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And Sinley's putting on a brave face despite reporting a big loss for the year to July. So the company's full year results show a one hundred and eighty one point one hundred and eighty two point one million dollar loss and debt up thirty three percent to just over five hundred and fifty million dollars, but Sinley says it is optimistic, especially after shaerholders approved a more than two hundred million dollar capital raise to restore its balance sheet. CEO Grant Watson is with us this evening.

And Sinley's putting on a brave face despite reporting a big loss for the year to July. So the company's full year results show a one hundred and eighty one point one hundred and eighty two point one million dollar loss and debt up thirty three percent to just over five hundred and fifty million dollars, but Sinley says it is optimistic, especially after shaerholders approved a more than two hundred million dollar capital raise to restore its balance sheet. CEO Grant Watson is with us this evening.

Hi, Grant Cure to Jack, good evening.

Hi, Grant Cure to Jack, good evening.

Why has it been such a tough time?

Why has it been such a tough time?

Oh? Look, a combination of factors. The first is an impairment of one hundred and fifteen million dollars and that speaks to our very underutilized assets in the North Island. Secondly, trading has been very, very challenging on a number of fronts. And thirdly we've been sitting on too much debt and then off the back of that, the final and costs have been very very high.

Oh? Look, a combination of factors. The first is an impairment of one hundred and fifteen million dollars and that speaks to our very underutilized assets in the North Island. Secondly, trading has been very, very challenging on a number of fronts. And thirdly we've been sitting on too much debt and then off the back of that, the final and costs have been very very high.

What are those trading challenges.

What are those trading challenges.

Trading challenges for US range from lower demand, lower pricing, the way that we operate our ingredients contracts. There's a lag and in the back end of Y twenty four that generated some quite negative profitability for US foreign exchange and less favorable product mix.

Trading challenges for US range from lower demand, lower pricing, the way that we operate our ingredients contracts. There's a lag and in the back end of Y twenty four that generated some quite negative profitability for US foreign exchange and less favorable product mix.

Are those conditions turning around it all? Do you have reason for optimism on the trading front?

Are those conditions turning around it all? Do you have reason for optimism on the trading front?

Yeah, we certainly do. We've started twenty five off on a really good footing and if we look at each of those areas, all of them are moving far more in favor for US. And Y twenty five. Y twenty four was a year of headwinds. Are twenty five heading into that it's looking more like tailwinds on balance?

Yeah, we certainly do. We've started twenty five off on a really good footing and if we look at each of those areas, all of them are moving far more in favor for US. And Y twenty five. Y twenty four was a year of headwinds. Are twenty five heading into that it's looking more like tailwinds on balance?

Oh that's good to hear. So talk us through the one off payments to South Island farmers. What is the purpose of that.

Oh that's good to hear. So talk us through the one off payments to South Island farmers. What is the purpose of that.

So effectively our have said to us, we want to stay with sinlay. Give us a reason to stay. Sort out your balance sheet, we've done that. Sort out your advance rates, we've done that. The twenty cent incentive is to effectively sure up their supply. A number of our farmers have cease noticism, which have a two year period and we've effectively got those two years to convince them to stay. So rather than wait for two years, it's offering offering that twenty cents up, bringing it forward and knowing that we've got a certainty around milk supply moving forward.

So effectively our have said to us, we want to stay with sinlay. Give us a reason to stay. Sort out your balance sheet, we've done that. Sort out your advance rates, we've done that. The twenty cent incentive is to effectively sure up their supply. A number of our farmers have cease noticism, which have a two year period and we've effectively got those two years to convince them to stay. So rather than wait for two years, it's offering offering that twenty cents up, bringing it forward and knowing that we've got a certainty around milk supply moving forward.

So sorry, just just explain that to me. So the cease note is basically that you have locked in for two years and if they want to leave Sinlay, they've got to give you two years notice, and you can use that two years to try and convince them to stay as how it works.

So sorry, just just explain that to me. So the cease note is basically that you have locked in for two years and if they want to leave Sinlay, they've got to give you two years notice, and you can use that two years to try and convince them to stay as how it works.

Yeah, that's exactly right, that's exactly right. So we've got some with only a year to run, some with two years to run. We want to reverse those cease notices. Know that we've got that milk supply locked in and the feedback we're we've had from our farmers is a twenty cent per kilogram of milk solids is a really good incentive and the feedback we've had today has been very, very positive in that regard.

Yeah, that's exactly right, that's exactly right. So we've got some with only a year to run, some with two years to run. We want to reverse those cease notices. Know that we've got that milk supply locked in and the feedback we're we've had from our farmers is a twenty cent per kilogram of milk solids is a really good incentive and the feedback we've had today has been very, very positive in that regard.

Yeah, talk to us about the feedback today.

Yeah, talk to us about the feedback today.

Oh look, look, I mean we've just paid out seven eighty three as a market farmgate milk price. We're paying on average and extra twenty eight cents per kilogram. This is the icing on the top. This is enough of an incentive for them to draw that notice. And so off the back of that, it's been very very positive feedback from our.

