Good morning, everyone, and welcome to Synlait's full year results conference call. I'm Hannah Lynch, the head of Strategy and Corporate Affairs, and today I'm joined by our CEO, Grant Watson, and our CFO, Rob Stowell. Grant and Rob will provide a short update based on the investor presentation, which we released to market this morning. We'll then open for Q&A. I ask that you keep your questions to two per person, and we're happy, of course, to take any follow-ups following today's conference call. I'll now hand over to Grant, followed by Rob. Morena Tatou, good morning, and again, welcome to Synlait's full year results investor presentation. FY 2023 was an extremely challenging financial year with a poor financial result delivered, driven primarily by a reduction in consumer demand and infant formula, force majeure event impacts, ERP go-live impacts, and inflationary cost pressures across the business. In saying this, I'm pleased to report we launched our Joyhana UHT Foodservice whipping cream into the China market. We received re-registration of our SAMR license. We made significant improvements across staff engagement, health, safety, and well-being, and I'm delighted to confirm our executive leadership team renewal phase is now complete. Our strategy refresh is also complete, ensuring a more focused Synlait, with an appropriate organizational structure now being in place to ensure quality execution against our strategy. I would also like to add, commercial production for Synlait's new customer, Abbott, commenced in Q4 FY 2023 at Pokeno and Auckland sites, focused on business-to-business relationships. I'd now like to hand over to Rob Stowell, our CFO, to take you through our financial performance. Thank you, Grant. Good morning to all those online. There's no doubt FY 2023 was a challenging year to navigate. In saying that, the business has completed several large strategic projects, while also having to negotiate many business challenges, some of which were in our control and some of which were outside our control. Unfortunately, some of those challenges materially impacted our profitability and debt reduction targets, and I will shed some light on those this morning. Just turning to results at a glance, revenue was down 3% to NZD 1.6 billion, mainly impacted by lower ingredients, volume, and commodity prices. Net profit after tax is down NZD 42.8 million to a NZD 4.3 million dollar loss. On a normalized basis, we were down NZD 33.8 million to NZD 2.5 million. This was in our guidance range. No matter how you reflect on these results, they're disappointing. The normalized profit figure considers a normal spend and income items in FY 2023, such as the ERP project and other items. EBITDA on a normalized basis is down NZD 27.4 million to NZD 95.6 million. Average milk price is finalized at NZD 8.49 per kg of milk solids. Base milk price, NZD 8.22 per kg of milk solids, which is still relatively high in historical terms. However, we know our farmers are still experiencing high inflation, a tight labor market, and rising interest rates. Operating cash was down 83% to NZD 39 million. Again, a very big drop from last year, mainly due to lower operating profitability and higher inventory levels. CapEx tracked down 32% to NZD 65.1 million. Pleasing to see this step down further as planned. Net debt is up 21% to NZD 413.5 million. Good to see this much lower than it was at our half-year result. However, it was much higher than we originally targeted. If I turn to slide five, Synlait's FY 2023 result. The slide unpacks some of the key components of the result. If you cast your eyes across to the adjusted NPAT profit bridge on the top right-hand side, it checks the adjusted NPAT of NZD 36.3 million for FY 2022 to adjusted NPAT of NZD 2.5 million for FY 2023. I'll quickly summarize the key factors. Ingredients delivered a NZD 2.9 million margin loss due to volume impacts of a roughly 18% less ingredient volumes. This was mainly due to 38% higher advanced nutritional- based powder manufacture. This had a negative impact of NZD 10.3 million. Profit margin impacts from excellent skim milk powder, AMF stream returns, was roughly NZD 7.3 million, offsetting the volume down. A big shout-out for our teams for getting all the ingredient sales delivered in the year, despite the ERP system challenges earlier in the year. The next bar is Advanced Nutrition. That reduced NZD 16.8 million margin. This was due to a negative volume impact of NZD 3.4 million compared to FY 2022, from roughly 5% lower volume caused by demand reductions and SAMR re-registration delays. Also, a negative margin impact of NZD 13.4 million, driven by the timing impact of lagged pricing, where it takes some months for increases in raw materials and packaging to flow through to the invoice sales. Also, large increases in manufacturing costs and more normal FX. This was partially offset by higher volumes of Advanced Nutrition base powder production. Consumer Foods. This includes our Beverages business and also Dairyw orks. This delivered NZD 7.6 million margin growth. Obviously, good to see these businesses perform better in FY 2023. The margin growth of NZD 4.3 million in Beverages and cream came mainly from pricing lag and lower overhead costs. Dairyw orks benefited NZD 3.3 million from a full year of the closure of the Temuka cheese plant and the first full year of a new coal store operations. The next bar is milk trading and other income. This is NZD 11.1 million upside. This is predominantly made up of milk and cream sales, also Foodservice and Synlait Farms. The key reason we've made gains here was the way the market and the contracts performed, including FX, as we sold milk dollars to maximize stream returns. SG&A costs. Large increase in adjusted SG&A costs of NZD 21 