

Turning to Slide 37, which provides a summary of the financial returns. From a headline perspective, the combined transactions will deliver an internal rate of return greater than our cost of capital, with return on invested capital achieving cost of capital in FY '29.

I'll now step through each of the transactions in more detail, starting with the a2 Pokeno acquisition. Slide 39 provides a summary of the key terms of the acquisition. We are purchasing the facility for $282 million on a debt and cash-free basis. The transaction is unconditional and expected to complete on the 1st of September. Importantly, the facility is approved to produce 2 China label products, with one additional potential slot available for use, subject to regulatory approvals. We will immediately commence the amendment application process for the 2 existing China label registered products to bring them under the a2 brand, which is expected to take up to 12 months. In the unlikely event that we do not receive the necessary regulatory approvals within this time line, we have the right, but not the obligation to unwind the transaction.

Slide 40 provides an overview of the a2 Pokeno facility. The facility is ideally located for milk sourcing in North Island import and export logistics. The facility has milk receiving for drying, blending, canning and warehousing capability and has a proven track record as a high-quality IMF manufacturer already producing 2 of a2 English label products being Gentle Gold, and our recently launched Genesis product.

Turning to the next page. The China label registered market makes up approximately 81% of China's total IMF market. Access to the China label market is exclusively through SAMR registered product linked to approved manufacturing facilities with a limit of 3 product registrations per facility. The opportunity to increase a2's China label portfolio assists with capturing the potential for future growth in lower-tier cities, the domestic online channel and the super premium price segment where we're currently under-indexed.

Further to this, as outlined on Slide 42, of the top 10 players in the China IMF market, a2 is the only brand in the top 10 with a single China label product. It's obviously challenging to capture the full potential of our brand in a large and complex market with one product.

Continuing on to the next slide, the acquisition is expected to increase a2's product registrations from one to 3 in the near term, which will enable us to expand our product portfolio to develop differentiated consumer and trade propositions to drive market penetration in a way that complements our English label portfolio.

Turning to Slide 44. In the short term, we will change the milk base of the existing products to our pure and natural A1 protein-free milk from New Zealand. And as previously mentioned, we will apply for regulatory approval to amend the 2 registrations to bring them under the a2 brand. The existing products fit well with our current [ 2 ] as a portfolio. Over the medium term, we have plans to reformulate and upgrade the existing products to enhance our consumer proposition, and we'll work to seek approval for a third slot, which is expected to take several years.

Slide 45 provides an indicative time line for a2 Platinum in-sourcing from Synlait and the launch of our new China label products subject to regulatory approvals. The time line is indicative of the financial year in which the relevant item will occur, not necessarily beginning and ending within the time frame. Just to manage expectations, the nature and timing of product innovation is commercially sensitive. We're providing this high-level plan in the context of making a significant investment, and we'll provide milestones but not detailed updates to the market as we implement our plans.

Moving to Slide 46. In addition to the initial acquisition costs, we will also invest approximately $100 million in a multiyear capital investment program to lift capability and capacity at the facility and to derisk potential future regulatory changes. This will include the installation of new services electrode boiler to reduce our environmental impact in support of our sustainability goals. We also plan to almost double the size of our team at a2 Pokeno over time, adding more than 100 new roles, providing significant development opportunities to our existing and future team members.

Turning to Slide 47. Access to an A1 protein-free raw milk pool is essential to the production of a2 branded products at the newly acquired facility. To this end, we have entered into a long-term supply agreement with Fonterra for A1 protein-free raw milk from the highly regarded Waikato region in the North Island, sufficient to meet the company's needs. This leverages the milk pool we have developed together with Fonterra over recent years, provides supply flexibility and is mutually beneficial for Fonterra A1 protein-free farmer suppliers, Fonterra farmer shareholders and The a2 Milk Company.

So to conclude this section of the acquisition, we are excited to secure a world-class asset to help us build our supply chain of the future and start the next chapter in our growth story.

Now let's move on to the MVM divestment. Turning to Slide 49. Alongside the announcement of our agreement to acquire a2 Pokeno, we are today also announcing the divestment of MVM to optimize our asset footprint and capacity utilization whilst retaining access to high-quality A1 protein-free ingredients through a commercial supply agreement.

The divestment will see full ownership of MVM transferred from a2 and China Animal Husbandry Group to Open Country. A2 is expected to receive net proceeds of approximately $100 million on a debt and cash-free basis with the divestment conditional on China Animal Husbandry Group completing the requisite China regulatory filing with completion expected to occur by the 31st of October.

The company expects to recognize a non-cash loss on sale for MVM of approximately $130 million during the first half of FY '26 with MVM treated as discontinued operations until completion of the divestment. It's been a difficult decision for us to exit MVM, and we sincerely appreciate the commitment that MVM famer suppliers, our team members, the local core community and China Animal Husbandry Group have made over many years to develop the facility from a greenfield site in 2016 to what it is today.

And with that, I'll now hand over to Dave to take you through the financials in a bit more detail.

Thanks, David. I will now take you through the key drivers of financial benefit of the combined transactions. Starting on Slide 50, the largest financial benefit resulting from these transactions in the medium term is expected to be generated through vertical margin capture, which will be achieved through the scaling of IMF manufacturing, in particular, the in-sourcing of a2 Platinum and the production of China label products. The amount of margin capture is dependent on overall facility economics, which are expected to increase as production scales over time.

