LIC seeks shareholder support for 50% stake in Afimilk

LIC is the trading name of Livestock Improvement Corporation Limited

Private Bag 3016
Hamilton 3240
New Zealand
PHONE 07 123 4567
www.lic.co.nz




Market Announcement
19 February 2020

LIC seeks shareholder support to acquire 50% stake in leading global agri-tech company

• LIC to seek shareholder approval to acquire 50% stake for $108.7 million in Israeli agri-tech
company Afimilk.
• The investment will strengthen LIC’s ability to deliver superior herd improvement services and agri-
tech to its farmers.
• The proposed 50% stake in Afimilk will help LIC keep its world-leading edge in pastoral dairy
farming data while broadening access to new information to meet future needs and challenges.
• Afimilk is profitable, has no debt and has historically paid dividends to its shareholders.
• Afimilk is a leader in its field, and has been of real interest to LIC for a number of years.
• $108.7 million purchase price will be funded primarily through new debt under LIC’s current
facilities, with the investment intended to be self-funding via projected dividend streams (in the
absence of significant adverse economic events and unforeseen expenditure requirements).
• 50% stake will ensure an equal say in governance and strategy.

Herd improvement and agri-tech co-op, Livestock Improvement Corporation Limited (NZX: LIC) (LIC), has
signed a conditional deal to acquire a stake in leading global agri-tech company Afimilk which develops and
commercialises dairy farm technology and farm automation systems.

Under the proposed deal, LIC will acquire a 50% stake in Afimilk for $108.7 million.

The company, based in Israel, has a global presence across all its products and solutions, with particular
success in regions of intensive dairy farming. Afimilk is widely regarded as one of the industry leading
producers of milk meters, behaviour sensors, and farm management software, with particular strength in
having strong distribution across Europe and North America.

LIC Chair Murray King says the investment will help give LIC access to the data it needs to deliver superior herd
improvement services and agri-tech for New Zealand farmers into the future and will improve access to on-
farm technology solutions.

“To do that, it’s vital we keep our world-leading edge in pastoral dairy farming data, while broadening access
to new information to meet future needs and challenges. The proposed investment in Afimilk will do both.

“It will help ensure LIC’s on-going access to pastoral dairy farming data through the increased use of in-line
milk meters and animal monitoring systems (such as collars).

“We believe there are likely to be further development opportunities for in-line milk meters, to increase LIC’s
resilience to the threat of disruption to access to pastoral dairy farming data posed as a result of the move
away from traditional herd-testing services.

“The investment will also help to drive future growth by opening LIC’s access to data on other farming
methods beyond pastoral held by Afimilk.

“Access to Afimilk’s resources and information on other farming methods will assist LIC to develop genetic
programmes for the farming systems of the future.”

Page 2 of 3

The investment is proposed to be funded primarily through debt provided under LIC’s existing banking
facilities, with the balance paid out of its cash reserves. Subject to Afimilk’s performance being in line with
current expectations, LIC anticipates that the dividends received from Afimilk will be sufficient to meet all
interest costs, while also likely funding a portion of principal repayment, and therefore the proposed
investment is not expected to negatively affect future dividends to LIC shareholders.

King says LIC has built a strong platform for growth over the past four years with solid financial results. This
includes ensuring the co-operative has the financial headroom to achieve innovation-led growth.

While the proposed investment will be subject to Afimilk’s performance and the associated business and
investment risks, Afimilk has been a profitable operation over the years.

Murray King says the LIC Board has endorsed the investment, which now requires shareholder approval in
accordance with the NZX Listing Rules.

“This is a sound strategic proposition for our business which will further strengthen and grow our co-op.
Afimilk is a leader in its field and has been on our radar for a number of years.

“We have undertaken a comprehensive and independently assessed due diligence process before deciding to
proceed to a shareholder vote. We believe this is a good deal for our farmers but now is their chance to assess
this proposal for themselves and vote.

“Afimilk is looking for a long-term strategic investor with a shared mission to improve the profitability and
performance of dairy farmers through its innovation and technology – so LIC is the right fit. We also have
shared values being two agricultural co-operatives.”

King says that, importantly, the investment stacks up financially as well as strategically.

“Afimilk has been profitable over the years, has no debt, and has historically paid dividends to its shareholders.

“The 50% stake will give us shared governance and an equal say in the strategic direction of the business.

“Finally, the investment in Afimilk positions LIC and our farmers to benefit from Afimilk’s expertise in advanced
technology solutions such as cow wearables and on-farm management systems.

“If the investment proceeds, we will look to integrate these solutions with LIC offerings to make access to the
technology easy for our shareholders and farmers.

“LIC and Afimilk have also commenced good faith discussions to determine whether Afimilk will acquire the
parts of LIC’s automation business that are complementary to Afimilk’s business, in anticipation of greater
scale for R&D and greater synergies. However, there is no certainty that terms for that transaction will be
concluded.

“For more than 100 years, LIC has been delivering value to the New Zealand dairy industry through innovation
and gains in genetics and animal performance, achieved by transforming data into insightful information.

“The proposed investment in Afimilk will help ensure that we retain our world-leading edge in pastoral farming
data, and speed up the development of new technologies, products and services for LIC and our farmers.”

The LIC Board considers that using Afimilk’s advanced sensors and actionable analysis, is expected to deliver
short, medium and long-term strategic value to New Zealand dairy farmers.

The deal is subject to approval by LIC’s 10,000+ farmer shareholders. The shareholder vote will be held on
Tuesday 7 April 2020. Shareholders will be sent a Notice of Meeting containing important information about
Afimilk and the proposed transaction. Shareholders should carefully read and consider the information
contained in it, including the strategic rationale and risks associated with the proposed investment.

Page 3 of 3

Ends

For investor relations questions, please contact
Gillian Brennan
Company Secretary
Gillian.Brennan@lic.co.nz
+64 7 856 0700

For media enquiries, please contact
Jo Jalfon
Communications Manager
Jo.Jalfon@lic.co.nz
+64 27 297 1904

About LIC

LIC is a farmer-owned co-operative that provides a range of services and solutions to improve the productivity
and prosperity of farmers. This includes dairy genetics, information technology, herd testing, DNA parentage
verification and farm advisory services through FarmWise. Subsidiary business LIC Automation also provides
integrated automation systems and unique milk testing sensors that present real-time data while a cow is
being milked. With origins dating back to 1909, LIC has a long history of world-leading innovations for the dairy
industry.

Today the New Zealand-based co-operative employs more than 700 permanent staff, swelling to 2000 during
the peak dairy mating season. LIC also has offices in the United Kingdom, Ireland and Australia. All LIC profit is
returned to its farmer owners/shareholders in dividends or re-invested for new solutions and research and
development. www.lic.co.nz

About Afimilk

Afimilk is an Israeli company, which develops, manufactures and markets advanced systems to manage dairy
farms. It has a global reputation for its innovations and ability to commercialise new products for the dairy
industry. Its key products include farm management software, cow wearables, in-line milk meters and
automation technology. Afimilk’s revenue for 2018 was US$53.4 million (NZ$83 million) from an asset base of
US$36.5 million (NZ$56.7 million).

In the financial year ending 31 December 2019, Afimilk’s revenue was US$57.4 million (NZ$89.1 million), with
an EBITDA of US$14.2 million (NZ$22.1 million) from its core operations. These numbers reflect unaudited
management accounts as, at the time of preparation, audited accounts for the 2019 financial year were
unavailable.

Afimilk sells through a dealership model with access to 250 dealers in over 50 countries. Target customers are
those with a large farming production and multi farm owners who operate a barn style farming model.

Afimilk’s current shareholders are Kibbutz Afikim and Fortissimo.

Fortissimo is a private equity firm based in Israel, which invests primarily in technology and industrial companies.
As a private equity firm, its strategy has been to develop Afimilk with the intention of providing a return to its
investors at an appropriate time.