million, with material drivers being employee costs, legal and consultancy, logistics, travel, and general inflationary pressures. We're split out recurring ERP costs. Our annual, cost of running the ERP system is NZD 10.6 million, and this includes NZD 6 million of depreciation. Financing costs. Our adjusted interest costs compared to last year were higher by NZD 12.8 million. This was predominantly due to the higher wholesale interest rates and also debt balances. Turn to page six. Revenue and sales volumes. Overall revenue was down 3%. However, revenue attributed to the business units was down 8% or NZD 117 million. This slide simply gives more detail on the key components, so I won't dwell on it, other than to say that you can see that most of the dramatic drop comes from the ingredients being down 20% or NZD 165 million. This was offset in part by increases in all other areas, and please note our first year of sales of the UHT whipping cream business of 757 metric tons. We turn to page 7, production and inventory volumes. Overall production reduced 2% or 3,804 metric tons. This was mainly due to ingredient volumes being driven down by higher production of Advanced Nutrition base powders, displacing ingredient product. Also, our milk process was down 4% due to us maximizing skim versus AMF production, and where we sold the surplus milk and cream to other processors. In good news, despite the challenges we had with the ERP project early on, our high inventories at our half year, we closed almost 50% down on our previous year's inventory on hand. In Advanced Nutrition, there was a healthy increase of 26% in volumes for both consumer packaged and nutritional base powders. As we successfully built inventory for the summer registration launch and to optimize production for the FY 2024 peak milk processing. In Consumer, we had a relatively stable volumes of production and inventory levels. In food service, we made 1,514 metric tons of Joyhana UHT whipping cream, as we started to commercialize this business. While we have had some teething issues getting going in FY 2023, reports back from our key customers are that the product is of high quality and demand is very strong. Hence, we are already into producing much larger volumes for FY 2024. Overall, inventories were up 30% on FY 2022. This was made up of increased levels of advanced nutritional base powder, roughly NZD 55 million, and NZD 21 million in raw materials and inventories, mainly due to price rises. We turn to slide eight, gross margin performance. This slide unpacks by business unit, where the gross margin was made. In total, our gross margin was down 2.8% compared to FY 2022, sitting at NZD 144 million versus NZD 146.8 million for last year. The slide really is a repeat of a lot of the summary information in slides five to seven. However, it gives some more detail and shows the impact by business unit on a per metric ton basis. I won't go into further detail on this call, but the information is there. We turn to page 9, SG&A and manufacturing cost performance. As mentioned earlier, the group was impacted by a range of challenges throughout the year, including a complicated sales and production plan caused by salmon deliverables, implementation of the ERP system, challenges around COVID-19, critical material shortages, extreme weather events, and unexpected plant outages. This slide gives visibility to what is driving the makeup of these costs. In short, there were many reasons, but the main themes are as follows: We have increased our payable costs in response to a very tight labor market. We similarly felt it necessary to give market-based pay increases to help retain and attract new talent. Supporting the China SAMR registration process, including the inventory build required, we employed three extra shifts and other staff to manage the volumes. We also invested in capability and resource, and the readiness for much higher volumes of Advanced Nutrition at our Pokeno site and our advanced liquid milks plant. We continue to make changes to our ELT. We had extra costs incurred on our ERP implementation. While we went live on the first of August, we had to spend more than we anticipated on hypercare and stabilization phases of the project. This was critical as we sought to stabilize the business around the new system, while still trying to desperately serve our customers. While there are several other factors, such as increases in travel due to the borders opening up, high levels of R&D due to a couple of one-off events, the overwhelming driver is that our costs have been pushed up due to strong inflationary pressures. This has been a major headwind for several similar manufacturing companies in New Zealand. What are we doing about it? A key focus for the last six months has been focusing on how we mitigate inflation and waste in the business. We have run wide-ranging cost out programs and a thinking-led approach to staff recruitment. We are very pleased to say we'll be spending NZD 10 million-NZD 20 million less on costs in FY 2024 than we did in FY 2023, even in the face of inflationary pressures. If you turn to page 10, Cash Flow and Net Debt. I'll be honest, strong cash flows and net debt reductions have been challenging over the last 12 months. This was due to significantly lower profitability, including higher interest costs and higher investment in inventories, mainly advanced nutritional base powder and raw materials. This has meant our debt has risen NZD 72 million compared to where we were a year ago. Key points to note on the slide: Operating cash flows were NZD 39 million, down 83% on FY 2022, due to the reasons already mentioned. We have continued to reduce capital expenditure. For example, we have wound up our ERP project. We have also substantially completed