1 00:00:05,559 --> 00:00:08,520 Speaker 1: Kilden and welcome to shared lunch. Well, milk is on 2 00:00:08,560 --> 00:00:11,360 Speaker 1: the menu today. Cinlay is not a name that you 3 00:00:11,360 --> 00:00:14,200 Speaker 1: will see on supermarket shelves, but it is playing a 4 00:00:14,200 --> 00:00:17,880 Speaker 1: part in our big dairy exports story. I'm Garth Bray 5 00:00:17,920 --> 00:00:21,279 Speaker 1: and I'm joined by Sinlay's chair George Adams to talk 6 00:00:21,440 --> 00:00:24,119 Speaker 1: about a big vote that could shape the future of 7 00:00:24,160 --> 00:00:26,760 Speaker 1: the company. But first here's some important information. 8 00:00:27,200 --> 00:00:29,800 Speaker 2: Investing involves the risk you might lose the money you 9 00:00:29,840 --> 00:00:33,120 Speaker 2: start with. We recommend talking to a licensed financial advisor. 10 00:00:33,840 --> 00:00:37,680 Speaker 2: We also recommend reading product disclosure documents before deciding to invest. 11 00:00:37,920 --> 00:00:40,320 Speaker 2: Everything you're about to see and here is current at 12 00:00:40,320 --> 00:00:41,199 Speaker 2: the time of recording. 13 00:00:41,720 --> 00:00:44,720 Speaker 1: No my heart, am I welcome here at George. A 14 00:00:44,760 --> 00:00:48,280 Speaker 1: lot of people won't know what Sinnay is, what it does. 15 00:00:48,760 --> 00:00:50,480 Speaker 1: Can you give us a sense of where it fits 16 00:00:50,520 --> 00:00:51,320 Speaker 1: into the industry? 17 00:00:51,400 --> 00:00:56,680 Speaker 3: Absolutely? Thanks for having me. Hey, look, Sinley is part 18 00:00:56,720 --> 00:01:00,000 Speaker 3: of the New Zealand dairy industry. We would be discribed 19 00:01:00,160 --> 00:01:02,760 Speaker 3: was a tier two player. So you've obviously got Fonterra, 20 00:01:03,040 --> 00:01:06,240 Speaker 3: who is the you know, the the largest of all 21 00:01:06,520 --> 00:01:09,080 Speaker 3: the large dairy companies, and then there's a probably three 22 00:01:09,160 --> 00:01:11,200 Speaker 3: or four Tier two players which sit just onto that 23 00:01:11,640 --> 00:01:15,160 Speaker 3: so similar today I think would be the third largest 24 00:01:15,160 --> 00:01:21,240 Speaker 3: by production volume in the in the country. So a 25 00:01:21,319 --> 00:01:24,120 Speaker 3: sizeable company in an off its own rate, and I 26 00:01:24,120 --> 00:01:27,760 Speaker 3: think a reasonably important player for New Zealand's export industry. 27 00:01:28,760 --> 00:01:30,960 Speaker 1: George Adams Sinley chere, that's got a pretty new ring 28 00:01:31,000 --> 00:01:33,720 Speaker 1: to it. But you've got plenty of experience around boardroom 29 00:01:33,720 --> 00:01:36,120 Speaker 1: tables and unlisted companies, a lot of it in sort 30 00:01:36,160 --> 00:01:39,360 Speaker 1: of food and that kind of technology. But you also 31 00:01:39,440 --> 00:01:42,280 Speaker 1: ran Coca Cola amatal here for about like a decade. 32 00:01:42,280 --> 00:01:44,840 Speaker 1: What did a decade of selling fizzies teach you about 33 00:01:44,840 --> 00:01:47,360 Speaker 1: how to handle the dairy industry right here and right now. 34 00:01:49,280 --> 00:01:52,120 Speaker 3: I have to say probably a decade of selling Coca Cola, 35 00:01:52,240 --> 00:01:57,000 Speaker 3: Probably not so much, to be fair, but you certainly learn, 36 00:01:57,520 --> 00:01:59,760 Speaker 3: you know a lot about the commercial side of business. 37 00:02:01,480 --> 00:02:04,680 Speaker 3: Coca Cola was a fantastic thing, to be honest, and 38 00:02:04,920 --> 00:02:06,320 Speaker 3: you know a lot of what people don't really know 39 00:02:06,400 --> 00:02:10,120 Speaker 3: about it is it's one of the most efficient manufacturing 40 00:02:10,160 --> 00:02:13,000 Speaker 3: systems anywhere in the world. It is one of the 41 00:02:13,000 --> 00:02:17,080 Speaker 3: most efficient and smartest distribution systems anywhere in the world. 42 00:02:17,200 --> 00:02:19,520 Speaker 3: And if you want to understand how to create you know, 43 00:02:19,639 --> 00:02:21,840 Speaker 3: get a product within an arm's reach of desire of 44 00:02:21,960 --> 00:02:25,640 Speaker 3: the consumer, which is part of the mantra. You know, 45 00:02:25,720 --> 00:02:28,160 Speaker 3: the coke system is a great place to learn the 46 00:02:28,240 --> 00:02:30,280 Speaker 3: disciplines of fast moving consumer goods. 47 00:02:30,639 --> 00:02:32,880 Speaker 1: As there much of a match then for taking those 48 00:02:32,919 --> 00:02:35,520 Speaker 1: skills into the boardroom and explaining how a Sinila gets 49 00:02:35,520 --> 00:02:37,720 Speaker 1: its product to market, gets that milk or whatever it 50 00:02:37,800 --> 00:02:40,440 Speaker 1: is that you're making with an arm's reach of desire, 51 00:02:40,680 --> 00:02:41,079 Speaker 1: right Fay. 52 00:02:42,400 --> 00:02:45,959 Speaker 3: Probably not so much from the front end perspective, because 53 00:02:45,960 --> 00:02:48,839 Speaker 3: certain is effectively an ingredient manufacturer, so we would sit 54 00:02:48,880 --> 00:02:54,320 Speaker 3: behind the Coca Cola type business. But from a product 55 00:02:54,320 --> 00:02:58,880 Speaker 3: efficiency perspective, from a distribution efficiency perspective, I mean, essentially 56 00:02:58,919 --> 00:03:01,200 Speaker 3: that's what we trade on. Has been able to manufacture 57 00:03:01,240 --> 00:03:05,440 Speaker 3: the same product day in, day out very efficiently because 58 00:03:05,480 --> 00:03:08,720 Speaker 3: the market for pricing is largely set, so we're we're 59 00:03:08,800 --> 00:03:11,880 Speaker 3: largely priced takers on tear pretty much in the and 60 00:03:11,880 --> 00:03:14,120 Speaker 3: and the and the global dairy auction pretty much sets 61 00:03:14,160 --> 00:03:17,280 Speaker 3: the price. So your ability to manufacture ahead of that 62 00:03:18,480 --> 00:03:22,720 Speaker 3: and and and and which should be currency or product type, 63 00:03:23,120 --> 00:03:25,880 Speaker 3: your ability to actually operate within the with with within 64 00:03:25,919 --> 00:03:31,960 Speaker 3: a really strict kind of uh, you know, tram tracks, 65 00:03:33,480 --> 00:03:36,000 Speaker 3: not disimilar to anybody in in business. 