Kibbutz Afikim is one of the largest kibbutzim in Israel. “Kibbutzim” is a type of collective economic grouping,
not dissimilar to a co-operative. Afikim recognises the importance of a partnership approach with LIC,
requiring an equal shareholding, and so it has agreed to sell its stake in 19.23% of the Afimilk shares to LIC to
achieve that.

LIC is proposing to acquire 50% of the shares in Afimilk from its current shareholders (30.77% from Fortissimo
and 19.23% from Kibbutz Afikim).

---

NOTICE OF SPECIAL
MEETING AND
EXPLANATORY
MEMORANDUM
Strategic Investment in Afimilk
Agricultural Cooperative Limited
VOTE IN FAVOUR
The Board of LIC recommends a YES vote
A special meeting of the shareholders of Livestock Improvement
Corporation Limited will be held to consider this matter at LIC’s
Tempero Centre, Cnr. Ruakura and Morrinsville Roads, Newstead,
Hamilton on Tuesday 7 April 2020 commencing at 10:30 am.
19 FEBRUARY 2020
LIVESTOCK IMPROVEMENT CORPORATION LIMITED

LIC - NOTICE OF SPECIAL MEETING AND EXPLANATORY MEMORANDUM
2
Important transaction for LIC shareholders
LIC is pleased to announce its proposed strategic investment
in Afimilk. This is an important transaction for LIC and its
shareholders, and the Board strongly advises that you read
the information provided here carefully and in full before
deciding how to vote.
Enquiries in connection with this document can be directed
to your broker, financial, investment, or other professional
adviser. If you have any questions about the number of
Shares you hold in LIC, or how to vote or complete the Voting
Form, please contact the Election Helpline on 0800 666 033.
No investment advice
This document has been prepared without reference to the
commercial or investment objectives, financial and taxation
situation or particular needs of any shareholder or any other
person or entity. The information and recommendations
contained in this document do not constitute, and should
not be taken as, financial or investment advice. The Board
encourages you to seek independent financial, investment or
other professional advice before making any decision as to
whether or not to vote in favour of the Resolution or any other
investment decision in connection with any matter related to
the information provided.
Foreign exchange rate against New Zealand dollar
Where US Dollars (USD) and Israeli New Shekel (NIS) have
been used instead of New Zealand Dollar (NZD), we have
assumed the following conversion rates, based on the prior
day closing rate derived from Bloomberg on 18 February 2020:
$1 NZD = $0.64 USD
$1 NZD = ₪2.20 NIS
₪1 NIS = $0.29 USD
Defined terms
Unless otherwise indicated, capitalised terms used in this
document have the specific meaning given to them in the
Glossary on page 29 of this document.
NZX listing
NZX has reviewed this Notice of Meeting but does not take any
responsibility for any statement contained in this document.
Date of this document
This document is dated 19 February 2020.
Important
Information

3
INVESTMENT PROPOSAL - STRATEGIC INVESTMENT IN AFIMILK AGRICULTURAL COOPERATIVE LIMITED
Contents
Summary ................................................................................. 4
Business Overview 5
Strategic Rationale 5
Investment Summary 5
Key Risks 5
Implementation Timing (if approved) 5
Board Recommendation 5
Notice of Special Meeting ..................................................... 6
Notice 7
Eligibility to Vote and Required Approvals 7
Voting 7
Overview of Afimilk ................................................................ 8
Afimilk’s Business 9
Market Presence 10
Afimilk’s Shareholders 10
Strategic Rationale for Investment ..................................... 12
Driving Genetics and Animal Performance Through Information 13
Financial Performance 14
Accessing Further Opportunities for our Farmers 14
Key Considerations Relevant to Your Vote 14
Post-Investment Governance of Afimilk and
Shareholder Arrangements .................................................. 16
Governance 17
Head Office and Management Team 17
Shareholders’ Agreement 17
Investment Details .................................................................. 18
Timing 19
Key Investment Terms 19
Structure and Funding 19
Other Key Arrangements 19
Due Diligence 21
Investment Risks 21
Key Questions ....................................................................... 22
Explanatory Notes and Additional Information .................. 26
Resolution 27
Voting 27
Roadshow Timetable ............................................................. 28
Glossary ................................................................................... 29
Directory .................................................................................. 30

LIC - NOTICE OF SPECIAL MEETING AND EXPLANATORY MEMORANDUM
4
Summary

5
INVESTMENT PROPOSAL - STRATEGIC INVESTMENT IN AFIMILK AGRICULTURAL COOPERATIVE LIMITED
Summary
As announced by Livestock Improvement Corporation (LIC)
to the NZX on 19 February 2020, LIC has signed a conditional
agreement to acquire 50% of a leading global agri-tech
corporation, Afimilk Agricultural Cooperative Limited (Afimilk).
The LIC Board wishes to seek shareholder approval for the
proposed investment, in accordance with the Listing Rules.
This document sets out further information for shareholders
about the proposed investment and details of the special
meeting at which the investment will be considered.
Business Overview
Afimilk is an Israeli corporation, which develops,
manufactures and markets advanced systems to manage
dairy farms. It has a global reputation for its innovations and
ability to commercialise new products for the dairy industry.
Its key products include farm management software, cow
wearables, in-line milk meters and automation technology.
In the financial year ending 31 December 2019, Afimilk’s
revenue was US$57.4 million (NZ$89.1 million), with an
EBITDA of US$14.2 million (NZ$22.1 million) from its core
operations
1
. You can find more information about Afimilk and
its business on page 8 of this document.
Strategic Rationale
For the ongoing success of LIC and our farmers, we need
to continue to deliver the best herd improvement services.
To do that, it’s vital we keep our world-leading edge in
pastoral dairy farming information, while broadening access
to new data to meet future needs and challenges. The
proposed strategic investment in Afimilk will do both and
will help deliver the data and technological edge to further
strengthen and grow LIC.
Afimilk also provides a sound financial proposition as an
investment. Afimilk is currently and has been profitable, has
no debt, funds R&D from annual cash flows, has a track record
of both paying dividends and delivering new innovations to
farmers. It is a leader in its field and has been on LIC’s radar for
a number of years.
After an extensive due diligence process, LIC considers that
the proposed strategic investment in Afimilk will position LIC
and its farmers to benefit from Afimilk’s advanced expertise
in innovative technology solutions, such as cow wearables
and on-farm management systems, through a closer
relationship and information sharing arrangements.
In addition, LIC and Afimilk have commenced good faith
discussions to determine whether Afimilk will acquire the
parts of LIC’s automation business that are complementary
to Afimilk’s business, in anticipation of greater scale for R&D
and greater synergies. However, there is no certainty that an
acquisition will be concluded or the terms on which it would
take place.
Investment Summary
LIC is proposing to acquire 50% of the shares in Afimilk from
its current shareholders (30.77% from Fortissimo and 19.23%
from Kibbutz Afikim). The total price payable by LIC will be
US$70 million (NZ$108.7 million), subject to typical purchase
price adjustments relating to annual net cash/debt and
working capital levels.
The investment is proposed to be funded primarily through
debt provided under LIC’s existing banking facilities, with the
balance paid out of its cash reserves.
Following the investment, LIC and Kibbutz Afikim will each hold
50% of the shares in Afimilk. See page 18 of this document
for further information on the investment and how the
shareholding structures will work following the investment.
The investment is conditional on a number of matters,
including:
• Approval of the investment by LIC shareholders;
• Approval of the investment by Kibbutz Afikim members;
• There being no material adverse event specifically
affecting the Afimilk business;
• An agreed level of existing personnel remaining in the
Afimilk business; and
• Confirmation that the audited 2019 financial year
information does not vary materially from certain
information in the management accounts provided to LIC
in January 2020, relating to Gross Revenue, Cost of Goods
Sold, Operating Expenses and EBITDA.
This investment can only proceed if shareholder approval is
received and if the other conditions are met.
Key Risks
There are business and investment risks associated with the
transaction, including geopolitical, economic and company-
specific risks. LIC’s return on the investment will depend
on the commercial performance of Afimilk. Page 21 of this
document provides further details about the potential risks
the investment presents.
Shareholders should consider these potential risks, the
likelihood of a risk event occurring, and the impact it may
have on a shareholder’s investment in LIC.
Implementation Timing (if approved)
If the investment is approved by the shareholders, and all
other conditions are satisfied, the transaction is expected to
be completed on 1 June 2020. This date may be subject to
change as may be approved by the Board and announced to
the shareholders.
Board Recommendation
The Board recommends shareholders vote in favour of the
investment in Afimilk, to strengthen LIC’s ability to deliver industry-
leading solutions to our farmers, now and into the future.
You can vote by internet voting, postal voting, proxy
appointments or in person at the special meeting of
shareholders to be held at LIC’s Tempero Centre, Cnr.
Ruakura and Morrinsville Roads, Newstead, Hamilton on
Tuesday 7 April 2020 commencing at 10:30 am. Internet voting,
postal voting and proxy appointments close at 10:30 am on
Sunday 5 April 2020.
1
These numbers reflect unaudited management accounts as, at the time of preparation, audited accounts for the 2019 financial year were unavailable.

