Synlait publishes HY21 result

Half Year Results28 March 2021SMLConsumer Staples

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SYNLAIT MILK HALF YEAR RESULT FOR THE SIX MONTHS ENDED 31 JANUARY 2021
CHAIR AND CEO LETTER

`
19%
REVENUE
$
664.2M
76%
N PAT
$
6.4M
16%
CONSUMER-PACKAGED INFANT
FORMULA SALES
18,085MT
29%
EBITDA
$
47.7M
FINANCIAL PERFORMANCE
Infant Formula Base Powder production down 61%
Comparisons are for the six months ended 31 January 2020 (HY20) unless stated otherwise.
16%
LACTOFERRIN PRODUCTION
13.6MT
DAIRYWORKS REVENUE
$
112.6M
CHAIR AND CEO LETTERPAGE 02

Synlait CEO Leon Clement (right)
Synlait Chair Graeme Milne (left)
Nau mai | Welcome
Our first half was challenging, and we
continue to find ourselves in a period
of significant uncertainty and volatility
as Synlait faces into several headwinds.
This is impacting our short-term
operations and will impact our full year
2021 financial result (FY21).
We cannot control COVID-19 but we
can control our response. This includes
how we execute on our strategy. A
strategy which was already positioning
Synlait well for a sustainable, diverse,
and recurring revenue base that comes
from multiple customers, sites, markets,
and categories in the future.
Our focus is now to mitigate the
impact COVID-19 has had on our
key customers as we manage costs
and capacity and pull forward value
creation initiatives to accelerate the
CHAIR AND CEO REVIEW
execution of our strategy.
We will need time to get through this,
but we remain confident about our
future. Our investment phase is
complete. We have the capacity,
capability, and customer base to
generate significant value. COVID-19
hit us late, but we will emerge from
the pandemic a stronger, more
sustainable Synlait.
COVID-19 impacts now being felt with
our strategic partner
The revised demand forecast received
from our cornerstone customer and
shareholder, The a2 Milk Company™,
in December 2020 was significant
and sudden. It provided evidence
that the delayed impacts of COVID-19
on consumer behaviour, channel
dynamics and supply chain disruptions
are real as the pandemic enters its
second year. The continuation of this
uncertainty was one of several factors
that resulted in the withdraw of our
FY21 guidance earlier this month.
The knock-on effects of this demand
change continue to play out in real
time. While sales of consumer-
packaged infant formula fell 16% to
18,085 MT, a larger impact was felt
in our manufacturing recoveries with
infant formula base powder (IFB)
production dropping by 61% as we
reset our outputs and inventory levels
to a new forward outlook. We continue
to take a conservative view on the
recovery. While we remain highly
confident it will occur, the timing and
rate of recovery remains uncertain.
Despite this challenge, The a2 Milk
Company™ remains a strong strategic
partner. We are committed to supporting
CHAIR AND CEO LETTERPAGE 03 HALF YEAR REVIEW 2021

execution of our strategy. Progress is
encouraging.
Our short-term focus: mitigating
COVID-19 – cost and capacity
changes
Since our December 2020 downgrade
approximately $22 million worth of
cost savings have been captured.
These are in the following areas:
Operational cost savings:
~$10.8 million
An organisational restructure reduced
salary costs by $1.9 million and ensures
our capabilities are better aligned with
strategy. Year-to-date discretionary
spending reduced $3.5 million. The
focus on cost control continues to help
offset unavoidable spend.
Reviewing our production approach
generated savings of $5.4 million
and sees Synlait Pokeno manufacture
ingredients only as it focuses on
preparing for our new multinational
them to restabilise local supply chains
and protect market access in the critical
China infant nutrition market.
Another factor contributing to this
uncertainty is our ingredients business.
The suddenness of the drop in infant
nutrition demand, combined with
rapidly rising Global Dairy Trade prices,
foreign exchange, and a changing
product mix, creates volatility. It means
we have not been able to rely on our
ingredients business to absorb this
impact as much as we would have liked.
Finally, the pandemic continues to slow
the arrival and departure of goods in
and out of ports globally. While this
is a timing issue, we expect delays to
continue for some time and this will
likely impact our FY21 result further.
We continue to move forward
Our focus is now on mitigating the
short-term impact by managing costs
and capacity and pulling forward value
creation initiatives to accelerate the
customer. Staff shift levels have also
been reduced at Synlait Auckland and
Dunsandel.
Value chain cost savings:
~$11 million annualised
Dry Store 4 will be complemented by
a 30-wagon rail siding in May. This
extends Synlait’s highly integrated
manufacturing facility from farm-to-
can to farm-to-port with containerised
goods sent via rail between Synlait
Dunsandel and Lyttelton Port. This
project generates a permanent
annualised EBITDA savings of $8
million from FY22 onwards.
We have not lost sight of waste
reduction and yield improvement
initiatives either which have an
annualised benefit of $3 million.
Our long-term focus: pulling forward
value and accelerating strategy
execution
Having completed a phase of
Milk reception bay,
Synlait Dunsandel
CHAIR AND CEO LETTERPAGE 04

significant investment to create new
growth opportunities, we are now well
placed to focus on delivery. It therefore
makes sense to refine and focus our
growth strategy. Our purpose and
ambition remain the same, but our
strategic focus has narrowed from five
growth pathways to two value add
growth pathways. These are:
• Nutrition, Food Service and
Ingredients have a business-to-
business focus. They consolidate
our Food Service and Infant
Nutrition categories and include
opportunities our new multinational
customer will bring to Synlait. We
have also acknowledged the role
our ingredients business plays in
optimising our assets.
• Consumer Foods has a business-
to-consumer focus. It will pursue
branded opportunities. Dairyworks
is our mainstay as we build a
product portfolio to support New
Zealand and Australian consumers
and explore further offshore growth.
Our enabling strategy (Net Position
For The Planet, World Class Value
Chain and Building A Healthier Synlait)
remains the same and continues to
serve us well.
Despite the short-term challenges, the
fundamentals of our purpose, ambition
and strategy remain the same – and
the opportunities ahead are exciting.
Our team is mobilising around new
opportunities that generate growth,
value, and efficiencies. Examples
include a differentiated ingredient
offering which commercialises our
Lead With Pride™ programme, the
launch of functional creams and Synlait
branded consumer products, and the
on-boarding of our new multinational
customer at Synlait Pokeno which
supports our diversification as our
infant nutrition business recovers.
We also see opportunities to keep
reducing waste and improving yields
and efficiencies as we work to keep
capturing more value from the milk
we collect. And, the good thing is we
have already completed a large part of
the investment required to tap these
opportunities.
Outlook
As signalled earlier this month, Synlait
is continuing to experience significant
uncertainty and volatility within its
business. This is due to:
• Ongoing uncertainty in The a2 Milk
Company’s expected demand for
the remainder of FY21 and FY22.
Synlait does not currently have
sufficient confidence to forecast
when this recovery will occur. The
resulting impact of this on Synlait’s
business is two-fold: demand for
consumer-packaged infant formula
remains uncertain, which in turn
impacts forward infant base powder
production and asset use.
• Synlait’s ingredients business. The
sudden drop in consumer-packaged
infant formula demand, combined
with rapidly rising Global Dairy
Trade prices, foreign exchange, and
a changing product mix, creates
volatility which limits returns.
• Our expectation is that global
shipping delays will continue and
further impact the FY21 result.
Board and management have
considered the above factors and
how they will impact Synlait’s FY21
profitability. There is still a range
of scenarios contributing to the
company’s profitability, and our current
outlook suggests a broadly breakeven
FY21 NPAT result.
While all banking covenant ratios
were met during HY21, Synlait has
proactively engaged with its banking
syndicate to increase its leverage
ratios to manage any risk at the end of
FY21. The company’s FY21 business
plan is fully funded by its current
banking syndicate.
Thank you
Thanks to our employees, suppliers,
and customers for your commitment,
energy, and engagement. Thanks
also to our shareholders for your
loyalty, and belief in Synlait’s purpose,
ambition, and strategy. Despite the
adversity, we remain committed to
being open and honest with you.
Our belief and commitment to Doing
Milk Differently For A Healthier World
remains unchanged.
Ngā manaakitanga.
Graeme Milne ONZM
Synlait Chair

Leon Clement
Synlait CEO
CHAIR AND CEO LETTERPAGE 05

---

INTERIM FINANCIAL STATEMENTS
For the six months ended 31 January 2021

Dairyworks, Christchurch
Directors’ responsibility statement 03
Interim financial statements 04
Income statement 04
Statement of comprehensive income 05
Statement of changes in equity 06
Statement of financial position 07
Statement of cash flows 08
Notes to the financial statements 09
01 Reporting entity 09
02 Basis of preparation of six monthly financial report 10
03 Segment reporting 11
04 Expenses 14
05 Reconciliation of profit after income tax to
net cash outflow from operating activities 15
06 Trade and other receivables 15
07 Inventories 16
08 Property, plant and equipment 16
09 Loans and borrowings 17
10 Share capital 18
11 Related party transactions 18
12 Contingencies 20
13 Commitments 20
14 Events occurring after the reporting period 20
Independent Auditor’s Review Report 21
CONTENTS
INTERIM FINANCIAL STATEMENTS 2021

The Directors are pleased to present the condensed interim financial statements for Synlait Milk Limited and its subsidiaries,
Synlait Milk Finance Limited, The New Zealand Dairy Company Limited, Eighty Nine Richard Pearse Drive Limited, Synlait
Business Consulting (Shanghai) Limited, Dairyworks Limited, and Dairyworks (Australia) Pty Limited (together “the Group”) as
set out on pages 4 to 20 for the six months ended 31 January 2021.
The Directors are responsible for ensuring that the condensed interim financial statements present fairly the financial position
of the Group as at 31 January 2021 and the financial performance and cash flows for the six months ended on that date.
The Directors consider that the condensed interim financial statements of the Group have been prepared using appropriate
accounting policies, consistently applied and supported by reasonable judgements and estimates and that all relevant
financial reporting and accounting standards have been followed. The Directors believe that proper accounting records have
been kept which enable, with reasonable accuracy, the determination of the financial position of the Group and facilitate
compliance of the financial statements with the Financial Markets Conduct Act 2013.
For and on behalf of the Board.
Graeme Milne
Chair
26 March 2021
Simon Robertson
Independent Director
26 March 2021
DIRECTORS’ RESPONSIBILITY STATEMENT
Period endedPeriod endedYear ended
31 January 202131 January 202031 July 2020
UnauditedUnauditedAudited
Notes$’000$’000$’000
Revenue664,182559,2861,302,025
Cost of sales4(604,529)(476,410)(1,098,292)
Gross profit59,65382,876203,733
Other income1,611604404
Share of (loss)/profit from associates(33)-33
Sales and distribution expenses4(18,739)(13,871)(32,318)
Administrative and operating expenses4(22,906)(23,230)(48,561)
Earnings before net finance costs and income tax19,58646,379123,291
Finance expenses(10,720)(8,610)(19,777)
Finance income3049134
Loss on derecognition of financial assets(436)(938)(1,747)
Net finance costs(11,126)(9,499)(21,390)
Profit before income tax8,46036,880101,901
Income tax expense(2,087)(10,684)(26,693)
Net profit after tax for the period6,37326,19675,208
Earnings per shareCentsCentsCents
Basic earnings per share (cents)3.2314.6141.95
Diluted earnings per share (cents)3.2214.5741.85
INCOME STATEMENT
For the six months ended 31 January 2021
INTERIM FINANCIAL STATEMENTS 2021
The accompanying notes form part of and are to be read in conjunction with these financial statements.
PAGE 03 & 04

Period endedPeriod endedYear ended
31 January 202131 January 202031 July 2020
UnauditedUnauditedAudited
$’000$’000$’000
Profit for the period6,37326,19675,208
Items that may be reclassified subsequently to profit and loss
Effective portion of changes in fair value of cash flow hedges30,3061,51553,882
Exchange differences on translation of foreign operations2(49)(12)
Income tax on other comprehensive income(8,486)(424)(15,087)
Total items that may be reclassified subsequently to profit and loss21,8221,04238,783
Other comprehensive income for the period, net of tax21,8221,04238,783
Total comprehensive income for the period28,19527,238113,991
STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 January 2021
Share
Capital
Employee
Benefits
Reserve
Cash Flow
Hedge
Reserve
Foreign
Currency
Translation
Reserve
Retained
Earnings
Total
Equity
UnauditedUnauditedUnauditedUnauditedUnauditedUnaudited
Notes$’000$’000$’000$’000$’000$’000
Equity as at 1 August 2019268,0741,658(26,148)-248,776492,360
Profit or loss for the year----26,19626,196
Other comprehensive income
Effective portion of changes in fair value of cash flow hedges--1,515--1,515
Exchange differences on translation of foreign operations---(49)-(49)
Income tax on other comprehensive income--(424)--(424)
Total other comprehensive income--1,091(49)-1,042
Total comprehensive income--1,091(49)26,19627,238
Employee benefits reserve470(426)---44
Total contributions by and distributions to owners470(426)---44
Equity as at 31 January 2020268,5441,232(25,057)(49)274,972519,642
Equity as at 1 August 2020268,5441,32212,647(12)323,983606,484
Profit or loss for the period----6,3736,373
Other comprehensive income
Effective portion of changes in fair value of cash flow hedges--30,306--30,306
Exchange differences on translation of foreign operations---2-2
Income tax on other comprehensive income--(8,486)--(8,486)
Total other comprehensive income--21,8202-21,822
Total comprehensive income--21,82026,37328,195
Issue of new shares10196,082----196,082
Employee benefits reserve10148(637)---(489)
Total contributions by and distributions to owners196,230(637)---195,593
Equity as at 31 January 2021464,77468534,467(10)330,356830,272
STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 January 2021
PAGE 05 & 06INTERIM FINANCIAL STATEMENTS 2021
The accompanying notes form part of and are to be read in conjunction with these financial statements.The accompanying notes form part of and are to be read in conjunction with these financial statements.