our Pokeno upgrade project, and operational CapEx is also tracking downward. As a guide, capital expenditure will be less than NZD 30 million in FY 2024. Net debt has increased up to NZD 413.5 million since last July. While we remain within our facility limits throughout FY 2023, we did need to adjust our banking ratios due to the large drop in EBITDA. It's an obvious comment, but it's critical we continue to deleverage over the next 12 months, so we can manage our high servicing costs. We are confident we have a good plan to do this. You will also see guidance note that we are targeting a debt ratio of below 3.5x for FY 2024. If you turn to page 11, Banking Facilities and Debt Structures. We were pleased to announce last Monday that Synlait has successfully refinanced its debt facilities, introducing four new banks to the syndicate led by ANZ. The new banks are Bank of China, China Construction Bank, Rabobank, HSBC. The facilities, when combined with the bond, give us a peak funding through the year of NZD 660 million, and taper down throughout the season to save on cost. The group is required to make a repayment of NZD 130 million in March next year. This is part of our deleveraging plans in any case. The refinancing is the first step of many to get our capital structure in a much better state. Both management and the board are highly committed to this. The next step is to repay the NZD 130 million, while also continuing to produce strong operating cash flows. Synlait's new syndicate provides increased service offerings, extra capacity, at significantly reduced cost. We welcome the new banks and thank ANZ for their ongoing support. That's a wrap on the financials. I'll pass over to you, Grant. Great. Thank you, Rob. I'll now take you through an update on our various business units. Advanced Nutrition. In terms of leadership, Naheeda Agarwala started as Director of Advanced Nutrition in January 2023. The five-year advanced nutrition strategy refresh was completed during the year. Our category focus is on early life and adult nutrition. We remain focused on B2B relationships, where Synlait can provide formulated powders in bulk or consumer-ready formats, with key focused partners such as the A2 Milk Company and strategic Chinese and Southeast Asian local partners. From a business development perspective, our plant-based capability has now been fully ratified, and related new product development work has been initiated and aligned to strategic priorities. Now, in terms of achievements, as previously mentioned, Synlait achieved re-registration of the A2 Milk Company's Chinese labeled infant formula, stages 1, 2, and 3, in June 2023. Re-registration allows Synlait to manufacture and export this product for China until September 2027. In terms of U.S.A. market access, all three Synlait manufacturing sites, Dunsandel, Pokeno, and Auckland, were audited by the US Food and Drug Administration and received positive outcomes. It is worth noting, as we look to FY 2024, Synlait is forecasting a further softening in infant formula of approximately 11.4%. Moving on to food service. From a leadership perspective, Abby Ye started as President China and Director of Foodservice in March 2023. The five-year Foodservice strategy was created with the initial focus on functional UHT whipping cream sold into B2B customers. The total cream market in China exceeded 250,000 metric tons in 2022, and New Zealand is the leading country for cream exports, with roughly 58% market share. Both butter and cream cheese categories have been considered as potential long-term opportunities for food service. From a business development perspective, FY 2024 will see Synlait continuing to expand Joyhana within China, focusing on bakery and pastry, along with beverage chains, and considering access to Southeast Asian markets in the second half of FY 2024. The launch of the Joyhana partnership between Synlait and Savencia Fromage & Dairy commenced in FY 2023, and volumes will continue to ramp up in FY 2024. Market feedback to date around the product has been extremely positive. Joyhana UHT Whipping Cream won the New Product Innovation Award at May's very prestigious China International Bakery Exhibition. The Savencia Fromage & Dairy and Synlait partnership is very complementary. Savencia Fromage & Dairy is responsible for distribution, branding, and marketing, and Synlait is responsible for high-performance product development and manufacturing. During FY 2023, Synlait and Massey University celebrated five years of our partnership. This is our home for cutting-edge innovation. In terms of ingredients, our 5-year ingredient strategy refresh has also been completed. The focus is on driving strong sales disciplines while ensuring we have a leaned out cost base. From a business development perspective, we are exporting to a diversified range of markets, approximately 50 countries, with low concentration into China. Our focus is on generating high-value, multi-year contracts for differentiated specifications. We are driving sustainability initiatives with global customers that leverage labor, Lead with Pride, and supports best practice development on-farm. We are tightening premiums and lead bucket disciplines to maximize returns and sales timings against the milk curve to ensure that we minimize risk. In terms of achievements, as Rob mentioned, we delivered record low year-end inventory levels and working capital positions. Despite the supply chain challenges that we experienced in the first half of FY 2023, 100% of contracted volumes were shipped and delivered in the second half of FY 2023. In terms of our consumer business, which is primarily Dairyw orks. Dairyw orks has recently focused on its core cheese category, exiting yogurt and spreadable butter. The strategic