In order to secure these benefits, we will invest in the facility through a multiyear CapEx program and build working capital progressively over time. The facility will be loss-making in FY '26 as we build capability and capacity and integrate the facility into our supply chain. Approximately EBITDA breakeven in FY '27 before potential transition costs as we commence in-sourcing of a2 Platinum before achieving profitability in future years.

Looking now at Slide 52. We also expect to benefit from China label brand contribution. The acquisition provides 2 to 3 new China label products, enabling us to expand our reach to a wider consumer base and opens a pathway to achieve greater market share over time. An expanded China label portfolio is estimated to generate incremental sales in excess of $100 million by FY '30 and an EBITDA margin of greater than or equal to 26%. As a result of the decision to divest MVM, these losses will now be avoided immediately.

Slide 53 provides a pro forma summary of our financials to give a view of continuing operations, excluding MVM from our reported results.

I will now hand back to David to give an overview of our FY '26 outlook and provide an update on capital management.

Thanks, Dave. Outlined on Slides 55 and 56 is our comprehensive FY '26 outlook statement, which we provided to help you understand changes to our reporting in FY '26 that will result from the transactions we announced today. Our FY '26 outlook is prepared on the basis that both transactions complete as expected and for the avoidance of doubt, excludes any special dividend payment.

On a continuing operations basis, including a2 Pokeno and excluding MVM, we expect to achieve the following key outcomes: revenue growth of high single-digit percent versus FY '25 continuing operations; EBITDA margin of approximately 15% to 16%; and net profit after tax similar to FY '25 reported of $203 million. Given the nature of the transactions, it's important to compare revenue against FY '25 continuing operations, excluding MVM's much higher ingredients revenue and earnings against FY '25 reported as we are essentially swapping one loss-making asset for another with far greater potential to create value in future years.

I appreciate it's a bit complicated, but hopefully, you'll find the breakdown of FY '26 continuing operations outlook helpful on Slide 56. Again, we don't intend to provide this level of granularity going forward, but consider it important in the context of the transaction to provide additional information to the market at this time.

Moving to Slide 57. The net impact of the combined transaction provides us with clarity in relation to our future capital needs. As a result, the Board intends to declare a special dividend of $300 million, subject to obtaining regulatory approvals to bring the new China label registered product under the a2 brand and completion of the MVM divestment. The special dividend is expected to be unimputed and fully franked. And finally, we reaffirm our ordinary dividend policy of 60% to 80% payout of normalized net profit after tax.

That concludes the formal part of today's presentation. As a reminder, our business leaders are also on the call and available to take any questions in relation to our FY '25 operational performance. I'll now hand back to the operator for Q&A.

[Operator Instructions] Your first question today comes from Tom Kierath from Barrenjoey.

I can now see why this deal took a little while to play out. It's obviously quite complex performance. Just had a couple of questions. One, can you maybe just step us through how this acquisition or deal is different to the MVM one? Obviously, that MVM one hasn't been a great story, financially at least. But can you maybe just talk us through how you're derisking it and how it's a little different?

And then two, is the way to think about it, you're spending $280 million and then investing another $220 million more. So kind of all in, you're spending $500 million. I think you're saying you get a 10%, or you're looking to get a 10% return or more. So should we think about the return from this as being more than $50 million EBITDA in FY '29?

No problem, Tom. I'll cover the first one, Dave might cover the second part. So, in terms of how it's different to MVM, I mean, the MVM acquisition at the time made sense, but in a very different context. And what happened subsequently was that we were constrained in our ability to transition any material volume from Synlait to the MVM facility for base powder production because of exclusivity commitments that were removed back in September last year. We were -- also it was difficult for us to execute the blending and canning investment required to support the longer term SAMR registration process through not having confidence in the utilization of the facility and the execution of that.

So where we stand today, it would have taken 5 or more years to achieve SAMR registrations at the MVM facility. The context now is quite different. So with the acquisition of the Pokeno facility, it comes immediately with 2 China label registrations and subject to regulatory approvals, we should be able to utilize those in the near term, that provides incremental growth and brand contribution from that to us. And the second aspect of that is the vertical margin capture potential we have from what is already at the site, what we will grow in the future, but most importantly, from the transition of a2 Platinum volumes from Synlait to the Pokeno facility. So the context is quite different, Tom.

And then from an execution point of view, we don't underestimate the challenges involved in manufacturing infant formula, but we have -- we get confidence by the fact that the facility and the team have operated at scale in infant in the past, that we have developed 2 products there already with the team with Gentle Gold and the a2 Genesis products and we have more or less had the chance to try before we buy and also because of our supply chain leader, Chopin Zhang, was the former CEO of Yashili International and intimately familiar with the site as well.

So I think the context is very different this time around. Made sense at the time with MVM and the growth of the company was different and well above the commitments to Synlait, but we're very confident in the economics and our execution in relation to the Pokeno acquisition.

And Dave, do you want to comment on the invested capital and returns?

Yes. So it's a good question. So in terms of -- when we talk about the returns, the IRR, et cetera, we're looking at the $400 million net. We're looking at this on a combined basis. So if you take the $282 million purchase price on Yashili NZ to take the CapEx of approximately $100 million, take the working capital and product development cost of [ $120 million ], that gets you to $500 million, and you take off the approximately $100 million related to the proceeds from MVM to get you to $400 million. So that's how we've derived the returns on that basis.

So it's kind of incrementally $40 million, so literally 10% times $400 million? Is that the simple math?

Yes. At [indiscernible], yes.

Yes. At least.

Your next question comes from Josephine Forde from Bank of America.