STATEMENT OF FINANCIAL POSITION
As at 31 January 2021
STATEMENT OF CASH FLOWS
For the six months ended 31 January 2021
31 January 202131 January 202031 July 2020
UnauditedUnauditedAudited
Notes$’000$’000$’000
ASSETS
Cash and cash equivalents9,1336,9745,887
Trade and other receivables6123,03068,18463,057
Intangible assets5,2904,9594,230
Goods and services tax refundable9,3407,8416,398
Income accruals and prepayments7,5616,81112,404
Inventories7406,404306,441269,384
Derivative financial instruments63,4982,52522,530
Other current assets2,5002,5002,500
Total current assets626,756406,235386,390
Non-current assets
Property, plant and equipment81,007,149934,497965,104
Intangible assets49,26017,84542,503
Goodwill64,18919,14365,545
Other investments110110143
Derivative financial instruments9691,25314,084
Right-of-use assets15,58311,86118,497
Total non-current assets1,137,260984,7091,105,876
Total assets1,764,0161,390,9441,492,266
LIABILITIES
Trade and other payables324,218305,788238,770
Loans and borrowings9214,199174,328102,837
Current tax liabilities22,71432,43124,561
Derivative financial instruments8,90329,79814,148
Lease liabilities3,1264,6294,422
Total current liabilities573,160546,974384,738
Non-current liabilities
Loans and borrowings9276,956276,267426,754
Derivative financial instruments3,5528,8034,805
Deferred tax liabilities66,64931,29754,647
Lease liabilities13,4277,96114,838
Total non-current liabilities360,584324,328501,044
Total liabilities933,744871,302885,782
Net assets830,272519,642606,484
Equity
Share capital10464,774268,544268,544
Reserves35,142(23,874)13,957
Retained earnings330,356274,972323,983
Total equity attributable to equity holders of the Group830,272519,642606,484
Total equity and liabilities1,764,0161,390,9441,492,266
Period endedPeriod endedYear ended
31 January 202131 January 202031 July 2020
UnauditedUnauditedAudited
Notes$’000$’000$’000
Cash flows from operating activities
Cash receipts from customers611,349563,8301,316,076
Cash paid for milk purchased(320,097)(277,945)(545,792)
Cash paid to other creditors and employees(357,427)(269,580)(635,402)
Net movement in goods and services tax(2,940)(4,155)(2,709)
Income tax payments2(1)(26,633)
Net cash (outflow)/inflow from operating activities5(69,113)12,149105,540
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired-(18,988)(72,927)
Interest received3049134
Purchase of property, plant and equipment(62,578)(87,321)(139,212)
Proceeds from sale of property, plant and equipment3,467(81)242
Purchase of intangible assets(11,364)(3,902)(13,262)
Net cash outflow from investing activities(70,445)(110,243)(225,025)
Cash flows from financing activities
Proceeds from the issuance of subordinated bonds9-180,000180,000
Transaction costs paid on issue of subordinated bonds-(3,294)(3,370)
Repayment of borrowings9(65,000)(120,000)(43,224)
Net movement in working capital facility926,36344,6523,211
Interest paid(11,786)(11,163)(23,048)
Repayment of lease liabilities(2,808)(1,144)(4,185)
Receipt of cash from issue of shares10196,081--
Net cash inflow from financing activities142,85089,051109,384
Net increase/(decrease) in cash and cash equivalents3,292(9,043)(10,101)
Cash and cash equivalents at the beginning of the financial year5,88716,00716,007
Effects of exchange rate changes on cash and cash equivalents(46)10(19)
Cash and cash equivalents at end of year9,1336,9745,887
PAGE 07 & 08INTERIM FINANCIAL STATEMENTS 2021
The accompanying notes form part of and are to be read in conjunction with these financial statements.The accompanying notes form part of and are to be read in conjunction with these financial statements.

The consolidated condensed interim financial statements presented are those of the Group, including Synlait Milk Limited
and its subsidiaries Synlait Milk Finance Limited, The New Zealand Dairy Company Limited, Eighty Nine Richard Pearse
Drive Limited, Synlait Business Consulting (Shanghai) Limited, Dairyworks Limited, and Dairyworks (Australia) Pty Limited.
Readers of these financial statements should be mindful of the impact of the acquisition of Dairyworks Limited on 1 April
2020 when making comparisons to the comparative periods presented.
Synlait Milk Limited is primarily involved in the manufacture and sale of dairy products.
The parent company, Synlait Milk Limited, is a profit-oriented entity, domiciled in New Zealand, registered under the
Companies Act 1993 and listed on the New Zealand Stock Exchange and the Australian Securities Exchange. Synlait
Milk Limited is a FMC reporting entity under the Financial Market Conducts Act 2013 and its financial statements comply
with that Act.
The unaudited consolidated condensed interim financial statements have been prepared in accordance with Generally
Accepted Accounting Practice (NZ GAAP) as appropriate for interim financial statements. They comply with International
Accounting Standard 34 (IAS 34) and New Zealand equivalent to International Accounting Standard 34 (NZ IAS 34)
Interim Financial Reporting and other applicable financial reporting standards appropriate for profit oriented entities.
Synlait Milk Limited is subject to seasonal fluctuations which have an impact on both revenue and production levels due
to northern hemisphere dairy market demand and the dairy milking season. Synlait Milk Limited recognises this is the
nature of the industry and plans and manages the business accordingly.
Items included in the condensed interim financial statements of the Group are measured using the currency of the
primary economic environment in which each entity operates (‘the functional currency’). The financial statements are
presented in New Zealand Dollars ($), which is the functional currency of the parent and are rounded to the nearest
thousand ($000).
There have been no significant changes in accounting policies during the current period. The same accounting policies
and methods of computation are followed in these financial statements as the most recent annual financial statements
for the year ended 31 July 2020.
Economic conditions and uncertainties
Current global economic conditions continue to be highly volatile due to the COVID-19 pandemic, which was declared in
March 2020. Ongoing uncertainty around the magnitude, duration and severity of the COVID-19 pandemic could affect
the significant estimates and judgements used in the preparation of the consolidated financial statements. Management
continues to assess the impact of COVID-19 on all aspects of the Group’s supply chain and financial performance and
position, in particular the carrying value of receivables and inventory, the impact of key customer demand on revenue,
the timing of receivables collection on cashflows, impairment of assets such as goodwill and intangibles, and any impact
from currency volatility on the Group portfolio of derivatives.
Milk accrual
At interim reporting date, the milk accrual is a key management estimate. The milk accrual represents the amount
the Group is forecasting to pay its suppliers for the current year less advance payments made during the period. The
Group’s policy is to value its inventory using the weighted average monthly milk price necessary to achieve the Group’s
forecast annual milk price for the season. Managements’ forecast of the milk price for the season is the basis of the
calculation of the milk accrual and at interim reporting date requires judgement from management. Key assumptions
in the calculation of the forecast annual milk price for the season include dairy commodity prices, on-farm milk
composition, sales and production curves, annual foreign exchange conversion rate and other conversion costs.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the six months ended 31 January 2021
01. REPORTING ENTITY
02. BASIS OF PREPARATION OF SIX MONTHLY FINANCIAL REPORT
PAGE 09 & 10INTERIM FINANCIAL STATEMENTS 2021

(a) Reportable segments
NZ IFRS 8 Operating Segments requires disclosure of information about operating segments, products and services,
geographical areas of operation, and major customers. Information is based on internal management reports, both in
the identification of operating segments and measurement of disclosed segment information.
The Group’s chief operating decision maker is the Synlait Milk Limited Board of Directors (“the board”). Previously the
board made resource allocation decisions based on expected cash flows and results of the Group’s operations as a
whole rather than on a segment basis. In prior years, the Group has therefore reported that it operates in one segment,
being the manufacture and sale of fresh milk and milk powder related products.
During the period ended 31 July 2020, the Group acquired selected assets in Talbot Forest Cheese Limited through
its newly incorporated subsidiary Synlait Foods (Talbot Forest) Limited and also acquired Dairyworks Limited. On
31 December 2020, Synlait Foods (Talbot Forest) Limited was amalgamated into Dairyworks Limited. Following the
acquisition, the Group has determined that the company (and it’s predecessor companies) operates in the manufacture
and sale of cheese and other products segment, and that this segment exceeds the qualitative thresholds for a
reportable segment under NZ IFRS 8.
As such, although the Group continues to report internally on a consolidated Group basis, the Group has identified the
following segments for external reporting purposes:
• Manufacture and sale of fresh milk and milk powder related products (Nutritionals, ingredients, fresh milk)
• Manufacture and sale of cheese and other products (Cheese, butter, ice-cream)
The accounting policies of the Group have been consistently applied to the operating segments. Net Profit After
Tax (NPAT) is the measure reported to the chief operating decision-maker for the purposes of resource allocation
and assessment of performance for the Group. A consistent measure has been used for the purpose of reporting
the performance of each operating segment. Inter-segment pricing is determined on an arm’s length basis.
(b) Description of segments
The following is an analysis of the Group’s revenue and results by reportable segment:
The following is an analysis of other financial information by reportable segment:
03. SEGMENT REPORTING
31 January 202131 January 202131 January 202131 January 2021
Unaudited
$000’s
Unaudited
$000’s
Unaudited
$000’s
Unaudited
$000’s
Nutritionals,
ingredients,
fresh milk
Cheese,
butter,
ice-cream
EliminationsTotal
External revenue551,625112,557-664,182
Inter-segment revenue from sale of goods10,097-(10,097)-
Revenue from sale of goods561,722112,557(10,097)664,182
Net profit after tax for the period4,5211,852-6,373
31 January 202131 January 202131 January 202131 January 2021
Unaudited
$000’s
Unaudited
$000’s
Unaudited
$000’s
Unaudited
$000’s
Nutritionals,
ingredients,
fresh milk
Cheese,
butter,
ice-cream
EliminationsTotal
Finance income426-30
Finance expense(8,961)(1,759)-(10,720)
Depreciation and amortisation(24,967)(3,142)-(28,109)
Income tax (expense) / benefit(1,369)(718)-(2,087)
Total assets1,588,829175,187-1,764,016
Total liabilities(859,370)(74,374)-(933,744)
Total net assets729,459100,813-830,272
31 January 202031 January 202031 January 202031 January 2020
Unaudited
$000’s
Unaudited
$000’s
Unaudited
$000’s
Unaudited
$000’s
Nutritionals,
ingredients,
fresh milk
Cheese,
butter,
ice-cream
EliminationsTotal
External revenue551,3277,959-559,286
Inter-segment revenue from sale of goods10,298-(10,298)-
Revenue from sale of goods561,6257,959(10,298)559,286
Net profit (loss) after tax for the period28,154(1,958)-26,196
Finance income454-49
Finance expense(8,558)(52)-(8,610)
Depreciation and amortisation(20,514)(661)-(21,175)
Income tax (expense) / benefit(11,447)763-(10,684)
Total assets1,339,81951,125-1,390,944
Total liabilities(855,282)(16,020)-(871,302)
Total net assets484,53735,105-519,642
31 July 202031 July 202031 July 202031 July 2020
Unaudited
$000’s
Unaudited
$000’s
Unaudited
$000’s
Unaudited
$000’s
Nutritionals,
ingredients,
fresh milk
Cheese,
butter,
ice-cream
EliminationsTotal
External revenue1,209,98092,045-1,302,025
Inter-segment revenue from sale of goods13,296-(13,296)-
Revenue from sale of goods1,223,27692,045(13,296)1,302,025
Net profit (loss) after tax for the period77,334(2,126)-75,208
Finance income1259-134
Finance expense(18,661)(1,116)-(19,777)
Depreciation and amortisation(45,362)(2,698)-(48,060)
Income tax (expense) / benefit(27,890)1,197-(26,693)
Total assets1,294,742197,524-1,492,266
Total liabilities(787,218)(98,564)-(885,782)
Total net assets507,52498,960-606,484
PAGE 11 & 12INTERIM FINANCIAL STATEMENTS 2021

(c) Geographical revenue
The Group operates in one principal geographical area being New Zealand. Although the Group sells to many different
countries, it is understood that a significant portion of both infant nutritional and ingredients sales are ultimately
consumed in China.
The proportion of sales revenue by geographical area is summarised below:
All Group non-current assets are located in New Zealand, other than $0.6m (31 January 2020: $0.7m, 31 July 2020:
$0.9m) located in China.
(d) Other profit and loss disclosures
Revenues of approximately 60% (31 January 2020: 63%, 31 July 2020: 66%) are derived from the top three
external customers.
03. SEGMENT REPORTING (CONTINUED)04. EXPENSES
Period endedPeriod endedYear ended
31 January 202131 January 202031 July 2020
UnauditedUnauditedAudited
China13%8%5%
Rest of Asia24%23%19%
Middle East and Africa5%6%8%
New Zealand51%35%43%
Australia5%24%22%
Rest of World2%4%3%
Total100%100%100%
Period endedPeriod endedYear ended
31 January 202131 January 202031 July 2020
UnauditedUnauditedAudited
Notes$’000$’000$’000
The following items of expenditure are included in cost of sales
Depreciation and amortisation22,60717,17238,851
Employee benefit expense41,00133,82178,748
Kiwisaver contributions1,0597491,656
(Decrease) / increase in inventory provision7(585)1,4711,702
Increase / (decrease) in onerous contracts provision71,235(397)(156)
The following items of expenditure are included in sales and distribution
Depreciation and amortisation3,2022,8695,936
Employee benefit expense8,2465,64813,137
Kiwisaver contributions196153376
The following items of expenditure are included in administrative and
operating expenses
Depreciation and amortisation2,3001,1343,273
Employee benefit expense10,47110,79021,467
Kiwisaver contributions282276618
Directors fees414369802
Share based payments expense673321523
Impairment of intangibles5301,5611,561
PAGE 13 & 14INTERIM FINANCIAL STATEMENTS 2021

05. RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH
OUTFLOW FROM OPERATING ACTIVITIES
07. INVENTORIES
06. TRADE AND OTHER RECEIVABLES
Period endedPeriod endedYear ended
31 January 202131 January 202031 July 2020
UnauditedUnauditedAudited
$’000$’000$’000
Profit for the period6,37326,19675,208
Non-cash and non-operating items:
Depreciation and amortisation of non-current assets25,09419,30243,112
Depreciation of right-of-use assets3,0151,8744,948
Loss on sale of property, plant and equipment2781355
Impairment of property, plant and equipment and intangible assets5301,5614,761
Impairment recovery on property, plant and equipment--(2,958)
Share of loss / (gain) from associate33-(33)
Non-cash share based payments expensive(673)321523
Interest costs classified as financing cash flow10,7208,61019,777
Interest received classified as investing cash flow(30)(49)(134)
Loss on derecognition of financial assets4369381,747
Deferred tax3,9387,4699,291
(Gain) / loss on derivative financial instruments(4,044)96(23)
Unrealised foreign exchange loss (gain)46(10)6
Movements in working capital:
(Increase) / decrease in trade and other receivables(59,973)(6,251)1,833
Decrease / (increase) in income accruals and prepayments4,8432,743(2,850)
(Increase) in inventories(137,021)(141,591)(104,533)
(Increase) in goods and services tax refundable(2,942)(4,152)(2,709)
Increase in trade and other payables82,36290,16534,673
(Decrease) / increase in current tax liabilities(1,847)3,211(4,659)
Working capital items acquired-1,63527,205
Net cash inflow from operating activities(69,113)12,149105,540
Period endedPeriod endedYear ended
31 January 202131 January 202031 July 2020
UnauditedUnauditedAudited
$’000$’000$’000
Raw materials at costs82,58046,37671,305
Work in progress at cost26,94010,71211,573
Finished goods at cost255,699246,941178,336
Finished goods at net realisable value41,1852,4128,170
Total inventories406,404306,441269,384
The Group has derecognised trade receivables that have been sold pursuant to the terms of receivables purchase
agreements that the Group has entered into with its bankers. The Group has assessed the terms of the agreements and
has determined that substantially all the risks and rewards have been transferred to the respective banks.
Raw material inventories at $82.6m (16,667 MT) have increased (31 January 2020: $46.4m, 9,455 MT; 31 July 2020:
$71.3m, 13,614 MT), primarily due to the acquisitions of subsidiaries with a business model geared towards a higher
holding of raw materials than finished goods.
Work in progress inventories at $26.9m (3,537 MT) have increased (31 January 2020: $10.7m, 1,578 MT; 31 July 2020:
$11.6m, 1,678 MT), also from subsidiary acquisition with a larger holding of cheese undergoing the maturation process.
Finished goods have increased to $296.9m (60,101 MT) (31 January 2020: $249.4m, 48,144 MT; 31 July 2020: $186.5m,
32,109 MT). The increase half on half relates to finished goods holdings of acquired subsidiaries, and a larger holding
of lower value commodity products, due to reduced demand for infant formula converting the fixed milk pool into
commodity powders.
The cost of inventories recognised as an expense during the year was $567.9m (31 January 2020: $460.9m; 31 July
2020: $1,098.3m). The cost of inventories recognised as an expense includes $4.6m (31 January 2020: $2.5m; 31 July
2020: $10.9m) in respect of write downs of inventory to net realisable value.
The total inventory condition provision as at reporting date was $1.4m, of which $1.2m related to finished goods
and $0.2m to raw materials (31 January 2020: $1.8m, all related to finished goods; 31 July 2020: $2.0m, $1.8 for
finished goods and $0.2m for raw materials). The decrease results from production mix gearing towards less-complex
commodity products, leading to lower production issues.
In addition, the total onerous contracts provision as at reporting date was $1.6m (31 January 2020: $0.1m; 31 July 2020:
$0.3m). Onerous contracts have increased due to unfavourable foreign currency exchange rates lowering converted
revenues, and rising milk prices driving a higher cost to fulfil.
08. PROPERTY, PLANT AND EQUIPMENT
During the six months ended 31 January 2021, $69.3m has been added to capital work in progress relating primarily to
three projects (Drystore 4 and rail siding project, Dunsandel Farms, and Synlait Pokeno). During this period, $105.2m
of historical work in progress as well as additions during the six months relating primarily to three projects (Drystore 4,
Dunsandel Farms, and Liquid Products UHT plant) have been transferred to fixed assets.
PAGE 15 & 16INTERIM FINANCIAL STATEMENTS 2021

09. LOANS AND BORROWINGS10. SHARE CAPITAL
11. RELATED PARTY TRANSACTIONS
Interest bearing liabilities are recognised initially at fair value, net of transaction costs incurred. Interest bearing liabilities
are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the
redemption value is recognised in the profit and loss component of the consolidated statement of comprehensive
income over the period of the borrowings using the effective interest method.
The Group had 218,581,661 ordinary shares on issue as at 31 January 2021 (31 January 2020: 179,306,908, 31 July
2020: 179,306,908).
During the reporting period, 59,068 new ordinary shares were granted to participants of the Group’s Long Term Incentive
scheme as a result of share options that were granted under the scheme vesting and being converted to ordinary shares
(31 January 2020: 83,880, 31 July 2020: 83,880). These shares were issued to the participants at no cost.
On 18 November 2020 32,785,933 shares were granted to participants of an underwritten placement announced on
10 November 2020 for total proceeds of $167.2m. On 1 December 2020 a further 6,429,752 shares were granted to
participants of a share purchase plan for existing shareholders which was also announced on 10 November 2020
for total proceeds of $32.8m. Total transaction costs for shares issued under the underwritten placement and share
purchase plan were $3.9m for net proceeds of $196.1m.
Parent entity
Bright Dairy Holding Limited hold 39.01% of the shares issued by the Synlait Milk Limited (31 January 2020: 39.02%;
31 July 2020: 39.02%). Bright Dairy Holding Limited is a subsidiary of Bright Food (Group) Co. Limited, a State
Owned Enterprise domiciled in the Peoples Republic of China.
Other related entities
In June 2013 a subsidiary of Synlait Milk Limited, Synlait Milk Finance Limited, was set up primarily for holding all
banking facilities for the Group and related interest rate swaps. Funds are loaned to Synlait Milk Limited and interest
is charged at market rates.
In January 2015, the Group acquired 25% of the shares of Sichuan New Hope Nutritionals, an infant formula company
registered in China. This company owns and markets the “Akara” and “E-Akara” infant formula brands in the Chinese
market, which are exclusively manufactured by Synlait Milk Limited. New Hope Innovation (Hong Kong) Trading
Company Limited is a related entity of Sichuan New Hope Nutritionals and is engaged in the import and export of dairy
foods. Main products include whole milk powder, skim milk powder and whey powder. The company is the Hong Kong
operation of the Chinese New Hope Dairy group, New Hope Dairy.
In May 2017 the Group acquired 100% of the share capital of The New Zealand Dairy Company Limited and Eighty Nine
Richard Pearse Drive Limited. The New Zealand Dairy Company Limited was constructing a blending and canning plant
in Auckland, which was subsequently sold to Synlait Milk Limited. The New Zealand Dairy Company Limited is now a
nontrading entity. Eighty Nine Richard Pearse Drive Limited owns the land and buildings at which the Auckland blending
and canning plant was constructed. Eighty Nine Richard Pearse Drive Limited leased its land and buildings to The New
Zealand Dairy Company Limited, and now leases them to Synlait Milk Limited.
The bank loans and working capital facility within the Group are secured under the terms of the General Security Deed
dated 26 June 2013, by which all present and future property is secured to the ANZ Bank and Bank of New Zealand.
The Group facilities include:
• A secured revolving credit facility (Facility A) of $100m that matures on 1 October 2021.
• A secured revolving credit facility (Facility B and Facility C) of $100m that matures on 1 August 2023.
• A secured working capital facility of NZD $250m that matures on 30 September 2021.
The Group is subject to capital requirements imposed by its bank through covenants agreed as part of the lending
facility arrangements. The Group has met all externally imposed capital requirements for the six months ended 31
January 2021, 31 January 2020 and the year ended 31 July 2020.
Retail bonds:
Borrowings under the retail bond programme are supported by a Master Trust Deed and supplemented by the Series
Supplement entered into between the Group and the New Zealand Guardian Trust Company Limited. The retail bonds
are unsecured and subordinated and mature on 17 December 2024. At 31 January 2021, the retail bond had a fair value
of $184.4m (31 January 2020: $181.1m 31 July 2020: $187.7m), based on NZX Debt Market valuation.
Period endedPeriod endedYear ended
31 January 202131 January 202031 July 2020
UnauditedUnauditedAudited
$’000$’000$’000
Current liabilities
Working capital facility (syndicated) NZD77,90099,80068,910
Working capital facility (syndicated) USD51,29944,52833,927
Revolving credit facility85,00030,000-
214,199174,328102,837
Non-current liabilities
Revolving credit facility100,000100,000250,000
Loan facility fees(373)(440)(259)
Subordinated Bonds180,000180,000180,000
Bond facility fees(2,671)(3,293)(2,987)
276,956276,267426,754
PAGE 17 & 18INTERIM FINANCIAL STATEMENTS 2021

11. RELATED PARTY TRANSACTIONS (CONTINUED)12. CONTINGENCIES
13. COMMITMENTS
14. EVENTS OCCURRING AFTER THE REPORTING PERIOD
In May 2019, Synlait Business Consulting (Shanghai) Limited was incorporated. The wholly owned foreign entity started
operations from 1 August 2019 and the principal activity of the entity is to provide services to assist Synlait to market
products in China.
On 1 August 2019, the Group acquired selected assets and liabilities of Talbot Forest Cheese Limited. The acquirer was
a newly incorporated company, Synlait Foods (Talbot Forest) Limited. The acquisition included a cheese manufacturing
plant located in Temuka, New Zealand, capable of manufacturing a variety of cheese products. On 31 December 2020,
Synlait Foods (Talbot Forest) Limited was amalgamated into Dairyworks Limited.
On 1 April 2020, the Group acquired 100% of the share capital in Dairyworks Limited. Dairyworks Limited specialises
in the processing, packaging, and marketing of dairy products, including cheese, butter, and milk powder. Dairyworks
Limited owns an Australian subsidiary, Dairyworks (Australia) Pty Limited. Refer to the Group’s 31 July 2020 financial
statements for additional information regarding the acquisition of Dairyworks Limited.
(a) Transactions with other related parties
As at 31 January 2021 the Group had no contingent liabilities or assets (31 January 2020: $nil, 31 July 2020 $nil).
The Group has committed expenditure as at 31 January 2021 for the construction of a significant processing
modification to the Pokeno processing plant of $42.0m (31 January 2020: $nil, 31 July 2020: $nil), Dairyworks plant
upgrades of $4.0m (31 January 2020: $nil, 31 July 2020: $nil) and the SAP implementation project of $11.7m (31 January
2020: $nil, 31 July 2020: $17.0m).
The Group also has remaining commitments relating to the initial construction of the Pokeno dryer and related facilities
of$5.7m as at 31 January 2021 (31 January 2020: $18.5m, 31 July 2020 $10.3m) and the Drystore 4 rail siding project
which has committed expenditure of $5.9m as at 31 January 2021 (31 January 2020: $20.1m, 31 July 2020: $14.1m).
Banking facilities
Subsequent to reporting date, the Group renegotiated and amended certain terms and conditions of its banking facility
agreements with its banking syndicate.
All transactions with related parties are at arm’s length on normal trading terms.
Period endedPeriod endedYear ended
31 January 202131 January 202031 July 2020
UnauditedUnauditedAudited
$’000$’000$’000
Purchase of goods and services
Bright Dairy and Food Co Ltd - Directors fees133102259
Sales of goods and services
Bright Dairy and Food Co Ltd - Sale of milk powder products5,531-4,074
New Hope Innovation (Hong Kong) - Sale of milk powder products8091,7731,773
Period endedPeriod endedYear ended
31 January 202131 January 202031 July 2020
UnauditedUnauditedAudited
$’000$’000$’000
Current receivables (sales of goods and services)
Bright Dairy and Food Co Ltd - Sale of milk powder products3,5641-
Bright Dairy and Food Co Ltd - Reimbursement of costs(625)(335)(492)
Sichuan New Hope Nutritionals Ltd - Sale of milk powder products(65)(72)(71)
Sichuan New Hope Nutritionals Ltd - Other costs269300292
New Hope Innovation (Hong Kong) - Sale of milk powder products2531,122-
(b) Outstanding balances
The following balances are outstanding at the reporting date in relation to transactions with related parties:
PAGE 19 & 20INTERIM FINANCIAL STATEMENTS 2021

INDEPENDENT AUDITOR’S REVIEW REPORT TO
THE SHAREHOLDERS OF SYNLAIT MILK LIMITED
Conclusion
We have reviewed the unaudited condensed consolidated interim financial statements (‘interim financial statements’) of Synlait Milk
Limited and its subsidiaries (‘the Group’) which comprise the statement of financial position as at 31 January 2021, and the statement
of comprehensive income, statement of changes in equity and statement of cash flows for the period ended on that date, and a
summary of significant accounting policies and other explanatory information on pages 4 to 20.
Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements of the Group
do not present fairly, in all material respects, the financial position of the Group as at 31 January 2021 and its financial performance
and cash flows for the period ended on that date in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34 Interim
Financial Reporting.
Basis for Conclusion
We conducted our review in accordance with NZ SRE 2410 (Revised) Review of Financial Statements Performed by the
Independent Auditor of the Entity (‘NZ SRE 2410 (Revised)’). Our responsibilities are further described in the Auditor’s
Responsibilities for the Review of the Interim Financial Statements section of our report.
We are independent of the Group in accordance with the relevant ethical requirements in New Zealand relating to the audit of the
annual financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Other than in our capacity as auditor and the provision of taxation advice, we have no relationship with or interests in Synlait Milk
Limited or its subsidiaries. These services have not impaired our independence as auditor of the Company and Group.
Directors’ responsibilities for the interim financial statements
The directors are responsible on behalf of the Company for the preparation and fair presentation of the interim financial statements
in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34 Interim Financial Reporting and for such internal control as
the directors determine is necessary to enable the preparation and fair presentation of the interim financial statements that are free
from material misstatement, whether due to fraud or error.
Auditor’s responsibilities for the review of the interim financial statements
Our responsibility is to express a conclusion on the interim financial statements based on our review. NZ SRE 2410 (Revised)
requires us to conclude whether anything has come to our attention that causes us to believe that the interim financial statements,
taken as a whole, are not prepared, in all material respects, in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34
Interim Financial Reporting.
A review of the interim financial statements in accordance with NZ SRE 2410 (Revised) is a limited assurance engagement. We
perform procedures, primarily consisting of making enquiries, primarily of persons responsible for financial and accounting matters,
and applying analytical and other review procedures. The procedures performed in a review are substantially less than those
performed in an audit conducted in accordance with International Standards on Auditing (New Zealand) and consequently do not
enable us to obtain assurance that we might identify in an audit. Accordingly we do not express an audit opinion on the interim
financial statements.
Restriction on use
This report is made solely to the company’s shareholders, as a body. Our review has been undertaken so that we might state to the
company’s shareholders those matters we are required to state to them in a review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the company’s shareholders as a body, for
our engagement, for this report, or for the conclusions we have formed.
This review report relates to the unaudited interim financial statements of Synlait Milk Limited for the 6 months ended 31 January 2021 included on
Synlait Milk Limited’s website. The Board of Directors is responsible for the maintenance and integrity of Synlait Milk Limited’s website. We have
not been engaged to report on the integrity of Synlait Milk Limited’s website. We accept no responsibility for any changes that may have occurred
to the unaudited interim financial statements since they were initially presented on the website. The review report refers only to the unaudited
interim financial statements named above. It does not provide an opinion on any other information which may have been hyperlinked to/from these
unaudited interim financial statements. If readers of this report are concerned with the inherent risks arising from electronic data communication
they should refer to the published hard copy of the unaudited interim financial statements and related review report dated 26 March 2021 to
confirm the information included in the unaudited interim financial statements presented on this website. Legislation in New Zealand governing the
preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Mike Hawken, Partner
for Deloitte Limited
Christchurch, New Zealand
26 March 2021
PAGE 21 & 22INTERIM FINANCIAL STATEMENTS 2021