LIC - NOTICE OF SPECIAL MEETING AND EXPLANATORY MEMORANDUM
6
Notice of
Special Meeting

7
INVESTMENT PROPOSAL - STRATEGIC INVESTMENT IN AFIMILK AGRICULTURAL COOPERATIVE LIMITED
Notice of Special Meeting
Notice
Notice is given that a special meeting of the shareholders
of LIC will be held at LIC’s Tempero Centre, Cnr. Ruakura and
Morrinsville Roads, Newstead, Hamilton on Tuesday 7 April
2020 commencing at 10:30 am, with registration from 9:30 am.
The business of the meeting will be to consider and, if
thought fit, to pass the following resolution:
“to approve the acquisition of 50% of the shares in
Afimilk Agricultural Cooperative Limited, as described
in more detail in the Notice of Meeting and associated
explanatory information, and that the Board be
authorised to take all actions, do all things and execute
all documents and agreements necessary, or considered
by the Board to be expedient or desirable, to give effect to
the proposed acquisition (and associated arrangements).”
See Explanation of the resolution on page 27 for further
information about the resolution.
Eligibility to Vote and Required Approvals
The resolution is an ordinary resolution to be passed by LIC
shareholders. All LIC shareholders are entitled to attend and
vote at the Special Meeting (subject to the constitutional
voting restrictions).
In accordance with Listing Rule 5.1.1(b), the proposed
investment requires approval by shareholders holding a
simple majority (more than 50%) of shares entitled to vote
and voting on the resolution.
Voting
Shareholders can vote in one of the following ways:
Attend the Special Meeting - bring your Voting Form
to the meeting, as the barcode is required to assist
with your registration; or
Electronic voting - visit www.lic.co.nz and follow
the prompts. You will need your pin and password
as shown on your Voting Form. Electronic voting will
close at 10:30 am on Sunday 5 April 2020; or
Postal voting - complete the “Postal Vote” section
of the Voting Form and return it in the reply paid
envelope provided to Electionz.com Limited, as per
the details provided at the bottom of this section.
Your form must be received before 10:30 am on
Sunday 5 April 2020; or
Appoint a Director or Councillor of LIC, the
Chairman of the meeting, or another person as
your proxy - complete the “Proxy Appointment”
section on the Voting Form, including how you wish
them to vote (as a directed vote) or as “Proxy’s
Discretion”, and return in the reply paid envelope
provided, to electionz.com Limited, 3/3 Pukaki Road,
Yaldhurst, Christchurch 8042. Your form must be
received before 10:30 am on Sunday 5 April 2020.
Your appointed Director/Councillor/Chairman/
representative will receive voting papers upon
registration at the meeting. A proxy need not be a
shareholder of LIC.
1
2
3
4

LIC - NOTICE OF SPECIAL MEETING AND EXPLANATORY MEMORANDUM
8
Overview of Afimilk

9
INVESTMENT PROPOSAL - STRATEGIC INVESTMENT IN AFIMILK AGRICULTURAL COOPERATIVE LIMITED
Overview of Afimilk
Afimilk is an Israeli corporation, which develops,
manufactures and markets advanced systems to manage
dairy farms. Israel is a world-leader in agritechnology,
with its government active in setting up and funding
agritechnology incubators to drive investment and support
for the sector. Afimilk’s developments are utilised globally.
Afimilk has a global reputation for its innovations and
ability to commercialise new products for the dairy industry,
including farm management software, collars and other
cow monitoring devices, in-line milk meters and automation
technology. Some of these products are already sold in New
Zealand and the demand for them is growing.
Afimilk is currently owned by Kibbutz Afikim (69.23%) and
Fortissimo (30.77%). Under the investment, LIC will acquire
Fortissimo’s entire 30.77% interest and another 19.23% from
Kibbutz Afikim, so that Kibbutz Afikim and LIC will each hold
50% of the shares in Afimilk, with Afimilk operating as a
stand-alone business.
Afimilk’s Business
Afimilk has a global presence with its products and solutions.
It has particular success in regions of intensive dairy farming.
Afimilk’s products are broadly regarded as one of the
industry leading producers in milk meters, behaviour sensors
and farm management software, with particular strength in
having strong distribution across Europe and North America.
Afimilk describes its business as consisting of three main
segments, with a fourth (dairy robotics) under development:
Milk Sensors – Afimilk produces milk sensors, which provide
International Committee for Animal Recording (ICAR) approved
information about milk volume. They also provide free flow milk
solids technology, to monitor and record the most essential
aspects of herd production and individual cattle health.
Cow Monitoring Solutions – Afimilk produces leg
pedometers, tags, sensors and neck collars to monitor the
health of the individual cow. These technologies provide
animal identification, heat and lameness detection,
calving alerts, rest, health and group wellbeing, and other
information for efficient farm operations and profitability.
Data and Information Systems – AfiFarm™ is Afimilk’s
comprehensive, flexible and user-friendly software for the
automation and management of high scale dairy farms
in real time. AfiFarm™ software collects data about cows,
stores and completes analysis to present detailed and
actionable information from around the world.
Dairy Robotics – Afimilk has established a robotic
development group, with the objective of improving
efficiency on farm.
Using Afimilk’s advanced sensors, communications, herd
improvement and farm management insights, is expected to
deliver short, medium and long-term strategic value to New
Zealand dairy farmers.
Selected Financial Information
Unlike LIC, Afimilk is a private company which is not required
to, and does not, make its financial information publicly
available. However, to assist LIC shareholders, we have
presented some key financial information about Afimilk’s
business below.
In the financial year ending 31 December 2019, Afimilk
has achieved revenue of US$57.4 million (NZ$89.1 million)
and an EBITDA of US$14.2 million (NZ$22.1 million) from
its core operations
2
. Over the past 10 years, Afimilk has
achieved annual revenue growth of 8.4% when averaged
and calculated on a compounding basis. Afimilk has also
achieved a gross margin improvement of 6.4% over the last
five years, and 11.2% over the last 10 years.
See key selected financial information from Afimilk’s audited
financial statements for the financial year ended 31 December
2018 prepared in accordance with Israeli GAAP below.
• Revenue: US$53.4 million (NZ$83 million).
• Asset base: US$36.5 million (NZ$56.7 million) (including
US$7 million (NZ$10.8 million) of intangibles).
• Gross costs attributed to R&D: US$9.6 million
(NZ$14.8 million).
• Debt: nil.
At the time of preparation, audited accounts for the 2019
financial year were unavailable.
2
These numbers reflect unaudited management accounts as, at the time of preparation, audited accounts for the 2019 financial year were unavailable.

