Synlait Milk : Half Yearly Report and Accounts

HALF YEAR RESULTS INVESTOR PRESENTATION

For the six months ended

31 January 2022

FINANCIAL PERFORMANCE

Robert Stowell

Chief Financial Officer

A birds eye view of Synlait's 600m long rail siding hard stand where up to 30 wagons can be loaded with containers filled from Dry Store 4.

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KEY FINANCIAL METRICS

$790.6M 19%

$117.3M 269%

REVENUE

OPERATING CASH FLOWS

338%128%

$27.9M

$14.5M

$46.0M 37%

NPAT

ADJUSTED NPAT*

CAPITAL EXPENDITURE

45%20%

$68.4M

$56.5M

$391.8M 19%

EBITDA

ADJUSTED EBITDA*

NET DEBT

27%

$9.60kgMS

FORECAST BASE MILK PRICE FOR 2021/2022 SEASON

All comparisons are to H1 21 which has been restated for a change in accounting policy.

* Excluding Synlait Auckland gain on sale and leaseback and related items.

BUSINESS REVIEW ACTIONS PROGRESSED IN FIRST HALF

Significant progress made to create more value and support a return to sustainable profitability, however there is still work to do and opportunities to unlock:

Cost structure review

Working capital management

Ingredients

•	Cost structure review completed.	•	Cashflow initatives implemented.	•	Team structure reviewed, new appointments made.
•	Organisational reset completed.	•	Improved sales phasing and inventory reductions.	•	Sales strategy and policy reviewed.
•	Both delivered savings ahead of budget.	•	Sale and leaseback of Synlait Auckland completed.	•	Key projects progressing to plan.

ValuecreatedinH122

Nutritionals

• • Team structure reviewed, new appointments made.

• • Sales strategy and priorities reviewed.

• • Key projects progressing to plan.

Beverages & Cream

Capital projects management

• • Tighter control, CAPEX down on FY21.

• • ERP implementation $20 million over budget.

• • CAPEX increase for Synlait Pokeno's new customer.

Operations

•	New executive appointed and reorganisation	•	New Executive appointed and reorganisation
completed.	completed.
•	Synlait Swappa Bottle pilot off to a good start.	•	Slow progress on key metrics due to reorganisation,
COVID-19, and supply chain challenges.
•	UHT product launch date delayed.

Consumer Foods

• • Focused on growth and operational performance.

• • Inventory management and working capital going well.

• • Talbot Forest Cheese investment to deliver acceptable return.

REVENUE AND SALES VOLUMES

Revenue up 19% ($126.4m), driven by ingredients volumes and commodity price increases. This is Synlait's largest H1 volume and revenue on record.

Ingredients

Increase in sales revenue (H1 22: $423.7m vs H1 21: $275.0m) driven by:

• • Higher sales volumes (H1 22: 72,028 MT vs H1 21: 56,971 MT).

• • Higher dairy commodity prices and strong FX position.

Nutritionals

Decrease in sales revenue (H1 22: $174.8m vs H1 21: $223.7m) driven by:

• • Lower sales volumes (H1 22: 13,774 MT vs H1 21: 19,679 MT) due to ongoing rebalancing of inventory levels by The a2 Milk Company.

• • Lactoferrin performance consistent with H1 21 in a firm market (H1 22: 8.4 MT vs H1 21: 9.4 MT).

Beverages & Cream

Lower than expected increase in sales revenue (H1 22: $22.0m vs H1 21: $18.5m) driven by:

• • Flat sales volumes (H1 22: 16,043 MT vs H1 21: 16,151 MT).

• • Sales prices bolstered by higher dairy commodity prices.

• • Performance below expectations due to the need for ongoing product formulation refinement.

Consumer Foods

Increase in sales revenue (H1 22: $126.8m vs H1 21: $112.6m) driven by:

• • Higher dairy commodity prices.

• • Flat sales volumes (H1 22: 14,342 MT vs H1 21: 14,119 MT).

Sales volume (MT)

Total*

Ingredients

Nutritionals

Beverages & Cream

H1 20

H1 21

H1 22

Consumer

Foods

86,273 106,920 116,187

45,673 56,971 72,028

23,657 19,679 13,774

15,886 1,057 16,151 14,119 16,043 14,342

Revenue ($ millions)

Total*

Ingredients

Nutritionals

Beverages & CreamConsumer

Foods

H1 20

H1 21

H1 22

517.1 629.8 747.3

237.9 275.0 423.7

251.6 223.7 174.8

19.6 8.0

18.5 112.6

22.0 126.8

* Totals exclude raw milk and cream sales, freight recoveries, and other revenue items which are not attributable to business units.