growth focus is very much on the diversification of geography and channel, not category. From a divestment perspective, Synlait announced its intentions to divest Dairyw orks and its Temuka Cheese assets in June 2023. Synlait is actively engaging with several parties and will provide a further update in due course. As Rob mentioned, the proceeds will be used to pay down debt if a divestment occurs. In terms of business development, a significant pipeline of opportunities has been developed for Southeast Asia and Australia. During this very challenging period in the economic cycle, Dairyw orks is really well placed to address consumers' cost of living focus with brands across all stages of the economic cycle. From an achievements perspective, our manufacturing market share in key natural cheese increased to 70% from 64% in FY 2022. Food service volumes and Dairyw orks continue to grow. Capital projects to enable greater labor efficiencies, health and safety improvements, and quality at the processing facility in Hornby. Capital improvements to be commissioned during Christmas shutdown later this year. On-farm excellence and sustainability. From a leadership perspective, Charles Fergusson started as Director of On-Farm Excellence and Business Sustainability in February 2023. Our on-farm excellence five-year strategy was developed. In November 2022, we established a Synlait Farmer Leadership team.... Eight farmers who are effectively a conduit between Synlait and our farmer supplier base, providing feedback and direction on Synlait's strategic choices and prioritizations, and prioritization against tactics. In terms of our Synlait Farms, we continue to invest in on-farm infrastructure and our people. Our ambition is to become Lead with Pride certified and to establish a center of excellence for all of our farmers. In terms of industry engagement, we became a founding shareholder of AgriZeroNZ, a partnership and investment fund between agribusiness and government to accelerate agricultural emissions reductions by 30% by 2030. In terms of sustainability, a further 19 farmer suppliers became Lead with Pride certified in FY 2023. We transitioned Boiler Two at Dunsandel to biomass, using wood pellets as a fuel source, enabling significant reduction in emissions. Our B Corp certification is on track for December 2023, confirming that we are paying a market farm gate milk price for FY 2023 of NZD 8.22 and an average farm gate milk price of NZD 8.49. We retain our current outlook for the 2024, FY 2024 season at NZD 7. I'll now take you through a brief update of our strategy refresh. As mentioned, our strategy refresh means the creation of a more focused Synlait. The board and our executive leadership team have now completed our strategy refresh. Our refresh strategy leverages Synlait's world-class capabilities and asset base to partner to produce high-value, Advanced Nutrition and Foodservice B2B products, supported by a disciplined and well-run ingredients business. On Slide 20, we have a very high-level overview of our Synlait strategy. Effectively, a top-level view based on our Ingredients, Advanced Nutrition, Foodservice, and Consumer business strategies. The structure of this page gives a clear definition of our ambition, what success looks like in FY 2028. Right to Play speaks to the importance of having strong foundations. It then covers our channels, categories, and geographies. Our Right to Win speaks to where we believe we can gain and maintain competitive advantage, and our key enablers speak to the important areas of execution across the business. In terms of some of those key changes, Right to Play is Synlait's core capabilities. Some might refer to this as our tickets to the game. For us, it sits in food safety and quality, highly utilized, efficient plants, Advanced Nutrition and Foodservice know-how, integrated value chain, regulatory know-how, and sustainability credentials. Channels, otherwise described as the business units or business types that we choose to focus on, are the areas that we will apply our efforts to. Clearly, it's Advanced Nutrition, food service, and ingredients. Categories, clearly the products Synlait manufactures within its business units. Category focus areas include infant nutrition, adult nutrition, advanced ingredients such as lactoferrin, food service cream, AMF. As mentioned, we're exploring opportunities with both butter and cream cheese, and then, of course, commodity powders. Summary of key changes to our key enablers, and as mentioned, these are the areas that will drive greater execution to ensuring that we deliver against our ambitions. These include on-farm excellence, best-in-class customer engagement, disciplined product innovation, high-performance culture, systems, tools, and processes, world-class manufacturing and supply chain. So again, this is a very, very high-level summary of our strategy on a page. We now have an outstanding leadership team in place who are 110% capable, committed, and determined to returning this business back to being a highly profitable business again. In terms of Synlait's full year 2024 outlook, FY 2023 was highly challenging for Synlait, with material reductions in customer demand, CO2 shortages, extreme weather events, the COVID-19 pandemic, inflationary impacts, ongoing investment in new product workstreams, and the launch and stabilization of the company's new enterprise resource planning system. Looking ahead to the 2024 financial year, Synlait could still face challenging China market dynamics, softening global conditions more generally, and continued inflationary pressures across its cost base, which could impact future customer demand and the company's overall profitability. Synlait does, however, expect Advanced Nutrition volumes to continue to grow