66 00:03:37,120 --> 00:03:40,280 Speaker 1: What drew you to the company, because if it's not 67 00:03:40,360 --> 00:03:43,200 Speaker 1: quite exactly what you've been used to doing, what it's 68 00:03:43,200 --> 00:03:44,920 Speaker 1: a it's a bit of a turnaround, really, isn't it, 69 00:03:44,920 --> 00:03:49,160 Speaker 1: with a lot of interested parties having the essay what 70 00:03:49,160 --> 00:03:50,280 Speaker 1: what drew you in there? Yeah? 71 00:03:50,720 --> 00:03:55,360 Speaker 3: Probably certainly unusually and and yes, I've got ten years 72 00:03:55,400 --> 00:04:01,960 Speaker 3: experience in the boardroom today, mostly private companies, family companies, 73 00:04:02,000 --> 00:04:06,640 Speaker 3: a couple have kind of co founded, but also probably 74 00:04:06,680 --> 00:04:08,760 Speaker 3: in the last five or six years, a number of 75 00:04:08,760 --> 00:04:14,440 Speaker 3: public companies also, I genuinely guess a couple of things. One, 76 00:04:14,480 --> 00:04:16,760 Speaker 3: I think Simley is important, and I'll tell you why 77 00:04:16,760 --> 00:04:19,839 Speaker 3: it's important. I think it's important to the dairy industry 78 00:04:20,120 --> 00:04:26,440 Speaker 3: in general. I think that it's important to our farmers, 79 00:04:26,480 --> 00:04:29,320 Speaker 3: it's importantly to our staff. But it's important to have 80 00:04:30,279 --> 00:04:34,120 Speaker 3: smaller companies aren't necessarily the fonterers of the world who 81 00:04:34,120 --> 00:04:38,359 Speaker 3: can generally go after smaller but important opportunities, because you know, 82 00:04:38,440 --> 00:04:40,800 Speaker 3: the big monopolies generally can't do that, right And that 83 00:04:40,880 --> 00:04:43,200 Speaker 3: was certainly my experience of British Telecom some years ago, 84 00:04:45,279 --> 00:04:50,200 Speaker 3: but also genuinely was very enthusiastic about the challenge. Right, 85 00:04:50,680 --> 00:04:52,640 Speaker 3: You've got a lot of directors and boardrooms today who 86 00:04:52,640 --> 00:04:56,240 Speaker 3: are actually quite a freid and quite cautious around taking 87 00:04:56,279 --> 00:05:01,159 Speaker 3: on challenges like this. And I genuinely felt, having looked 88 00:05:01,160 --> 00:05:03,520 Speaker 3: at it in detail, that there was a pathway through 89 00:05:03,600 --> 00:05:08,520 Speaker 3: to a solution for Sidley and for our waiter, you 90 00:05:08,760 --> 00:05:12,120 Speaker 3: day aspa of interested stakeholders, and I felt that it 91 00:05:12,200 --> 00:05:13,279 Speaker 3: was worth taking that risk. 92 00:05:13,760 --> 00:05:15,960 Speaker 1: Let's talk a bit about the pathway then, because I mean, 93 00:05:15,960 --> 00:05:18,719 Speaker 1: you've got you've had a pretty hectic five months so 94 00:05:18,680 --> 00:05:20,080 Speaker 1: that she took on the chair, And I'm just going 95 00:05:20,120 --> 00:05:22,320 Speaker 1: to recap some of the events to catch people up 96 00:05:22,320 --> 00:05:24,680 Speaker 1: if they haven't caught it as I understand them anyway. First, 97 00:05:24,760 --> 00:05:28,440 Speaker 1: you had a dispute over intellectual property rights and production 98 00:05:28,480 --> 00:05:32,080 Speaker 1: agreements with a business partner A two Milk who also 99 00:05:32,120 --> 00:05:33,880 Speaker 1: happens to be quite a major shareholder. 100 00:05:34,160 --> 00:05:34,560 Speaker 3: Awkward. 101 00:05:35,240 --> 00:05:38,560 Speaker 1: And then a bailout from your biggest shareholder, Bright Dairy. 102 00:05:39,080 --> 00:05:42,440 Speaker 1: And now you're asking my minority Sorry, now you're asking 103 00:05:42,480 --> 00:05:46,600 Speaker 1: minority hit Sorry, Now you're asking minority shareholders to effectively 104 00:05:46,680 --> 00:05:49,640 Speaker 1: kind of hand control of the company to those two 105 00:05:49,839 --> 00:05:52,320 Speaker 1: major shareholders. Am I going okay? 106 00:05:52,360 --> 00:05:55,480 Speaker 3: So far that's not bad. I probably correct you slightly 107 00:05:55,480 --> 00:05:58,840 Speaker 3: in terms of handing control. I mean effectively Bright Hu 108 00:05:59,000 --> 00:06:04,599 Speaker 3: Hud control since twenty ten when they were a majority shareholder, 109 00:06:05,600 --> 00:06:07,880 Speaker 3: and while they dropped to thirty nine percent I think 110 00:06:07,920 --> 00:06:12,760 Speaker 3: twenty thirteen is my history. They woultend a very interesting 111 00:06:12,880 --> 00:06:16,839 Speaker 3: constitutional arrangement which the ends it exclained off on whereboy 112 00:06:16,880 --> 00:06:22,039 Speaker 3: they could control the board. So in that sense it's 113 00:06:22,160 --> 00:06:23,120 Speaker 3: kind of status. 