---

SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION
For the six months ended 31 January 2021

PEAK MILKSHOULDER SEASON
December 2020
Downgrade
WHAT IS HAPPENING IN OUR BUSINESS
FY20FY21
VOLUMES
Synlait Production OutputCustomer Projected DemandCustomer Demand
INDICATIVE ONLY
?
• Synlait typically produces 45% to 50% of its infant base power during
the ‘shoulder season’ as milk quality is high and manufacturing capacity
is available.
• These infant base powder inventories are held to produce fully finished
consumer-packaged infant formula volumes as customer demand
formalises in future months.
• In the shoulder season of FY20, Synlait produced infant base powder
inventories on a forward demand forecast that assumed ongoing
growth of infant nutrition demand into FY21.
• The December 2020 downgrade was significant and sudden. It resulted
in infant base powder production dropping significantly as we reset
inventory levels to a new demand outlook.
• This dynamic has resulted in low utilisation of infant dryers
throughout FY21, which materially impacts Synlait’s profitability until a
recovery occurs.
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 03

FINANCIAL PERFORMANCE
Angela Dixon
Chief Financial Officer
Dairyworks’ performance continues
to meet our expectations. The team
expanded Dairyworks’ footprint over
the past 12 months launching finishing
butters and protein yoghurts. This has
been supported by strong EBITDA
growth and an increased market
share in Australia.
DAIRYWORKS
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 04

RESULTS AT A GLANCE
*
The impact of COVID-19, and ongoing recovery of our key customer, had a significant
impact on Synlait’s production and profitability.
• Net profit after tax $6.4 million.
• Revenue up 19% predominately driven by Dairyworks, supported by strong Global Dairy
Trade pricing, offset by consumer-packaged infant formula volumes.
• Gross profit down 28% reflected product mix moving away from consumer-packaged
infant formula into powders and creams, and lost manufacturing recoveries for infant base
powder production.
• EBITDA down 29% impacted by significant under recoveries due to a reduction in infant
base powder production.
• Full impact of depreciation and interest costs from capacity build now flowing through (up
33% and 17% respectively).
• Dairyworks is on track to deliver full year EBITDA growth of $15 million - $20 million in line
with expectations.
90
180
80
160
70
140
60
120
50
100
40
80
10
20
0
0
20
40
30
60
FY18
FY18
FY19
FY19
FY20
FY20
FY21
FY21
37.3
70.2
26.2
67.6
6.4
4 7.7
Net Profit After Tax
EBITDA
41.3
74.1
33.3
64.5
74.6
138.6
44.9
81.9
82.2
152.1
49.0
103.8
75.2
171.4
6.4
4 7.7
$ millions
$ millions
1H
2H
1H2H
HY20HY21% Change
Revenue559.3664.219%
Gross Profit82.959.7(28%)
EBITDA67.64 7.7(29%)
NPAT26.26.4(76%)
Depreciation Costs(21.2)(28.1)33%
Financing Costs(9.5)(11.1)17%
*Comparisons in this presentation are for the six months ended 31 January 2020 (HY20) unless stated otherwise.
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 05

REVENUE AND SALES VOLUMES
Total revenue up 19% to $664.2 million.
Key highlights:
• Dairyworks revenue contribution $112.6 million as its Australian market share
continued to increase.
• Global Dairy Trade pricing increased due to strong prices globally.
• Powders and creams sales increased due to a reduction in consumer-packaged
infant formula demand.
• Global shipping delays had an adverse impact on the volume of product
shipped and invoiced.
Consumer-packaged infant formula
• Volumes down 3,486 MT as our key customer’s demand profile resets.
• China-label volumes continued to grow. English-label sales fell as our
key customer responds to the impact of COVID-19 on the CBEC and
daigou channels.
• As a result of this, infant formula base powder production is down 61%.
Powders and creams
• Volumes up 10,766 MT as milk that had been planned for consumer-
packaged infant formula was switched into powders and creams towards
the end of the half.
Lactoferrin
• Sales remain strong up 21%, offset by softer pricing as global
capacity increases.
Liquid milk
• Volumes are stable and remain below expectations. We continue to work
in collaboration with Foodstuffs South Island to grow this partnership.
Cheese and Butter (Dairyworks)
• Strong domestic in-home demand, supported by increase in Australian
market share.
70080,000
70,000
600
60,000
500
50,000
400
40,000
100
10,000
00
200
20,000
300
30,000
HY18HY19HY20HY21
17,684
21,571
18,085
Sales Volumes*
16,839
44,435
61,274
73,800
67,830
75,110
56,116
46,259
57,025
$ millionsMT
Consumer Packaged Products
Powders and CreamRevenue
* Sales volume numbers exclude Dairyworks and Liquid Milk
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 06

PRODUCTION VOLUMES
Lactoferrin
• Production increased 1.9 MT or 16%.
• We continued to optimise lactoferrin extraction methods and
our facilities.
Milk
• Milk processed up 17.8% to 56 million kgMS as the North Island milk
pool increased.
Powders and creams
• First half powders and creams production up 15,735 MT or 22% as
sales mix changed.
• Infant formula base powder production reduced 61%.
Liquid milk
• Liquid milk volumes remain consistent at 15.5 million litres.
140,000
35
60
120,000
30
100,000
25
50
80,000
20
40
20,000
5
10
0
0
0
40,000
10
20
60,000
15
30
HY18
FY18
HY19
FY19
HY20
FY20
HY21
FY21
72,852
6.9
3.0
71,932
11.7
87,667
Production Volumes*
Lactoferrin Production Volumes (MT)
64,001
17,821
17,636
16.0
22.9
28.7
13.6
22,212
17.0
16,659
13.6
MT
MT
kgMS (m)
Powders and Cream
Consumer-packaged Products
Second facility
commissioned in FY19
Milk Processed
1H2H
9.0
12.0
*Excludes Dairyworks and Liquid Milk
81,822
90,488
94,144
104,326
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 07

GROSS PROFIT PERFORMANCE
• Gross profit reduced 28% to $59.7 million.
• This was driven by lower consumer-packaged infant formula sales as our
key customer reset its demand profile and rebalanced inventories. As a
consequence the need for infant base powder reduced significantly as
existing inventory was used to satisfy customer demand.
• Gross Profit / kgMS sold was impacted as product mix was switched
to lower margin commodity products due to decreased demand of
consumer-packaged infant formula and infant formula base powder.
• The sudden switch from NZD to USD sales mix resulted in unfavourable FX.
180
200
160
140
120
100
80
20
0
40
60
FY18FY19FY20FY21
85.9
82.9
59.7
86.0
80.5
166.5
100.4
186.3
120.8
203.7
59.7
220
Gross Profit$ millions
1H
2H
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 08

SG&A COSTS
Costs are a strong focus:
• Discretionary costs (consultancy, travel, entertainment) down $3.5 million.
• A reset of our organisational structure reduced salary costs. This is starting
to flow though with more savings to be realised in the second half. We
continue to right size our business structure for expected volumes in the
near term.
These savings are offset by:
• A full year of Dairyworks costs resulting in $4.5 million more costs than
in HY20.
• Depreciation continue to roll through from previous upgrades to
administration spaces.
• Higher technology costs relating to licencing and cyber protection costs.
• Other relates to asset impairments and bad debt write offs.
10
0
30
20
50
40
HY21OtherEmployee
costs
Discretionary
Spend
Information
Services
DepreciationDairyworks
and
subsidiary
HY20
3 7.1
4.5
1.2
1.3
1.4
(3.5)
(0.4)
41.6
SG&A Cost Movements$ millions
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 09

CASH FLOW
Operating
• Synlait typically experiences seasonality in cash flows due to the milk
production curve.
• Higher Global Dairy Trade pricing for milk has also impacted cash flow.
• HY21 operating cash flow $(69.1) million is down (HY20: $12.1 million) as a result
of lower product margin mix and an increase in receivables.
• This includes a full half year of Dairyworks receivables in HY21.
• Shipping delays impact timing of cash collections.
Investing
• Capital expenditure on property, plant and equipment was $62.6 million.
Financing
• Interest and fees paid up slightly from $11.2 million to $11.8 million with an
increase average debt levels partly offset by lower interest rates.
150
100
(50)
(100)
-
50
FY18FY19HY21FY20
(69.1)
75.0
23.4
98.4
136.7
105.5
(69.1)
31.5
105.2
12.1
93.4
200
Cash Flows From Operating Activities$ millions
1H
2H
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 10

NET DEBT
• Net debt (excluding lease liabilities) decreased to $485.1 million.
• $200 million equity raise completed. Reduced debt by $196.1 million
(net of transaction costs).
• Funds raised used to complete strategic investment phase, facility
modifications for Synlait’s new multinational customer, and to strengthen
the balance sheet. Funds raised are also being used to provide more
financial headroom as Synlait navigates COVID-19.
• Dairyworks acquisition increased debt by $95.9 million between HY20
and HY21, with consideration transferred (net cash) of $52.7 million and
$43.2 million loan acquired and repaid.
• While all banking covenant ratios were met during HY21, Synlait has
proactively engaged with its banking syndicate to increase its leverage
ratios to manage any risk at the end of FY21.
500
400
100
0
200
300
FY18HY18FY19HY19FY20HY20HY21
49.7
114.9
287.6
333.6
447.4
527.0
485.1
600
Net Debt$ millions
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 11

STRATEGY & OUTLOOK UPDATE
Leon Clement
Chief Executive Officer
The 30-wagon rail siding at Synlait
Dunsandel will be complete in May.
It will extend our highly integrated
manufacturing facility from farm-to-
can to farm-to-port with containerised
goods transported by rail between
Synlait Dunsandel and Lyttelton Port.
DUNSANDEL RAIL
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 12

OUR FOCUS NOW...
1
2
COVID-19
Growth from recent
Investments
Waste, yield
and efficiency
Organic growth and
recovery of infant
nutrition business
1
2
SHORT-TERM: MITIGATE COVID-19 COSTS AND CAPACITY CHANGES
LONG-TERM: PULL FORWARD VALUE AND ACCELERATE STRATEGY
VALUE
INDICATIVE ONLY
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 13

Finished ingredients ready to ship
from the newly-opened Dry Store 4
at Synlait Dunsandel
1
• Organisational structure reset to reduce salary costs and
ensure capabilities better aligned with strategy.
• Production approach reviewed to ensure facilities resourced
and optimised efficiently:
• Synlait Pokeno now manufactures ingredients only as it
focuses on preparation for our new multinational customer.
• Staff shift levels reduced at Synlait Auckland and Dunsandel
blending and canning facilities.
• Dundandel dryers optimised again new product mix.
• Year-to-date discretionary spend (consultancy, travel,
entertainment) reduced. Focus continues on cost control
across the business to help offset unavoidable spend.
$1.9M
$10.8M
$5.4M
$3.5M
SHORT-TERM FOCUS: MITIGATING
COVID-19 COST AND CAPACITY
CHANGES
OPERATING COST SAVINGS
(~$10.8 MILLION)
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 14 PAGE 14

An estimated 3,400 sleepers
were laid along 2,500m railway
tracks for Synlait’s rail siding.
Dry Store 4 and rail siding
• Dry Store 4 to be complemented by a 30-wagon rail siding in May.
• This will extend Synlait’s highly integrated manufacturing facility
from farm-to-can to farm-to-port with containerised goods trained
between Synlait Dunsandel and Lyttelton Port.
• Generates a permanent annualised EBITDA contribution of
$8 million from FY22 onwards.
Efficiency initiatives
• Waste reduction and yield improvement initiatives have a
annualised benefit of $3 million.
• Further improvements on quality and right-first-time production
reducing rework and waste.
1
SHORT-TERM FOCUS: MITIGATING
COVID-19: COST AND CAPACITY
CHANGES
VALUE CHAIN COST SAVINGS
(~$11 MILLION ANNUALISED)
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 15

$2 billion in revenue
Zero injuries
Zero defects
Zero losses
A Healthier
Synlait
Consumer
Foods
Nutrition,
Food Service
and Ingredients
2
+
ZERO
World Class
Value Chain
Net +ve impact on
planet and communities
+ve place to grow with
100% engagement
Net Positive
for the Planet
DOING MILK
DIFFERENTLY FOR A
HEALTHIER WORLD
DOING MILK DIFFERENTLY
FOR A HEALTHIER WORLD
HEART OUR PURPOSEHEAD OUR AMBITIONHANDS OUR STRATEGY
We narrowed our strategic focus having completed a phase of significant investment to create new growth opportunities.
It therefore made sense to refine and focus our growth strategy.
LONG-TERM FOCUS: PULL FORWARD
VALUE AND ACCELERATE STRATEGY
2
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 16

PHASE 1PHASE 2PHASE 3
Build
2015 - 20202021 - 20252026 - 2030
CREATE OPPORTUNITIES
AND REDUCE RISK
EXTRACT AND GENERATE
NEW VALUE
BUILD GROWTH
MOMENTUM
Fill and develop
capability
Expand in response
to demand
OUR FOCUS HAS MOVED TO EXTRACTING VALUE
FROM INVESTMENTS WE HAVE ALREADY MADE
2
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 17

CUSTOMERSFACILITIES CATEGORIES
INFANT NUTRITION
LACTOFERRIN
FRESH MILK AND CREAM
CHEESE
AMBIENT DAIRY DRINKS
FOOD SERVICE CREAMS
BUTTER
PLANT-BASED PRODUCT
DUNSANDEL
South Island Limited
2
THE VALUE WE CAN SEE COMES FROM LEVERAGING
OUR ASSETS: CUSTOMERS, CATEGORIES, AND FACILITIES
NEW ZEALAND / AUSTRALIA
MULTINATIONAL
CHINA
POKENO
PALMERSTON NORTH
AUCKLAND
HORNBY
TEMUKA
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 18

... AND WE ARE CHASING ~$200 MILLION WORTH OF VALUE
SHORT-TERM (Next 12 Months)MEDIUM-TERM (Next 12 - 24 Months)
FORMULATED LIQUID
NUTRITION
LONG-TERM (24 Months Plus)
LAUNCH MADE WITH BETTER MILK
(DIFFERENTIATED INGREDIENTS)
FOODSERVICE CREAMSSYNLAIT BRANDED
CONSUMER PRODUCTS
NEW MULTINATIONAL
CUSTOMER AT POKENO
CAPTURE VALUE OF MILK
COMPONENTS
WHEY
LACTOSE
CHEESE
FRESH
CASEIN
BUSINESS TO BUSINESS
BUSINESS TO CONSUMER
2
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 19