LIC - NOTICE OF SPECIAL MEETING AND EXPLANATORY MEMORANDUM
10
Overview of Afimilk
Market Presence
Afimilk sells through a dealership model with access to 250
dealers in over 50 countries. Target customers are those
with a large farming production and multi farm owners who
operate a barn style farming model. Afimilk’s top 10 dealers
make up a significant portion of their annual revenue.
Afimilk’s Shareholders
Afimilk’s current shareholders are Kibbutz Afikim and Fortissimo.
Fortissimo is a private equity firm based in Israel, which
invests primarily in technology and industrial companies.
As a private equity firm, Fortissimo’s strategy has been to
develop Afimilk with the intention of providing a return to its
investors at an appropriate time.
Kibbutz Afikim is one of the largest kibbutzim in Israel.
“Kibbutzim” is a type of collective economic grouping,
not dissimilar to a co-operative. Afikim recognises the
importance of a partnership approach with LIC, requiring an
equal shareholding, and so it has agreed to sell its interest in
a further 19.23% of the Afimilk shares to LIC to achieve that.
As highlighted in the following Strategic Rationale for
Investment section of this document, LIC and Afimilk
both have identified that the key macro trends driving
change in the global dairy industry, such as increasingly
technology enabled, data-driven agriculture, and globalised
competition, are the future of dairy farming. Innovation
and investment are central to both LIC’s and Afimilk’s
strategies, with both companies sharing the stated purpose
of increasing dairy farmer prosperity and productivity
through their industry leading products, services and
new innovations. This long-term strategic investment will
combine our collective expertise and resources to expand
and improve our existing range of products and services.

NorthAmerica
&Mexico
China
Israel
Europe
Australia &
NewZealand
Africa
SouthAmerica
Asia
25%
15%
1%
1%
2%
7%
8%
9%
Russia &CIS
32%
Afimilk Revenue by Region (%)

11
INVESTMENT PROPOSAL - STRATEGIC INVESTMENT IN AFIMILK AGRICULTURAL COOPERATIVE LIMITED
Overview of Afimilk

LIC - NOTICE OF SPECIAL MEETING AND EXPLANATORY MEMORANDUM
12
Strategic Rationale
for Investment

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INVESTMENT PROPOSAL - STRATEGIC INVESTMENT IN AFIMILK AGRICULTURAL COOPERATIVE LIMITED
Strategic Rationale for Investment
The Board is recommending the investment in Afimilk as it will
strengthen LIC’s ability to deliver the best herd improvement
services to our farmers, now and into the future. LIC also
anticipates a closer operational working relationship with
Afimilk as a consequence of the investment, which LIC
considers likely to deliver ancillary benefits to LIC farmers, such
as the increased availability and use of Afimilk products, and
further collaboration and development opportunities.
The investment will do this by helping ensure on-going
access to pastoral dairy farming data through the increased
use of in-line milk meters and animal monitoring systems
(such as collars), and opening access to data on other
farming methods held by Afimilk.
Importantly, Afimilk has strong cash flow and is a profitable
company that has no debt and has historically paid
dividends to its shareholders. Beyond that, an investment
in Afimilk will raise Afimilk’s profile in New Zealand, opening
further opportunities to deliver enhanced animal health and
agri-tech solutions to our farmers.
The investment in Afimilk will strengthen LIC, increase
collaboration opportunities and deliver returns for LIC and
our shareholders.
This strategic investment is for the long term and will
provide opportunities to combine our collective expertise
and resources to expand and improve our existing range
of products and services, and speed-up the development
of new technologies, products and services for LIC and our
farmers. This strategic investment will increase the collective
research and development and exposure to global markets.
Driving Genetics and Animal Performance
Through Information
For more than 100 years, LIC has been delivering value to the
New Zealand dairy industry through innovation and gains in
genetics and animal performance, achieved by transforming
data into insightful information.
Information has been and always will be critical to what we
do as a co-op.
The success of LIC and ultimately that of our farmers
depends on us keeping our world-leading edge in pastoral
dairy farming information, while broadening access to new
data sets to meet future needs and challenges.
The proposed investment in Afimilk will do both and will
help deliver the information and technological edge to
further strengthen and grow LIC. It will enable LIC to make
more informed decisions to build its genetic business,
reflecting changing approaches to farming domestically and
internationally. Both internationally and within New Zealand,
data is seen as critical to the operation of agritechnology
companies. Control and access to data is seen as vital to
continuing sustainability, with many companies having data
access at the core of recent investments.
In particular, LIC’s view is that there are likely to be further
development opportunities for in-line milk meters to increase
LIC’s resilience to the threat of disruption to its access to
pastoral dairy farming data posed as a result of the move
away from traditional herd-testing services. We consider
information provided from in-line milk meters in the future
will be critical to animal evaluation, and Afimilk is a world
leader in in-line milk meters. LIC will need to continue to have
access to this milk testing data from traditional herd testing
and in-line milk meters to continue the development of
genetics in New Zealand.
The investment will drive future growth by broadening LIC’s
access to knowledge and information beyond pastoral
dairy farming methods, ensuring that our co-operative can
be more agile in responding to opportunities and threats
in the future. Access to Afimilk’s resources and information
on other farming methods will assist LIC to develop genetic
programmes for the farming systems of the future.

LIC - NOTICE OF SPECIAL MEETING AND EXPLANATORY MEMORANDUM
14
Strategic Rationale for Investment
Financial Performance
Afimilk provides a sound financial proposition. Afimilk is
profitable, has no debt, funds R&D within annual cash
flows, and has a track record of both paying dividends to its
shareholders and delivering new innovations to farmers. It is
a leader in its field and has been on LIC’s radar for a number
of years. The 50% stake will ensure that LIC has an equal say
in the governance and strategic direction of the business.
As a business that operates in the dairy sector, the
performance of Afimilk is impacted by fluctuations in the
global dairy market: sales are high following high milk price
years (for example, in 2018), tend to decline following low milk
price years (for example, in 2016), but have historically more
than recovered in subsequent years. Over the past decade,
Afimilk has matured as a business, with an integrated
product offering, distribution network and an established
market presence. Revenue growth has averaged 8% per
annum over the last 10 years.
Afimilk has improved its gross margin by 11.2% over the
past 10 years, with a demonstrated ability to control costs
prudently during periods of downturn. Like LIC, the business
has a strong R&D focus to ensure its product pipeline remains
robust into the future.
The investment in Afimilk will be primarily funded through
debt provided under LIC’s existing banking facilities
with Westpac and Rabobank, with the balance paid out
of its cash reserves. LIC considers the increase in debt
associated with the investment to be within prudent limits,
and dividends received from Afimilk will likely self-fund the
associated interest expense and a portion of principal
repayment (in the absence of significant adverse economic
events and material unforeseen expenditure requirements).
Dividends paid by LIC to its shareholders are not expected
to be negatively impacted by the investment and over
time should result in increased dividend returns, subject to
Afimilk’s performance, exchange rate and cost of finance
being in line with current expectations.
This investment will not change LIC’s ongoing commitment
and investment into R&D, technology and improved products
and services to New Zealand dairy farmers. Capital will still
be available to fund appropriate investments and to support
the future plans of the co-operative.
As a 50% shareholder, the LIC Board and Executive will
play a part in the governance of Afimilk and overseeing
the investment generally. However, this investment will not
require extensive time or personnel commitment and LIC’s
focus will remain on its core business with the investment
helping strengthen that focus.
Accessing Further Opportunities for our Farmers
LIC and Afimilk have commenced good faith discussions
to determine whether Afimilk will acquire the parts of LIC’s
automation business that are complementary to Afimilk’s
business, in anticipation of greater scale for R&D and
greater synergies. Regardless of whether the acquisition
of parts of LIC’s automation business is concluded, LIC
considers that the investment in Afimilk positions LIC and our
farmers to collaborate with Afimilk on advanced technology
solutions, such as on-farm management systems.
While there is no certainty of these opportunities, it is
envisaged that LIC and Afimilk will look at ways to deliver
efficiencies and leverage LIC Automation’s experience.
This investment will also increase access and encourage
closer ties to the Israeli and global agritechnology sectors
for LIC, by providing further insights and opportunities.
Key Considerations Relevant to Your Vote
There are a number of key considerations relevant to your vote.
• Recommendation of the Board: LIC’s Board considers
the strategic investment in Afimilk represents an excellent
opportunity for LIC to leverage its experience and insight
into New Zealand pastoral dairy farming and Afimilk’s
advanced sensors, communications, and actionable
analysis to deliver short, medium and long-term value to
New Zealand dairy farmers. The LIC Board recommends
that shareholders vote in favour of the strategic investment.
• Your vote is important: Shareholder approval is required
for the investment to proceed. If shareholders do not
approve it, the strategic investment will not proceed.
The investment requires approval of an ordinary (50%)
resolution of shares voted.
The key reasons to vote in favour of the investment are
outlined in the Strategic Rationale section above. In
summary they are:
• It will allow LIC to access information to better drive
genetic decisions: A key part of the strategic investment
is the access that LIC will gain to animal health and
animal performance information held by Afimilk. LIC
will use its data and the information obtained through
Afimilk’s products (such as in-line milk meters and animal
monitoring systems), to help inform decisions to grow
and strengthen the genetic business, reflecting changing
approaches to farming domestically and internationally.
• It is a sound financial investment: As a profitable
business that is aligned with LIC’s strategy, LIC believes
the dividends received from Afimilk will likely finance
the interest component of the debt needed to fund this
strategic investment, while providing additional returns
over time to LIC shareholders.