114 00:06:22,839 --> 00:06:27,279 Speaker 1: Qual So this is coming to quite a crunch though, 115 00:06:27,320 --> 00:06:30,159 Speaker 1: because you're putting together a capital raise basically in a 116 00:06:30,200 --> 00:06:33,039 Speaker 1: restructure of your debts and so on, and that's happening 117 00:06:33,560 --> 00:06:36,040 Speaker 1: within the next week or so. On September the eighteenth, 118 00:06:36,440 --> 00:06:39,280 Speaker 1: we walk people through that. So those two big shareholders, 119 00:06:39,680 --> 00:06:42,159 Speaker 1: Bright Dairy and A two Milk, they're putting in close 120 00:06:42,200 --> 00:06:43,960 Speaker 1: to two hundred and twenty million dollars to sort of 121 00:06:43,960 --> 00:06:46,840 Speaker 1: reset the balance sheet. And that's set a time when 122 00:06:47,279 --> 00:06:50,360 Speaker 1: I think Sinay's carying about five hundred and fifty million 123 00:06:50,360 --> 00:06:51,000 Speaker 1: dollars worth of. 124 00:06:50,920 --> 00:06:52,000 Speaker 3: Debt all spot on. 125 00:06:52,120 --> 00:06:56,760 Speaker 1: So for so with that reset, Bright Dairy goes to 126 00:06:57,000 --> 00:07:00,160 Speaker 1: about two thirds of the shareholding of the company to 127 00:07:00,520 --> 00:07:03,279 Speaker 1: keep six twenty percent, and that if you do the 128 00:07:03,320 --> 00:07:06,719 Speaker 1: maths means that all of those other minority retail shareholders 129 00:07:07,200 --> 00:07:10,360 Speaker 1: basically get squeezed down. They wind up with about half 130 00:07:10,400 --> 00:07:11,760 Speaker 1: of what they had before, right. 131 00:07:11,560 --> 00:07:15,000 Speaker 3: Correct, actually quite actually actually actually less. 132 00:07:16,480 --> 00:07:20,720 Speaker 1: So what makes you confident that shareholders will accept that? 133 00:07:20,960 --> 00:07:24,280 Speaker 3: Yeah? Yeah, no, it's Look, honestly, you've pretty much described 134 00:07:24,320 --> 00:07:27,000 Speaker 3: the conundrum that we've had and we've been working through it. 135 00:07:27,000 --> 00:07:29,320 Speaker 3: And look, I'm not doing this by myself, right, I've 136 00:07:29,360 --> 00:07:32,560 Speaker 3: got a you know, I'm part of a board which 137 00:07:32,600 --> 00:07:34,800 Speaker 3: which sets alongside of management team and trying to work 138 00:07:34,800 --> 00:07:40,720 Speaker 3: our way through this. So yeah, essentially we needed to 139 00:07:40,760 --> 00:07:43,920 Speaker 3: reais at least two hundred and twenty million dollars. In reality, 140 00:07:43,960 --> 00:07:45,920 Speaker 3: we are a one hundred and thirty million dollars which 141 00:07:45,960 --> 00:07:49,800 Speaker 3: Break Food Group put in roughly yet weeks ago, which 142 00:07:49,920 --> 00:07:52,880 Speaker 3: was by way of shareholder on but a subordinated it's 143 00:07:53,040 --> 00:07:55,200 Speaker 3: that's one hundred and thirty million dollars is subordinated to 144 00:07:55,480 --> 00:07:57,880 Speaker 3: the senior debt that we that we have, so it 145 00:07:57,880 --> 00:08:00,640 Speaker 3: sits behind that, but it does set out of our bonds. 146 00:08:00,880 --> 00:08:04,480 Speaker 3: Right So, so ultimately as three hundred and fifty million 147 00:08:04,520 --> 00:08:07,560 Speaker 3: dollars to reset effectively the five hundred and fifty million 148 00:08:07,600 --> 00:08:12,600 Speaker 3: dollars in debt that that that we had, and there's 149 00:08:12,600 --> 00:08:14,720 Speaker 3: no doubt about it. This effectively is a is A 150 00:08:14,760 --> 00:08:18,240 Speaker 3: is a bailout, right. So it's so the challenge I 151 00:08:18,280 --> 00:08:22,160 Speaker 3: think for us, sitting as really three independent directors is 152 00:08:22,840 --> 00:08:26,600 Speaker 3: how do you go to the market and raise three 153 00:08:26,640 --> 00:08:31,240 Speaker 3: and a half times your market cap? That's the challenge, so, 154 00:08:32,559 --> 00:08:34,959 Speaker 3: you know, and we looked long and hard at the 155 00:08:35,040 --> 00:08:40,360 Speaker 3: you know how, we had to also have assurance that 156 00:08:40,400 --> 00:08:44,280 Speaker 3: we could raise the money because our bank refinance runs 157 00:08:44,280 --> 00:08:46,640 Speaker 3: out on the second of October, which is in two 158 00:08:46,679 --> 00:08:49,000 Speaker 3: and a half weeks time, right, so the clock is 159 00:08:49,040 --> 00:08:53,880 Speaker 3: ticking for us on all fronts, on top of having 160 00:08:53,920 --> 00:08:56,680 Speaker 3: to sort out the disputes between ourselves and a two 161 00:08:56,760 --> 00:08:59,280 Speaker 3: plus three is capital in a in a certain way, 162 00:08:59,559 --> 00:09:02,160 Speaker 3: and we're all doing a refinance. I don't I think 163 00:09:02,160 --> 00:09:06,280 Speaker 3: you might have forgotten that one. So essentially everything's moving right, 164 00:09:07,559 --> 00:09:10,520 Speaker 3: So we had to be absolutely certain that we we 165 00:09:10,520 --> 00:09:12,920 Speaker 3: could raise this cash. Otherwise we wouldn't get to a 166 00:09:12,960 --> 00:09:16,080 Speaker 3: point where we could do the refinance deal with the banks, 167 00:09:16,760 --> 00:09:18,920 Speaker 3: who are still going to need to basically have around 168 00:09:18,920 --> 00:09:24,600 Speaker 3: four and fifty million dollars of flexible term debt sitting 169 00:09:24,600 --> 00:09:30,559 Speaker 3: available for Sinny. So back to the challenge, which is 170 00:09:30,679 --> 00:09:33,000 Speaker 3: raising three and a half times your market cap. So 171 00:09:33,280 --> 00:09:36,040 Speaker 3: to put that in perspective, if I'm sitting there as 172 00:09:36,600 --> 00:09:39,439 Speaker 3: a as an independent shareholder with ten thousand dollars with 173 00:09:39,520 --> 00:09:42,880 Speaker 3: a stock this is at our previously undisturbed sure price 174 00:09:42,920 --> 00:09:46,640 Speaker 3: as the term is, and I've got ten grand in Sinley, 175 00:09:47,480 --> 00:09:49,480 Speaker 3: I would have been asked for about thirty four thousand 176 00:09:49,480 --> 00:09:57,120 Speaker 3: dollars to retain my relative a percentage holding position. Now, 177 00:09:57,800 --> 00:09:59,520 Speaker 3: we did take soundings, and I have to say that 178 00:09:59,600 --> 00:10:01,920 Speaker 3: it's highly unlikely that we would have raised a lot 179 00:10:01,920 --> 00:10:06,200 Speaker 3: of money on that front. So then you look at 180 00:10:06,280 --> 00:10:08,880 Speaker 3: well do you do? And the mechanism for that, sorry 181 00:10:09,000 --> 00:10:13,200 Speaker 3: is you would do generally a rights issue. So rights 182 00:10:13,200 --> 00:10:16,480 Speaker 3: issues are done at the at a turp, which is 183 00:10:16,520 --> 00:10:20,800 Speaker 3: a theoretical X rights price. Right, So that minus a 184 00:10:21,200 --> 00:10:25,280 Speaker 3: discount normally twenty twenty five percent, Given that we're in 185 00:10:25,280 --> 00:10:29,360 Speaker 3: a distressed position, it probably would have been Latin and more, 186 00:10:30,120 --> 00:10:32,120 Speaker 3: which means that we would have been issuing shus at 187 00:10:32,160 --> 00:10:36,079 Speaker 3: four cents. That's the theoretical X rights price less a discount, 188 00:10:37,000 --> 00:10:38,760 Speaker 3: which meant we've had issue. I think I've worked at 189 00:10:38,840 --> 00:10:43,360 Speaker 3: five point four billion shures, right, so quite challenging pinball numbers, 190 00:10:43,480 --> 00:10:48,440 Speaker 3: pinball numbers. And the difficulty with that is then essentially, 191 00:10:48,480 --> 00:10:50,920 Speaker 3: if those rights aren't taken up, someone's got to pick 192 00:10:50,920 --> 00:10:52,480 Speaker 3: them up. And that would have meant bright only to 193 00:10:52,559 --> 00:10:54,800 Speaker 3: picking out and I genuinely think we would have ended 194 00:10:54,840 --> 00:10:59,559 Speaker 3: up probably in about the same position from a shareholding perspective. 195 00:11:00,480 --> 00:11:02,920 Speaker 3: And the difficulty with actually issuing stock at a discount 196 00:11:02,960 --> 00:11:06,280 Speaker 3: is that the existing minority shareholders wouldn't be sitting here 197 00:11:06,280 --> 00:11:09,920 Speaker 3: looking at fourteen percent post raise. They would have been smashed. 198 00:11:09,920 --> 00:11:11,720 Speaker 3: They'd have been sitting with literally a couple of percent 199 00:11:12,200 --> 00:11:14,520 Speaker 3: because we'd have been issuing stock at a heavy discount. 200 00:11:15,600 --> 00:11:17,480 Speaker 3: That's the best outcome, I think, which we will have 201 00:11:17,480 --> 00:11:21,720 Speaker 3: gotten to, whereas issuing stock at a which we were 202 00:11:21,720 --> 00:11:25,040 Speaker 3: doing to two of the shareholders, we're doing it at 203 00:11:25,080 --> 00:11:27,960 Speaker 3: a premium. So coming back to your numbers, let me 204 00:11:28,040 --> 00:11:31,760 Speaker 3: just probably work through this. At the thirty cents which 205 00:11:31,880 --> 00:11:34,760 Speaker 3: was referred to this previously undisturbed price, and that's the 206 00:11:34,800 --> 00:11:38,440 Speaker 3: price at which was the day before, effectively we made 207 00:11:38,440 --> 00:11:44,360 Speaker 3: the announcement, the minority shareholders were worth twenty seven million 208 00:11:44,360 --> 00:11:50,520 Speaker 3: dollars market cap post cap raise, assuming the same short price, 209 00:11:50,960 --> 00:11:53,480 Speaker 3: the minority shareholders will be worth forty two million dollars. 210 00:11:54,480 --> 00:11:57,319 Speaker 3: So even though you've got a smaller percentage you're shareholding, 211 00:11:57,440 --> 00:11:59,440 Speaker 3: the value for shuretolding actually increases. 212 00:12:00,280 --> 00:12:02,360 Speaker 1: Something is better than one hundred percent or nothing kind 213 00:12:02,360 --> 00:12:02,800 Speaker 1: of thing. 214 00:12:02,679 --> 00:12:05,880 Speaker 3: More or less, more or less. So certainly in this case, 215 00:12:06,600 --> 00:12:08,920 Speaker 3: forty one percent of something is worth a lot less 216 00:12:08,920 --> 00:12:14,120 Speaker 3: than fifteen percent of something. That so you know, we've 217 00:12:14,120 --> 00:12:17,000 Speaker 3: tried to be as far as possible, but genuinely we're 218 00:12:17,040 --> 00:12:20,240 Speaker 3: threatening eye of a needle in terms of assurance on 219 00:12:20,880 --> 00:12:24,040 Speaker 3: the dollars that we needed to raise, plus the the 220 00:12:24,600 --> 00:12:28,680 Speaker 3: the the bank, and also not making sure you don't 221 00:12:28,720 --> 00:12:32,160 Speaker 3: creator the value for minorities or who actually don't want 222 00:12:32,160 --> 00:12:32,760 Speaker 3: to participate. 