Shareholder Loan Update

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






NZX: SML
ASX: SM1


13 June 2025

Shareholder Loan Update

Synlait Milk Limited (Synlait) has extended its $130 million shareholder loan from Bright Dairy
International Investment Limited, a related company of Bright Dairy Holding Limited, for a further 12-
month term, maturing 12 July 2026.

The loan was initially for 12-months and included an option for Synlait to extend it by a further year.

Shareholders approve the proposed entry into the loan at a Special Shareholders’ Meeting in June
2024 as part of the company’s broader balance sheet reset programme. The programme, which was
successfully delivered in 2024, also included an equity raise, and was supported by bank refinancing.

Synlait’s current, one-year bank refinancing facilities are due for renewal on 30 September 2025, this
refinancing work is now underway.

Bright Dairy are Synlait’s largest shareholder, owning 65.25% of shares in the company.

For more information contact:
Hannah Lynch
Head of Milk Supply, Strategy & Corporate Affairs
P: +64 21 252 8990
E: hannah.lynch@synlait.com

=== IR PAGE TRANSCRIPT: Synlait Full Year Results 2025 Conference Call Transcript 29 September 2025 ===

TRANSCRIPTION
Company: Synlait Milk
Date: 29 September 2025
Duration: 40 minutes
Reservation Number: 10048681

[START OF TRANSCRIPT]
Operator: Thank you for standing by, and welcome to the Synlait Milk Full Year Results
Call. All participants are in listen-only mode. There will be a presentation
followed by a question-and-answer session. If you wish to ask a question via
the phones, you will need to press the star key followed by the number one on
your telephone keypad.
I'd now like to hand the conference over to Synlait Milk. Please go ahead.
Hannah Lynch: Good morning, everybody, and welcome to Synlait's full year results conference
call. It's great to have so many of you on today's call and a real pleasure to
introduce you formally to our new CEO, Richard Wyeth, who joined Synlait
earlier this year in May. He's joined of course today on the call by our CFO,
Andy Liu, who many of you will now know.
Richard and Andy will speak today to our investor presentation released this
morning and then we'll open the line for Q&A. Just a reminder, if you can keep
your questions to two per person and we'll follow up with you later today as
required. Richard over to you.
Richard Wyeth: Thanks, Hannah. Good morning to you all. Thank you for joining us on Synlait's
full year 2025 results call. To indulge some sporting analogy, FY25 was a year
of two halves of Synlait. We won the first half and celebrated a return to
profitability, but the second half was challenging on a number of fronts and the
impact of those will be clear in today's presentation. Andy and I will go over
those in detail throughout the presentation, but before that we have some good
news.
If you please turn to Slide 2. We have entered into a binding conditional
agreement to sell our North Island assets to our valued customer and global
health care leader Abbott. These consist primarily of our Pokeno factory and

two Auckland sites in the blending and canning facility at Richard Pearse Drive
and Jerry Green which is the warehouse.
The sale price of the transaction is US$178 million, which equates to
approximately NZ$307 million. Abbott has confirmed it will onboard most of the
people who work in these sites which is a fantastic outcome for both our people
and also for the local community.
The targeted completion date for the transaction is 1 April 2026 and the sale will
be subject to various conditions, including Synlait obtaining shareholder
approval and Abbott receiving consent under the Overseas Investment Act
2005 and normal consents such as regulatory consents from the likes of MPI.
We released a notice of meeting with detailed information on the sale to inform
shareholders before they vote on the transaction at Synlait's annual meeting on
21 November 2025 and also note Bright Dairy, our major shareholder has
confirmed it will vote in favour of the transaction so the requirement for
shareholder approval will be achieved.
That's a real step forward for Synlait. The proceeds of the sale will be used to
pay down debt will mean that by the end of FY26, we are largely debt free with
the exception of working capital facilities. In short, the sale will deliver a
stronger, simpler and more secure Synlait.
We will have greater space to focus on our South Island operations and the
ability to carefully and strategically review our strategy for Dunsandel. The goal
is to release an updated strategy at our half-year result in March 2026. But in
the meantime, we're certainly very excited and this is an outstanding win for
both Synlait and Abbott.
Moving on to Slide 3. I've now been in the business for just over four months as
CEO of Synlait. I was attracted to this role due to the company's strategic
strengths. It has world-class assets and its foundations are strong. Dunsandel
is located in the heart of Canterbury's dairy sector with good connectivity to
global markets and the ability to produce goods at scale.
The company also enjoys strong demand from our global customers. I've now
spent a short amount of time in the business, I've identified three immediate
needs that we need to focus on. First and foremost, we need to improve our