FY21 GUIDANCE UPDATE
As signalled earlier this month, Synlait is continuing to experience
significant uncertainty and volatility within its business. This is due to:
• Ongoing uncertainty in The a2 Milk Company’s expected demand
for the remainder of FY21 and FY22. Synlait does not currently
have sufficient confidence to forecast when this recovery will
occur. The resulting impact of this on Synlait’s business is
two-fold: demand for consumer-packaged infant formula remains
uncertain, which in turn impacts forward infant base powder
production and asset use.
• Synlait’s ingredients business. The sudden drop in consumer-
packaged infant formula demand, combined with rapidly rising
Global Dairy Trade prices, foreign exchange, and a changing
product mix, creates volatility which limits returns.
• Our expectation is that global shipping delays will continue and
further impact the FY21 result.
Board and management have considered the above factors and
how they will impact Synlait’s FY21 profitability. There is still a range
of scenarios contributing to the company’s profitability, and our
current outlook suggests a broadly breakeven FY21 NPAT result.
While all banking covenant ratios were met during HY21, Synlait
has proactively engaged with its banking syndicate to increase its
leverage ratios to manage any risk at the end of FY21. The company’s
FY21 business plan is fully funded by its current banking syndicate.
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 20

APPENDICES
Our in-house staff cafeteria at Synlait
Dunsandel brings teams together from
across the business on a daily basis.
DUNSANDEL CAFE
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 21

SALES VOLUME (MT)
HY19FY19HY20FY20HY21
Powders and Cream56,116106,80246,259101,22257,025
Consumer-Packaged Powders17,68442,90721,57149,18018,085
Lactoferrin6218309
Subtotal73,806149,73067,838150,43275,119
GP/MT
HY19FY19HY20FY20HY21
Powders and Cream959969899914*393
Consumer-Packaged Powders789800824824849
Lactoferrin397,938646,099823,492943,074798,575
Subtotal9491,2681,2341,352690
GROSS PROFIT PERFORMANCE BY CATEGORY
* Please note this number has been amended from the FY20 investor presentation as it was incorrectly calculated
GROSS PROFIT ($m)
HY19FY19HY20FY20HY21
Powders and Cream69.6142.259.6134.429
Consumer-Packaged Powders14.034.317.840.515.4
Lactoferrin2.313.36.328.47. 4
Subtotal85.9189.883.7203.351.8
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 22

BANK FACILITIES, COVENANTS AND BOND ISSUE
Synlait currently has four syndicated bank facilities in place with
ANZ and BNZ
1. Working capital facility (multi-currency) – facility limit of $250 million and
reviewed annually
2. Revolving credit facility (Facility A) – facility limit of $100 million maturing
1 October 2021
3. Revolving credit facility (Facility B) – facility limit of $50 million maturing
on 1 August 2023
4. Revolving credit facility (Facility C) – facility limit of $50 million maturing
on 1 August 2023
Bond issue
• $180 million of five-year unsecured subordinated fixed rate bonds listed on
the NZX Debt Market in December 2019
We have five key covenants in place with our bank syndicate
These are:
1. Interest cover ratio – EBITDA to interest expense of no less than 3.00x based on
full year forecast result
2. Minimum shareholders funds – no less than $400.0 million
3. Working capital ratio – inventory and debtors to working capital facility
outstanding of no less than 1.5:1
These final two covenants have been temporarily reset:
4. Leverage ratio 7.5x – total debt to EBITDA
5. Senior leverage ratio 4.75x – total debt excluding Subordinate Bond to EBITDA
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 23

DISCLAIMER
This presentation is intended to constitute a summary of certain information about the Synlait Group
(“Synlait”) or in connection with its half year 2021 financial results. It should be read in conjunction with,
and subject to, the explanations and views in documents previously released to the market by Synlait.
This presentation is not an offer or an invitation, recommendation or inducement to acquire, buy, sell
or hold Synlait’s shares or any other financial products and is not a product disclosure statement,
prospectus or other offering document, under New Zealand law or any other law.
This presentation is provided for information purposes only. The information contained in this
presentation is not intended to be relied upon as advice to investors and does not take into account
the investment objectives, financial situation or needs of any particular investor. Investors should
assess their own individual financial circumstances and should consult with their own legal, tax,
business and/or financial advisers or consultants before making any investment decision.
Any forward looking statements and projections in this presentation are provided as a general guide
only based on management’s current expectations and assumptions and should not be relied upon
as an indication or guarantee of future performance. Forward looking statements and projections
involve known and unknown risks, uncertainties, assumptions and other important factors, many
of which are beyond the control of Synlait and which are subject to change without notice. Actual
results, performance or achievements may differ materially from those expressed or implied in this
presentation. No person is under any obligation to update this presentation at any time after its
release except as required by law and the NZX Listing Rules, or the ASX Listing Rules.
Any forward looking statements in this presentation are unaudited and may include non-GAAP
financial measures and information. Not all of the financial information (including any non-GAAP
information) will have been prepared in accordance with, nor is it intended to comply with: (i) the
financial or other reporting requirements of any regulatory body or any applicable legislation; or (ii) the
accounting principles or standards generally accepted in New Zealand or any other jurisdiction, or with
International Financial Reporting Standards. Some figures may be rounded and so actual calculation of
the figures may differ from the figures in this presentation. Some of the information in this presentation
is based on non-GAAP financial information, which does not have a standardised meaning prescribed
by GAAP and therefore may not be comparable to similar financial information presented by other
entities. Non-GAAP financial information in this presentation has not been audited or reviewed.
Any past performance information in this presentation is given for illustration purposes only and is not
indicative of future performance and no guarantee of future returns is implied or given.
While all reasonable care has been taken in relation to the preparation of this presentation, to the
maximum extent permitted by law, no representation or warranty, expressed or implied, is made as
to the accuracy, adequacy, reliability, completeness or reasonableness of any statements, estimates
or opinions or other information contained in this presentation, any of which may change without
notice. To the maximum extent permitted by law, Synlait, its subsidiaries, and their respective directors,
officers, employees, contractors, agents, advisors and affiliates disclaim and will have no liability or
responsibility (including, without limitation, liability for negligence) for any direct or indirect loss or
damage which may be suffered by any person through use of or reliance on anything contained in,
or omitted from, this presentation.
All values are expressed in New Zealand currency unless otherwise stated.
All intellectual property, proprietary and other rights and interests in this presentation are owned by Synlait.
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 24

Investors and Media
Hannah Lynch
Corporate Affairs Manager
P: +64 21 252 8990
E: hannah.lynch@synlait.com
SYNLAIT MILK HALF YEAR INVESTOR PRESENTATION 2021PAGE 25

---

Synlait Milk Limited · 1028 Heslerton Road, RD13 Rakaia, Canterbury, New Zealand · +643 373 3000 · www.synlait.com

NZX: SML
ASX: SM1

29 March 2021

Synlait publishes HY21 result

Synlait Milk Limited (Synlait) today published its financial result for the six months ended 31 January 2021
1
:

• Revenue up 19% to $664.2 million
• EBITDA down 29% to $47.7 million
• NPAT down 76% to $6.4 million
• Consumer-packaged infant formula sales down 16% to 18,085 MT
• Lactoferrin production up 16% to 13.6 MT
• Dairyworks revenue $112.6 million

Synlait Chair Graeme Milne commented: “Our first half was challenging, and we continue to find ourselves
in a period of significant uncertainty and volatility as Synlait faces into several headwinds. This is impacting
our short-term operations and will impact our full year 2021 financial result (FY21).”

Synlait CEO Leon Clement commented: “We cannot control COVID-19 but we can control our response.
Our focus is now to mitigate the impact COVID-19 has had on our customers, as we manage costs and
capacity and pull forward value creation initiatives to accelerate the execution of our strategy.”

“We will need time to get through this, but we remain confident about our future. Our investment phase is
complete. We have the capacity, capability, and customer base to generate significant value. COVID-19 hit
us late, but we will emerge from the pandemic a stronger, more sustainable Synlait.

“Despite the short-term challenges, the fundamentals of our purpose, ambition and strategy remain the
same, and the opportunities ahead are exciting. Our team is mobilising around new opportunities that
generate growth, value, and efficiencies.”

FY21 guidance update

As signalled earlier this month, Synlait is continuing to experience significant uncertainty and volatility
within its business. This is due to:

• Ongoing uncertainty in The a2 Milk Company’s expected demand for the remainder of FY21 and
FY22. Synlait does not currently have sufficient confidence to forecast when this recovery will
occur. The resulting impact of this on Synlait’s business is two-fold: demand for consumer-
packaged infant formula remains uncertain, which in turn impacts forward infant base powder
production and asset use.

• Synlait’s ingredients business. The sudden drop in consumer-packaged infant formula demand,
combined with rapidly rising Global Dairy Trade prices, foreign exchange, and a changing product
mix, creates volatility which limits returns.

• Our expectation is that global shipping delays will continue and further impact the FY21 result.

1
Comparisons are for the six months ended 31 January 2020 (HY20) unless stated otherwise.

Synlait Milk Limited · 1028 Heslerton Road, RD13 Rakaia, Canterbury, New Zealand · +643 373 3000 · www.synlait.com

Board and management have considered the above factors and how they will impact Synlait’s FY21
profitability. There is still a range of scenarios contributing to the company’s profitability, and our current
outlook suggests a broadly breakeven FY21 NPAT result.

While all banking covenant ratios were met during HY21, Synlait has proactively engaged with its banking
syndicate to increase its leverage ratios to manage any risk at the end of FY21. The company’s FY21
business plan is fully funded by its current banking syndicate.

For more information contact:
Hannah Lynch
Corporate Affairs Manager
P: +64 21 252 8990
E: hannah.lynch@synlait.com

---

Results announcement

29 March 2021

Results for announcement to the market
Name of issuer Synlait Milk Limited
Reporting Period 6 months to 31 January 2021
Previous Reporting Period 6 months to 31 January 2020
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$664,182 18.8%
Total Revenue $664,182 18.8%
Net profit/(loss) from
continuing operations
$6,373 -75.7%
Total net profit/(loss) $6,373 -75.7%
Interim/Final Dividend
Amount per Quoted Equity
Security
Not proposing to pay dividends.
Imputed amount per
Quoted Equity Security
Not applicable.
Record Date Not applicable.
Dividend Payment Date Not applicable.
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$3.26 $2.66
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Please refer to the following accompanying documents:
• Synlait HY21 Chair & CEO Review
• Synlait HY21 Financial Statements
• Synlait HY21 Investor Presentation
Authority for this announcement
Name of person authorised
to make this announcement
Synlait Chair Graeme Milne
Contact person for this
announcement
Synlait Corporate Affairs Manager Hannah Lynch
Contact phone number +64 21 25 28990
Contact email address hannah.lynch@synlait.com
Date of release through
MAP
29/03/21

Unaudited financial statements accompany this announcement.

=== IR PAGE TRANSCRIPT: Synlait HY21 Conference Call Transcript 29 March 2021 ===

TRANSCRIPTION
Company: Synlait
Date: 29 March 2021
Time: 10:00am NZDT
Duration: 1 h 08 m
Reservation Number: 10011875

[START OF TRANSCRIPT]
Hannah Lynch: Good morning, everyone and welcome to Synlait Milk's half year results conference
call. My name is Hannah Lynch and I'm the corporate affairs manager here at
Synlait. I'm joined in the room here today by Leon Clement, our CEO and Angela
Dickson, our CFO. There'll be an opportunity to ask questions at the end of the
presentation from Leon and Angela. But if your question is not answered, please feel
free to follow up with me directly after the call. I'll now hand over to Leon.
Leon Clement: [Māori greeting] and welcome to Synlait's interim investor results presentation for the
financial year for FY 21. Thank you very much for joining this morning. For those of
you that have read forward in the presentation, or had a look at our guidance, you will
see that we are signalling an outlook of broadly break even for the full year FY 21.
Today's an opportunity for us to have a good look at the result for the first half, but
also to help understand how we're thinking about our business going forward. It's
been well signalled that the impact of the infant nutrition drop and our demand back
in December has been well signalled how that's impacted our organisation. And
today's an opportunity to further understand that, have a look at what's happening in
the organisation. Talk a little bit about what we are doing about the situation and why
we still feel really optimistic about the future in the medium to longterm.
Leon Clement: I've just got a couple of slides up front that I'll step through. And then I'll hand over to
Angela to talk through the financials and I'll come back to then talk through our plan
and the outlook going forward. Moving to our first slide. You'll see that revenue
continues to be a key feature of some of those results, we're up 19%. Slightly
different mix of what's driving that this half. We've got a full period impact of
Dairyworks coming in there, and you can see the reference to that, at just over 112
million for the first half year. So, that's a good result, and Dairyworks continues to
perform at or about the levels that we expected. Our core business revenue has also
been supported by strong global dairy trade prices. So, commodity prices drive
higher revenue outlook for us, but that has been offset by lower infant nutrition sales,
which you'll see later on in the pack.
Leon Clement: The next metric there is the consumer package, infant formula sales, which is down
16% on period, but what's more relevant there is the considerable drop in infant base

powder production, which is down more than 60%. That's a core driver in our
business and I'll come back a little bit later just to why that has a material impact on
the way that we operate and perform. EBITDA 29%, largely driven by again, the
infant nutrition drop and the decline on NPAT demonstrates the importance of
keeping our plants full and the impact of those base powder production levels being
down. NPAT at 6.4 million for the period down 70% on prior period. I'll just move
through to slide three now, before I hand to Angela. This is a really important
contextual slide for you to understand what's going on in our business and why a
sudden drop and forward demand for our customers results in us, essentially,
considerably dropping the utilisation of our factories, which drives our profitability for
us.
Leon Clement: Many of you have been following Synlait for some time will know that we have a
seasonal nature for the production in our organisation. In our first half we're
predominantly focused on processing peak milk. New Zealand has a seasonal milk
curve, which starts about October, what we call peak season and runs through till
about December, January. During that period, our plants are largely focused on
processing milk into commodities. Because the milk flow is so high, we can't slow our
dryers down to make high value infant nutrition. The best time for us to produce our
base powders for infant nutrition is typically between January to April, May. We call
that our shoulder season and it's when we have a combination of high quality milk
and capacity in our dryers to be able to run. As you can see from the chart, back in
the shoulder season in the second half of FY 20, we were predicting that our infant
nutrition business would continue to grow on the FY 20 levels.
Leon Clement: For those of you that remember we produced about... Or we sold about 50,000
tonnes of infant nutrition and the FYI 20 year. So our production plan and that
shoulder season reflected that growth rate and was producing materials accordingly.
What the suddenness of the drop and infant nutrition outlook coming through in
December, we had to rapidly reset our production levels within our factories so that
we could reset our inventories to a much softer forward outlook. That meant that the
product that we'd produced in the second half of last year largely covered us for
much more of the demand for FY 21. And essentially we turned our plants right down
and experienced what's typically described as a classic bullwhip effect in the supply
chain. This factor has been made slightly worse because of the seasonal nature of
our business. It's also been further impacted by the fact that we're emerging from a
significant investment phase and are carrying the costs of additional capacity that we
have built.
Leon Clement: And finally, as we flipped the infant nutrition production over to ingredients, we faced
quite a volatile commodity in ingredients market, with product mix diverging, markets
and customer mix also diverging for us. And finally, the shipping delays have further
impacted our results in this half. So I think it's really important we set the scene for
the dynamic in our business at the moment. In a growth year, we typically produce
more than we will sell because we're looking forward to a higher demand profile on
the following year. In a declining year we're forced to produce less than we plan to
sell as we reset inventories for a new outlook. That's the dynamic in our business at