223 00:12:33,720 --> 00:12:35,960 Speaker 1: You mentioned before that sinlay is important for a lot 224 00:12:36,000 --> 00:12:39,720 Speaker 1: of reasons. Surely part of it was to give retail 225 00:12:39,760 --> 00:12:43,840 Speaker 1: investors and exposure to what is an industry that underpins 226 00:12:43,880 --> 00:12:47,000 Speaker 1: New Zealand. Does this cut that back? 227 00:12:47,600 --> 00:12:51,679 Speaker 3: Look it certainly? From so let's go back if you 228 00:12:51,760 --> 00:12:56,760 Speaker 3: talk about percentages, yes, it does. You'd have to say 229 00:12:56,760 --> 00:13:01,400 Speaker 3: that over the last few years it has not performed 230 00:13:01,440 --> 00:13:04,280 Speaker 3: particularly well. Right, So from about and I think for 231 00:13:04,480 --> 00:13:06,880 Speaker 3: reasons of COVID et cetera. And and and particularly with 232 00:13:06,960 --> 00:13:10,320 Speaker 3: the Chinese infant births dropping off from an average kind 233 00:13:10,320 --> 00:13:12,960 Speaker 3: of longer an average of seventeen million to maybe nine million, 234 00:13:13,400 --> 00:13:15,520 Speaker 3: which halfs the market effectively. 235 00:13:15,120 --> 00:13:17,760 Speaker 1: Because most of what Sinai is doing is creating. 236 00:13:17,559 --> 00:13:21,320 Speaker 3: A big chunk of it was infant formula. These days 237 00:13:21,320 --> 00:13:23,920 Speaker 3: we're much more diverse house so we're infant formed the 238 00:13:24,240 --> 00:13:30,480 Speaker 3: adult nutrition ingredients into the likes owns and nesle. So 239 00:13:30,840 --> 00:13:32,560 Speaker 3: there's a there's a bunch of other things that we 240 00:13:32,679 --> 00:13:35,720 Speaker 3: that we do, including fresh milk, and particularly the one 241 00:13:35,720 --> 00:13:38,800 Speaker 3: that actually is growing for us very strongly is creams, 242 00:13:39,040 --> 00:13:44,040 Speaker 3: so shelf stable creams into Southeast Asia and interestingly, I 243 00:13:44,080 --> 00:13:47,240 Speaker 3: mean even Fonterra is getting into that as as well 244 00:13:47,520 --> 00:13:50,559 Speaker 3: with their recent announcements. So yes, it does give that exposure. 245 00:13:51,760 --> 00:13:54,000 Speaker 3: I'd have to say it hasn't been it hasn't been 246 00:13:54,040 --> 00:13:58,360 Speaker 3: a great outcome over the last couple of years, but 247 00:13:58,440 --> 00:14:02,120 Speaker 3: I guess we are we are, and ultimately what I'm 248 00:14:02,200 --> 00:14:05,800 Speaker 3: giving the shareholders is an opportunity to continue to participate 249 00:14:05,800 --> 00:14:07,360 Speaker 3: in the upside going forward. 250 00:14:07,720 --> 00:14:11,360 Speaker 1: Should we maybe talk about what you think Sinley is worth, 251 00:14:11,880 --> 00:14:16,520 Speaker 1: then what is sinlay Worth, Oh. 252 00:14:16,679 --> 00:14:21,120 Speaker 3: Well Sinddley is worth sor what our market caps probably 253 00:14:21,160 --> 00:14:24,160 Speaker 3: seventy really million dollars at the minute. That's pretty much 254 00:14:24,200 --> 00:14:29,080 Speaker 3: what it's worth going forward. That if you disaggregate that 255 00:14:29,480 --> 00:14:33,720 Speaker 3: right in reality, we've got a business in Dune Sandal 256 00:14:33,760 --> 00:14:35,640 Speaker 3: which I think we'll be able to get back to 257 00:14:36,280 --> 00:14:41,480 Speaker 3: a strongly profitable position. Last two years have been challenging 258 00:14:41,520 --> 00:14:44,680 Speaker 3: for a number of reasons, but largely for X exposure 259 00:14:44,720 --> 00:14:48,760 Speaker 3: has has really troubled the business. Haven't done particularly well there. 260 00:14:49,920 --> 00:14:52,960 Speaker 3: So I think that's a strongly profitable business. Dairy Works, 261 00:14:53,080 --> 00:14:55,160 Speaker 3: I think it's been on the cards for a bit, 262 00:14:56,200 --> 00:14:58,880 Speaker 3: certainly as far as some of the parts goes. Yep, 263 00:14:58,960 --> 00:15:02,120 Speaker 3: we've had sort of offer, but in really nothing that 264 00:15:02,280 --> 00:15:05,200 Speaker 3: God has anywhere close to effectively what it cost. 265 00:15:06,280 --> 00:15:08,960 Speaker 1: But just senal disclosure, I really like your dairy Works 266 00:15:09,000 --> 00:15:10,640 Speaker 1: tasty cheese. I think it's probably one of the better 267 00:15:10,640 --> 00:15:12,440 Speaker 1: tasty cheeses on the market. I'm not sure if that 268 00:15:12,440 --> 00:15:14,520 Speaker 1: will make the cut in the podcast, but well, this 269 00:15:14,640 --> 00:15:17,520 Speaker 1: is a personal disclosure of interest. Look, I suppose I 270 00:15:17,560 --> 00:15:21,080 Speaker 1: was asking what is it worth because the former chair 271 00:15:21,360 --> 00:15:24,800 Speaker 1: John Peno, he was challenging your numbers wasn't it. He 272 00:15:24,880 --> 00:15:27,720 Speaker 1: was saying, actually, broken up, this company is worth more 273 00:15:28,120 --> 00:15:30,560 Speaker 1: than the reports that you are seeing it is worth. 274 00:15:30,720 --> 00:15:33,560 Speaker 1: And that is why you should seriously consider not voting 275 00:15:33,600 --> 00:15:37,640 Speaker 1: for this proposal and instead just put it through and 276 00:15:37,680 --> 00:15:41,360 Speaker 1: you will actually make more money that way. Why should 277 00:15:42,160 --> 00:15:43,440 Speaker 1: why should shareholders pay him? 278 00:15:43,480 --> 00:15:46,720 Speaker 3: No mind? No? I think you know. Look, John's are broad, 279 00:15:46,760 --> 00:15:50,320 Speaker 3: gay and a lot of time for John, and he 280 00:15:50,400 --> 00:15:53,160 Speaker 3: certainly holds I think a very sincere very sincere view. 281 00:15:53,440 --> 00:15:56,080 Speaker 3: I don't think it's right, but I think it's very 282 00:15:56,080 --> 00:16:01,320 Speaker 3: sincerely held. You we've been looking at essentially selling a 283 00:16:01,360 --> 00:16:03,800 Speaker 3: couple of the company's assets for the past few months, 284 00:16:03,800 --> 00:16:05,960 Speaker 3: and as you know, we also were looking at what 285 00:16:06,080 --> 00:16:10,960 Speaker 3: the Pocono business was worth, and you know, the market's 286 00:16:11,040 --> 00:16:14,560 Speaker 3: changed a little bit and right now we just cannot 287 00:16:14,600 --> 00:16:19,200 Speaker 3: find the value that John was purporting to believe that 288 00:16:19,240 --> 00:16:20,960 Speaker 3: the company was worth. That's fine, that's the difference off 289 00:16:20,960 --> 00:16:24,840 Speaker 3: opinion between us. Ultimately, we also have to then take advice. 