operational stability at Dunsandel so we can consistently deliver for our
customers. I'll talk to you more about that in a moment.
Secondly, we need to reduce complexity to deliver a financial uplift. The North
Island transactions will assist with that. And finally, there is a need to reset the
high-performing culture within the business. Synlait is filled with some great
people who have been through a huge amount of challenges over the last few
years. My observation coming into the business is that it's very much a culture
of reactivity driven some of those challenges. I want to reset the business so we
can really focus on proactive performance.
To that end, our focus for FY26 will be very much targeted on operational
stability. To assist with that, we are recruiting and onboarding a new
Canterbury-based Chief Operating Officer who will be responsible for delivering
a raft of improvements in that area, and also ensuring that we can deliver the
North Island transaction by 1 April 2026.
We're also embedding our values framework, the Synlait Spirit, in the short term
to allow us to improve our culture. Moving on to then focus into Slide 4, you will
see focus areas internally that have been dubbed the Big 6 for '26. Top of that
list is operational stability. That should come as no surprise to many of you.
As we announced to the market in July, Synlait has had manufacturing
challenges earlier this year. The impact of those is clear in today's result, with
one-off costs totaling 43.5 million. While the manufacturing challenges are
largely behind us, operational stability must remain a core focus alongside
quality, performance, and customer satisfaction.
And to those who focus on financial resilience, it was great to see the banking
facility come through last week and include the North Island sale. Then
strengthening our financial performance is largely complete. We now need to
deliver on culture, operational stability, and quality, and that will lead to strong
overall financial performance.
We'll move through now to Slide 5 to look at our results at a glance. We are
reporting total group EBITDA of 50.7 million today, which is an increase of 54.8
million on FY24. Our bottom line is a net loss after tax of 39.8 million, which is
an improvement of 78% year-on-year. As mentioned, this reflects costs
associated with challenges at Dunsandel.

Just the bottom line is a net profit after tax of 0.8 million, which shows you
Synlait's recovery was on track. Pleasingly, Synlait's debt level has decreased
by 55% during FY25. Of course, most of this was courtesy of last October's
equity raise, but an uplift in our trading performance has added to that with net
debt now down at 250.7 million. As mentioned, the proceeds from the North
Island transaction will largely bear this.
Group revenue increased to a record 1.8 billion, or 12%. Operating cash flow is
up 451% to 165.5 million, and gross profit increased to 105.3 million. I'm
delighted to confirm that our final milk price for the 2024-2025 season is a
record $10.16 per kilo of milk solids.
Add to that Synlait's incentive programme, which averages out to $0.30 per kilo
of milk solids, and our secured milk premium of $0.20 per kilo of milk solids for
our South Island farmers, and you can see that our Synlait suppliers will be very
happy. Our average milk price or payment to South Island farmers will sit $0.50
above the farm gate milk price. That should result, as I said, in some very good
Christmas presents for many of our farming staff.
I'll now hand over to Andy Liu, our CFO, who will take you through some more
detail on the financials.
Andy Liu: Thanks, Richard. Good morning, everyone. Let me take you through Synlait's
financial results for the year '25. This year's results show a very strong
improvement and a fresh sense of progress across our main business areas,
even though we faced some manufacturing challenges at Dunsandel.
Let me begin by outlining the key highlights on Slide 7. The advanced nutrition
segment experienced robust customer demand and demonstrated strong
growth in new product development. This success translated into a $21.1
million increase in underlying gross profit, underscoring the strength of our
customer relations and our ability to innovate and bring new products to market.
Our ingredients business achieved a notable turnaround from FY24, recording
a $26.6 million improvement. This was driven by effective foreign exchange
management and a strategic shift to value over volume. Although stream return
did not always favour our current product mix, our enhanced risk management
approach proved beneficial.

