Sale shows A2 Corp's new direction

The unconditional sale of A2 Corporation's Australian marketing and distribution business has delighted chief executive Andrew Clarke.

He said the $1.1 million sale to Fraser & Neave Dairy Investments represented the start of the company's new international strategy.

A review of A2 Corporation last year by Ferrier Hodgson resulted in a restructuring of management and a change strategy for the company.

"The outcome of it was that A2 should have a greater involvement in the start-up of businesses overseas," Clarke said.

The tiny company, listed on the NZAX, owns technology that enables the production of a variety of milk containing just A2 proteins, rather than the mix of A1 and A2 proteins in ordinary cows' milk.

The company claims its milk may offer health benefits relating to diabetes and disorders such as autism.

A2 Corporation has chosen not to become a producer of the milk product and has instead concentrated on developing licensing agreements with health companies around the world.

Under the sale deal, A2 will retain a licence for production of the milk in Australia for distribution there.

A2 also confirmed yesterday that it would be paid US$400,000 ($569,000) by US licensee IdeaSphere by January 24.

The payment is part of a "minimum royalties" clause that IdeaSphere agreed to when it signed the licensing deal last year.

A2 reported a pre-tax loss of $2.16 million for the year to March 31, 2004. Management have said they expect the company to make a profit by the end of the 2005/06 financial year.