A2 Milk Limited, Annual Meeting 2025

28 October 2025

A2 Milk Limited (ATM)

The company will hold its Annual Shareholders Meeting at 11.00am Thursday 20 November 2025.

The location is The Ballroom at the JW Marriott Hotel, 22/26 Albert Street, Auckland.

You can also join the meeting online at this link.

Company Overview

The a2 Milk Company was founded in New Zealand in 2000 by Dr. Corran McLachlan. While studying at Cambridge University, he learned that proteins in milk affect people differently. He also learned that ordinary cows produce milk with different beta-casein protein types, called ‘A1’ and ‘A2’. Research over the years has demonstrated that many people who have digestive discomfort when drinking ordinary cows’ milk find A2-based milk easier on digestion. That is because A2 milk contains only the A2 protein and no A1.

The Company listed on the NZX in 2004 and is also listed on the ASX. It has a 19.8% shareholding in Synlait Milk (NZX: SML) and a 75% shareholding in Mataura Valley Milk.

In October 2025, the company sold its 75% shareholding in Mataura Valley Milk to Open Country Dairy Ltd. In September 2025, the company acquired a manufacturing facility with two China label infant milk formula product registrations, located in Pokeno, south of Auckland.

In August 2025 Grant Dempsey was appointed to the Board and in November 2024 David Wang retired from the Board.

Current Strategy

The company describes its purpose as pioneering the future of Dairy for good. Its strategic priorities are Invest in people and planet leadership, Capture full potential in China IMF, Ramp up product innovation, Transform the supply chain, Accelerate path to profitability in USA and MVM.

Previous Year Shareholder Meeting

NZSA recorded the following key items at last year’s annual shareholder meeting:

1. The big news from the A2 AGM is that they will be paying a dividend for the first time next year; given their large cash reserves this seems appropriate.
2. A2 is having to work extremely hard in the China market (70% revenue).
3. New Board appointee Tonet Rivera from the Philippines is recently retired from a much larger player in the international milk produce market.

The meeting report is available at this link.

Disclaimer

To the maximum extent permitted by law, New Zealand Shareholders Association Inc. (NZSA) will not be liable, whether in tort (including negligence) or otherwise, to you or any other person in relation to this document, including any error in it.

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Information included on www.nzshareholders.co.nz and in this document is for information purposes only. It is not an offer of financial products, or a proposal or invitation to make any such offer. It is not financial advice and does not take into account any person’s individual circumstances or objectives. Prior to making any investment decision, NZSA recommends that you seek professional advice from a licensed financial advice provider.

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The information, calculations and any opinions on www.nzshareholders.co.nz and in this document are based upon sources believed reliable. The NZSA, its officers and directors make no representations as to their accuracy or completeness. All opinions reflect our judgement on the date of communication and are subject to change without notice.

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Key

The following sections calculate an objective rating against criteria contained within NZSA policies.

Governance

NZSA assessment against its key policy criteria are summarised below.

Directors Fees:  Generally good disclosure and in line with NZSA policy, although it is not disclosed if retirement benefits are offered.

Director Share Ownership: Directors are required to acquire one year’s worth of Director Fees in shares in their first three years as a Director.

NZSA does not favour a compulsory requirement for shareholding. While we encourage share ownership by independent Directors, we do not support compulsion as this reduces the pool of available Directors, may compromise independence, and removes the ‘market signal’ associated with share purchases. This requirement would mean a Director holding approximately $200,000 in shares, equivalent to a 33% accumulation rate.

It is not clear whether there is any Chair discretion as regards waiving this requirement in certain circumstances.

CEO Remuneration:  The company discloses its remuneration policy on its website, which includes an overview of the remuneration philosophy applicable to the company. The People and Remuneration Committee are responsible for implementing the policy.

Incentives: The CEO is paid a short-term incentive (STI) in cash and a long-term incentive (LTI) by way of Performance Rights.

NZSA encourages fulsome disclosure in relation to any incentive payments made to the CEO, including disclosure of measures (or measure ‘groups’), weightings, targets, and the level of achievement versus target for each component associated with any awards. This methodology is supported by the NZX Remuneration Reporting Template.

The STI is awarded at a target of 120%% of base salary with a maximum of 130% of target. The measures, weightings, and level of achievement against each component are well-disclosed, with the overall STI award being made at 110% of target. 75% of the award is paid immediately with the other 25% deferred for one year.

The LTI is awarded at a face value of 150% of base salary. Vesting occurs over a three-year period, based on compound annual growth in earnings per share and revenue. The relative weightings are not disclosed, although the overall level of achievement is shown. NZSA expects the LTI to include a shareholder return measure. Previous awards of LTI performance share rights that are yet to vest are not disclosed.