The consumer and food service segment achieved a $9.3 million increase in
gross margin. These were largely attributed to the outstanding performance of
dairy works and ongoing growth in our UHT cream portfolio in existing and new
markets.
We successfully reduced SG&A costs through disciplined cost control
measures and a strong focus on eliminating wastage. Financing costs also
reduced significantly, supported by better cash flow management and the
recovery in trading performance.
On to Slide 8. In FY25, Synlait total revenue increased 12% to 1.8 billion after a
flat FY24. Growth was broad-based. Advanced nutrition up 8% on high volumes
and a new neutral-based powder successfully launched in Southeast Asia.
Ingredients revenue increased by 7% on pricing and favourable for exchange.
Our consumer-based business unit reported a 12% revenue increase, with
growth in export markets helping to offset ongoing pressures in the domestic
market.
Revenue and volume from food service driven by UHT cream almost doubled
compared to the prior year, with growth extending into Asia and the Pacific.
Underlying gross profit increased to 142.5 million due to disciplined execution
and strategic improvements company-wise.
On Slide 9, you can see that our focus on operation efficiency and working
capital management has resulted in a remarkable recovery in cash flows. Our
operating cash flows increased by $213 million, reflecting improved trading
performance and optimised working capital management.
Capex investment remains at low level, a further 23% reduction compared with
prior year, with a focus on business continuity, growth initiatives, and regulatory
compliance, as well as strategic digitalisation, AI, cybersecurity to manage risk
and opportunities.
Net debt decreased by $300.9 million, or 55%, due to capital injection and
improved cash flow performance. Financing costs contributed $48 million to net
debt. That is a $7 million improvement on FY24. These costs are expected to
reduce further in FY26, with the completion of our refinancing. Our balance
sheet is much stronger, and we are targeting a net senior leverage ratio below
2.5x in FY26.

In summary, Synlait's FY25 results reflect a company regaining its strength,
simplifying its operations and establishing a platform for sustainable and
profitable growth. The sale of North Island assets marks an improved turning
point, significantly strengthening our balance sheet by reducing net debt,
improving leverage ratios, and restoring our credit worthiness.
With a streamlined business model and a solid financial foundation, Synlait is
well-positioned to invest in strategic growth, pursue new opportunities, and
deliver sustainable value to our shareholders.
Financially, Synlait is now equipped to support and execute a new future
strategy with confidence and resilience. Thank you. I will hand you back to
Richard now.
Richard Wyeth: Thanks, Andy. We'll now go through an update on each of our business units. If
you turn to Slide 11, first the advanced nutrition. For FY24, we saw an overall
uplift in volumes due to strong customer demand. Our achievements for that
year include an expansion of our customer base.
We also had a new record in lactoferrin sales volumes, which were up 12 metric
tonnes. We also had the successful launch of our Nutrabase powders, which
has secured multiple customers in Southeast Asia.
Our focus going forward for this financial year will include working with the a2
Milk Company to support growth in China, further expanding the Nutrabase
range, and looking to deepen relationships with our ingredients customers so
they're more aware of our advanced nutrition capability, and exploring new
sales channels and value-add products to uplift returns on lactoferrin.
So that's advanced nutrition. Moving through to Slide 14 in the ingredients
business. To those who know the Synlait story, you will recall we strategically
moved away from fresh milk processing at the North Island Assets last year.
This obviously impacted our ingredients overall volume, which decreased to
108,000 metric tonnes. However, offsetting that was improved premiums over
the last 12 months, which was an outstanding achievement, and obviously we
had increased revenue due to strong ingredient pricing.
We also saw progress in customer and market diversification with expansion
into the Middle East. Looking ahead, our focus areas for ingredients will be