the moment, it re stabilises as we get back in balance, but obviously this year we're
resetting ourselves and that's having the impact on forward outlook. So I'll ask that
you keep that context in mind as Angela walks through our financials and I'll return at
the end to take you through what we're doing about it and why we remain optimistic
about our future. Angela.
Angela Dixon: Good morning, everyone. Thank you, Leon. I'm just going to really focus on the half
results for the year, but as you'll see, a lot of those drivers flow through, into our
outlook. So starting on page five, the results at the glance, the impact of COVID and
the ongoing recovery of our key customer is having a significant impact on production
and profitability. I'll walk you through that. As Leon had outlined, both in this half and
going forward. As Leon said we've got a net profit after tax of 6.4 million, and that's
significantly down on same period last year. And you can see that in the graph to the
right and revenue, while being up, has been significantly impacted by our infant
formula volumes and our base powder production.
Angela Dixon: Therefor, EBITDA is down 29% for the half, and it has been further influenced by the
full impact of depreciation and interest costs, as a result of that capacity bills and
previous years continuing to flow through. On a more positive note, as Leon alluded
to, Dairyworks is on track to deliver a full EBITDA growth of 15 to 20 million in line
with what we have signalled in the past. Now onto page six, revenue in sales
volumes, as I explained earlier, revenue is up 19% and it's predominantly through the
inclusion of Dairyworks, our new acquisition last year, higher commodity volumes
and GDT prices having an influence as well. Also, we have been impacted by the
global shipping delays that everyone's well-versed about, and this is having an
adverse impact on our ability to get product out to customers. This particularly
impacted in December and January this year.
Angela Dixon: In a little bit more detail, the consumer packaged infant formula volumes were down
about three and a half thousand metric tonne, as our key customer reset their profile
through the year. China-label volumes did continue to grow in the half and English-
label was the label that fell, reflecting the demand profile was the daigu channel
issues. As emphasised earlier the biggest impact has been this base formula
production, which is down over 60%. We have had some small offsets in the half
through powders and creams, or otherwise referred to as ingredients, where we have
had increased sales of about 11,000 metric tonnes.
Angela Dixon: We've also had some positive impacts through Lactoferrin. So our sales have
remained strong at 21%, offset by a softer pricing as global capacity increases
around the world. Liquid milk volumes continue to be stable, but remain below
expectations. We will continue to work in collaboration with food stuff as we foster
this partnership more. Pleasingly cheese and butter has head strong domestic
demand through the COVID periods, we've had supported by an increase in the
Australian market share. It's really pleasing to see the success of this acquisition
come through into our results this half.

Angela Dixon: Moving on to page seven, production volumes from a production perspective, the half
is being really positive. Utilising the capacity we do have given the dramatic shift in
the mix that occurred in the last six weeks of the year. Firstly Lactoferrin, it's pleasing
to see that we've got a further increase in production of about two metric tonnes or
16%. The team have had a great result, continuing to optimise the Lactoferrin
extraction methods, and have worked that plant really well to get these results. You
can see that on the bottom right-hand graph in the continued growth in our
production of Lactoferrin. We've also had a positive milk collection this year, where
we're up almost 18%, as Pokeno's come on stream. And we've got a North Island
milk pool increasing. Our ingredients with powder and cream production increased
almost 16,000 metric tonnes or 22% as the mix changed as I've stated earlier.
Angela Dixon: Our liquid milk remains consistent through the year. Now, moving over to what the
impact therefore is on our gross profit on page eight. As A consequence of the
volume and mix changes, our gross profit performance has been impacted and gross
profit is down 28% to roughly 60 million. This was driven by the lower demand from
infant formula as our key customer resets its demand profile and rebalances their
inventories. The consequences on us is we need to also rebalance our inventories to
align our production was that demand. The switch in the product mix impacts us
significantly because we are moving our milk into a much lower margin commodity
product. We've also had the unfortunate bad luck of a sudden switching from New
Zealand dollars into US sales mix. Which results in an unfavourable FX position,
which creates a further headwind as we didn't have the time to get the favourable
hedges in place against the rising FX market.
Angela Dixon: In the later part of the half. Turning the page now to page nine, SG&A costs, always
a favourite slide. As a consequence of this lower demand the costs are really strong
focus in our business at the moment. And this will continue throughout the year.
Discretionary costs have improved or we've had savings of three and a half million,
half on half as this has been a conscious effort to reduce spend where it has been
sensible to. We completed the receipt about organisational structure to reduce salary
costs. This is starting to flow through in this half and more savings will be realised in
the second half. These savings, as you can see in the graph to the right, is offset by
the cost of Dairyworks coming in on the half as we didn't have Dairyworks in the FY
20 half. Depreciation continues to roll through from previous upgrades and
technology costs are increasing as our business gets more sophisticated. Moving
now to page 10, what's the impact on our cashflow, everything highlighting previously
Synlait does typically have a seasonal cash flow just to the milk production curve that
Leon talked about earlier.
Angela Dixon: You can see that in the graph to the right. We've also had an impact on cashflow this
year because of higher global theory trade, pricing for milk. And as that price has
increased, we've had to adjust our cash flows to our farmers. The Operating cash
flow now is down roughly 70 million or 69 million in the half and it's quite a dramatic
shift where we've been in previous years. Reflecting this lower margin mix and an
increase in receivables. We've also got the Dairyworks receivables coming into that
cashflow view this year, and we've also been impacted by shipping because shipping

continues to impact the timing of our cash collections as the product is delayed out
heading out of ports.
Angela Dixon: We have managed to keep investing capital... More constraints this year, as we
signalled that we would be moving out of the build phase and into our full up phase.
The cost this year of 62 million of cashflow so far on our key projects. Our financing
costs are up slightly because of the increased debt levels, which were partly offset by
lower interest rates that we experienced in the period. Moving now to my last slide,
page 11, with Net debt, a topic I guess everyone's really interested to understand
given our outlook, the net debt has decreased to 485 million, and you can see how
that compares to previous periods in the graph book to the right. We completed a
$20 million... sorry, $200 million equity raise in November. And this did reduce debt.
Angela Dixon: As we've moved through this half, we have had to use some of that head room that
we planned for, and that capital raise, to help cushion our business as we navigate
through the issues of COVID-19. All our relevant banking covenants we meet in the
half year and we have been proactively working with our banks and our banking
syndicates to increase the leverage ratios, to ensure we've got the ability to navigate
for the remainder of this year and meet all of our banking needs. So I feel like we're
leaving the half in a really positive position to address the headwinds that are ahead
of us. Now, I suppose on that note, I'll hand back to Leon.
Leon Clement: Thanks, Angela. So it's pretty clear that COVID has hit us late and it's important that
as an organisation, we rally around what we can control as we move forward. I'm
picking up on slide 13, which is a conceptual diagram to show what our focus is right
now. In any business that I've seen successfully navigate through crises, those
businesses have always found a way to focus simultaneously on two things. The first
one is to how do we successfully mitigate the impacts of the crisis and the impacts on
the business. And secondly, how do we simultaneously make sure that we're doing
the right thing for our strategy and pulling forward value and accelerating
Leon Clement: And the delivery of execution through that plan. So I'd like to take you through how
we're working through this. Firstly, on how we're mitigating the impacts of this current
year, and secondly, how we're pulling forward value as the organic business
recovers, and our waste yield and efficiency programmes start to deliver, and we
start to extract growth from the recent investments that we've made. I'd like to really
thank our staff and our teams and suppliers and our network who've been very
supportive of making sure that we make these changes in a really agile nature, and
the spirit on which they've leaned in to pulling forward some of the strategic value
that's available for us. As you know, we've made significant investments previously,
and we're really well-placed to emerge from this crisis as we pull together these two
simultaneous focuses.
Leon Clement: So there's two slides on 14 and 15 that talk through around $22 million worth of costs
and efficiencies that we're looking to extract from the business. I've acted really
quickly to make some appropriate changes to our organisation given what's
happening around us. The first slide focuses on operating cost savings. We've made

and worked through a significant organisational structure reset to ensure that we
have the capabilities that we feel are appropriate for our organisation right now, and
are aligned to our strategy. The savings within this financial year are just under 2
million for that. We also moved really swiftly in the new year, over the holiday period,
to make sure that the labour levels against our factories were appropriately matched
to the customer demand that we saw moving forward. That meant converting Synlait
Pokeno to make sure that it focused predominantly on manufacturing ingredients
only, and preparing for our new multinational customer, that results in a different shift
and labour structure against that site. As did the changes that we made to our
Auckland and Dunsandel blending and canning facilities, to adjust shifting operations,
to look for the new demand outlook.
Leon Clement: And finally, we optimised our Dunsandel dryer network against a new product mix
and made sure that we were segmenting our assets and facilities to ensure that they
met what we saw going forward. Against that... And I should have... About $5.4
million worth of cost has come out of the organisation in if FY 21. As we see demand
start to increase and the outturn period that will of course start to flex up, but it's an
indication of the swift movement that our operations team took to adjust to the
changes in our forward demand. The third area on that side is an ongoing focus that
we've had on our discretionary spend, travels and consultancies, entertainment. All
the usual things you'd expect us to be monitoring, so far this year $3.5 million has
been pulled out about cost base there.
Leon Clement: The second slide on page 15, around the short-term impacts, there's a focus on
extracting value chain, cost savings. A really great project that is delivered on time
and to budget as our Dry Store 4 and rail siding project, which we see coming to life
in May this year. We announced that some time ago, but it's important that we flag
the efficiency that this will be bringing to Synlait as we continue to grow and invest in
integrating manufacturing facilities. And really what this one does is moves us from a
farm to can value chain all the way from a farm to a port value chain with
containerized goods, trained between Synlait Dunsandel and Lyttelton port. This
initiative takes 16,000 truck movements off the road. There's a great picture, an
aerial shot on page 12, which shows the project and how it's making a difference for
us, but it also generates a permanent annualised EBITDA contribution of $8 million
from FY22 onwards. And we're looking forward to those benefits coming through into
our organisation.
Leon Clement: In addition to that, the teams have been really focused on some waste reduction and
yield improvement initiatives. And there's an annualised benefit that we've seen from
the changes that the team have made dear of $3 million. And we continue to just
focus on quality and right first time production metrics, which reduces rework and
waste. So those are some examples of the great work that the team have been doing
to adjust to the current situation and pull costs and efficiencies into our organisation,
as we go forward and face the current challenges that we're working through. Picking
up on slide 16, I just want to talk through what we're doing around pulling forward
value and our strategy. And the first thing is to make sure that we're really focused on
the right things. If you've been following Synlait for some time you'll notice that we've

narrowed up our strategic choices around the hands. Part of our framework here, our
strategy, the nutrition, food service, and ingredients, and consumer foods pathways
have been narrowed from five pathways that we had around growth down to two.
Leon Clement: This reflects a shift in the opportunities that we're facing and a focusing on the things
where we believe we can create the most value. We haven't changed our purpose or
ambition, and they'll continue to stay the same or the enabling strategy framework of
net positive for a planet, a healthiest Synlait and a world-class value chain. It's really
important. We don't compromise who we are or what we stand for, and we'll continue
to balance people and planet at the same level of profit and our business. Moving to
slide 17, it's also important to acknowledge that Synlait's moving from a build phase
and an investment phase to create opportunities and reduce strategic risk and into a
phase where we'll focus on filling the assets and opportunities that we've created and
extracting new value from them. As we move into this phase, you can see that that's
the opportunity to extract value from the significant investments we've made in
Synlait Pokeno and our liquids plant and then our cheese categories.
Leon Clement: So essentially we're melding from a build it phase to a fill it phase and focusing on
completing the investment with our new multinational customer and Synlait Pokeno
this year as we move into realising some value in FY22 from that initiative. But
essentially it also sets us up for some amazing opportunities. And it's really coming
just at the right time for us. As we start to focus on building a more sustainable
Synlait in the medium to longterm.
Leon Clement: The slide, page 18, I'm on now, just shows the assets that we now have to tap. We
have a customer base that would be the envy of any main... any dairy processor in
the world. We have a strong base in New Zealand and Australia with all the main
retailers and New Zealand and a strong partnership with Woolworths Australia led by
our Dairyworks team. We have a strong list of multinational customers in our
repertoire, not all are listed here, but some fantastic names in that stable. And
increasingly a strong set of partnerships emerging around China, Yili and Mengiau
have been ingredients' customers for some time, but also you'll see the emerging
domestic players of [inaudible], who are we are increasingly working with on
specialised ingredients.
Leon Clement: We've also got a great set of categories, which are increasingly listed there that we
can start to tap, to create opportunities against the facilities that we've built. Coming
to slide 19, I wanted to provide some insight into the value that we are starting to
chase as we look forward and our strategy. I've put this over three main horizons, the
short term, the medium term, and the longterm. We're getting really focused on these
initiatives and organising ourselves around teams that convert these into value. The
pictures and opportunities on the slide are examples only, but as we start to total
these up, we're eyeballing around $200 million worth of value coming from these
opportunities. Now, before you all go and put these on your models, I just caution you
that this does not include the headwinds that we would naturally face as part of this.
It focuses on the new value that we would create, but some examples are in there.