Congratulations, David and the team, on the acquisition. Keen to ask you about the FY '26 guidance. Can you talk through -- there's a few moving parts there. You've got MVM losses coming out, replacing with Pokeno losses. Just want to know, does this include the benefit that you're going to get from in-sourcing Synlait gross profit benefit you'll capture there? And then perhaps can you just talk to some of the confidence you have around your capability in executing -- now becoming an IMF producer?

Josephine, it's Dave. I'll start. So we appreciate this is quite a complex change with an asset coming out and another asset coming in. So on Page 56 of the presentation, we did our best to try and outline the moving pieces. So if you refer to that, what we've done is provided a pro forma result for '25. So that effectively is the baseline continuing business, excluding MVM. And then we've set our guidance on the far right-hand side based on the total business going forward, the continuing business, including the assets -- the new assets that we bought. And then what we've done against that is set out the components. So hopefully, it will be as helpful as possible in terms of getting to our guidance.

In terms of the -- you talked about the asset itself, we've been pretty clear in terms of what we think the financial performance of the asset will be next year, so $30 million to $35 million EBITDA loss, including $10 million to $15 million worth of transformation costs. That's embedded into our guidance.

In terms of the in-sourcing benefits, they won't start to come through until FY '27 and we start to internalize the a2 Platinum production from Synlait. So -- which in effect is why the loss is $30 million to $35 million in FY '26 because we're building capacity and capability in advance of in-sourcing pretty significant volumes in FY '27.

So hopefully, the way we set out on the page makes sense and happy to take any further questions. David, do you want to cover that?

Yes. Josephine, I'll just go on my comments that I made to Tom around execution. So things that give us confidence in our ability to execute. So firstly, the asset is a world-class asset. So it's a GEA dryer, actually similar to MVM [ drying ], blending, canning line as well. So the nature of the asset is state-of-the-art. So that's a great base to work with.

In terms of -- it's not just the asset, though, it's the capability of the team. They have experience in producing scale base powders for infant formula and packaging as well. We have tested the capability of the team working together with the a2 team in developing 2 products recently. So Gentle Gold and Genesis were developed with Yashili recently, which have been successfully implemented. I mentioned that [ Zhang Ping ] used to be the CEO of Yashili International and was very familiar with the site and the team there as well.

And lastly, because of the time it's taken to negotiate and execute the acquisition, we've had adequate time to prepare for our kind of transformation and implementation planning as well. And the execution time frames, which we've indicated here, are quite progressive. So it's a multiyear journey. It's not one big bang in terms of execution, and we're confident overall in terms of our ability to execute.

Great. And then maybe just one more on market share, particularly in English label, your market share came in at 19.2%. I think it was about 20.2% last year. But you've now got a new Gentle Gold and HMO products. I would have thought that your English label market share would have increased slightly. So can you just maybe talk to your market share in English label, please?

I'll let Yohan answer that.

Yes. So -- yes, you're right. So if we look at some of the market metrics on Page 27, and we look at Kantar, you can see the total English label share has come down. A few things to note. The first is for Gentle Gold, you mentioned, primarily, that's for ANZ, so for the retail market. So you can see that, I think in some of the commentary we've also mentioned that our retail sales in ANZ have grown, and that have partially offset the declines in the Daigou channel. So you can see that in our net revenue results for ANZ.

The second part in terms of Gentle -- in terms of HMO, we started our major marketing push in the fourth quarter of '25, so in April. And so we're starting to see some good growth. And you can see the trajectory in CBEC on Slide 28. But unfortunately, it's not enough time for it to have a meaningful impact on the market shares, which are an MAT number. What we also note in some of the market share data sets, such as Kantar and Smart Path, is that there are some limitations in terms of sample sizing.

So if you look at Kantar, one of the major discrepancies we see versus our own internal [indiscernible] sales is on O2O. So the sampling tends to bias towards Key&A cities, whereas a lot of our growth in O2O has come through what we call the long tail O2O segment, which is biased towards lower-tier cities, BCD. And so that, as a result, we believe, understates our performance in O2O as per the Kantar data.

And the second thing in the Smart Path data is that, that sampling is limited to the major platforms, but it also misses out some of the emerging CBEC platforms such as TikTok. So that's the other sample size limitations for Smart Path. So when we look at the English label market data, there's no perfect data set, but what we try to do is correlate on a basis of all the different pieces of data that we can see.

It's a bit perplexing, like we probably have lost a little bit of share. But if you look at our growth of 17% versus the market at 12% and that our inventory positions in the trade were similar at the beginning and end of the period, it's challenging for us to reconcile all the numbers. So I understand your concern.

Congratulations again on the acquisition.

Your next question comes from Stephen Ridgewell from Craigs Investment Partners.

First of all, congratulations on a good result and the acquisition and very clear and detailed disclosure. My first question just relates to supply chain. Just wanted to clarify the Mataura Valley relationship going forward. I think one of the rationales provided for retaining Mataura Valley in the last few years has been, despite those operating losses was to retain access to the organic a2 or any milk pool that's been developed in Southland. And David, as you called out, a2 will remain an important customer of Mataura Valley going forward. Will that include [indiscernible]...

Yes. So Stephen, our access to the organic milk pool that we have at the moment, which especially via Open Country remains in place and also our access to the broader A1 protein-free milk pool that we have developed with MVM over the years is also accessible to us on an exclusive basis. So the offtake arrangements we put in place over the longer term, we think will be beneficial to both us and Open Country. So we've secured that supply. It's what we need going forward. We may be able to make some of those products a little bit up in Pokeno over time, but it's mainly going to be focused on -- in production.