290 00:16:25,400 --> 00:16:29,120 Speaker 3: So you know, part of doing a CAPRAS is you're 291 00:16:29,160 --> 00:16:33,280 Speaker 3: obligated to get an independent assessor's report, which we have 292 00:16:33,320 --> 00:16:36,280 Speaker 3: got through Northington, and I think Northington's numbers are the 293 00:16:36,280 --> 00:16:38,720 Speaker 3: ones which the board is pretty much obligated to pay 294 00:16:38,720 --> 00:16:41,240 Speaker 3: attention to. So that's the one that says that our 295 00:16:41,360 --> 00:16:45,480 Speaker 3: view on the future value is that actually it was 296 00:16:45,560 --> 00:16:49,480 Speaker 3: certainly lower than the numbers that John was indicating that 297 00:16:49,520 --> 00:16:53,240 Speaker 3: he thought it was worth. So that's the numbers effectively 298 00:16:53,280 --> 00:16:55,280 Speaker 3: that we got to plug into our model going forward, 299 00:16:55,280 --> 00:16:58,000 Speaker 3: which means that ultimately we think there is value in 300 00:16:58,720 --> 00:17:00,200 Speaker 3: the In the Capris. 301 00:17:01,200 --> 00:17:03,240 Speaker 1: You make it sound like a very very principled and 302 00:17:03,320 --> 00:17:06,600 Speaker 1: gentlemanly disagreement, but you were talking about Russian roulette in 303 00:17:06,640 --> 00:17:09,239 Speaker 1: respect of what he was saying. I mean, let's say 304 00:17:09,240 --> 00:17:10,520 Speaker 1: he described it pretty strong words. 305 00:17:10,600 --> 00:17:15,159 Speaker 3: Yeah look Russian roulette in yeah, look and look I 306 00:17:15,240 --> 00:17:17,160 Speaker 3: worked in Russia for a while, so I'm very familiar 307 00:17:17,160 --> 00:17:20,560 Speaker 3: with with with with the particular phrase. But it wasn't 308 00:17:20,600 --> 00:17:24,200 Speaker 3: to describe John in anyway. But John's view was essentially 309 00:17:24,440 --> 00:17:27,480 Speaker 3: we should take it to VA, right, And I don't 310 00:17:27,560 --> 00:17:31,480 Speaker 3: think there is an elegant VA option after be really frank, 311 00:17:32,320 --> 00:17:36,080 Speaker 3: you know, my conversations with some of the receivers quite 312 00:17:36,119 --> 00:17:38,480 Speaker 3: recently have been very clear and consistent that, you know, 313 00:17:38,680 --> 00:17:40,920 Speaker 3: companies don't go into VA and come out looking. 314 00:17:40,720 --> 00:17:44,000 Speaker 1: Better, right, They just voluntary administration. 315 00:17:45,040 --> 00:17:49,679 Speaker 3: Administration, and it essentially provides for asset break up and 316 00:17:49,760 --> 00:17:51,480 Speaker 3: seal of the assets, right, which is so so in 317 00:17:51,560 --> 00:17:55,880 Speaker 3: other words, it's a single shot right, Whereas what we're 318 00:17:55,960 --> 00:17:58,360 Speaker 3: doing right and bearing in mind the directors are obligated 319 00:17:58,359 --> 00:18:01,479 Speaker 3: to act in the best interests of company. Right, And 320 00:18:01,520 --> 00:18:04,800 Speaker 3: particularly when you get down to the point where you're 321 00:18:04,840 --> 00:18:09,600 Speaker 3: looking at a challenging future from an insolvency perspective, you 322 00:18:09,640 --> 00:18:11,480 Speaker 3: then also got to start to think really heavily about 323 00:18:11,520 --> 00:18:19,560 Speaker 3: your creditors. So the proposal that we're supplying refloats the business, refinances, 324 00:18:19,640 --> 00:18:23,600 Speaker 3: the business, pays our creditors, provides a future for our 325 00:18:23,640 --> 00:18:27,840 Speaker 3: farmers and our staff and for Sinley as an ongoing 326 00:18:27,840 --> 00:18:32,000 Speaker 3: business in the dairy industry. So our proposal, I believe 327 00:18:32,320 --> 00:18:39,600 Speaker 3: as independent directors, provides multiple options for multiple stakeholders and 328 00:18:39,680 --> 00:18:43,440 Speaker 3: satisfies a lot more than say a single shot, which 329 00:18:43,480 --> 00:18:45,320 Speaker 3: is let's take it to VA and see what happens. 330 00:18:45,600 --> 00:18:47,159 Speaker 1: Look, you mentioned the famis that if we look at 331 00:18:47,160 --> 00:18:49,680 Speaker 1: the supply side, you can't have a dairy company unless 332 00:18:49,680 --> 00:18:53,520 Speaker 1: you've got dairy. So how do you convince your suppliers 333 00:18:53,640 --> 00:18:54,880 Speaker 1: to stick with Sinley? 