further uplifting the premiums we achieved last year, continued expansion of
our ingredients portfolio, and amplifying market awareness of our high level of
quality and consistency.
Moving now to Slide 13, you will see an overview of our food service business
performance. This is UHT cream, obviously a very popular product, certainly in
China. FY25 saw us successfully launch our second generation cream, which
has further increased product stability in market.
To deliver record volume last year, 8.4 1 litre bottles manufactured at our
Dunsandel site, every single one of these was sold. We had demand remains
exceptionally strong for this product in multiple global markets, and our focus
will be to continue to grow that into next year.
We're looking to grow margins, although that has been challenging. The real
unlocker for our Foodservice business is to continue to drive volume, and it's
really pleasing to see we've picked up a new distributor, which is sending
products into Fiji, and we're working more broadly to increase that volume
overall for that Foodservice business.
Moving on to Slide 14, the consumer business. FY25 was another outstanding
year for Dairyworks, which drives our consumer business. I would just like to
acknowledge Tim, who is the CEO of that business, who was acting CEO for
Synlait, and also Aaron, who stepped into his shoes for a period of time.
They've done an outstanding job once again for FY25.
The solid performance was driven by offshore markets, which stopped the
growth in New Zealand due to, obviously, cost of living pressures and increased
milk prices.
Overall gross profit for our consumer business was 39 million, up from 30.6
million in the prior year. Offshore, Dairyworks saw a 53% growth in cheese
export volumes, with a lot of success across the Tasman. Dairyworks is now
the fastest growing cheese brand in Woolworths, Australia.
The Alpine brand was also launched in Foodservice there, and both Alpine and
Dairyworks products ranges are now in Costco, Australia. The focus for FY26 is
to continue delivering value and new product lines to domestic companies and
further growing our export volumes. So a real standout for this year.

Moving now to Slide 15, which is milk supply. As I mentioned earlier today, we
have confirmed a record milk price, which is significantly up on the season's
opening forecast. This should deliver some very happy farmers, which has
been an important focus to assimilate across FY25.
Earlier in the year, our on-farm team did an excellent job of securing our milk
supplies for the current season after, working to encourage farmers to withdraw
their cease and onboarding 11 new farms. This was helped by additional
secured milk premiums, along with new guarantees around the milk price and
advance rates.
We'll continue to focus on finding new ways to add value on-farm. One of the
focus areas will be improving our digital offering and continuing to support our
on-farm through Whakapuāwai programme, which helps with riparian planting
on-farm. We will also look to launch our fixed milk price offering in FY26.
Now on to Slide 16. FY26 presents a valuable reset facility, as you well know.
As we've already said, the sale of our North Island assets will strengthen
Synlait's financial position considerably with the proceeds used to significantly
reduce debt.
Given the scale of the strategic reset, we will not provide further financial
guidance for FY26. Our focus is on executing the North Island sale and building
a simpler and more focused Synlait in Canterbury. We are committed to making
the most of this opportunity and aim to have an updated strategic plan in place
by March 2026.
So moving through to Slide 17, key takeaways from today. As noted, the sale of
our North Island assets will see Synlait become a stronger, simpler and more
secure business.
Financially, we will deliver a full and final balance sheet reset, ending the
company's survival phase. And strategically, it simplifies our focus and opens
the door for us to explore new opportunities here at Dunsandel. Andy and I will
now take questions.
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 the
handset to ask your question.