And also on the acquisition, I just wanted to be clear that the planned volume transfer from Synlait, Dunsandel to Pokeno starting FY '27 is only referring to English label a2 Platinum and not China label due to SAMR restrictions? And then is there potential to transfer China label volumes over time also?

That's -- the first part of that is correct, Stephen. So there's no intention to move our China label volumes. In fact, that's not possible under the regulations. It's only in relation to our a2 Platinum Stages 1, 2 and 3. We've already transitioned Stage 4, which we had flexibility to do previously, which is a smaller part of the portfolio base, automated MVM impact off at [ new milk ]. So yes, no intention of -- we've tried to be very clear in the presentation today, in our disclosures that there's no intention to impact [ dietary] volumes at Synlait, but the a2 Platinum volumes will start to transition during FY '27.

And then, just on the guidance for FY '26, encouraging to hear the comments on performance of Genesis with month-on-month sales growth and an interesting chart, Slide 28. I mean, can you just clarify expectations maybe for -- or company expectations for English label IMF growth in FY '26 overall? And to what extent are you expecting Genesis will be a material contributor to that growth? Any sort of steer on absolute levels of sales or that you might be expecting for FY '26 would be helpful?

So, our revenue growth on a continuing operations basis for next year against FY '25 continuing high single-digit growth, as I highlighted before. So we're still expecting strong growth in infant and other nutritionals in particular, to achieve that -- supporting that guidance. And within that, we're not giving specific guidance on English label and China label, but it would be fair to assume that we expect just based on momentum and current market dynamics that English label would be well ahead of China label during FY '26. And we expect Genesis will be more meaningful in FY '26, but it's going to be nowhere near to, obviously, the volume associated with a2 Platinum and the growth that will hopefully come from Platinum. So hopefully, that helps you. We're not inclined to give more specific guidance on that.

And just one last one, if I'm allowed. Just the recent supply disruptions from Synlait, you've called out sort of air freight costs elevated and some difficulty in the supply chain. I mean on a net basis, has a2 essentially been compensated for those costs and disruptions by Synlait? Is that sort of net neutral in terms of the result and the guide from those supply disruptions? Or is there a net negative included in the numbers?

There's a net negative, but what we did call out -- I mean there's been some sort of comments in the market around the level of air freight out of New Zealand venture products. Yes, we have been air freighting in the second half and particularly in the fourth quarter. So we experienced some supply constraints in the first and fourth quarter. We've called out what air freight was in the first half. Overall, for the year, Synlait has been supportive. I won't go into the details of that. But in the spirit of our partnership, they have been supportive. And overall, the net impact of air freight over the full year is not particularly material.

Your next question comes from Adrian Allbon4 from Jarden.

Just wondering if I could maybe focus on Slide 44. I guess the map you've given here, is this a guide to what the 2 new products would initially look like in the market? Like, for example, would you -- is that ultra -- would you be having an ultra-premium organic product, but you just swap an A1 milk with an a2 milk base?

So Adrian, we won't be specific about exactly what we're doing, but the underlying product formulation cannot be changed initially. We have to apply for SAMR approval over time to do that, which we will probably upgrade the products over time. So the initial change is to change the branding and put it under the a2 logo and the artwork and product branding, et cetera. So we'll change that in the packaging, et cetera, and we'll change -- obviously change the milk base from conventional to A1 protein free.

A1 -- so the A1 protein-free versus conventional and organic versus conventional are not part of the GB standard. So there's flexibility around that. So we won't be more specific around that, but the intention is to utilize those 2 formulations initially under the a2 brand and then to apply for a change or upgrade of those formulations over time as well.

Okay. Just related to this question, can you just give us a little bit more depth on what's required to effectively in-house the 2 registrations from the Synlait plant to a2?

Yes, sure. I mean it's quite a process. So the steps are -- first of all, we have to update our R&D plan with NPI, which then feeds into the GACC approval. Both of those steps are -- they're important steps but they're more kind of process oriented and largely procedural. Then, once the GACC application is approved and the details of that are updated, it's more a process issue. That has to be included in the SAMR application for the amendment of the registration to adapt them to what I was just talking about, putting them under the a2 brand.

And that's the last step in the process, a more substantive review by SAMR and something we're very respectful of and we'll put a lot of effort into our submission in relation to that. There are precedents in the past, so it's not -- we're not breaking new ground, but we're respectful of SAMR's process in that regard. They're all sequential. That's part of the reason why it takes quite a while, and that's why we've indicated it could take up to 12 months to achieve.

So just to summarize those steps, the first process of the NPI, which hopefully leaves you with an updated [ GAAP ], is that like a manufacturing [indiscernible], and then once you've got that, do you...

We're going to be very specific, we're going to change the company name to an a2 company name. We will then apply the risk management plan with NPI needs to be updated because that then goes into the GACC to China customs that goes into the application to China customs. And then, once that is approved and authorized and the certificate is available, that then feeds into our SAMR registration or amendment application. Now, in terms of preparation -- and we've already started on this, but in terms of preparation, that can run in parallel, but the actual approvals are sequential.

Okay. I got it. Just a clarification on -- I think coming back to the first question that Tom was asking, and I think Dave provided around the incremental $40 million per annum, which is the net 400 [ ton ] of WACC. Does that include, I guess, the extra sales that are now possible with the extra China labels just so we've got the right counterfactual?