334 00:18:56,400 --> 00:19:02,720 Speaker 3: It's a really good question, and I probably characterize this 335 00:19:02,800 --> 00:19:06,000 Speaker 3: a number of ways. So we've been going a long time. 336 00:19:06,080 --> 00:19:10,520 Speaker 3: It's particuarly in the Sutherland and the majority of farmers 337 00:19:10,520 --> 00:19:12,280 Speaker 3: that have that are with us in these two hundred 338 00:19:12,280 --> 00:19:15,360 Speaker 3: and twenty one of the minute farms have been with 339 00:19:15,440 --> 00:19:18,720 Speaker 3: us since the start, so we've got a very long 340 00:19:18,800 --> 00:19:21,920 Speaker 3: history with a lot of those farms and they've been 341 00:19:21,920 --> 00:19:25,280 Speaker 3: making it really clear to us that they like working 342 00:19:25,320 --> 00:19:29,200 Speaker 3: with Sinley. They've had a good relationship for the context 343 00:19:29,280 --> 00:19:31,640 Speaker 3: and it may be something that is helpful for your 344 00:19:31,840 --> 00:19:36,720 Speaker 3: listeners is that New Zealand is a little bit unusual 345 00:19:36,840 --> 00:19:40,680 Speaker 3: in that farm generally will only sell the one processor, 346 00:19:41,960 --> 00:19:47,040 Speaker 3: so not multiple processors. So if they have balance sheet risk, 347 00:19:47,320 --> 00:19:51,120 Speaker 3: that becomes your day factor risk. Also, so our farmers, 348 00:19:52,119 --> 00:19:54,320 Speaker 3: who you know, been on the land a long time, 349 00:19:54,320 --> 00:19:59,880 Speaker 3: in most cases intergenerational, they feel the risk of selling 350 00:20:00,080 --> 00:20:03,159 Speaker 3: to one process or very acutely, particularly if you've got 351 00:20:03,200 --> 00:20:07,280 Speaker 3: balance stress, which we've had. So the message that we've 352 00:20:07,400 --> 00:20:09,520 Speaker 3: had from them, and you know, I've met a lot 353 00:20:09,560 --> 00:20:13,840 Speaker 3: of them in the past five months, is you need 354 00:20:13,880 --> 00:20:16,200 Speaker 3: to sort your balance dope, because that's a real problem 355 00:20:16,240 --> 00:20:18,639 Speaker 3: for us and you need to get back to paying 356 00:20:19,240 --> 00:20:24,399 Speaker 3: market marching advanced threats. Right, so we acknowledged that, so 357 00:20:24,640 --> 00:20:27,399 Speaker 3: one we do when we have we are back paying 358 00:20:27,400 --> 00:20:33,320 Speaker 3: market marching advanced threats. We announced an increase in milk 359 00:20:33,320 --> 00:20:36,240 Speaker 3: price last week to sixty eighty, which actually is ten 360 00:20:36,320 --> 00:20:39,440 Speaker 3: sounds higher than the market sixty. I think you get sixty. 361 00:20:40,920 --> 00:20:43,119 Speaker 1: So I mean this is we're really getting too the 362 00:20:43,160 --> 00:20:45,520 Speaker 1: weeds or the long grass or the pastures here. But basically, 363 00:20:45,520 --> 00:20:49,439 Speaker 1: we've got a system where dairy companies a little bit 364 00:20:49,480 --> 00:20:52,480 Speaker 1: like a company paying a dividend, they kind of set 365 00:20:52,520 --> 00:20:55,200 Speaker 1: a price that they will pay an average price across 366 00:20:55,240 --> 00:20:57,560 Speaker 1: the air if you like more or to suppliers, and 367 00:20:57,800 --> 00:21:00,000 Speaker 1: that's a guarantee that they can take to the bank. Literally. 368 00:21:01,240 --> 00:21:04,320 Speaker 1: So if the farmers are getting an eight dollars sixty 369 00:21:04,359 --> 00:21:07,480 Speaker 1: price from you, are they breaking even? Now? Are their 370 00:21:07,520 --> 00:21:08,520 Speaker 1: balance sheets okay? 371 00:21:08,600 --> 00:21:11,800 Speaker 3: Oh yeah, there would be certainly in terms of in 372 00:21:11,880 --> 00:21:14,480 Speaker 3: terms of their operating costs. I mean the good you know, 373 00:21:14,680 --> 00:21:16,760 Speaker 3: really good, really good farmers been around a long time, 374 00:21:16,800 --> 00:21:21,480 Speaker 3: probably slowly bigger. They're making recentably good money at that point. 375 00:21:22,000 --> 00:21:25,280 Speaker 1: Smarter people than the analystic banks have said probably that 376 00:21:25,280 --> 00:21:27,760 Speaker 1: price needs to be more like eight dollars seventy. Oh look, 377 00:21:27,960 --> 00:21:29,399 Speaker 1: how does sin they get to that price? 378 00:21:29,720 --> 00:21:32,080 Speaker 3: Well, we do the same math as everybody else does, 379 00:21:32,119 --> 00:21:36,600 Speaker 3: So we basically sit down and work out, essentially in fact, 380 00:21:36,640 --> 00:21:39,560 Speaker 3: with what our mass balance is. So every milk, every 381 00:21:39,640 --> 00:21:43,040 Speaker 3: dairy company takes in a lead of milk, right, and 382 00:21:43,080 --> 00:21:45,520 Speaker 3: then from it you disaggregate it into the various parts, 383 00:21:46,080 --> 00:21:48,200 Speaker 3: and some parts sell for more. So wholemok poter will 384 00:21:48,200 --> 00:21:50,800 Speaker 3: sell for more than skim milk poter friggs, for example, 385 00:21:51,800 --> 00:21:55,000 Speaker 3: in formula poter might sell for more than that. Again, 386 00:21:55,560 --> 00:21:58,720 Speaker 3: cream's butters, et cetera. And so you kind of break 387 00:21:58,720 --> 00:22:01,840 Speaker 3: it up into a range of different products and they 388 00:22:01,920 --> 00:22:04,760 Speaker 3: sell for different amounts of value, and what you try 389 00:22:04,800 --> 00:22:07,760 Speaker 3: and do is you try to maximize that value depending 390 00:22:07,840 --> 00:22:10,560 Speaker 3: on the equipment and the installed capacity that you've that 391 00:22:10,600 --> 00:22:14,000 Speaker 3: you've got, so it's a balance and effectively that means 392 00:22:14,040 --> 00:22:16,000 Speaker 3: you can afford to pay so much for the milk? 393 00:22:16,520 --> 00:22:17,600 Speaker 1: Can you get to out seventy? 