Your first question comes from Sean Xu with CLSA. Please go ahead.
Sean Xu: Sorry. My first one is around your manufacturing challenge in our central facility.
It seems to be a reoccurring issue now. I'm just very interested to know what
specific process improvement can be in parallel to FY26 to prevent this kind of
operational disruption going forward? Thank you.
Richard Wyeth: I just didn't quite hear the second part of the question.
Hannah Lynch: Prioritise this in FY26 to prevent this happening going forward.
Richard Wyeth: Yes, so I appreciate there has been a number of manufacturing challenges for
a period of time and certainly coming in and being relatively new to the
business is a focus for me. So as I mentioned, for our Big 6 for ‘26, that focus
on operational stability is key. What I can say is that there are a number of one-
off issues and we just need to work through those systematically, recourse
analysis and fix those issues.
I'm now comfortable with we're largely through that, but as I say, the next six
months is very important for us.
Sean Xu: Thank you. My second question is around a2, the China-labelled digital
production. Mind this, it's requiring new registration to renew in calendar year
2027. I know that might be an early stage, but if I remember the last time
registration with SAMR takes a long time. I'm just curious to know if your team
can give us some indication on the timeline of when to start prep for this
process? Thank you.
Richard Wyeth: Yes, so we've already started that process. You're quite right, FY27 is key. And
so we've been working on that already for a fairly long period of time. There's a
bit of capital required going forward and we're working with both a2 and SAMR
quite closely to make sure we're ready for this.
Sean Xu: Thank you. If I may just quick check in, a very quick question. Last one, with
Bright being your largest shareholder, I'm just curious to know if any full
collaboration can leverage their connection distribution channel in China to
expand your market there?
Richard Wyeth: Yes, I mean, Bright are obviously a very supportive shareholder of us and we
are working with them. And I think there's good opportunities. I mean, we've got
a very strong working relationship with Bright. So I think as part of our strategy

reset, we'll certainly be looking at what opportunities we have to work with
Bright.
Sean Xu: Cool, thank you for that update. I appreciate that.
Management: Appreciate it.
Operator: Your next question comes from Stephen Ridgewell with Craig's Investment
Partners. Please go ahead.
Stephen Ridgewell: Yes, good morning. And first of all, congratulations on the sale of Pokeno.
That's a big one for shareholders. With that and the clear rise a year ago, two of
the big three challenges that have been facing similar you've been overcome.
So well done on progress. My first question is on the use of proceeds from the
North Island asset sales.
And it could either be for management or potentially for the chair. You know, if
you use the proceeds, $370 million proceeds to pay back debt, you know, it
could be in a position where it's got $74 million thereabouts of debt on the
balance sheet. But the comments say also talk to the proceeds providing an
opportunity to strategically diversify.
And I realise it's an early stage, but I'm just interested in the early thoughts the
company has on the extent to which those proceeds will be used to pay down
debt. And the extent to which somebody thinks it's got capacity to make
acquisitions or other growth investments that might be more organic. And then
related question is, your post or post the sale proceeds for the company and to
operate a lower net debt EBITDA ratio than the 2.5x conflict today. Thanks.
Richard Wyeth: Yes, thanks. I'll take probably the first part, and Andy you may chip in on that.
So certainly initially we'd look to obviously pay down as much debt as is
sensible. In terms of the long term, that'll be clearer through the strategic review
that we can update in March.
And just, I guess my final comments, personal perspective, which I'll share with
the board is that, I mean, I'd like to see our debt to debt equity ratio sitting at
about 20% to 25%. I think that's prudent.
We're seeing that as a good balance. When it gets to 45, 50, it doesn't really
work. So that would be my intention going forward. Andy, do you want to add
anything further?