15
INVESTMENT PROPOSAL - STRATEGIC INVESTMENT IN AFIMILK AGRICULTURAL COOPERATIVE LIMITED
Strategic Rationale for Investment
• Possible future opportunities for LIC’s business: LIC
anticipates that being a 50% shareholder in Afimilk
will give LIC a unique opportunity to work more closely
with Afimilk and to grow both businesses. In addition,
further synergies and opportunities may arise in the
event that LIC and Afimilk agree terms on which the
complementary aspects of LIC’s automation business
could be included in Afimilk.
Other considerations and risks relevant to the strategic
investment: While it is expected that the investment
will deliver strategic value to LIC, and the LIC Board has
recommended the approval of it, shareholders should also
consider the following factors relating to the strategic
investment and its impact on LIC:
• Borrowing is necessary to make the strategic
investment: LIC will fund the investment through new
debt under its existing facilities, which will represent a
significant increase in debt compared to the modest
amount of debt held currently, decreasing the equity to
assets ratio from 77% (at May 2019) to an estimate of 62%
(at May 2020). Given both LIC and Afimilk have relatively
low levels of debt and positive cash flows, LIC anticipates
that the equity to assets ratio will continue to increase. As
noted earlier in this document, it is anticipated that the
strategic investment will fund the debt costs (in the
absence of any significant adverse economic events and
material unforeseen expenditure requirements).
• LIC’s focus on its core business: This investment will
not take away from LIC’s focus on its core business. LIC
will continue to deliver value to farmers from the current
business of farm management, genetics, automation and
animal health. LIC remains focussed on optimising the
skill, knowledge and technology that the co-operative has.

As the company signalled at its Annual Meeting in
October 2019, over the next 12 months, it is working to
drive its strategy forward by taking full advantage of data
to benefit both LIC and its farmers. The co-operative’s
solid financial results show it is in a strong position to
continue to invest in technology and data platforms to
fuel genetics and herd management innovations. LIC’s
investment in Afimilk will complement and provide the
necessary information and tools to ensure that LIC is able
to keep its world-leading edge in pastoral dairy farming.
• LIC’s investment will increase its exposure to global
dairy downturns: Afimilk has demonstrated through its
historical financial performance even during global dairy
downturns, that it is a robust investment for LIC. While there
is a relationship between global dairy price downturns
and Afimilk’s revenue, the graph below demonstrates that
this has previously resulted in a temporary reduction only
and, to a lesser extent, in the downturns.
Relativity of Revenue
to Global Dairy Trade
Jan 09Jan 10
Jan 11
Jan 12Jan 13
Jan 14Jan 15Jan 16Jan 17Jan 18Jan 19
2000.0
1800.0
1600.0
1400.0
1200.0
1000.0
800.0
600.0
400.0
200.0
-
100
90
80
70
60
50
40
30
20
10
-
Global Dairy Trade Index NZD
GDT TWI index NZDRevenue NZ$m
Revenue NZ$m
Source: LIC, using information from Afimilk’s management accounts and interest.co.nz.

LIC - NOTICE OF SPECIAL MEETING AND EXPLANATORY MEMORANDUM
16
Post-Investment
Governance of
Afimilk and
Shareholder
Arrangements

17
INVESTMENT PROPOSAL - STRATEGIC INVESTMENT IN AFIMILK AGRICULTURAL COOPERATIVE LIMITED
Post-Investment Governance of Afimilk and Shareholder Arrangements
LIC’s and Afimilk’s views and strategies are complementary:
Afimilk’s mission is to provide dairy producers with
outstanding, innovative technological solutions and
comprehensive knowledge, paving the way for the most
profitable production of high quality milk, while LIC’s purpose
is to empower livestock farmers through the delivery of
superior genetics and technology.
Governance
Afimilk will continue to operate as a stand-alone business,
with a strong independent management team, reporting
to a board with equal board representation from LIC and
Afikim. Further details of the post-investment governance of
Afimilk are set out below.
Afimilk’s board decisions will be made by a majority vote
(and so there will need to be alignment between the LIC
appointed directors and the Afikim appointed directors for
any board decisions). One of the directors will be appointed
as the chair, with the opportunity to rotate between LIC and
Afikim periodically. LIC has not yet identified the directors it
wishes to appoint, but it is conscious of ensuring there is the
right mix of expertise and representation.
The equal representation on the board reflects the
partnership approach that LIC and Afikim will bring to
Afimilk. This means that LIC and Afikim will need to jointly
agree on the strategic direction of Afimilk, and give LIC
comfort that Afimilk’s activities will not deviate from the
agreed strategic direction.
.
Head Office and Management Team
Afimilk’s head office and management team operate in
Israel and that is not intended to change.
Afimilk’s management team will report to the Afimilk board,
providing LIC’s appointed directors with oversight of the
operations of Afimilk. It is intended that senior management
team appointments will be made by agreement but Kibbutz
Afikim will nominate the Chief Executive Officer and LIC will
nominate the Chief Financial Officer.
Shareholders’ Agreement
If the investment proceeds, LIC and Kibbutz Afikim have
agreed to enter into a Shareholders’ Agreement to govern
their relationship as shareholders in Afimilk. In addition to
the governance matters outlined above, the Shareholders’
Agreement addresses matters such as approval of Afimilk’s
budget and work plan, the dividend distribution policy for
Afimilk, key matters that require shareholder approval (in
addition to Afimilk’s board approval), deadlock resolution
arrangements, and rules governing transfers of shares in
Afimilk (including pre-emptive rights).