At target rates, this implies the ability for the CEO to earn almost three times his fixed remuneration in incentives. NZSA acknowledges the ‘Australian’ nature of ATM’s recruitment market for its CEO and the market practices common in Australia.

The company discloses the gender pay gap but not the CEO/employee remuneration ratio.

Golden Parachutes: In the interests of transparency, NZSA believes there should be explicit disclosure around the severance terms and notice periods associated with the CEO, including whether specific termination payments are offered.

We note clear disclosure that termination is by the CEO giving 6 months’ notice and the company 12 months’ notice. NZSA notes that the CEO received a one-off benefit on joining the a2 Milk, a position not supported by NZSA.

Director Independence: A majority of Directors are independent.

Board Composition:  Whilst the company includes a collective skills matrix in the Annual Report it does not attribute skill sets to individual Directors to demonstrate how they contribute to the governance of the company. The Annual Report does not disclose a full list of Directors other roles, with only changes during the year disclosed.

The company does not participate in any Future Director programme designed to develop and mentor the next generation of Directors. NZSA expects NZX50 companies to participate as part of a responsibility to develop and mentor the next generation of Directors.

The nature of the company’s Board indicates a commitment to thought, experiential and social diversity, with relevant experience for a2.

Director Tenure:  NZSA looks for evidence of ongoing succession or ‘staggered’ appointment dates that reduce the risks associated with effective knowledge transfer in the event of succession. We also prefer a term maximum of 9-12 years, unless there are exceptional circumstances that may apply.

Directors’ appointment dates range from 2019 to 2025 indicating a commitment to succession planning.

ASM Format: A2 Milk Limited is holding a ‘hybrid’ meeting, (i.e., physical, and virtual), a format preferred by NZSA as a way of promoting shareholder engagement while maximising participation.

Independent Advice for the Board & Risk Management: NZSA looks for evidence, through disclosures, that a Board has access to appropriate internal and external expertise to support board assurance activities. We also look for evidence that Boards are across their risk management responsibilities.

The Board Charter states that Directors are entitled to seek independent external advice at a2’s expense, with the prior approval of the Chair. Board members are also able to access the Company Secretary. KPMG acts as the Company’s independent internal auditor, reporting to the Company’s Head of Internal Audit.

a2 offers comprehensive disclosure of the key strategic, business, climate-related and financial risks that impact the business, as well as mitigations. There is also thorough disclosure of its risk management and governance processes. It has published a separate 43-page Climate Statement.

Audit

NZSA assessment against its key policy criteria are summarised below.

Audit Independence:  Good disclosure.

Audit Rotation:  There is no disclosure as to whether the audit partner is subjected to a ‘rotation’ after 5 years, as required by the NZX Listing Rules. We acknowledge that this is enshrined in legislation in Australia, however this is not the case in NZ and we expect clear disclosure, especially given the company’s primary listing remains in NZ.

There is no disclosure as to the tenure of the current audit firm. NZSA also expects disclosure of the appointment dates of the Lead Audit Partner and Audit Firm in the Annual Report to improve transparency for investors.

Environmental Sustainability

Overall approach: FY2025 marks a2 Milk’s second Climate Statement, prepared in line with NZ climate standards. The company continues to build capability and transparency in climate reporting, with the introduction of a GHG transition plan and updated emissions reduction roadmap. It relies on three adoption provisions (financial impacts, trend analysis, and comparatives), which are acceptable at this stage but limit full assessment. Disclosures are clearer than FY2024, and the company signals ongoing improvement.

Beyond climate, a2 Milk performed well on voluntary initiatives, achieving 98% recyclable packaging and funding 19 farm-level sustainability projects, including water and nutrient management. These actions reflect a strong environmental commitment outside regulated disclosure.

Sustainability Governance: Climate oversight is embedded across the organisation, with responsibilities clearly assigned from the board to management. The board reviews climate risks, approves strategy, and monitors metrics, with support from the Audit and Risk Management Committee (ARMC). The ARMC’s charter explicitly covers sustainability and climate risk management, requiring it to review climate strategy, risk processes and sustainability reporting. Management has a clear structure: the Executive Leadership Team monitors and manages climate/sustainability strategy, supported by a dedicated Sustainability team for day-to-day implementation. The board discloses its capabilities through its skills matrix, including relevant climate and ESG experience.

Strategy and Impact: Climate is integrated into business strategy, with net-zero targets for Scope 1 and 2 by 2030 and Scope 3 by 2040. Emissions reductions have been significant, particularly due to the shift from coal to renewable energy. While mitigation plans are well outlined, adaptation strategies are still underdeveloped. Progress is strong, but a clearer roadmap for Scope 3 reduction and adaptation would enhance credibility.