Andy Liu: No, as I said, actually that for our refinancing, we just finished it last Friday.
That's why I was using the two early stages just to talk about regarding when
we get the funds, what we will do. But as Richard already mentioned, yes,
principally definitely that's to just reduce our debt in order to just to keep it at the
very reasonable levels and also seeking for the opportunities. So this is a key
point. And Stephen just to try to make sure, what's your second question
regarding the debt to EBITDA level.
Stephen Ridgewell: Yes, just to ask whether the company would like to operate at a lower net debt
to EBITDA ratio, lower than 2.5x going forward in particular. If we kind of look
through a2 Milk's English label volumes migrating to their Pokeno site in the
next year or two?
Andy Liu: Yes, let's say that for the moment we still think that 2.5x is still a reasonable
one. That's why we don't think that we will change it for the moment.
Stephen Ridgewell: Okay, yes, like if you keep it at 2.5 x it does suggest potentially quite a lot of
firepower for acquisitions. But as you say, maybe we need to wait a bit longer to
see where we land there. Yes and then I guess as well, just on the -- in terms of
the impact of the asset sales, we can see the proceeds 307 million coming
through, which is great, but can you give us a -- can you hear me?
Richard Wyeth: Yes.
Hannah Lynch: Yes.
Stephen Ridgewell: Yes, great. Can you just give us a sense of the kind of EBITDA being generated
from those assets in the -- I feel like on a normalised basis in the year just
gone? You know, my understanding was Pokeno was kind of burning $35
million a year at EBITDA level, but just can you give a rough steer as to the
EBITDA loss that those assets generated in the year just gone?
Andy Liu: Yes, so I can quickly jump to this question. Based on our FY25 numbers that
they said once we get rid of the North Island. We are thinking about 5 to 10
million kind of the EBITDA to be improved. Because definitely the FY25 that the
plant is more filled, have more demand. That's why the level is not as high as
that what we said before. So 5 million to 10 million EBITDA impact.
Stephen Ridgewell: Okay, that's helpful, thank you. And then just one last one from me. Just on the
impact of a2 Milk's planned migration of English Label volume, from Dunsandel

to its soon to be acquired Pokeno plant. Can you give us a rough estimate of
the EBITDA impact that Synlait's kind of planning for?
Is it reasonable simply to take the gross margin per ton by the volume or are
there other things to consider? For example, is there cost out the company
connection or other factors such as the diseconomies of scale at lower
production volumes formula?
So I think that is obviously a key issue as the market kind of looks into the FY27
and beyond time period. I mean, some thoughts on that would be quite helpful.
How what the impact is and then the mitigation factors or the ways that you can
mitigate that impact?
Andy Liu: Yes, so Stephen, sorry, that's because these kind of numbers can be really very
commercial sensitivity. So yes, can't answer that very directly.
Stephen Ridgewell: Okay, well, I guess just there's an opportunity to make some comments. I guess
analysts will have to take a view in their own numbers.
Andy Liu: Maybe let me take it offline and just think about which kind of information we
can provide it.
Stephen Ridgewell: Okay, thanks, that's all for me.
Operator: Your next question comes from Adrian Allbon with Jarden. Please go ahead.
Adrian Allbon: Good morning, team. Maybe just a follow on from Stephen's question. What
sort of cost opportunity do you want to see in the Dunsandel asset going
forward. So initially and yes as you sort of deal with the transition of acres and
recycle volumes?
Richard Wyeth: Sorry Adrian, it's just a bit hard to hear. Can you have another go at that
please?
Adrian Allbon: Sure, is that better?
Richard Wyeth: Yes, that's a little bit better, yes.
Adrian Allbon: I was just, as a follow on to Stephen's question, I was just wondering what the
cost out opportunity – is it better?
Richard Wyeth: Yes, that’s great. Yes.