LIC - NOTICE OF SPECIAL MEETING AND EXPLANATORY MEMORANDUM
18
Investment Details

19
INVESTMENT PROPOSAL - STRATEGIC INVESTMENT IN AFIMILK AGRICULTURAL COOPERATIVE LIMITED
Investment Details
Timing
LIC and Afimilk agreed transaction documents on
18 February 2020, subject to the satisfaction of certain
conditions (including LIC shareholder approval). LIC has
called its shareholder meeting for 10:30am on Tuesday 7 April
2020 and, if approved by LIC shareholders, it is anticipated
that the investment will close on 1 June 2020.
Key Investment Terms
The key terms of the investment are outlined below:
• Investment: LIC will acquire 3,636 shares in Afimilk
(representing 30.77%) from Fortissimo and 2,273 shares in
Afimilk (representing 19.23%) from Kibbutz Afikim, giving
LIC a total shareholding of 50% (5,909 shares in Afimilk).
• Price: The total price payable by LIC will be US$70 million
(NZ$108.7 million), subject to typical purchase price
adjustments relating to net debt and working capital
amounts.
• Key Conditions: The investment is conditional on a
number of things, including:
• Approval of the investment by LIC shareholders;
• Approval of the investment by Kibbutz Afikim members;
• There being no material adverse event specifically
affecting the Afimilk business;
• An agreed level of personnel remaining in the business;
and
• Confirmation that the audited 2019 financial year
information does not vary materially from certain
information in the management accounts provided to
LIC in January 2020, relating to Gross Revenue, Cost of
Goods Sold, Operating Expenses and EBITDA.
• Termination Rights: There is no break fee payable by
either party should the investment not proceed. The
investment could be terminated where:
• A party has not completed its closing obligations;
• Any of the conditions have not been satisfied on or
before 25 May 2020;
• A governmental entity has made an order preventing
closing; or
• The parties agree to terminate the investment.
• Key Warranties and Purchaser Protections: The sale
and purchase agreement contains typical purchaser
protections, such as business warranties and a tax
indemnity. A portion (~8.5%) of the purchase price will also
be placed in escrow for a period of 18 months so that it is
available to meet warranty claims, if necessary.
Structure and Funding
LIC’s interest in Afimilk will sit within the LIC agritechnology
group. LIC will fund the investment primarily through bank
debt provided under its existing facilities with Westpac
and Rabobank. No adverse changes are expected to the
terms of these facilities (including the covenants under
which LIC operates).
LIC has carefully considered the increase in debt associated
with the investment and it considers that neither the level of
debt nor the repayment requirements will negatively impact
or restrict LIC’s ordinary course of operations in the short,
medium or long term. LIC considers that its current level of
borrowings is modest and that the decrease in equity-to-
assets ratio from 77% (at May 2019) to an estimated 62% (at
May 2020) is within prudent limits.
LIC anticipates that the dividends received from Afimilk
will be sufficient to meet all interest costs, while also likely
funding a portion of principal repayment, in the absence
of any significant adverse economic events and material
unforeseen expenditure requirements. LIC intends to repay
principal on the facility over time out of dividends received
from Afimilk (to the extent they exceed the interest costs)
and LIC’s cashflows from its core business.
Other Key Arrangements
As part of this investment, the following arrangements
in relation to LIC’s investment in Afimilk are also being
entered into:
• Shareholders’ Agreement: Afikim and LIC will enter into a
Shareholders’ Agreement to govern their relationship and
rights in relation to Afimilk. The key governance aspects
are set out in the previous section.
• Data Sharing: In line with the strategic rationale for
this transaction, LIC and Afimilk have agreed to an
arrangement to share certain data.
• Services Agreement: Afimilk has a services agreement
with Kibbutz Afikim for the provision of selected services
to Afimilk. Services provided by Kibbutz Afikim include
food, security, cleaning, gardening, transportation,
repairs, and ongoing facility maintenance.
• Lease Agreement: The Afimilk office and warehouse are
leased from Kibbutz Afikim on a long term lease. There are
restrictions around the relocation of Afimilk during this time.
In addition, LIC, Afikim and Afimilk have commenced good
faith discussions to determine whether Afimilk will acquire the
parts of LIC’s automation business that are complementary
to Afimilk’s business, in anticipation of greater scale for R&D
and greater synergies. However, there is no certainty that any
transfer will be concluded or the terms on which it would take
place. LIC’s investment in Afimilk is not conditional on reaching
any agreement about that possible transfer. LIC will advise
shareholders as and when any agreement is reached but LIC
expects that shareholder approval will not be required for it.

LIC - NOTICE OF SPECIAL MEETING AND EXPLANATORY MEMORANDUM
20

21
INVESTMENT PROPOSAL - STRATEGIC INVESTMENT IN AFIMILK AGRICULTURAL COOPERATIVE LIMITED
Due Diligence
LIC undertook a thorough and independently assessed due
diligence process to determine if there is strategic merit in
acquiring Afimilk and the value of Afimilk to LIC.
The due diligence process was led by LIC’s senior
management, reporting to a sub-committee of the Board.
A due diligence team was established using experts within
LIC to cover the key focus areas relevant to the business.
External consultants were used where special expertise
was required, including in-market specialists. Due diligence
was completed both on publicly available information and
on legal, financial, tax, operational and other information
provided by Afimilk. The due diligence process included
a visit of Afimilk’s office and facilities by some of the due
diligence team.
Investment Risks
LIC has conducted a thorough risk assessment as part of its
due diligence and has identified the following key business
and investment risks:
• Political / Regional Risks: There may be increased trade
sanctions or regional instability that impacts Afimilk’s
ability to conduct its international business from Israel.
While this risk will be monitored, it is noted that Israel is,
and will continue to be, an international business centre
involving a large number of multinational companies.
Israel is also a world recognised centre for innovation,
with a very strong agri-tech focus.
• Economic Risks: Afimilk has a high degree of reliance
on the global dairy industry and so the investment is
exposed to the economic risks associated with the sector.
Global dairy prices are a significant driver in the demand
for Afimilk products and services. Afimilk transacts in a
range of currencies and jurisdictions and so both the
investment and business is exposed to foreign exchange
risk and changes in tax regimes. Because Afimilk is a
global business, the overall risk to LIC is more diversified
as a result of this investment.





• Company-Specific Risks:
• The investment in Afimilk represents an expansion
from LIC’s core expertise. Afimilk’s products are
predominantly targeted at barn-style farming, with
LIC’s main focus on pasture-based farming, but
there is a degree of overlap between our respective
products. LIC has had limited involvement in barn-style
farming activities to date and will be relying on Afimilk
in relation to its barn-style farming specific expertise,
at least during the initial stages. LIC will be receiving
data in relation to animals from these production
systems, which will strengthen its genetic based
research and development.
• Afimilk’s location may create challenges for the
ability of LIC to oversee its operations. LIC proposes
addressing this by putting a strong governance team
in place which will include local representation. LIC will
also have the right to nominate the Afimilk CFO.
• Afimilk is dependent on recruiting and retaining highly
skilled technical staff and key management, both of
whom are sought after in a competitive market.
• Increase in Debt: LIC will fund the investment through
new debt under its existing facilities, which will represent
a significant increase in debt compared to the modest
amount of debt held currently, decreasing the equity
to assets ratio from 77% (at May 2019) to an estimate of
62% (at May 2020). As noted earlier in this document, it
is anticipated that the dividends received from Afimilk
will fund the debt costs (in the absence of any significant
adverse economic events and material unforeseen
expenditure requirements).
• Future Opportunities: While LIC believes that the
investment may present further opportunities in the
future and it has identified some of these in the Notice of
Meeting, there is no certainty that these opportunities
will emerge or will result in possible benefits to LIC. In
particular, while LIC and Afimilk have commenced good
faith discussions for the transfer of LIC’s complementary
automation assets, LIC and Afimilk may not reach
agreement on the terms and the possible benefits
associated with that may not eventuate.
LIC has also considered and is focussed on engagement
with Afikim’s customers, employees, business partners and
shareholders to ensure a smooth ownership transition.
Investment Details