at the Pokeno site in FY 2024, and the company's overall EBITDA performance is also expected to improve in FY 2024 compared to FY 2023. The A2 Milk Company's purported cancellation of exclusivity arrangements under the Nutritional Powders Manufacturing and Supply Agreement, the NPMSA, for the A2 Platinum and other nutritional products, is not expected to impact Synlait's FY 2024 results. Synlait disputes that the A2 Milk Company has the right to cancel the exclusivity arrangements. While Synlait is confident in its strategy to rightsize its cost base to current activities and its near-term Advanced Nutrition and Foodservice growth opportunities, the uncertainty of broader macroeconomic factors means the company will not provide guidance at this time. Synlait is committed to its refreshed strategy to create a more focused company and remains largely on track to meet its five-year FY 2028 strategic ambitions. In terms of next steps, management will host an institutional investor site tour at Synlait Pokeno on Monday, 30 October 2023. The agenda includes Synlait Pokeno site tour, a presentation by myself on the Synlait strategy, Q&A with key members of our Synlait executive leadership team, again, including myself. In terms of our annual meeting, this will be held on Friday, the first of December 2023, at 1:00 P.M., at Synlait Dunsandel. The notice of meeting, released in early November 2023, will include further information. I'd now like to open the call up to questions. Thank you. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. Your first question comes from Nick Mar, from Macquarie. Please go ahead. Morning, guys. Just on the volume outlook, you mentioned infant volumes down around 11%, and then, you know, Pokeno is obviously a new customer. On a net basis, what should we expect from Advanced Nutrition overall? Thanks, Nick. This is Rob here. Look, we're looking at a lower double-digit growth for our whole nutritional business in FY 2024. Oh, so the 11.4% includes Pukekohe ramp-up? No. So the 11.4% is down in the infant business. The, say, 10%-12% growth in our total nutritional business next year is what we're expecting. Oh, sorry, sorry. Overall growth. Yeah, that's great. Yeah. Then, in terms of the cost out numbers you talked about, does that include the costs that might leave the business from Dairyw orks, or is that separate to the NZD 10 million-NZD 20 million? Yeah. Yeah, good point. Now, look, it's actually separate. We've done a lot of work over the last six months, Nick, stress testing all our costs right across the board, and we're pretty confident that we can get at least NZD 10 million-NZD 20 million out on a group basis, including the Dairyw orks piece. Sorry, including the Dairyw orks. So cost out of Dairyw orks or costs leaving the business because Dairyw orks is being divested? I just work on the basis that assume Dairyw orks is in for the whole year. Even if that was the case, we'd still be looking at NZD 10 million-NZD 20 million savings on our expenses for FY 2023. That's great. Yeah. And then in terms of the capital structure, you know, you talked about repayment of debts with the next key milestone. Are you guys still ruling out raising equity at this point? Look, we're really focused and committed on the Dairyw orks sale, Nick. Obviously, there's a number of options open to us, including capital raising. But we're not, you know, willing to discuss those at this point. I think previously you ruled it out, so you're no longer doing that? I think it's fair to say, Nick, that there are a range of options that we could pursue, in the event that the Dairyw orks business doesn't sell, including a capital raise. Okay, great. And then lastly, just on the bank refinancing, could you just talk about any changes to the sort of margin profile of those facilities? Sorry, you're just coming through pretty lightly, Nick. You're talking about the margins? Yeah. Yeah, look, we... I can't go into specifics, but we have definitely lowered our average margins across our debt by bringing in and running a competitive process, and bringing in new banks into the syndicate. Great. Thank you. That's all. Thank you. Your next question comes from Matt Montgomerie, from Forsyth Barr. Please go ahead. Hi, guys. Just checking you can hear me all right? Yep, yep. Great. I might just start on your qualitative EBITDA guidance comments. There's a fair bit of crisscrossing in here, so I'm just after some clarification. So firstly, your EBITDA improvement comment, is that on your FY 2023 adjusted base of NZD 96 million? And then secondly, how have you thought about the Dairyw orks contribution with respect to that, that comment? Yeah, that's a good question, Matt. Look, we are looking at increases in EBITDA on an adjusted basis. Not willing to give guidance on how much at this stage. Hopefully, we'll be able to give guidance later on in the year. I would think about Dairyw orks, you know, roughly being in there for, say, half of the year for your purposes. But again, that's not certain. Okay, perfect. That's, that's good enough. Maybe if I just go back to Advanced Nutrition and sort of the margins in that business unit. If we look at your asset base utilization on the back of your comment from next question, versus the potential margins in that business, it feels quite unlikely that you'll be able to get back to pre-COVID level of margins. Would it be fair to assume that, you know, maybe you can step it up to mid, mid 2,000s, yeah, given the utilization of your asset base when we consider the volumes coming through in that segment? Yeah, look, obviously some headwinds currently, Matt, but look, we are optimistic that we can both through running the business more efficiently, and taking out any waste, looking at the way that, you know, we