Yes. Good question, Adrian. Yes, it does. So I think you'll see on the slide number, but -- the slide upfront that sort of talks to the combined outcomes, it's sort of the 3 components of it. So it's the purchase of the site and the vertical margin capture, the incremental brand, China label contribution on Page 37 and the MVM divestments, all come together on a net basis to deliver those outcomes.

And just from a China label perspective, the way that we think about it and the way that we sort of model it is the sort of the counterfactual if we just have the one product in market over that time compared to another 3 at Yashili and sort of the delta between the 2. And so yes, that is included as part of that.

Okay. No, that's helpful. And I'm presuming...

Sorry, without trying to overcomplicate, there's also a counterfactual around MVM, but we're trying to keep it as simple as possible and focus on the sort of outflow going forward.

I just wanted to be clear because obviously, like a lot of us will have the growth in the future. But the way the company might have been seeing that, as you've just explained is you've marked that versus only having one China label.

Yes, yes. And that's something -- we've been clear about this strategic imperative right back from 2021 and the need to expand our market access, et cetera. So it's always been part of our plan. So we are obviously delighted to be able to announce it today. But yes, it's a question for you and investors as to what extent you've already factored that in, in terms of the brand growth. Yes.

And we've tried to be as helpful as possible in providing some numbers around the returns at the factory as well sort of, as you get out to FY '30.

Your next question comes from Matt Montgomerie from Forsyth Barr.

Just Slide 51, this might be one for Dave Muscat. Just the $1,500 EBITDA per metric tonne number that you've put out as a target. I assume this is the anchor behind the ROIC target. I'm just trying to get a sense of -- it's very hard for us, given we don't see deals like this, what the range of outcomes is in this calculation, like all going well, are you at $1,500? I mean you've got a greater than sign there. I'm just trying to get a sense of the range of outcomes behind that if everything goes well?

Yes. Thanks, Matt. I mean we did a lot of diligence on the site, obviously. And a lot of it was focused on the operational financials around it, thinking about the capacity that we needed to add to the site from a workforce perspective and the shift patterns, et cetera, et cetera. There is a sort of a wide range of outcomes on this. We've sort of given greater than $1,500. Our modeling suggests it could be more than that. But we sort of want to give a realistic guide at this point in time. And as we learn more about the site, we can share more over time.

But is it more $1,500 or $2,000? I'm just trying to get a sense of the range of outcomes as you go through the execution path.

I don't think it starts with the 2. But yes, you'll have to make your own assessment on that, Matt. We can't -- we [ can't ] basically be telling you the exact number.

You sort of almost need to think about the gross conversion costs and more -- it's not like -- it's sort of like gross margin and you've got fixed costs -- fixed and variable costs and then the benefit of that. So you almost need to sort of model that out yourself. But anyway, we probably -- Matt, we'll probably try to be as helpful as we can. There are a range of outcomes. We wouldn't put greater than that if we thought it was circa $1,500 or less. So that will give you an indication. But we're mindful that we haven't produced implant at this scale. There's a lot of transition work to be done. We'll -- maybe we'll sort of might update that over time, just to give you a sense of how that's panning out, but that's probably a reasonable assessment [indiscernible].

Yes. And then just going back to Stephen's question about Synlait. Are these supply issues from Synlait impacting your '26 revenue guidance at all? Or is the air freighting that's been done, I guess, filling that void in terms of possible inventory complications?

Hopefully not. We did experience some constraints at the beginning and end of the year. We've continued to air freight at the moment as we get back into new season product. We're very focused on maintaining trade levels at distributors and retailers. Our own stock is at low levels, particularly in early-stage product, Stage 1 and 2, China and English label. And hopefully, we'll recover progressively, and that doesn't have an impact on our sales. So hopefully, not Matt, but we've had a few operational disruptions at Synlait and hopefully, we won't see a recurrence of that in the future.

Cool. I might go one more. Just on the balance sheet, David, if we sort of think about the profile of CapEx and divestment, et cetera, you're probably looking at $400 million to $500 million at least with some free cash flow generation once you get through this period. Just any comments that you can make on, I guess, where comfort levels are around the end, I guess, net cash position and possible scope for either more investment into China that you've talked about in the past or more capital management initiatives?

So, at the moment, like we've got roughly $1 billion of cash on the balance sheet. As I've clarified earlier in the call, the total kind of gross investment, net investment of the ambient divestment in relation to the Pokeno site is in the order of $400 million. Then we've stated our intent to declare a $300 million dividend, that's $700 million. So we're left with still excess, but we're mindful of maintaining a strong balance sheet and that we -- as the risk associated with transition and everything else and completion of the transactions occurs, there may well be scope for further distribution in time and maybe there will be some additional opportunities, but we'll make that decision with the Board in due course.

But I understand the sentiment that hopefully there may be further scope of distributions. And in terms of the nature of that, if we do that, it would be in special dividends rather than a buyback, I think we've covered that territory before. And ideally fully franked out of Australia, and we're short on imputation credits in New Zealand.

Your next question comes from Phil Kimber from E&P Capital.

Can I just -- on Slide 13, which is always really helpful, your medium-term goal targets. You've got work in progress for your CBEC share and your O2O Daigou share. And -- but then when I look at your sales momentum, the English label was up 21% in the second half. Just wondering why there still work in progress and China label isn't, even though the growth rates sort of recently would suggest you're doing a fantastic job in English label?

I think it goes back to what we discussed with -- Phil, with Yohan. The market share data that we see with Kantar and Smartpath for English label, it just doesn't quite align with our performance as you're indicating. So based on the reported share numbers, we'd say that's working -- it's sort of an inconsistency there. So we're not sort of declaring victory in that regard.