Oh look, look, I mean we've just paid out seven eighty three as a market farmgate milk price. We're paying on average and extra twenty eight cents per kilogram. This is the icing on the top. This is enough of an incentive for them to draw that notice. And so off the back of that, it's been very very positive feedback from our.

Farmer and so I appreciate its early days. You've only had a few hours to digest this, but what percentage of farmers that have ceased notices in place have already said that they will remove those ceased notices?

Farmer and so I appreciate its early days. You've only had a few hours to digest this, but what percentage of farmers that have ceased notices in place have already said that they will remove those ceased notices?

Oh, look, it's very early days. We've got our field teams out working with farmers at the moment, getting a sense of their plans, getting those commitments locked in. So literally, it was released this morning. They've got them till the end of May twenty twenty five. But the feedback, the sentiment coming back is extremely favorable.

Oh, look, it's very early days. We've got our field teams out working with farmers at the moment, getting a sense of their plans, getting those commitments locked in. So literally, it was released this morning. They've got them till the end of May twenty twenty five. But the feedback, the sentiment coming back is extremely favorable.

So what do you think again, I know it's early days, but like, what would extremely favorable mean that eighty percent of those who've got these notices at the moment would withdraw them or is there another figure you've kind of got in your mind.

So what do you think again, I know it's early days, but like, what would extremely favorable mean that eighty percent of those who've got these notices at the moment would withdraw them or is there another figure you've kind of got in your mind.

Yeah, we're targeting one hundred. Clearly, if we land it's something close to ninety percent, that would work very very well for our business model.

Yeah, we're targeting one hundred. Clearly, if we land it's something close to ninety percent, that would work very very well for our business model.

How many farmers had the seas notices in place.

How many farmers had the seas notices in place.

We haven't disclosed the exact amount, but it's comfortably north of fifty percent.

We haven't disclosed the exact amount, but it's comfortably north of fifty percent.

Right, that's a big number.

Right, that's a big number.

Aim, it's a big chuck, it's a big check.

Aim, it's a big chuck, it's a big check.

Oh yeah, And so what do you put that down to? What do you put the dissatisfaction down to?

Oh yeah, And so what do you put that down to? What do you put the dissatisfaction down to?

Up to this point, Oh, I've known that we've been very leveraged in terms of our balance sheet for the season twenty three twenty four, we didn't keep up with the market advance right. So when I say advance right, that's effectively the cash flow profile during the season to our farmers. We were behind the eight ball there. Both of those things are unacceptable to our farmers. We accept that, and that's exactly why we've addressed that. We've listened to them, and we've added this additional twenty cents into the mix.

Up to this point, Oh, I've known that we've been very leveraged in terms of our balance sheet for the season twenty three twenty four, we didn't keep up with the market advance right. So when I say advance right, that's effectively the cash flow profile during the season to our farmers. We were behind the eight ball there. Both of those things are unacceptable to our farmers. We accept that, and that's exactly why we've addressed that. We've listened to them, and we've added this additional twenty cents into the mix.

So acknowledging that you've had really good feedback that farmers say that, yeah, we had to ceased notice in place, but we're we're going to be ending that, and that you think that ninety percent of farmers who have those notices in place are likely to stick with some Well, what would have been the impact if they hadn't just on the impact on the business.

So acknowledging that you've had really good feedback that farmers say that, yeah, we had to ceased notice in place, but we're we're going to be ending that, and that you think that ninety percent of farmers who have those notices in place are likely to stick with some Well, what would have been the impact if they hadn't just on the impact on the business.

Do you think, Look, it would be quite devastating to the business. We were a dairy company with our good supply coming off the farms and onto our process and facilities. We're very limited as to the business we can operate, so it would have been devastating.

Do you think, Look, it would be quite devastating to the business. We were a dairy company with our good supply coming off the farms and onto our process and facilities. We're very limited as to the business we can operate, so it would have been devastating.

Yeah, okay, So give us a bit of a picture for the next twelve months or so. If we're having this conversation twelve months from now, what do you think you'd be saying.

Yeah, okay, So give us a bit of a picture for the next twelve months or so. If we're having this conversation twelve months from now, what do you think you'd be saying.

Yeah, there's three curious for us in the next twelve months. We've deleveraged the balance sheet and we need to continue to deliverage the balance sheet. We need to address profitability and it's primarily a function of lifting up our trading volumes and reducing expenses, and we've got a very very clear plan in place that we've started the year well. And thirdly, just making sure that we retain that milk supply with our farmers.

Yeah, there's three curious for us in the next twelve months. We've deleveraged the balance sheet and we need to continue to deliverage the balance sheet. We need to address profitability and it's primarily a function of lifting up our trading volumes and reducing expenses, and we've got a very very clear plan in place that we've started the year well. And thirdly, just making sure that we retain that milk supply with our farmers.

Yeah, fantastic. Hey, thanks so much for your time, Really appreciate it. Gran that is Grant Watton, who is the CEO of Sinlay.

Yeah, fantastic. Hey, thanks so much for your time, Really appreciate it. Gran that is Grant Watton, who is the CEO of Sinlay.

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