LIC - NOTICE OF SPECIAL MEETING AND EXPLANATORY MEMORANDUM
22
Key Questions

23
INVESTMENT PROPOSAL - STRATEGIC INVESTMENT IN AFIMILK AGRICULTURAL COOPERATIVE LIMITED
Key Questions
Q.A.
ABOUT AFIMILK
Who is Afimilk?Afimilk is an Israeli company, which develops, manufactures and markets advanced systems
to manage dairy farms. Afimilk has a global reputation for its innovations and ability to
commercialise new products for the dairy industry, including farm management software,
cow monitoring, in-line milk meters and automation technology.
Afimilk has a global presence across all its products and solutions, with particular success
in regions of intensive dairy farming. Afimilk’s products are broadly regarded as one of
the industry leading producers in milk meters, behaviour sensors and farm management
software, with particular strength in having strong distribution across Europe and North
America. Some of these products are already sold in New Zealand and demand is growing.
Afimilk is currently and has been profitable, has no debt, funds R&D within annual cash
flows, and has a solid track record of both paying dividends and delivering new innovations
to farmers. It is a leader in its field and has been on LIC’s radar for a number of years.
STRATEGIC RATIONALE FOR INVESTMENT
Why does LIC’s Board
think this investment is
a good idea?
The Board is recommending the investment in Afimilk to strengthen LIC’s ability to deliver
the best solutions to our farmers, now and into the future.
The investment will do this by helping ensure on-going access to pastoral dairy farming
data through the increased use of in-line milk meters and animal monitoring systems,
and opening access to data on other farming methods held by Afimilk. Beyond that, an
investment in Afimilk opens further opportunities to deliver enhanced animal health and
agri-tech solutions to our farmers.
This long-term strategic investment will leverage our collective expertise and resources
and will create opportunities to expand and improve our existing range of products and
services, and speed-up the development of new technologies, products and services for LIC.
In addition, there is the possibility that Afimilk will acquire LIC’s complementary automation
assets, which may produce synergies.
The investment is expected to deliver short, medium and long-term strategic value to New
Zealand dairy farmers.
POST INVESTMENT GOVERNANCE & MANAGEMENT OF AFIMILK
How will Afimilk be run?Afimilk will continue to operate as a stand-alone entity, with a strong independent
management team, reporting to a board with equal representation from LIC and Afikim.
The equal representation on the board reflects the partnership approach that LIC and
Afikim will bring to Afimilk. This means that LIC and Afikim will need to jointly agree on
the strategic direction of the Afimilk, and give LIC comfort that Afimilk’s activities will not
deviate from the agreed strategic direction.
Afimilk’s head office and management team operate in Israel and that is not intended
to change.
Afimilk’s management team will report to the Afimilk board, providing LIC’s appointed
directors with oversight of the operations of Afimilk. It is intended that senior management
team appointments will be by agreement but Kibbutz Afikim will be entitled to nominate the
CEO and LIC will be entitled to nominate the CFO.

LIC - NOTICE OF SPECIAL MEETING AND EXPLANATORY MEMORANDUM
24
Key Questions
INVESTMENT DETAILS
Will my shares in LIC be
affected?
Nothing is happening to your shares or your shareholding in LIC. If approved, the
strategic investment will see LIC, through LIC Agritechnology Company Limited, acquire a
shareholding in Afimilk. As such, all LIC shareholders will acquire an indirect interest in, and
exposure to, Afimilk.
Importantly, nothing affects LIC’s day-to-day operations or its focus on delivering value on-
farm to New Zealand dairy farmers.
SHAREHOLDER APPROVAL AND VOTING
Why is my approval being
sought?
The proposed investment constitutes a major transaction for the purposes of the Listing
Rules and therefore the investment is conditional upon the approval of LIC shareholders
at a special meeting held at LIC’s Tempero Centre, Cnr. Ruakura and Morrinsville Roads,
Newstead, Hamilton at 10:30 am on Tuesday 7 April 2020.
LIC is required to seek shareholder approval under Listing Rule 5.1.1(b), as the value of the
investment exceeds 50% of the Average Market Capitalisation of LIC. This means that more
than 50% of LIC’s shareholders who vote must vote in favour of the proposed investment,
amongst the other conditions, before the investment may proceed.
What if the investment is
not approved?
If the resolution is not approved by LIC shareholders, then the proposed investment
will not proceed and LIC’s Board will continue to investigate other potential investment
opportunities for LIC.
What are the risks for me
as a shareholder?
Shareholders should consider these potential risks, the likelihood of a risk event occurring,
and the impact it may have on a shareholder’s investment. An overview of the risks
identified by LIC is set out on page 21.
What do I need to do?Consider the information provided within this document and vote on the proposed
investment. LIC’s Board recommends voting IN FAVOUR of the investment as it is a vote for
the future of the co-operative.
Q.A.

25
INVESTMENT PROPOSAL - STRATEGIC INVESTMENT IN AFIMILK AGRICULTURAL COOPERATIVE LIMITED
Key Questions

LIC - NOTICE OF SPECIAL MEETING AND EXPLANATORY MEMORANDUM
26
Explanatory Notes and
Additional Information

27
INVESTMENT PROPOSAL - STRATEGIC INVESTMENT IN AFIMILK AGRICULTURAL COOPERATIVE LIMITED
Explanatory Notes and Additional Information
Resolution
Approval required under Listing Rule 5.1.1(b)
Because the gross value
3
of the proposed investment in
Afimilk exceeds 50% of the Average Market Capitalisation
of LIC, LIC must seek shareholder approval by ordinary
resolution pursuant to Listing Rule 5.1.1(b). The Listing Rules
may be viewed on the NZX website: www.nzx.com.
If the resolution is not passed, then the investment in Afimilk
will not proceed.
Voting restrictions
Under the Dairy Industry Restructuring Act 2001 and LIC’s
Constitution, there is a 1% voting cap which applies to all LIC
shareholders. The 1% voting cap is calculated based on the
number of votes that may be exercised at this meeting (and
so excludes treasury stock and other restricted securities).
Any LIC shareholder who holds more than 1% of LIC’s shares
on issue will be limited in their ability to vote to the equivalent
of 1% of the votes cast on the resolution. Where a particular
shareholder has multiple holdings across different entities
or debtor codes, restrictions will apply to all affected voting
securities on a pro-rata basis.
Voting
Please choose only one voting option. Each method of
voting and the way to use the Voting Form enclosed with
this document are explained in detail below.
If you are a postal voter or appointing a proxy, return your
Voting Form to electionz in any of the following ways:
• mail to electionz.com Limited in the reply paid envelope
provided; or
• address and mail to Livestock Improvement Corporation
Limited, PO Box 3138, Christchurch 8140; or
• deliver to electionz.com Limited, 3/3 Pukaki Road,
Yaldhurst, Christchurch 8042; or
• fax to 03 377 1474; or
• scan and email to info@electionz.com (please put
the words “LIC Meeting” in the subject line for easy
identification).
Alternatively, vote electronically as per the instructions on
page 7.
If you are not attending and voting at the Special Meeting,
your electronic vote must be cast or your Voting Form must
be received by electionz.com Limited no later than 10:30 am
on Sunday 5 April 2020 to be valid.
The Board has appointed Melanie Tonkin as the Returning
Officer. She has authorised electionz.com Limited to
receive, record and count all postal votes, electronic votes
and proxy votes.
If you have any questions regarding the voting, please
contact the Election Helpline on 0800 666 033.
All persons attending the Special Meeting must register at
the registration desk prior to entering the meeting room.
Multiple herd owners are reminded that, to fully exercise their
voting rights, they need to separately exercise the votes for
each participant code.
3
Gross value is defined under the Listing Rules as the greater of the gross value from the most recently published
financial statements of the relevant issuer or market value.

LIC - NOTICE OF SPECIAL MEETING AND EXPLANATORY MEMORANDUM
28
Roadshow Timetable
Roadshow Timetable
DayDateTimeLocationVenue
Monday2 Mar10:30am – 12:30pmStratford TET Multi Sports Centre
62 Portia St, Stratford
Monday2 Mar6:30pm – 8:30pmPalmerston NorthCopthorne Hotel
110 Fitzherbert Ave, West End
Tuesday3 Mar10:00am – 12:00pmWhangareiSemenoff Stadium
51 Okara Drive
Tuesday3 Mar6:30pm – 8:30pmHamiltonLIC, Tempero Centre
605 Ruakura Road, Newstead
Wednesday4 Mar10:00am – 12:00pmWhakataneAcacia House Conference Centre
19 Louvain Street
Thursday5 Mar10:00am – 12:00pmBalcluthaBalclutha South Otago Town & Country Club
1 Yarmouth Street
Thursday5 Mar6:30pm – 8:30pmInvercargill Ascot Park Hotel
Cnr Tay St & Racecourse Road
Friday6 Mar12:00pm – 2:00pmAshburtonHotel Ashburton
11-35 Racecourse Road
Monday 2nd to Friday 6th March 2020
Locations/Schedule