And as I said, I think we probably have lost a little bit of share, which is kind of hard to reconcile. But given the higher growth of some of our competitors with the innovation that they've had in market a little ahead of us, we probably have lost a little bit of share like in the HMO category and other specialty categories, which have been growing rapidly. So Aptamil and Nestle have done a great job in that respect and hopefully, we'll catch up shortly. So that's why we've put a triangle and work in progress against those 2 aspects.

On the other hand, in China label, even though the market has been more challenging, our growth relative to market at 3% versus market being down 5% or 6% and the robustness of the Nielsen's data in relation to that, which is the bulk of that channel, we've got more confidence in terms of our overall share growth. So anyway, that's why we've kind of rated them in that respect.

That's helpful. And then maybe just overall, again, your second half growth rate is pretty strong and yet your guidance is high single-digit for revenue growth. Why the -- I mean, is it just conservatism because it's such a fast-changing market? It just -- it seems a little light the revenue guidance given the momentum that you're coming into the year with?

Well, English label performed really well, but some of that growth is from -- the U.S. was really strong. MVM was high because of GDT pricing and volumes. There are some things that may not be recurring. So we probably expect overall lower growth from our liquid milk business, which has had an amazing year this year, like in combination, 14% up between ANZ and the U.S.

I think you expect liquid milk to be lower single-digits. And good growth in English label. I think China label with market conditions, I think that's going to be far more modest growth and other nutritional's should continue with high growth. So if you put all that together, I don't think our guidance is unreasonable. Of course, we'd love to achieve a better outcome, but we'll give you an update during the year.

Right. And last one for me. Just the risks up and down around that breakeven target for the Pokeno site in FY '27. Is that -- I mean, is that really just the speed of your execution to in-source that's going to move that number around? Or -- you talk about there might be some extra transformation costs. If you can just sort of give a bit of a sense of that FY '27 target?

Yes. So what the main determinant will be -- the pace and extent of in-sourcing of Platinum will be the key determinant. And then we've just -- we've called out there could be some transition costs associated with that because it's going to be quite a project to move Platinum from Synlait to the Pokeno facility. So we haven't got certainty over that at the moment. We're just lagging to the market that -- we don't expect that to be that material, but we're just saying that there could well be some transition costs associated with that.

But the underlying number before any kind of one-off transition costs, it's really the extent to which we transition Platinum and the timing of that in terms of balance sheet impacts as well and what's in inventory, et cetera.

Your next question comes from Richard Barwick from CLSA.

I want to just talk to you a little bit more about market share as well. I know you've had some questions, particularly on the English label. But if we take just a step back, first of all, and think about at the total market level, English label has obviously won share from Chinese label. What do you think -- or how does this play out from here? Because it would look like the drivers of that English label market share, those drivers are probably in place for 1 year or 2 more yet. So should we be thinking that English label is going to continue to take share from Chinese label?

Yohan, you might comment on that.

Yes. So I guess if you're referring to the share of English label of the total of the China market, right? If you go back to FY '20, right, it was at around 23%. At its low, it dropped to 14%. But what we've seen over the post-COVID quarter-on-quarter, you can see that number coming upwards, right? So even now for FY '25, you can see the number at 19%, but that's been increasing month-on-month. So I think that there definitely is, I guess, a consumer shift back towards English label for a few reasons.

Obviously, we've got -- we're in a post-COVID environment and COVID had -- was a significant headwind on English label. But secondly, English label is still quite a value for money offer in the market relative to other infant formula offers and consumers are recognizing that absent the COVID concerns. And so what we're seeing is English label as an overall subcategory improving.

Of course, the challenge for us is to keep up our market share. And what we're seeing, as David mentioned, is some of our competitors are performing better than us. So we can see that Nestle and Aptamil in particular, with some of their innovations in HMO and also in some of the specialty areas like hydrolyzed protein, have been performing quite well and gaining share. Our Genesis product is intended to try and address that and hopefully it will over time. But yes, to your point, we have seen momentum on the English label share of the total market improve quarter-on-quarter.

Okay. That's really good. And then, I guess for you guys, for a2, so what was your market share at the high watermark within English label? I'm just wondering at 19%, sort of has been bubbling around that for the last couple of years. Where can we see that arguably getting to?

Yes. So, if we look pre-COVID, it was around 25%. Important to note that the market composition by channel looked very different at that time versus now. So it was predominantly a Daigou model versus CBEC and the competitive set is quite different in Daigou versus CBEC, right? So you have to recognize that, that would have an impact on the market share. But in answer to your question, yes, the previous high water point was 25%.

So, I mean -- so if we look ahead though, I guess what I'm getting to is, would 25% be an achievable or a sort of pragmatic target within English label?

Well, I think that the competitive intensity is very different now in the channels that we operate versus what it was back in 2019. So 25% in the context of very few competitors is very different to 25% in the current market with a lot of innovation coming in from European label products, Hong Kong label products, et cetera. We'd hope to improve and 25% would be amazing, but I'm not sure that it would be achieved in the short-term. What we're more looking for is incremental improvement.

So our longer term goal is -- we'd love to get back to the 25%. But as Yohan said, it will take -- all going well, but it will still take some time to get that, yes.

And then where I'm going with this, if you go back all the way back to your -- I think your 2021 strategy document, David, that we talked about the $2 billion revenue. And you talked then about the margin in the teens could be higher depending on the performance of English label. So I'm just trying to pull the different pieces together now that I guess we're closer to the $2 billion of revenue and how we should be thinking about the bigger picture margin target?