can bring in more business as soon as possible, that we can get up to those sorts of margins again. So we're working very hard at that. Yeah. But in the absence of new business which, you know, there's been nothing disclosed today, would you concur with the comment that getting back to those levels, at least in the next year or so, is unlikely? Yeah, getting back to those levels in the next year would be very challenging, Matt. But look, we continue to be optimistic that we've got a lot of capability and great assets, and very good team working on business development at the moment. Okay, perfect. I might leave it there. Thank you. Thank you. Your next question comes from Ryan Li at Craigs Investment Partners. Please go ahead. Hi, guys. Can you hear me okay? We can. Thanks, Ryan. Yeah, great. So first question, just building on Matt's question earlier. So for your net debt to EBITDA target of below 3.5x in FY 2024, is that sort of assuming six months of contribution, EBITDA contribution from Dairyw orks and debts being repaid during the year once the divestment is completed? Yeah, correct. Yeah. Okay, cool. And, second question: so what sort of timing are you expecting to complete the divestment of Dairyw orks? And how reliant are you on completing the divestment to repay the NZD 130 million of bank debt before March 2024? Yeah. Ryan, a couple of points there. Firstly, we have a number of interested parties that we're working with. So at this stage, we can't confirm the timeframes, but we'll update you in due course. I think the second point that's worth noting is that there's not a direct link between the sale of Dairyw orks and the NZD 130 million that you referred to. Okay. So can I just ask a follow-up? So if you are not able to complete the divestment before March 2024, what sort of levers can you pull to repay the debt? Is it just from your operating cash flows, or just thinking about, you know, how confident are you to repay the debt without divesting the asset? We're working through that at the moment with our financial advisors, and as Rob mentioned, there's a range of ways that we could shore up our balance sheet in the event that we didn't sell Dairyw orks. Okay, great. Thank you. Thank you. The next question comes from Sean Xu, from CLSA. Please go ahead. Morning, Grant. Morning, Rob. My first question is with A2. So with A2 Milk being one of your most important customer over the years, has Synlait made a plan based on assumption that A2 will move all its English label away? And so what's sort of the timing you're expecting, and what's the implication on Synlait's business going forward, please? Thank you. Yeah, look, look, I think it's worth noting that we refute the claims made by A2. As you can imagine, we run a range of sensitivities around scenarios, including the phasing out of A2 volumes over time. But equally, we have current and prospective customer opportunities that we're working through that will create significant value for the business and deliver diversified growth over time. Sure. I'll probably do another question, please. So based on my understanding, is Bright Dairy, Bright Dairy provides some support on the refinancing process of Synlait's, debt facility with the Chinese banks. In the long term, is there anything you can leverage your relationship with Bright's network in China? Because based on my observation, there's a lot of synergy between the two. Is there any strategy you can share with us going beyond? Thank you. Yeah, good question. Maybe more generally, as you can imagine, Bright are extremely supportive as a shareholder, and through their strong membership around the board table. So look, whether it's banking relationships, same processes or customer acquisition opportunities up into China, Bright continue to provide really material support to the business, and we expect that to be ongoing. Can I just do a follow-up? Thank you for that. So let's say the NZD 130 million debt by 30, by March 2024, let's say, the divestment does not go well, and you don't want to go through capital raising. Is there a possibility Bright can inject the cash from China to support this repayment? Look, I can't speak specifically on behalf of Bright, but what I can say is that there are a range of options that we have to ensure that we shore up our balance sheet. Okay. Thank you. I'll leave it there. Thank you. Thank you. Your next question comes from Marcus Curley, from UBS. Please go ahead. Good morning. Can I just start with just a point of clarification, you know, on your, on your guidance comments? Am I right in assuming you're talking about adjusted EBIT growth with the assumption that Dairyw orks is only in the business for six months? So, you know, effectively a 6-month contribution from Dairyw orks relative to a 12-month contribution from last year. Is that the right interpretation? Yeah, that, that's correct, Marcus. Okay, great. Moving on, can you provide any commentary at this stage about gross margin per ton on the Abbott contract? You know, particularly in year one, given it's a start-up year and maybe a long-term aspiration, for that? Look, no, sorry, Marcus, we can't give any sort of guidance on that on this call. Okay. Gross margin per ton on ingredients, you know, was 870 first half, 500 for the full year. Obviously, a much lower second half. Could you talk a little bit to, you know, what's changed? You know, whether that was, you know, inventory write-downs, stream returns, or just market conditions. Is that second half, you know, a good benchmark for how we should think about FY 2024? You know, it's a good question. Look, there was a lot of volatility in the year. We had commodity prices moving around, FX, and also we had some a little bit of downgraded powder in the second six months. So