Adrian Allbon: Just as a follow on to Stephen’s question, I was just wondering what the
opportunity you see for cost out at Dunsandel actually is?
Richard Wyeth: Yeah, look, I think, as I say, when we reset the business with a focus just on
Dunsandel there will be some opportunity, and that's again too early to get into
the specifics unfortunately. But certainly we'll be able to provide more of an
update at the March announcement.
Adrian Allbon: Okay. Would it be useful as a starting point for us to kind of look to sort of FY18
as a sort of as some sort of benchmark?
Richard Wyeth: Andy, I don't know whether you want to comment on that. I haven't got any
numbers in my head at the moment so.
Andy Liu: Yes. So Andrew, that's regarding FY18. It's really from times ago. So, what I
can propose is that let me work out some numbers and try to provide you some,
let's say, some reasonable figures.
For example, based on FY25, we said that we are saving about 10 million just
we're still increasing on North Island. That's why we think about definitely the
number should be higher than 10 million. But let me just work out some
numbers, come back to you regarding how you can simulate it. Yeah, focus on
South Island.
Richard Wyeth: Yeah, what I can say in terms, I'm not sure what year to look back. But what I
do know given I've only been in the business a short time is what happened sort
of even two or three, four years ago in terms of throughput on the dryers at
Dunsandel was that we won't get as much throughput.
So, as we're focused on higher quality, it means we have to de-rate the dryers
somewhat now in terms of the specifics I haven't got those in front of me today.
But it does mean we can't just go look at the past as a precursor to the future
necessarily because as the standards have improved and China's requirements
continually to improve and all of those things mean we have to it does take
some capacity out not a lot, but it does take some capacity out of the dryers.
Adrian Allbon: Okay. Just related to that then, can you kind of go with us here on what your
sort of milk pool or what your contracted milk pool is for next year?
Management: Circa 70.

Adrian Allbon: Okay.
Management: Yes.
Adrian Allbon: Okay. And then I guess like in a broad question like are you expecting -- are
you actually expecting like EBITDA to be higher this year and I'm presuming
that the net debt is probably going to go higher as well because you've got all
these premium payments the farmers coming up shortly.
Richard Wyeth: Andy?
Andy Liu: So, let's say for this year compared with FY25, yes you are right that we will pay
some additional incentive to the farmers. It can be some challenge for the
EBITDA. But as said, regarding the FY26, that we are more focused on selling
in North Ireland.
We will try our best firstly to focus on product -- production state stability and
that that's why that we didn't share any kind of the our targets for the moment.
Adrian Allbon: Just if you assume that the North Island business was in the numbers, which is
probably what most of us are going to have to do like would you expect the net
debt to be higher this year like given your farmer incentive payments are due?
Andy Liu: I should say about the similar level than this year because yes farmers
payment, but also do remember we have the EBITDA to generate the cash so
that's why just do things and net debt should be a bit better than this year
theoretically.
Adrian Allbon: Okay. Thank you.
Management: Thank you.
Operator: Your next question comes from Matt Montgomerie with Forsyth Barr. Please go
ahead.
Matt Montgomerie: Hi, guys. Good morning. Maybe just start on manufacturing issues, Richard, I
suspect it's unlikely you'll provide detail on what they were, but there's sort of a
footnote around them being largely resolved. It'd be interesting if you could just
maybe talk to that what largely means what you need to see to get them
resolved and yeah just any further colour I guess give us confidence that you
know they have been isolated to the period that you've outlined previously.

Richard Wyeth: Yeah. Thanks, Matt. Good question. That was my fault. You know look I said
that to Hannah, look the nature of these businesses is that they're very complex
right making a vast nutrition. For example, you've got ingredients from 10 to 40
different ingredients you've got complex processing. So, I'm relatively
conservative by nature.
So, I said largely because while the issues we had from January to July are
largely behind us to say they're gone forever is you just can't do that. And look
in terms of the nature of those things they're a combination. You know we've
got people process systems, engineering, there's a whole raft of things that can
go wrong. A rotary valve can be put in some and, it might be an ingredient issue
or a supply incorrectly. So there's so many things that can go wrong in making
this advanced nutrition.
So the issues we've had in the first half of the calendar year are largely behind
us, but that's why I'm tuning up the focus on operational stability going forward.
So I am very comfortable with the issues we had in the first half of the year. We
have largely dealt with all of those, but you just never know what can be around
the corner.
So the way you deal with that in a processing operation like we are, is you have
very good systems processes and you have well-trained people. So that is the
area that I'm focused on at the moment.
Matt Montgomerie: Awesome, that's very clear. Just on Dairyworks, I think EBITDA of around 23,
clearly it's been a good business, over the last five, six years since you've
owned it. And I think from memory at the time, I think the target was around 20
of EBITDA.
So yes, maybe just from you Richard, how you think about that business going
forward, maybe anything where you see it, say three to five years from an
earnings point of view?
Richard Wyeth: Yes, thanks Matt. Andy might be able to put some numbers around it. In a
general comment, I'd say I think it's got massive opportunity. I think the team
there are fantastic. Tim and his leadership team have done a great job. So I
think there's a real opportunity.
The thing about that business is that you can just continue to scale it up, there's
no sort of restrictions on growth. And I think that's what's exciting. They can