Yes. The -- Muscat -- Yohan said, the -- it's not just the -- so the total amount of infant, which is sort of a little bit less now. Also the English label component was much higher. And within that, the Daigou channel was very high, and that was a very high gross margin and also very low cost to serve. So the -- I guess the mix of our business and margin structures and cost to serve have changed quite fundamentally since those pre-COVID times.

So we -- I mean, obviously, the more English label we manage, the more the demand and supply we have, I think that it's beneficial for our margins. We'd like to see our margins increase more substantially than we've seen recently. And I think the acquisition is a great driver of that. But if we ended up with more English label and a different mix of business, that would be potentially improvement on top of that.

We've also invested a lot more in our brand. We've doubled our marketing investment from $160 million to $320 million. The reinvestment rate has increased quite significantly as well. I think it was probably, from memory, 13%, 14% back then, it's now 17%. So the Daigou was a very efficient way back then in a different context to build the brand. But now we've had to double down the investment and particularly our consumer and medical trade investment to compensate for that. So it's quite -- it's a different dynamic now in terms of the shape of our business.

Your next question comes from Sam Teeger from Citi.

Well done on a good result and congrats on the Pokeno acquisition. No doubt, a lot of hard work to get this one over the line. My first question is, how are you thinking about what the transition of Platinum from Dunsandel to Pokeno will have on Synlait's stand-alone viability and their ability to deliver reliable for you in the future, given this industry is known for demand forecasting, which is inherently volatile? And I guess it goes without saying Synlait is still very important for you given they have your China license.

So we're very mindful of our partnership with Synlait commercially, which is obviously the most important aspect to us in terms of supply of high-quality product to us and our investment. So we're very close to them. We're mindful of the impact of this and the transition. Their Board and senior management team are aware of our plans. We've been -- not specifically, but we have been talking about the nature of this for some time. They've got actions and things that they are contemplating and working on themselves to mitigate the impact.

But overall, I think for Synlait focusing on China label production at Dunsandel in their core site there, I think, hopefully, if anything, it should be favorable in terms of the nature of their supply to us and the certainty of that. Financially, we're willing to support Synlait and we always have and our contribution to the equity raise last year is indicative of that. So we're very mindful of the impact on Synlait, and we think that is manageable, but that's probably more of a question for Synlait.

Okay. And then on Pokeno, I appreciate the need to have benefits that come from greater control over your supply chain. But how do you balance that with the fact that the China label part of the market has been declining for some time now? And this also has implications on how rational the market is. We've seen some big subsidies in recent times.

Yes. So I think -- I mean, the China label part, the registered part of the market is, it's the vast majority of the market at 80%. We're underindexing that. So despite the fact that it is underperforming versus English label at the moment, and mind you, that was completely the opposite over the last 5 years, we still think there's a huge share gain opportunity for us to execute.

But ultimately, the mix of business is not critical for us. I mean we'd like to really see our share rise in China label for the longer term. But in terms of the economics of our business, the mix between China label and English label and the utilization of the facility will still be -- largely have the same economic impact on the business. So I'm not overly concerned with that.

And I think what we'd expect to see things go in cycles, right? So that shift back towards English label. I think over time we'll see China label growth improve. English label, despite the fact that there may still be more of a shift to go, I think that will stabilize over time, and we'll see a different environment perhaps in another 2 or 3 years' time.

Okay. And then just on those 2 new products on Slide 44, will these be positioned above, in line, or below your existing China label products?

We -- maybe I'll say around, obviously, they won't be the same positioning. You can draw your own conclusions from that. But we won't be specific on that, Sam. And there's different ways that not only from a consumer point of view that we need to think about this, it's also from a trade point of view and how we optimize the distribution margin structures and incentives for the trade around execution as well.

So we've got our own strong hypothesis that we're planning towards that will kind of get refined over time as we bring these products to market. But we've conceptually indicated that they'll be around our J2 product. And we think the underlying nature of the products and the formulations kind of work well to complement J2, which is our hero brand in the China label category. You should think of these as be more -- obviously more incremental and this is in more volume in J2. So it's nowhere near as material as that certainly in the short to medium-term.

Your next question comes from Marcus Curley from UBS.

I just wondered if you can give a little bit more color around the $100 million -- or sorry, I should say, greater than $100 million worth of sales in FY '30 in terms of your market share assumptions or your store count assumptions or anything you can provide there would be useful?

Yes, we haven't -- we weren't thinking about -- a bit commercially sensitive, Marcus. I think we weren't thinking about providing much more information on that. I mean this is more than -- I mean we're sort of reluctant to be providing this much information at this stage. But in the context of a large acquisition, we thought we needed to explain how this would all work. But it's not -- I mean, obviously, J2 is our hero brand in the China label category, broad distribution, ultra-premium price points. You can imagine these 2 products will have a slightly different role to play in the portfolio. In terms of positioning, distribution, it will be a bit different. So I probably prefer not to comment too specifically on that at this stage.

Okay. But from what you said, your -- the portfolio will reach a much larger number of stores than what it does today?

What I would say, though, Marcus, sorry, just building on that is that -- sorry, our number of stores now is around 30,000. So it increased incrementally during the half again. One of the key focuses for us is growth in lower-tier cities. So we're already very strong in Key&A cities, and we called that out on one of the pages. So you would expect that we want to build on our current position, but we'd also want to drive growth and penetration further into lower-tier cities, particularly B and C. I mean D is probably more challenging for us with the positioning of our brands. But you would expect to see part of this portfolio expansion playing a role in achieving that.