Risk and Opportunity: The company identifies climate risks (physical and transition) and links them to business operations, supported by scenario analysis. Risks are monitored through the enterprise risk framework and disclosed alongside key opportunities. Response strategies include decarbonisation investments, diversified sourcing, and industry collaboration (e.g the AgriZeroNZ joint venture). Overall, the approach is robust and aligned with NZSA expectations.

Metrics and Targets: a2 Milk discloses Scopes 1–3 GHG emissions, with multi-year comparatives and intensity metrics. The reported targets are clear: net-zero Scope 1+2 by 2030 (absolute), net-zero Scope 3 by 2040, and an interim 30% reduction in Scope-3 intensity by 2030 (from FY21). Performance is transparently reported, with substantial progress on Scope 1.

Assurance: The Climate Statement includes an assurance report from EY, who provided reasonable assurance over Scope 1 and market-based Scope 2 emissions, and limited assurance over Scope 3 emissions and select disclosures related to climate governance processes. No assurance was provided over the broader climate scenario analysis or transition planning content. This level of assurance is consistent with NZSA’s minimum expectations for now, but the Company should look to expand the scope of future assurance to include additional material disclosures beyond emissions data.

Ethical and Social

NZSA assessment against its key policy criteria are summarised below.

Whistleblowing:  Good disclosure.

Political Donations:  There is no disclosure around whether the company makes political donations. NZSA expects an explicit disclosure.

Financial & Performance

A2 Milk Company’s share price rose from $6.53 to $10.49 (as of 22^nd October 2025) over the last 12 months – a 61% increase. This compares favourably with the NZX 50 which rose 4% in the same period. The capitalisation of ATM is $7.6b placing it 8^th out of 115 companies on the NZX by size and makes it a large company.

¹ per share figures based off actual shares at balance date (not weighted average)

² Attributable to shareholders of the company.

2025 continued the forward momentum that ATM have with most metrics improving on the already improved FY24 and FY23. A couple of seasons of run on the board have restored confidence and this was reflected in the share price which rose 61%.

Revenues increased 14% to $1,899m and Gross Profit was up 14% to $875m on a steady gross margin of 46%. NPAT was up 21% to $202.9m. EPS, was up 21% to $0.28 and this places ATM on a higher PE of 37, mostly attributed to share price appreciation.

Operating cashflow fell slightly to $201m, and inventories continued to decline. Inventory turnover rose substantially by 32% to 6.43.

The company is in extremely sound financial position with a current ratio of 3.22 and a low debt equity ratio of 0.36. During FY25 the company commenced the payment of dividends and an inaugural dividend of $0.20 was paid. Dividends are fully franked (Australian) and party but almost fully imputed. ATM state that: “The Company intends to impute and frank dividends to the maximum extent possible subject to available credits, noting that imputation credits are limited”.

As at balance date, ATM held cash balances of $1,100m, some of which ($282m) has been utilised in the post-balance date purchase of the Pokeno plant as highlighted earlier in this report.

The NTA per share rose to $1.82, and the company trades at a large 475% premium to NTA. (Impressive considering the cash component of NTA)

The company provided investors with a 6-page results commentary and outlook statement. For FY26 ATM expect that:

• EBITDA % margin to be approximately 15% to 16%
• NPAT similar to FY25 reported ($203m)
• Capital expenditure of approximately $50 million to $70 million

The top 20 shareholders, all institutions, collectively hold 76.44% of the company and shares are reasonably widely held.

Resolutions

This is an administrative resolution.

We will vote undirected proxies IN FAVOUR of this resolution.

2 (a) To re-elect Pip Greenwood as an Independent Director.

Pip Greenwood was appointed to the Board 1 July 2019 and Chair in November 2023. She is also the Chair of Westpac New Zealand and a director of Westpac Banking Corporation. She was previously a director of Spark New Zealand, Fisher & Paykel Healthcare and Vulcan Steel. Prior to becoming a full-time director, Pip was a senior partner at law firm Russell McVeagh, where she spent over 10 years on the firm’s Board including acting as the firm’s Board Chair and interim CEO. She has been named New Zealand ‘Dealmaker of the Year’ at the Australasian Law Awards five times; and she has twice been recognised as a finalist at the Women of Influence Awards.

We will vote undirected proxies IN FAVOUR of this resolution.

2  (b) To re-elect Sandra Yu as an Independent Director.