procure a product, they can add value to it and they can put it into different
markets.
So I've got good markets here in New Zealand now targeting Australia and I'd
like to get into look even beyond that. So that's sort of my general comment in
terms of the numbers around that.
Andy, I don't know if you've got any more favour to add to that.
Andy Liu: Yes, so let's say for FY25, our revenue for the dairy works is about 12%
increase, but growth profit is about 28. So it's a really show that other than the
sporting growth, it's also internally they said from their focus in always their
strength for the efficiencies, productivity, also supporting these numbers. That's
why we still said it's a very good business that's in a good trend and also
expected to have a further growth.
Matt Montgomerie: And one more, just a small one. Andy, the depreciation associated with North
Island assets, what's the EBIT drag?
Andy Liu: Sorry, can you repeat your question? What do you mean the EBIT drag?
Matt Montgomerie: So, just following up from Stephen's question, what's the DNA sitting over the
North Island assets in FY25?
Andy Liu: It's around about a million per month.
Matt Montgomerie: Thanks.
Operator: Once again, if you wish to ask a question, please press star one on your
telephone and wait for your name to be announced. Your next question comes
from Nick Mar with Macquarie. Please go ahead.
Nick Mar: Good morning. Could you just talk through the net debt number? I think the
trading update right at the end of your financial year, you were sort of guiding
towards 300 and you came in at 250. How did that change so much?
Andy Liu: Yes, sure. I can just take this question. So what has changed is mostly because
we have higher customer demand and the customer demand also triggers
some additional deposits. So this is how it comes, regarding one of the
reasons.

Another reason is that, as you know, Nick, we also have the receivable
assignment. So at the end of the month, there is some kind of additional kind of
deliveries, which we get the receivable assignment earlier. That's why this is
mostly the two kinds of the main driven for the 15 million just reduced.
Nick Mar: That's good. And in terms of what you're selling with the North Island
investment, you mentioned the kind of lease warehouse as well. Does that sort
of line up to what the North Island CGU was when it was impaired at the end of
FY24, just trying to work out the price relative to the holding value and also, do
you have any sort of breakdown of the value by PP&E versus net working
capital?
Andy Liu: Yes, so to answer your question, yes, it's roughly the same regarding our CGU
for North Island the last year when we share the numbers. So what I can
propose you is that you can take the last year annual report to the numbers.
And yes, this is kind of the baseline regarding the CGU, the net asset value for
the moment.
Nick Mar: Yes, and the sort of mix between sort of PP&E and net working capital?
Andy Liu: So working capital one, because here what we said is regarding the total $178
million, it's $170 million for the PP&E and $80 million for the working capital,
let's say, just inventory.
Nick Mar: Thank you.
Operator: There are no further questions at this time. I'll now hand back to Mr. Richard
Wyeth for closing remarks.
Richard Wyeth: Thanks everyone for joining the call today. I look forward to meeting with many
of you over the coming days. And in the meantime, if you've got any questions,
you can just follow those up with Hannah. And that concludes our call for today.
Operator: Thank you. That concludes the conference for today. Thank you for
participating. You may now disconnect.
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