And we would be right in assuming that not all the products would be in all the stores?

Yes, correct. Yes. Nor is our J2 currently. I mean around 30,000 doors, probably maybe 75,000 to 100,000 stores. I mean our weighted distribution is 55% numeric lower. So absolutely, I mean, even our current hero brand in the category is not in full distribution.

And then on the 26% margin, I assume here, what we're seeing is potentially lower gross margin on the China label products, but offset by leverage through marketing as you layer in extra products into the same stores?

Yes, that's correct. And we shouldn't underestimate the scale economies and benefits that come with the production of Platinum and J2 for Synlait currently. So there -- it's one of the highest volume simplest portfolios in the world in the infant category in terms of volume. So we're now with the 2 additional China lab registrations that we will hopefully have the benefit of. I mean they're going to start to be smaller -- obviously, smaller volumes and the production economics, but [ in line with ] sort of price points and end state margin structures at scale. Initially when you start producing them, the cost of it -- of shorter runs through the dryer, shorter packaging runs, more changeovers, all that adds complexity and therefore, lower margins overall. But you're right, we will benefit from the leverage through the P&L to drive similar or more finishing EBITDA margins from the growth in those brands.

And then just finally, just going back to the results. I just wondered if you could comment on your O2O performance? Was that seeing stronger growth than what you were seeing in the broader English label category and how you're going with your partnership there?

Yes. Yohan, you want to answer that?

Yes. So Marcus, yes, we're seeing very good growth in O2O, and that's one of the key drivers of the English label performance. As we saw in the first half of '25, the biggest component of that growth has actually been in that long-tail O2O segment. So this is the smaller stores serviced by our specialist distributors via drop ship models. And that's expanding both in terms of the volume per store and also the number of stores. And so, as you mentioned, we have relationships with Europe, as an example, [ infant ], and those relationships are going very well, and we're seeing continued growth. So that's supporting the result that you can see today.

And sorry, was that right in hearing that O2O growth was ahead of the English label overall?

Yes. So if you look at the 3 key markets for English label, you've got O2O, you've got CBEC and you've got Daigou. Obviously, Daigou as a market was in decline. And if you look at CBEC and O2O, that was [ both at ] high growth.

[indiscernible] as well.

[indiscernible] as well. Yes.

Your next question comes from Julia de Sterke from Morgan Stanley.

Just 2 follow-ups. First, coming back to the in-sourcing of the English label product. Can you just provide a little bit more detail as to what exactly you need to do to the product, what you need to do to the facility by FY '27 to make that transition happen successfully?

I won't comment specifically on the product. But suffice to say, we obviously need to develop the base powder and blending and canning. It's -- I won't get into the details, but the manufacturing infant product is incredibly complex. It's very challenging almost sort of pharmaceutical product to manufacture. So that's on the product side. And there's nothing that we need to do really to the facility as it stands at the moment to produce English label products. The investment, because the dry is there, blending and canning operations are there. So there's everything there that we need.

Our investment going forward is more for the future and providing for what we're going to need when the facility is at scale and more heavily utilized in producing China label product and adapting the boiler for our sustainability needs and investing in laboratory facilities to improve our overall turnaround times and risk management, et cetera, addressing some of the -- where we think the direction of travel is on the semi regulations front to more closely align with China local standards. So we're trying to get ahead of the game there. But in terms of English label production, there's nothing specific that we need to do at the moment. It's more of a longer term plan on CapEx.

Got you. Okay. And then just secondly, just, I guess, kind of stepping back a little with this acquisition, there's a meaningful shift in investment to China label. I guess, could you just talk about kind of the longer term market dynamics that you're thinking about in terms of English label versus China label and how you're thinking about incremental investment in English label versus China label over kind of the longer term?

I mean China labels -- I mean, even though our company really grew on the English label cross-border business, and it's a critical part of our business, and we have a higher share there, the China label registered market is absolutely fundamental to our future. So it's 80% of the world's largest infant market, you can't play in that category or that part of the market unless you have registration. So despite the fact that the dynamic is at the moment the pendulum swung in favor of English label, it wasn't that way up until recently. And in any event, China label is going to be a massive part of the market. We have a huge share opportunity gain there, and we'll continue to invest in that.

So -- but as I said before, ultimately, whether it's China label or English label, the economics of our business is kind of similar and the utilization of the factory is similar as well. So we're sort of indifferent in that respect, but there's a key focus on China label. It's not as though we're kind of overly investing in one or the other. We're trying to -- we really do a drop day 1 brand, 2 label approach across multiple categories, and we try to get leverage through our business that way. And that's one of the benefits of the a2 business and brand. We've established such a wonderful brand in China and other markets. We've got a great opportunity to leverage that and expand over time.

There are no further questions at this time. I'll now hand the conference back to Mr. Bortolussi for any closing remarks.

That's great. Thanks, everybody, for joining us today. It's obviously a really important day with 3 key announcements. So I know we didn't get a chance to spend much time on our FY '25 result, but we're delighted with the results, fantastic result across the business. Obviously, the transactions were really important, big strategic step forward in our supply chain transformation to build a better business.

And then thirdly, hopefully demonstrating disciplined capital management in terms of our intent to declare a sustained special dividend over time. So hoping that will be received well by our shareholders, both institutional and retail, and we look forward to catching up on the roadshow for those of you that are scheduled. So anyway, talk soon. Thank you.

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