KEY POINTS:
Milk company A2 Corporation is planning to relocate its head office across the Tasman to build on soaring sales in Australia.
A2 owns and licenses intellectual property for identifying cows, producing and marketing milk with the A2 beta-casein protein.
There are two types of milk, A1 and A2,
which are usually mixed together. The A1 beta-casein, which is a gene carried by about half of New Zealand cows, has been linked by some people to heart disease, diabetes and schizophrenia.
The Auckland-based company started selling its milk in 2003 eight years after co-founder Corran McLachlan helped develop a DNA test using hair from the tail of a cow, but in the same year was rocked by the deaths of McLachlan from cancer aged 59, and the then chairman and co-founder Howard Paterson who died unexpectedly while on holiday in Fiji aged 50.
The science and arguments relating to A1 and A2 milk has led to disputes and investigations, including a study under way by European Food Safety Authority.
NZX-listed A2 yesterday said it had started a strategic market review after financial results for the six months ending September 30 showed sales in Australia were up 260 per cent on the previous year, although the company still posted an overall loss of $1.99 million.
More than 90 per cent of A2's revenue comes from Australia.
Chairman Cliff Cook said the board had decided that the strategic review would include a restructuring proposal where Australia would be one of the key drivers of business operations in a bid to make the company fully profitable by the end of 2009.
"We are pleased with the success A2C is having in the Australian market," Cook said.
"The key focus will be to build on this success.
"Consequently, the restructuring will include a proposal that the New Zealand A2C head office is transferred to Australia to ensure management focus is on this key market."
Shares closed up 2c yesterday at 12c.
The registered office, treasury, secretarial responsibilities and research would stay in New Zealand, where A2 would remain listed.
Chief executive Anthony Lawler said: "In a few years time when we look back we will see that profitability in Australia really started driving the company in the right direction".
"Certainly, for our very patient and loyal shareholders, they need to see profitability and the only way that's going to happen is in Australia and hence the focus."
The company has an Australian half-owned joint venture called A2 Dairy Products Australia and raised $3.3 million through a new share placement in September, which followed an $11.3 million rights issue in August.
Meanwhile, the company said A2 milk launched in South Korea in August had received pleasing acceptance from retailers.
ACROSS THE DITCH
* Auckland-based A2 Corporation develops A2 milk products.
* A1 beta-casein is linked by some to heart disease, diabetes and schizophrenia.
* Head office will be moved to Australia, which will drive future profitability.
* European Food Safety Authority is examining the science of A1 and A2 milk.