Leon Clement: In the short term, we're excited about the pending launch of a differentiated
ingredient stream. Our made with better milk proposition reflects that differentiated
milk that we capture from our lead with pride programme, with our farmers. And we're
looking forward to starting to capture the value that we see on that, we've got strong
customer and trust in that proposition Later this financial year, we'll be launching our
food service creams, starting with a beachhead in China. We're really excited about
the quality of the product and the functionality that we're currently producing and
looking forward to that making a significant contribution in FY22. It's been well
canvased that we've got a new multinational customer that we're working on to
develop in Synlait Pokeno, that customer and the new opportunity start to create
value for us at the start of the FY23. So in just over 12 months time, and we also see
opportunities, it was we'd go for what around Synlait branded consumer products.
Leon Clement: As you know, we've got fresh milk capability, which we're looking at, but we've also
got a great quality Lactoferrin product. And whilst that product is a little bit hard to
see, starting to think about immunity based propositions using our Lactoferrin as
something that we're considering. And longer term, we have a product mix that's
made in heaven for our dairy processing company, infant nutrition against cheese,
with strong demand for both products, capturing the whey and casein interchange
between those two products represents significant value opportunity for us. It will
require some investment, but if we can get this right over time, we see strong value
emerging in the longer term. And finally, we're continuing to progress our liquid infant
nutrition products. As we start to build capability in that space against our advanced
liquids theory factory.
Leon Clement: So moving now to slide 20, our guidance update. As we signalled earlier this month,
Synlait's continuing to experience uncertainty and volatility within its business. This is
due to the uncertainty of the a2 milk companies, expected demand for the remainder
of FY21 and for if FY22. As we spoke to earlier this March, we don't have current
sufficient confidence to forecast when this recovery will occur. This has two main
impacts on Synlait. The demand for Synlait for consumer packaged infant formula
remains uncertain, which in turn impacts the forward infant base powder production
and the asset use and utilisation of our facilities. Secondly, Synlait's ingredients
business. With the sudden drop in consumer packaged infant formula demand,
combined with rapidly rising GDT prices, foreign exchange and changing product
mix. This has created volatility for us and limits the returns that we would otherwise
expect against a more stable demand profile.
Leon Clement: Finally, the expectation that global shipping delays will continue to further impact our
FY21 result. We've considered the above factors and how they will impact Synlait's
FY21 profitability. You will note the word uncertain is used a number of times in our
guidance site statement, but we also think it's important we provide you with a signal
of where we're heading. Our current outlook suggests a broadly break even FY21
impact result. Given the above sectors, while all of our banking covenant ratios have
been met for this path, we've proactively engaged with our banking syndicate to
increase our leverage ratios and manage any risk at the end of FY21. So therefore

the companies FY 21 business plan is fully funded by its current thinking syndicate.
That concludes our presentation this morning. So we'll pause there for questions.
Leon Clement: Thank you.
Operator: Thank you. If you wish to ask a question, please press star one on your telephone
and wait for your name to be announced. If you wish to cancel your request, please
press star two. If you're on a speakerphone, please pick up your handset to ask you
a question. Your first question comes from Stephen Ridgewell from Craigs
Investment Partners. Please go ahead.
Stephen Ridgewell: Good morning team. Just firstly, on the guidance. I mean, given we've said two pretty
large downgrades in pretty quick succession. I'm just wondering if you can give us a
little bit more clarity or specificity on the key assumptions that are underpinning that
guidance for break even input for the full year.
Leon Clement: Yeah. Good morning, Stephen. And thanks for the question. I think essentially what's
significant and the assumptions that sit behind that is the uncertainty that we have
around the allay to infant nutrition demand and what that looks like. And if FY22, I
think the slide that we presented upfront shows that our forward view starts to inform
how busy our factories are, especially in those shoulder seasons. And so what's
materially changed from our position in December where we felt we had some
confidence that a recovery may occur in FY22. As we signalled in March, we were no
longer confident that we had sufficient evidence to be able to call that. And as a
result, we can no longer get confidence that our factories will be turned back on in
the second half. So that's one of the main assumptions. Another one is the significant
volatility that's occurred around our ingredients business as a high-level of new
ingredients business came back onto our plan.
Leon Clement: So as we reset our base powder production, what we do with the milk, as we flip it
back to commodity products, that means in the rest of the financial year, we're selling
far more ingredients products than we anticipated. And we're selling them into a
market that has got somewhat abnormal for us. We've seen divergence of butter and
AMF. We've seen divergence of customer buying patterns and markets. We've also
seen sudden changes and effects that limited our ability to capture that.
Leon Clement: So those are assumptions that are driving the softening of our outlook and the reason
that we're saying will be boldly break even against the uncertain scenarios that we're
facing.
Stephen Ridgewell: That's helpful. I'm just wondering though, I mean, compared to the kind of demand
level to approximately what you've seen in the last couple of months, for canned AF,
are you assuming that that doesn't get better over the balance of the half? Is it what
we should take into this guidance? Great.
Stephen Ridgewell: Okay. Thank you. And then just on maybe one for Angela, just on CapEx for the full
year, I think you called out 60 odd million in the first half. Can you just remind us the

level of CapEx for the second half, and also just, just given the impact guide, roughly
what you might expect being in the full year.
Angela Dixon: Thanks, Stephen. So, I'm just finding my page. I think we've always signalled that our
new multinational customer will be roughly about 70 million spread over two years
and that's expected to continue as planned. We have continued at the completion of
our dry store, which Leon talked to, and that is operational from May, so that will
have some cost still flowing into the second half of the year. We're continuing to do
our ERP system and upgrade our systems across our business. And that will
continue on in the second half of the year as well. And then this year in the 70 million
or the 60 million that I talked about for the first half has also got the cost of buying the
farms that happened last year, but the cash flow actually came through in this year in
August. And then the rest is we are containing our operational cashflow tightly while
ensuring that we are still spending what's necessary to get optimised
Angela Dixon: ...production out of our facilities and keep our assets in good shape. So, that's pretty
much where we are from a CapEx perspective. So, guiding very similar to what I was
at the full year result six months ago.
Stephen Ridgewell: And just on the net debt injury, any guidance here in terms of where that might land,
just given those working capital moves you cited?
Angela Dixon: I'm not really keen to guide yet. We're still working through all the options around our
balance sheet. We've reset the covenants, which allows us to consider a number of
different scenarios we've got in our plan, and that's why our guidance talks to a broad
breakeven position with a whole of uncertainty around it. And the key thing, Stephen,
is we've been very careful about what we spend and we will continue to be very
prudent, right through to the remainder of the year, given the scenario we're in.
Stephen Ridgewell: Okay, thanks. And just one last one from me, just with net debt to EBITDA, obviously
lifting, if you look at the sort of run rate in the first half and with the guidance, and
appreciate the comments that you're fully funded for this year, but that would
presume, just given the company to [inaudible] preference for, call it two times net
debt to EBITDA, you'd be needing a recovery into next year to remain within that
target range for net debt to EBITDA. I mean, is an [inaudible] raising a possibility, if
not, if it's not a preferred option, are asset sales also under consideration?
Angela Dixon: At this point in time, we said at the full year that we would continue to look at our
balance sheet and work through other, additional options with our debt portfolio and
that's the plan and it will continue on. I'm loathe to go back to the capital markets at
this point, and further dilute our shareholders, this is what we are perceiving as a
timing issue. We just don't know when the swingback is. So if we can avoid that, we
certainly will be. And we'll just continue to work through what options we have in the
debt markets to get a stable position for the years ahead.
Stephen Ridgewell: Okay. Thanks very much-

Leon Clement: Stephen, perhaps I can answer your question around asset sales. And I think it's
building on Angela's answer. I mean, I think we're fairly, clearly signalling on page 23,
that these are temporary resets of our covenants. And there is some work to lock
forward, around what's an appropriate capital structure between equity and debt and
how we'll move that forward. And Angela's committed to taking that forward, given
the context of the current environment.
Leon Clement: You'll see from the levers that we've put forward around what we've done around it,
we spoke to operating costs, we spoke to value chain efficiencies that we've got in
place. We are doing a review of our structural cost space, and we'll be making sure
that we have a look at what sits within that. Obviously, one of the levers in that
bucket is asset sales, but no decisions have been made at this point.
Stephen Ridgewell: Okay. Thank you much. Appreciate it.
Operator: Thank you. Your next question comes from Chelsea Leadbetter from Forsyth Barr.
Please go ahead.
Chelsea Leadbet...: Morning team. I guess, extending that last question a little bit further in terms of
covenant changes, so my understanding or interpretation here, is that it's just a
temporary change, i.e. just for this financial year '21 period, is that right? Or does it
extend into 1H22 as well?
Angela Dixon: Yes. FY21. End of year FY21.
Chelsea Leadbet...: Okay. And in terms of the 7.5 times total debt to EBITDA, I guess it's quite a large
change. I'm just interested in, I guess, who drives that number. And ultimately, are
you trying to buy yourself quite a bit of headroom in case you need it? I'm just trying
to understand, why take it to that level? And then secondly, what's the cost of this
change for your interest bill in the second half?
Angela Dixon: Yeah, Chelsea, that's a really good question. Yes. And as both, I think, Leon and I
have talked to today, there is significant uncertainty of the recovery of the rebuild in
our infant formula. I've had very open, sharing relationships and directions with our
banking syndicate in the last, wee while. But we've set that 7.5 times at what we think
is appropriate, given the work we have worked through together on the different
scenarios that could play out for our business, given the timing impact. So, that's
pretty much how we got to that number.
Angela Dixon: In terms of the cost, it's fair to say you always pay. So it has cost us a little bit more,
given that we are going to be stretching our net debt and asking for more capacity
from the banks. And that has taken us into a slightly higher risk profile within the
range, but it's all manageable within our facility at this point in time.
Chelsea Leadbet...: Okay. Are you-
Leon Clement: I think, Chelsea, the thought here is consistent with what we're saying, this is a
temporary impact. What's being, I think, communicated via us through our banks is

that there's headroom around a broad range of scenarios that we're seeing there.
We'll continue to do some work on that, but it also shows the confidence that they
have in our medium to a long-term outlook here.
Chelsea Leadbet...: Okay. No, that's helpful. And Leon, you talked a lot at the beginning and, obviously,
through the presentation about rebalancing and, obviously, the challenges that the
sharp change in demand has created for the business. I'm just interested in how we
think about when that has been rebalanced. Is this still kind of thinking into 1H22, is
this still a challenging period here for you in terms of what that could look like?
Leon Clement: Yeah. Look, it does rebalance. It sort of takes a year to unwind as long as we get
stability around that demand outlook. So I think, we've broadly signalled what we
think the drop would be when we first assess the impact, just post the December
downgrade. Assuming that's broadly stable and stays consistent over the next 12 to
18 months, our production levels start to realign with our infant nutrition sales to
those levels, as long as they remain stable.
Leon Clement: But in this year, unfortunately, we are producing a lot less than we're selling. And that
is painful on an organisation that has recently invested in capacity. So if we, all things
being equal, have stable demand on this year's outlook, we would be performing
materially better. Unfortunately, we're resetting inventory from a view that we had in
the second half of last year, that we would continue to see growth on the 50,000 odd
tonnes of infant nutrition sales that we made.
Chelsea Leadbet...: Okay. Thank you. I'll leave it there for now.
Leon Clement: Chelsea.
Operator: Thank you. Your next question comes from Adrian Allbon from Jarden. Please go
ahead.
Adrian Allbon: Good morning. Again, just kind of, I guess, seeking a bit more clarification on, I
guess, what both Stephen and Chelsea have asked already. In terms of the reset at
the first half, the Canon performance was down 15%, the ISP production down 62. In
the plan that you've agreed with the bank around the covenants, are you expecting
any sort of ISP production in the second half? I presume you are.
Leon Clement: Yes we are, but at materially lower levels than historically, Adrian. So I think, what
we're signalling is this dynamic is expected to continue for the rest of the year. And if
you think about our seasonal production, normally we would be looking at this period,
around February, March, April to really be ramping up infant nutrition production and
base powder production for a forward view into FY22, that we'd be rebuilding on.
Leon Clement: Given, we don't have certainty of what FY22 looks like, it's not like we're not running
our plants, but they're running at materially lower levels than historical. So just to give
you an indication they're about a third as full as they were last year in totality. And
that's what's causing us some pain because we've got a whole lot of expensive

plants, and some people that we can't let go, that we're continuing to pay for but we
can't run product through them.
Adrian Allbon: And just related to that, what are you doing around the milk contracts into '22 and
'23?
Leon Clement: We still want the milk pool because we still use that ability to switch between
ingredients, products and infant nutrition as a natural hitch. We want our plants to be
full, but we also prefer them to be full with a high-value product mix. So, no change to
our milk contracts. We're going to continue to protect the milk pool that we have. We
really just move the lever between our commodity and ingredients business. And
there's an indication on that side of how we're looking to differentiate that part of our
business, maybe with better milk and just leaving the flex for infant nutrition as and
when that recovers.
Adrian Allbon: Okay. I think, at the year-end last year, you had a reasonable stockpile of the IFB
powder. With the dramatic reduction and production, have you worked through that
now? The IFB production across the second half, will that be new stuff, I suppose?
Leon Clement: We are working through that now as probably the best term. So I think, we're doing
our best to smooth based-powder production, given we're now in the shoulder
season. It's when we typically start to move towards that. And we're assessing what
we think our FY22 demand will be, especially in that first half, to set those production
plans. But over time, that inventory starts to moderate down to the new demand
outlook. So, I'd expect it to be moderated by the end of this financial year.
Adrian Allbon: Okay. And then, I think, at the year-end in last year you provided a sort of a
management estimate of the diversification drag, which I think was sort of the 20 to
25 million of impair, as with some of the stuff that you're indicating here, I think
through slides 14 to 15, would your forward view on that be... like into '22, '23, would
that be sort of 10 million less on some of these efficiencies that you're targeting? Is
that the right way to think about it?
Leon Clement: I think we'd have to go away and do the maths against a slightly different scenario.
The diversification drag is probably the cost of new optionality, which does include
Synlai Pocono. But yes, I'm sorry, Adrian, I think we might just have to regroup on
the maths around how we did that calculation last result.
Adrian Allbon: Okay. And then just final question, on slide 19, when you talked about 200 million of
value, are you talking about additional impaired or additional EBIT, what's the
reference here?
Leon Clement: It depends on the nature of the initiative and how it comes through in our P and L. It's
indicative of a pipeline of value and you'd hope that most of it would drop to the
bottom line, although some of them come with investment. So for instance, say the
top right opportunity, around capturing the value of milk components, that would
come with capital investment to invest in the required infrastructure to do that. And so
you'd only see the value there dropping at an impact level.