that all came through. The 500 is probably around about, you know, probably 10% higher than what we'd expect on the go forward. However, an example, you know, where we did really well this year was around the skim milk powder AMF differentials. We entered the year, and it was neutral. We've actually seen that actually pop up again. So that's a benefit that we're trying to extract again this year. So, in short, it's difficult to pick, but I'd just be taking a slightly more conservative view than NZD 500 at the moment, Marcus. Robert, if you stripped out the stream returns, what would have been that underlying number? And, yeah, the NZD 500 would have been what in FY 2023? Somewhere between $400 and $450 per metric ton. Particularly in a situation where you're reducing your costs dramatically. Okay. And thirdly, given no one's stuck to the two-question limit, I won't either. You know, just a point of clarification, when you talk about the NZD 10 million-NZD 20 million worth of overhead cost reduction, is that excluding the fact that you had NZD 11 million worth of one-off ERP costs? So in essence, that doesn't include the fact that that cost is disappearing, so it's an addition to that NZD 11 million? It's absolute costs, minus NZD 10 million-NZD 20 million. Look, that's in the face of inflationary pressure, so you've still got inflationary pressure coming through for another year, which, say, could be 10%. We're saying actually, we're gonna go below what we spent in FY 2023 by NZD 10 million-NZD 20 million. Okay. So in other words, it includes the fact that you're losing, or one would assume- ... Given the ERP project is finished, you don't have any further one-off costs for that this year? No, no further one-off costs, but, but you'll see in the presentation, there's a recurring cost of NZD 10.6 million. Sure. That's- But that was also in this year's numbers as well, right? Yeah, correct. Yep. Yep. Okay, thank you. Thank you. Your next question comes from Adrian Allbon from Jarden. Please go ahead. Oh, good morning, team. I just want to firstly, can I just clarify what you were sort of saying in Advanced Nutrition? You, you're expecting the infant formula volumes to be down circa 11%, but I just sort of missed at the start. Are you, are you then assuming that the overall volumes for that division would be up 10%-12%, which includes the offset from the Abbott contract? Yeah, so the way to think about it, Adrian, is we're expecting infant formula to be down. We're expecting other parts of the advanced ingredients business to be up, up, and net-net, we're expecting to be up. So, when I say other parts, there's a range of customer opportunities that will play out in FY 2024 that ensure that we end up in a positive net position. Just for clarification, is that sort of infant formula base powder? When we talk about 11.4, we're talking about packaged goods rather than base powders. No, no, but just in terms of, you said there's a range of other parts that may play out in FY24. There's obviously Abbott, and then there's... Are you talking about other parts likely being infant formula base powder for other customers, or? I can't comment specifically on the other opportunities at this stage, Adrian. Okay. All right, just while I've got you, Grant, just from, I guess the, the back and forth we had via the A2 announcement last week, like, they've sort of made—like, they're obviously looking to drop the exclusivity, which in practical terms, I, I suspect allows them to, to sort of glide path off when it suits them, like the end label volumes, as they build up their own capability or with other partners. Like, can you comment on, like, what would... Like, if, if they, if they did, like, if you did agree to the, the loss of exclusivity, I know you're refuting at the moment, what would it mean for Synlait? Like, does that mean that you have to maintain this 150% capacity for FY 2023, of 2023, sorry, that they cited through the length of the contract, or are there other mechanisms available to Synlait? Yes, so maybe to talk through the process we're in. So we'll work our way through in good faith. There's 20 working days, so that's the first part of the process. Yep. In the event we don't get resolution through that, we'll give thought to: are there benefits in actually letting the exclusivity drop away? And we think there are a number of benefits, but equally look at the benefits of challenging A2 on the position that they claim. So, again, we'll work our way through that in good faith, if that's where we get to. You know, in terms of going down an arbitration process, again, if we do that, we're expecting that that could take 12-24 months. So, one step at a time from our perspective. We're focused on continuing to deliver against that contract, onboarding new business, and diversifying the growth of Synlait. Okay. But sorry, because my understanding is it's not take or pay, so like... So, so the assertion that you'd have to maintain 150% of FY 2023 volume is not necessarily correct, if you went, if you went- Yeah. Let's not prejudge what might come out of the processes that lie in front of us. We'll work through those in good faith, and determine what we think is in the best interests of our shareholders. Okay, understood. Just to, I guess, circle the wagons a little bit on Dairyw orks. Like, are my calculations kind of correct? I was just looking at your notes. Did it, after sort of, you know, just call it short of NZD 10 million impact, does it work back up to sort of NZD 16.5 million of EBIT? And then with a bit of depreciation, it probably did around NZD 20 million of EBITDA for FY 2023. Is that sort of ballpark correct? Yeah, that's, that's, that's a pretty good math there, Adrian- Would that then be a reasonable assumption for the next year? Like, just as a placeholder, I mean, obviously we're going to divide it by two, given the earlier comments. Look, actually, the outlook for Dairyw orks is actually growth. They continue their growth story into next year. We've got a number of opportunities, both in Australia and Southeast Asia, so we'd expect that to grow. Okay. All good. Thank you. Thank you. 