29
INVESTMENT PROPOSAL - STRATEGIC INVESTMENT IN AFIMILK AGRICULTURAL COOPERATIVE LIMITED
Glossary
Afimilk means Afimilk Agricultural Cooperative Limited.
Board means the Directors numbering not less than the
required quorum acting together as a board of Directors.
Company or LIC means Livestock Improvement
Corporation Limited.
Councillor means a person elected by shareholders of LIC
within a ward to represent that ward on the LIC
Shareholder Council.
Directors means the directors for the time being of the
Company.
Fortissimo means Fortissimo Capital Limited, an Israel
private equity firm which currently holds 30.77% shareholding
in Afimilk through Fortissimo Capital Fund II (Israel), LP.
Kibbutz Afikim means the Kibbutz Afikim, which currently
holds its shareholding in Afimilk through Afikim Properties -
Cooperative Agricultural Society Ltd.
Listing Rules means the NZX Listing Rules which relate to the
NZX Main Board, as amended from time to time, and may be
a reference to a particular Rule or Rules as specified.
Shares means shares in the Company, being ordinary shares
and nil paid shares.
Special Meeting means the special meeting of shareholders
to be held at LIC’s Tempero Centre, Cnr Ruakura and
Morrinsville Roads, Newstead, Hamilton on Tuesday 7 April
2020 at 10:30 am.
Voting Form means the combined proxy appointment and
voting form to be used for the purposes of the Special Meeting.
Glossary

LIC - NOTICE OF SPECIAL MEETING AND EXPLANATORY MEMORANDUM
30
Directory
Directory
LIC
Livestock Improvement Corporation Limited
LIC Head Office
Corner Ruakura and Morrinsville Roads
Newstead, Hamilton
Private Bag 3016
Hamilton 3240
+64 7 856 0700
www.lic.co.nz
Financial advisers to LIC
Ernst & Young
144 Menachem Begin Road
Tel-Aviv, Israel
+972 3 623 2525
www.ey.com
Registrar
Link Market Services Limited
Level 11, Deloitte Centre
80 Queen Street
Auckland 1010
PO Box 91976
Auckland 1142
+64 9 375 5998
enquiries@linkmarketservices.co.nz
Legal advisers to LIC (investment approval)
Simpson Grierson
Lumley Centre
88 Shortland Street
Auckland 1010
Private Bag 92518
Auckland 1141
+64 9 358 2222
www.simpsongrierson.com
Legal advisers to LIC (terms of investment)
Shibolet & Co.
Museum Tower
4 Berkowitz St
Tel Aviv, Israel
+972 3 777 8333
www.shibolet.com
Election manager
electionz.com Limited
33/3 Pukaki Road
Yaldhurst
Christchurch 8042
PO Box 3138
Christchurch 8140
+64 3 377 3530
info@electionz.com

31
Section title in here
INVESTMENT PROPOSAL - STRATEGIC INVESTMENT IN AFIMILK AGRICULTURAL COOPERATIVE LIMITED
ote
Internet voting, postal voting and proxy
appointments close

10:30am Sunday 5 April 2020
Or
Vote in person at the Special Meeting

10:30am Tuesday 7 April 2020
Our Co-operative. Our Future. Your Vote

---

Dear Shareholder,
The LIC Board is pleased to seek shareholder approval to complete a strategic investment
to acquire a 50% stake in leading global agri-tech company Afimilk, which develops and
commercialises dairy farm technology.
The Board considers this is a compelling strategic proposition for our business which will further
strengthen our co-op. The investment will help grow our business by giving us an industry-leading
edge in milk meters and cow wearable technology, while also strengthening our leadership in herd
improvement services through access to international herd data.
Afimilk is a leader in its field and has been on our radar for a number of years. Afimilk is also a
sound financial investment. Afimilk has been profitable over the years, has no debt, funds R&D from
annual cash flows, and has a track record of both paying dividends and delivering new innovations
to farmers.
The investment is proposed to be funded primarily through debt provided under LIC’s existing
banking facilities, with the balance paid out of its cash reserves. LIC has built a strong platform for
growth over the past four years with solid financial results. While we will take on new debt to fund
a portion of this investment, our shareholders will understand that what we’re doing is like funding
the purchase of a neighbour’s well-run farm.
The investment is expected to be self-funding. Subject to Afimilk’s performance being in line with
current expectations, LIC anticipates that the dividends received from Afimilk will be sufficient to
meet all interest costs, while also likely funding a portion of principal repayment, and therefore the
proposed investment is expected to positively affect future dividends to LIC shareholders.
The ultimate decision on whether to proceed with this investment rests with you – our shareholders.
The Board is now asking for your vote to allow LIC to make this investment.
The Board of LIC recommends a YES vote
Voting is easy and will only take a few minutes of your time. Internet voting, postal
voting and proxy appointments close 10:30am, Sunday 5 April 2020 or you can vote in
person at the Special Meeting, commencing at 10:30am, Tuesday 7 April 2020, at LIC’s
Tempero Centre, Cnr. Ruakura and Morrinsville Roads, Newstead, Hamilton.
Before you vote, you will want to know why we are recommending this investment. That information
is set out in the Notice of Meeting booklet in this pack, which we encourage you to read in full,
including the sections on strategic rationale and risks associated with the investment. A summary
of the key details is below.
Private Bag 3016
Hamilton 3240
New Zealand
PHONE 07 123 4567
www.lic.co.nz

Why the LIC Board supports the investment
The investment will bring together LIC’s experience and insights in pastoral dairy farming with Afimilk’s
advanced sensors, software, and real time data analytics to deliver the following key benefits:
• The proposed 50% stake in Afimilk will help LIC keep its world-leading edge in pastoral dairy
farming data, while broadening access to new information to meet future needs and challenges
facing New Zealand dairy farmers.
• Afimilk is a leader in its field, and has been of real interest to LIC for a number of years.
• The investment will strengthen LIC’s ability to deliver superior herd improvement services and
agri-tech to our farmers.
• Afimilk has been profitable over the years, has no debt and has historically paid dividends to
its shareholders.
• Nothing in this proposal affects LIC’s day-to-day operations or its focus on delivering value on-
farm to New Zealand dairy farmers.
Ensuring that LIC is able to meet the current and future needs of our shareholders and their
businesses is at the heart of why we are recommending this investment. That means the investment,
over time, must deliver value for our shareholders and your farming businesses.
We consider it will.
About Afimilk
Headquartered in Israel, Afimilk is the global leader in developing, manufacturing, and marketing
advanced systems for dairy farms and herd management. Afimilk’s systems are installed and in use
on farms in 50 countries, including New Zealand.
The company’s mission is to provide dairy farmers with superior technology, to automate and
manage dairy farms, enabling profitable milk production and improvement of animal welfare. Our
two companies are both focused on increasing the profitability of our dairy farmer customers.
About the acquisition
Here are some key points:
• LIC is seeking shareholder approval to acquire a 50% stake for NZ$108.7 million in Israeli agri-tech
company Afimilk.
• LIC anticipates that the dividends received from Afimilk will be sufficient to meet all interest costs,
while also likely funding a portion of principal repayment, and therefore the proposed investment is
expected to positively affect future dividends to LIC shareholders.
• The investment is proposed to be funded primarily through debt provided under LIC’s existing banking
facilities, with the balance paid out of its cash reserves.
• Following the investment, LIC and Kibbutz Afikim will each hold 50% of the shares in Afimilk.
• The 50% stake will give LIC shared governance and an equal say in the strategic direction of Afimilk.

More information
In addition to the information set out in the Notice of Meeting booklet in this pack, I would also
encourage you to visit the investment website investment.lic.co.nz, which has more information
about Afimilk and its technology at the company’s base in Israel, and video interviews with:
• Wayne McNee (LIC Chief Executive) and Mike Wilson (LIC Head of Marketing and Products) during
one of their due diligence trips to the company;
• Yuval Rachmilevitz, Afimilk CEO, about why his company wants to partner with LIC and what we
can achieve for our shareholders and farmers together; and
• Myself, on behalf of the LIC Board, about why we want to make this investment.
What happens next
Your Board of Directors considers this investment is in the best interests of shareholders and your
co-operative. We strongly recommend a YES Vote.
Your voting papers are included in this pack.
Yours faithfully
Murray King
Chairman