Sandra Yu was appointed to the Board 1 March 2022. She currently serves as a Director at 91AAP Inc., a provider of retail Software as a Service. In addition to her role at the company, she is also engaged as an advisor and an executive coach, contributing her expertise to foster growth and success in various capacities. Throughout her career, Sandra has held various senior executive positions at Mead Johnson Nutrition, including her tenure as president of the Greater China division and as Global Marketing Vice President. She played a pivotal role in enhancing global brand equity, developing a sustainable innovation pipeline, and transitioning the company towards new digital media and e-commerce platforms. In addition, Sandra has served as the non-executive chair of the RB China Advisory Board. Prior to Mead Johnson, Sandra had 13 years’ experience at Unilever in senior executive roles, leading skin care and personal care categories across multiple Asian markets. Sandra resides in Greater China.

We will vote undirected proxies IN FAVOUR of this resolution.

2 (c)  To elect Lain Jager as an Independent Director.

Lain Jager was appointed to the Board 1 December 2024 and is therefore required to offer himself for election. He was formerly CEO of Zespri International. Zespri is the world’s largest marketer of kiwifruit, distributed in more than 50 countries with revenue of around NZ$5 billion. Lain’s nine years as CEO of Zespri International from 2008 to 2017 included the development of a successful global growth strategy, and significant increases in revenue and profitability. Lain joined the Zespri board in 2025. Since stepping down as Zespri CEO in 2017, Lain has focused on private business interests including personal investments in a range of entrepreneurial, technology and agriculture related businesses.

We will vote undirected proxies IN FAVOUR of this resolution.

2 (d) To elect Grant Dempsey as an Independent Director.

Grant Dempsey was appointed to the Board 1 September 2025 and is therefore required to offer himself for election. He commenced his career as an auditor before spending time in business development at Bank of Melbourne and General Electric. Grant then gained significant experience in investment banking, initially at UBS and Citi, then at JP Morgan for 10 years, including as its Head of Banking, where he led a number of high value transactions in Australia for ASX20 companies. Following this, Grant held CFO roles at Alumina, a bauxite and alumina mining business, and TPG Telecom, one of Australia’s largest telecommunications companies. Grant retired as an executive in 2024 and is now a professional director. He has been a director of Industry Funds Management (IFM) Investors since 2018 and chairs its board investment committee. More recently, he has been appointed as the Chair of Firmus Technologies, Chair of Housing Hub, and a director and Chair of the audit and risk committee of Sims Metals and Megaport, both of which are ASX listed companies. Grant resides in Australia.

We will vote undirected proxies IN FAVOUR of this resolution.

3.  To increase the Director Fee Pool by $310,000 (22.7%) from $1,365,000 to $1,675,000.

The current Fee Pool was approved by shareholders at the 2018 ASM. CPI has increased by 27% in New Zealand and 24% in Australia. The Board has commissioned PwC to prepare an independent Report and a link to that is included in the Notice of Meeting. the Report includes comparator data from NZX and ASX companies. The proposal is to increase the Chairs and Directors fees to around the median of the comparator group. The Pool now also includes an allowance for travel costs of Australian and international Directors.

The Notice of Meeting states “The Board also notes that current Non-executive Directors’ fee pool headroom of $45,500 is insufficient to fund market increases in fees in line with CPI over time or any non-routine work required of Directors in the future.” The proposal is to increase the headroom to $190,000.

The proposal is to increase the Directors Fees by $105,000 and Travel Costs of $60,000 from 1 December 2025 and to increase Directors Fees by $144,500 over the next 5 years based on CPI increases.

We have considered the Notice of Meeting, the (provided) independent Report and undertaken our own analysis. We believe the proposed fees are appropriate.

From an NZSA perspective, we acknowledge the requirement for a2 Milk to maintain the ability to benchmark across an Australian and Asian director pool, given the nature of its markets and core activity. We also note that the company’s (sustainable) increase in market capitalisation. On the basis of international comparisons, NZSA has assessed the proposed fee pool as falling within an appropriate range, although the fee pool would be above the range for a NZ-domestic focused company. As an aside, this situation continues to raise a more systemic issue as regards an increasing salary/wage gap between New Zealand and other economies.

On this basis, we will vote undirected proxies IN FAVOUR of this resolution.

The approval of shareholders is sought on an advisory basis and for the purpose of ASX Listing Rule 10.14 and all other purposes, to permit the Managing Director and Chief Executive Officer, David Bortolussi, or an associate named in this notice, to acquire 324,606 Rights, as calculated below, for FY26 under the LTI Plan. The full details are set out in the Notice of Meeting.

We will vote undirected proxies IN FAVOUR of this resolution.

Proxies

You can vote online or appoint a proxy at https://vote.cm.mpms.mufg.com/ATM/

Instructions are on the Proxy/voting paper sent to you.

Voting and proxy appointments close 11.00am Tuesday 18 November 2025.

Please note you can appoint the Association as your proxy. We will have a representative attending the meeting.

The Team at NZSA