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 Jonathan Snape from Bell Potter. Please go ahead. Yeah, hi, can you hear me okay? We can, Jonathan. Great. Look, can I just ask a question? In particular, I'm looking at the segment note 4, and the expenses level, and there's a couple of numbers I just want to check, because I might have lost it in translation. But the inventory positions and write-downs of NZD 19.8 million there, the increase in inventory provisions is NZD 6.1 million, and the increase in onerous contracts is NZD 2 million. I think it's all up just under NZD 28 million bucks. Is that in the headline number or in your underlying EBITDA? Is that correct? Because I couldn't see any adjustments in your little waterfall for it, but I'm assuming you've taken that NZD 28 million as an expense against your underlying 90, whatever it was. Yeah, yeah. Hi, Jono. Yes, we have. So that, that experience kind of drops into each one of those business units, mainly heads into Advanced Nutrition, ingredients, and also a little bit has gone into Foodservice. So, just it's part of the reason and part of the story around, the, the margin erosion within those areas. Okay. So when you're talking costs down 10-20, does that include that not repeating? I guess what I'm trying to figure out is that- Yeah. If I'm looking at next year, I kind of should be up 28, just opening the doors and not really having to write down anything. If I've got some costs out, I've got another 10 or 20 there. You know, I can make my own assumptions around volumes and stuff like that. I guess what I'm trying to figure out is, is that in the 10-20, or is the 10-20 in addition to that? Yeah, no, great question. So it's in addition to that, so the ten to twenty is essentially our SG&A and manufacturing or operations costs, excluding inventory provisioning write-downs. So that would be on top of that. Obviously, really disappointing result around those areas. We were producing new products. That's part of it. Part of it's the ERP system project and inventory tracking, and part of it's because some of our demand moved out in the year. But we definitely won't be repeating that in FY 2024, so you can add that on top. Okay. Can I just ask around your debt numbers? Because obviously you used the assigned receivables facility as well, and it looked like that would have shifted NZD 31 million odd of debt onto your balance sheet this year relative to a year ago. If A2 volumes are gonna fall, IMF volumes, sorry, are gonna fall next year in your thinking, then obviously your ability to use that facility would probably drop as well. When you're looking at your year-end debt targets, are you kind of factoring a lower usage of that facility by year-end? Yeah. There's a couple of things going on. Obviously, you know, the Dairyw orks business also uses those facilities, so that would potentially come out. And saying that we are also pursuing bringing some more newer customers onto that facility, so I'm not expecting it to drop dramatically for next year. Okay. Great. Thanks a lot. Thank you. Your next question comes from Deidre Copley, from Craigs Investment Partners. Please go ahead. Hello. Just checking that you can hear me, please? We can hear you. Great, thank you. My question's slightly different. In terms of the estimate of your financing costs, it was 5.5 for the full year this year, or 5.5%, and you're talking about a reduction for the full year 2024. Is that a reduction you're looking at in terms of debt cost, which I assume incorporates the subordinated bonds, which are only paying a coupon of 3.83%? So presuming that 5.5 is inclusive of that, and also, are you expecting a reduction going forward on that 5.5% figure, or are you relating it to more recent financing facilities? Thank you. No, thank you. Great question. Look, I'm looking forward. Basically, we have got a save, you know, I guess a price saving on our interest rates. Obviously the other piece is our debt loading across the year and how that plays out with our ingredient sales. We've estimated, at a high level, roughly 10% across our total interest costs for next year because of improved pricing, which is, you know, could be in the range of NZD 3 million-NZD 4 million per annum. Thank you. So no estimate on what your financing costs might be looking at for full year 2024, putting it another way? You mean the interest rate? Yes. Look, I don't have that to hand. Sorry. Okay. Thank you. Thank you. Your next question comes from Sam Xu, private investor. Please go ahead. Hey, Dean. Could you just help us understand how that issue with A2 came about? Like, was that from the CO2 shortages in the first half, or was it a labor issue? I can't specifically talk to what sits behind their claim. We'll work through a process in good faith, and again, we refute their claim. Okay, that's helpful. And, just on the Abbott contract, how much of an impact can we expect from that going forward? We won't be giving any information on that customer going forward. Okay. Yeah. That's great. Thank you. Thank you. There are no further questions at this time. I'll now hand back to Mr. Watson for closing remarks. Thank you to everyone for joining our call this morning. We look forward to connecting in with you on our annual results roadshow in the weeks ahead. Thank you. That does conclude our teleconference for today. Thank you for participating. You may now disconnect.