Adrian Allbon: Okay. Thank you.
Leon Clement: It's indicative of the new value that we would look to create, and we'll continue to
focus in on chasing that.
Operator: Thank you. Your next question comes from Richard Barwick from CLSA. Please go
ahead.
Richard Barwick: Good morning, everybody. A couple of more detailed questions for me to start. When
you talk about the sudden switch from NZ dollars to US dollars, re sales mix, are you
talking about A2's English label weakness, but China label strength? To clarify.
Angela Dixon: Yeah, sort of. So most of our infant is paid for in New Zealand dollars. And when
we've got to move that milk into our ingredients or commodity products, we sell all of
that in US dollars. So our US dollars exposure is changed quickly overnight. And
that's where we weren't able to put ourselves in a position to hedge for those. And at
the same time, we had the foreign exchange market, around Christmas, moving up
significantly. So that has certainly had a headwind for us this year and will continue
into the second half as well.
Richard Barwick: All right, thank you. And then on slide 15, where we were talking about the $3 million
under the efficiency initiatives, what's the timing associated with that $3 million? And
also, if you're talking around sort of yield improvements, what sort of volumes are
required to achieve that from here?
Leon Clement: Yeah, those are this year's improvements that will contribute to FY21 and are on an
annualised basis, the $3 million is locked in. There are a mixture of opportunities that
sort of cross there. Some of them sitting across our commodity and ingredients
business, some on our infant. And they're broadly sized on our current mix. A lot of
them, Richard, are around how we do things, like make sure that we get really close
to the standard specified within the bill of materials. And whether or not, we can get
much closer to the levels of protein and fat within the mix. And so that's where the
opportunity sits. And they're largely agnostic to the product mix that we have.
Richard Barwick: Right. But presumably, if volumes... Okay, if you agnostic in the mix. No, that makes
sense.
Leon Clement: So yeah, we broadly have stable volumes. It's just the volumes of infant versus
ingredients. I would guess that these initiatives are spanned across both.
Richard Barwick: Okay. And then the last one, for me, just thinking back, some of the wording you've
used around the December downgrade, the level of uncertainty that you have within
the business. How does this work when, I mean, you are reliant on A2 demand or A2
volumes for the English label, what sort of visibility do you get from A2? Is that
improving? Because I mean, it reads like you've got no visibility, if you go back to
December, for instance. Is there a sense that that's improving or do you find out
when the rest of the market finds out, in terms of what the demand outlook looks
like?

Leon Clement: Well, I think that A2 have been reasonably clear that the December downgrade also
came as a surprise to them and that's reflective in how they went to market around it.
So for that instance, we broadly found out, as everybody else was, including A2
themselves. We get quite good forward forecast from A2. And we work
collaboratively with them on that outlook.
Leon Clement: I guess what's changed is we've moved from a position in December, January, where
we were taking that forward view and putting it back into our business and seeing
what it could do, through to the fact that we decided that until we saw really clear
evidence of a recovery, it was inappropriate for us to start guiding on that basis. So
it's not so much the visibility that we get, it's the confidence that we have in that
forecast that we receive that is changing our position on the outlook that we're taking.
Richard Barwick: Right. And just to be clear in terms of your... I know we're talking a mix effect here,
but the production of the infant formula, it sounds like you've really only made the
switch... post that December downgrade, there wasn't much of a change in your
production ahead of
Leon Clement: No.
Leon Clement: That December downgrade. I'm just thinking about when we reacted post the
December downgrade. There was probably a little bit of a softening that occurred in
the first half, but it was immaterial. The big impact was post the December one, and I
think the chart shows that. And whilst it's [inaudible], it probably gives you an
indication of how we reacted. You combine that with making 45 to 50% of our base
powder production in that four month window, we were assuming at that point that
growth would continue on FY20. That's the inventory reset that we're experiencing.
Richard: Yep. Okay. All right. Great. Thank you. Appreciate that.
Leon Clement: Thanks Richard.
Operator: Thank you. Your next question comes from Andrew McLennan from Goldman Sachs.
Please go ahead.
Andrew McLennan: Good morning, everyone. There's quite a few impacts coming through on your
working capital, to say the least. I'm just wondering, receivables have clearly been
quite dynamic, you provided some commentary around what was driving that
outcome, but can you just provide a bit more detail and specifically around what
factors you may think are permanent versus temporary?
Angela Dixon: If I got your question, right, Andrew, you wanted to just more colour on what are the
drivers of our cashflow outlook and cashflow impact on the half? Is that right?
Andrew McLennan: Yeah, particularly on the half, just so we can get a better understanding of what
factors are a permanent versus more temporary.

Angela Dixon: One of the biggest factors was the fact that GDT prices started increasing halfway
through the half year. As that happens, that means we need to reset our milk pricing
through our farmers to ensure that we catch up to where we think the end position
will be. We started the year at an announced milk price of about $6.40 and our most
recent milk price announcement was seven 20. That has significant impact in your
payments out to farmers. We always... That's one of the reasons we have this
cashflow impact in the first half of the year compared to the second. We make our
biggest portion of that payments to farmers, in the first half of the year. We've also
had the switch effect from going from high value margin products to lower margin
value products in the last part, the last six weeks of the year. Plus we've had some
delayed cashflow impacts around shipping, just because there's a certain quantity
that's rolling through every month, so we just can't get out and that's not catching up.
Angela Dixon: Those are the predominant drivers of our cashflow being negative this year. We
would expect that to get better as the year goes through because we will get the
higher GDP prices on our ingredients flowing through and our revenue lines and our
cash lines as we get the sales come through. At this point in time, we've effectively
paid farmers ahead of when we get the milk receipts off the products. That's one of
the phenomenons flowing through.
Andrew McLennan: Okay. In addition to that, you've had, as has been discussed earlier, the build up of
inventory, within infant formula in particular, and you'll be working down by the end of
the year. A lot of it is temporary and some of it quite unique. How significant is the
factor on the returns? You said it was just for six weeks. Sorry, the high margin
product impact was that a significant component of the impact to, I guess,
receivables?
Angela Dixon: Yes, it certainly is when you compare a half on half. Yeah. I guess the component to
look through is we do have receivable assignments for our big international players.
We've had a significant volume of commodities products that we now need to sell in
the world at the [inaudible]... And second half of the sales curve we've broadened out
our customer base. That means we've gone. We were relying more on more general
terms of trade rather than our receivables assignment, which gives us the cash right
up front. There is a whole lot of factors in here. I hope that gives you a better clarity.
Andrew McLennan: Okay. The GDT trade means that your payment terms, the receivable terms will
increase. That'll be an issue for the second half?
Angela Dixon: Yeah.
Andrew McLennan: Yeah. Okay. Also, just, I guess a bit similar to Richard's question earlier. What
controls can you put on? Obviously the key issue here is with, with A2. It seems like
a pretty asymmetric situation when it comes to information. I'm just wondering, are
there better controls you can or have been able to put on this relationship and the
information sharing, because it just seems quite an extraordinary limitation for your
bill. Although this is a pretty unique situation in the middle East, but I'm just
wondering if there's anything we can do better here?

Leon Clement: Yeah. I think it's a good question on something that we have been reflecting on
internally and in our discussions with A2. I think it's a unique situation, but the
dynamic of participants further up the value chain often experiencing more adverse
and volatile impacts as well, documented and understood. There are certainly ways
that we can address that. It's been less visible to us in terms of the risks that we
carry, because we've broadly been following A2 up and investing ahead of its curve
to create... To be able to meet the demand as it's growing. There are things that we
can start to do both in the relationship and our own value chain to start to expand that
planning window for the shoulder season.
Leon Clement: We can look at channelling meltdown to seasonal plants, like our cheese plants that
gives us the opportunity to just broaden that. We can go to more just-in-time
inventory models and more robust planning arrangements. We can also start to look
at reshaping the nature of our contractual agreements. Certainly that's something
that both us and NATO we're looking forward to in the second half that I think we'll
look towards as we start to reset our relationship here.
Andrew McLennan: Okay, great. Thank you.
Operator: Your next question comes from Marcus Curley from UBS. Please go ahead.
Marcus Curley: Good morning. Just a couple for me. Can you just talk a little bit to, I suppose the
guidance pointing to a lower second half profitability. Can you just talk a little bit to
what the deltas are between the first half and the second half against the plan?
Leon Clement: Can I just understand the question Marcus, you're saying we've made the impacts
[crosstalk] first half.
Marcus Curley: And breakeven for the full year, so you're going to go from plus six to minus six, if
you take break evens literally. [crosstalk].
Leon Clement: Go ahead. Sorry.
Marcus Curley: Why are you 12 million profit worst off in the second half?
Leon Clement: Okay. I'm with you. Well, I think that there's two or three main sectors that are
indicating why our second half flips from a small profit to assuming the broadly
breakeven guidance materialises in the second half. The first one is our factories
remain relatively quiet. As you know, in the second half, we typically turn our
factories on to infant based powder production. That not happening has a significant
impact on our second half relative to other periods. We were tracking through, I think
August, September, October, November, the first half, still broadly with a stronger
outlook until we got to December. We were still producing infant nutrition before the
peak arrived that drove profit for us in that first half. We're now saying for all of the
second half, we're broadly impacted by this impact, and that's coming through.
Leon Clement: The second major impact is what we've talked around ingredients. We've seen quite
material shifts and the ingredients market probably from about December onwards.

What's pretty well signalled in the public domain is the rapid increase and dairy
prices and commodity prices. Most of that demand is coming from China, but some
of the challenges that we experienced there is around where that market demand
comes from and where our key customer bases are formed. What that means is we
move a lot of our ingredients into spot contracts, as opposed to some of the more
longer term customised ingredients contracts that we have with some of our
multinationals. They are less returning, than the contracted volume that we would
have with the now ingredients space.
Leon Clement: What we've also noticed is that product mix factors such as the divergence of the
butter price from the AMF price are having an impact. The milk price that we have to
pay is derived on a notional producer model that assumes that we would have a
butter plant. We don't have a butter plant, that's driving the milk price up, but we've
seen butter diverge from IMF by as much as 18% this year. That has created some
headwinds for us in the second half. Add to that, the assumption that shipping delays
will continue to impact our year. Then I think it's fairly clear why the second half starts
to look fairly challenging for us.
Marcus Curley: Great. Secondly, Leon, you spoke to your last milk price at seven 20, frontier has mid
point $7.60. Is that a genuine sort of number that's in the plan? Because it's
obviously quite a large variance at this stage.
Leon Clement: We gave the seven 20 update guidance in January. We do another one in May. We
typically only do three a year Marcus and that's seven 20 has some upside to it. Our
internal models are indicating that it'll be higher than that. We typically don't tend to
respond to external factors. We provide three a year and good communication with
our farmers on the factors that are driving that. We expect that that seven 20 number
will increase.
Marcus Curley: Then just finally, when you articulated the issues around the A2 volumes, obviously
you alluded to the fact that they're also managing down their own inventory levels.
Do you have any visibility in terms of how much of this temporary impact reflects their
inventory reductions at the moment, versus the underlying demand pitcher?
Leon Clement: No, I don't think we do have great visibility of inventory sitting within A2's network. I
think that question's a better placed with them.
Marcus Curley: Sure. Okay. Thank you.
Operator: Thank you. Your next question comes from Kurt Gelsomino from Morgans. Please go
ahead.
Kurt Gelsomino: Good morning, Leon, Angela, just a quick question from me. Maybe can you just talk
through, I guess what you've assumed for lactoferrin pricing in the second half of 21.
Do you expect them to be sort of broadly consistent with the first half of 21 or do you
sort of expect them to lengthen further?

Leon Clement: I guess it's another factor where uncertainty prevails, Curt. We've got as signalled
earlier, a lot of additional capacity globally coming onto the market against still
relatively robust demand for high quality infant, lactoferrin. We're broadly assuming
that it's relatively stable on our first half achievement and current scenario, but again,
that has some fairly wide parameters around where it could swing. It's broadly
stabilised for now, but there's still more capacity coming on the market.
Kurt Gelsomino: Awesome. Thanks for that.
Operator: Thank you. Your next question comes from Xavier Waterstone from QuayStreet.
Please go ahead.
Xavier Waterstone: Morning guys. I just got a quick one about the inventories. Specifically the finished
goods say there's been a reallocation from cost to net realisable value. It looks like
there's about an 87% increase in volumes and inventory, but a 22% decline in
average unit value. Could you just talk a bit about what's driving that and whether or
not there's further risk of finished goods and write downs, if you don't get that buyer
support through in demand, which result in getting converted into commodity
powder?
Angela Dixon: We might have to come back to you on that one because the challenge with
understanding our closing inventories is now that we've put dairy works into the mix,
they have got a significantly different inventory profile cause they have a longer
maturation on their imagery products. We've got a lot more commodity products
coming into the business at the end of the year, but that we are expecting to be
largely fully sold and not holding a lot of commodity products at the end of the year,
apart from what impacts on shipping.
Xavier Waterstone: All right. Thanks for that.
Leon Clement: We might make this the last question. Thanks.
Operator: Thank you. Your next question comes from Nicholas Pointon from RNZ, please go
ahead.
Nicholas Pointon: Good day, can you... Oh, sorry. Just to make sure... Good day, Nicholas from RNZ
here. Sorry. I'm just a bit all over the place. Just want to go back to some of the
conversations that were being had about banking covenants. I think Angela, you
mentioned to say that you'd be loathed to go back to the capital markets and then
Leon, you followed that up by saying that asset sales were just one lever and a suite
of measures that could be taken to help pay down that debt position and whatnot.
Could you just run through what other options there are available?
Leon Clement: I don't want those comments to be taken out of context. I think we're obviously facing
a temporary challenge in our business as it washes through. We've gone to
shareholders last year and raised $200 million to complete our investment phase and
for the purposes of facing into the uncertainty, that was well signalled from COVID,
which has emerged.

Leon Clement: We also signalled at the end of last year after the capital raise that we wanted to
come back to our capital structure and work through how we finance debt. Against
that we've got the optionality to consider structural cost implications for what we need
going forward. The way that I would look at this, is this as a total package. I think it's
fair to say that having gone to shareholders to support us for an investment cycle
ahead and to make sure that we're well braced for uncertainty, we wouldn't want to
go back there again when we've still got the two levers of debt and structural costs to
be able to look back. Until we've fully worked through those options, it's not
something that we'll be returning to in the immediate term. I Hope that provides you
with some context for how we're looking at.
Nicholas Pointon: All right. Wonderful. Thank you.
Operator: Thank you. That concludes our question session at this time. I will now hand back to
Leon for closing remarks.
Leon Clement: All right. Well, thanks everybody for your well-placed questions. I'm sure we'll have
follow-ups with many of you. I hope that the key messages that you've taken out of
today is that we're working through a temporary, but sudden impact on our business.
We do have confidence that this will reverse, we just don't know when and that
uncertainty is as reflected in our guidance statement. I hope that you've seen that we
are taking appropriate action to mitigate the impacts and that we are continuing to be
confident in our future, given the investments that we've made and the confidence
that we can have on, on the forward picture. We'll close off there and hopefully we'll
catch up with you all very soon. Thank you.
[END OF TRANSCRIPT]

SPH Notice – FIL Limited Synlait CEO to step down

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