Regulatory changes in China

Regulatory changes in China

As part of its growth agenda, The a2 Milk Company Limited (a2MC) is establishing a business engaged in the sale of high-quality, a2® Platinum™ infant formula for sale initially into China, Australia and New Zealand. The product is exclusively manufactured on behalf of the Company by Synlait Milk Limited in Canterbury.

a2MC has previously advised shareholders that the regulatory environment for infant formula in China is evolving and we have been closely monitoring and responding to developments. More recently there have been moves to change the access arrangements for infant formula imported into China including a requirement for manufacturing companies and brands to achieve a new form of registration from 1 May 4014

The Minister of Primary Industries announced on Thursday 24 April 2014 that based on advice from Chinese officials most if not all New Zealand based infant formula manufacturers will achieve registration however the timing for this is presently uncertain. In addition Chinese authorities will require a close association between brand owner and manufacturer over the manufacturing process and formulation of brands.

a2MC Managing Director Geoffrey Babidge says “the requirements of the registration process are consistent with our expectations. We have been working closely with Synlait Milk in anticipation of potential changes and will continue to do so to build the Company’s position in this market. a2MC

applies additional quality management processes to the supply chain from certifying each individual cow in the a2 milking herds to the finished product. The application of the A2 System© ensures that a2® Platinum™ branded infant formula is consistently of the highest quality and performance.”

Currently there are sufficient levels of inventory of a2® Platinum™ infant formula held by our distribution partner China State Farm State to ensure consumer demand in China continues to be satisfied.

The regulatory changes affecting China should not impact the production of a2® Platinum™ infant formula for sale in other markets, including Australia and New Zealand.

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