394 00:22:18,400 --> 00:22:21,199 Speaker 3: Look, honestly, I think it seveny might be late for 395 00:22:21,280 --> 00:22:24,399 Speaker 3: this year. You know, certainly, indications that we're looking at 396 00:22:24,480 --> 00:22:27,639 Speaker 3: is that actually it might go higher than that. But 397 00:22:27,680 --> 00:22:30,560 Speaker 3: you gotta remember only two months into the into the season. 398 00:22:30,840 --> 00:22:33,960 Speaker 3: You've only sold a tiny portion of the year as such, 399 00:22:34,840 --> 00:22:37,760 Speaker 3: but certainly indications are that that that pricing is likely 400 00:22:37,840 --> 00:22:41,240 Speaker 3: to strengthen across the the year. I mean, Fonteria went 401 00:22:41,320 --> 00:22:43,239 Speaker 3: up from eight dollars eight dollars, fifty went from we 402 00:22:43,280 --> 00:22:46,200 Speaker 3: went from eighty at six sixty. So I think there 403 00:22:46,240 --> 00:22:49,320 Speaker 3: could well be room and have to put a obviously 404 00:22:51,720 --> 00:22:53,879 Speaker 3: a warning or that that's that's not a guarantee of 405 00:22:53,920 --> 00:22:55,760 Speaker 3: the future of a of a of a future of 406 00:22:55,760 --> 00:22:56,480 Speaker 3: a future payer. 407 00:22:56,960 --> 00:22:58,760 Speaker 1: So but back to your don't start looking at the 408 00:22:58,800 --> 00:22:59,960 Speaker 1: new Ford ranger just yet. 409 00:23:00,200 --> 00:23:04,840 Speaker 3: Yet, just yet, But back to your question. That's essentially 410 00:23:05,720 --> 00:23:09,640 Speaker 3: give us confidence that once we've resolved with two issues, 411 00:23:10,280 --> 00:23:12,480 Speaker 3: our farmers like doing business with us, and I've given 412 00:23:12,560 --> 00:23:15,480 Speaker 3: us very strong indications that at that stage they'll start 413 00:23:15,520 --> 00:23:17,200 Speaker 3: to withdraw their cease notices. 414 00:23:17,840 --> 00:23:20,439 Speaker 1: Right because they're I mean, they're really the clock sticking 415 00:23:20,440 --> 00:23:21,200 Speaker 1: for them too, right. 416 00:23:21,160 --> 00:23:22,760 Speaker 3: And taking for them too. They have two years you 417 00:23:22,800 --> 00:23:26,000 Speaker 3: basically give two seasons on a day effectively is the 418 00:23:26,000 --> 00:23:28,440 Speaker 3: notice period that you have to to give. 419 00:23:31,160 --> 00:23:33,400 Speaker 1: You've talked a bit about why you think it's important, 420 00:23:33,480 --> 00:23:36,080 Speaker 1: but can you expand a little bit more on the 421 00:23:36,119 --> 00:23:39,760 Speaker 1: future for this company and what you would want to see, 422 00:23:40,840 --> 00:23:43,240 Speaker 1: you know, doing differently if you can get this one 423 00:23:43,280 --> 00:23:43,800 Speaker 1: over the line. 424 00:23:45,480 --> 00:23:48,280 Speaker 3: But I think a couple of things are probably worth 425 00:23:48,520 --> 00:23:53,520 Speaker 3: also remembering is that fundamentally the two businesses that we 426 00:23:53,640 --> 00:23:59,080 Speaker 3: run are well run, smart businesses. So if I look 427 00:23:59,119 --> 00:24:02,040 Speaker 3: at the Dune Hattle Busines, I mean it's a fantastic business, 428 00:24:02,359 --> 00:24:04,880 Speaker 3: runs well and you know, nine years out of ten 429 00:24:04,920 --> 00:24:09,040 Speaker 3: will make a very good return, just not last year. 430 00:24:09,600 --> 00:24:14,320 Speaker 3: But that's a different issue. Therery works good business. You 431 00:24:14,359 --> 00:24:16,879 Speaker 3: know Tim runs it, does a great job, right, so 432 00:24:16,960 --> 00:24:22,040 Speaker 3: that that's a solid business. Ultimately, the decisions that we're 433 00:24:22,040 --> 00:24:25,560 Speaker 3: taken around some of the investments were taken not by 434 00:24:25,560 --> 00:24:29,040 Speaker 3: the people who are running these businesses or operating these businesses. 435 00:24:30,280 --> 00:24:34,040 Speaker 3: There were issues effectively taken after say by senior manager 436 00:24:34,040 --> 00:24:36,720 Speaker 3: at the board table, which for whatever reason didn't pan out. 437 00:24:37,359 --> 00:24:41,399 Speaker 3: So ultimately, what we're doing through this cap is actually 438 00:24:41,440 --> 00:24:45,560 Speaker 3: taking that issue, solving for that issue. So the future 439 00:24:45,600 --> 00:24:48,320 Speaker 3: force in me is really in the in the adult nutrition, 440 00:24:49,160 --> 00:24:54,159 Speaker 3: infant nutrition and value add ingredient business going forward. So 441 00:24:54,320 --> 00:24:56,240 Speaker 3: it's a little bit back to the roots, but it's 442 00:24:56,280 --> 00:24:59,840 Speaker 3: really focusing on what we do well because you know 443 00:25:00,040 --> 00:25:03,400 Speaker 3: there is significant growth available to us in those markets. 444 00:25:04,240 --> 00:25:06,840 Speaker 3: And just for context, I think it might be helpful 445 00:25:06,840 --> 00:25:11,679 Speaker 3: to know that global dairy is worth approximately twice what 446 00:25:11,800 --> 00:25:17,080 Speaker 3: Apple is worth. Right. So, but the recent report I 447 00:25:17,119 --> 00:25:20,200 Speaker 3: saw from Coriolisis vows it about nine hundred million dollars, 448 00:25:20,240 --> 00:25:27,480 Speaker 3: which is twice what Apple's capitalized. That right, Global consumption 449 00:25:27,560 --> 00:25:30,560 Speaker 3: of dairy is increasing by one point something kilos per 450 00:25:30,600 --> 00:25:36,040 Speaker 3: person per year, as essentially the world gets wealthier, that 451 00:25:37,040 --> 00:25:39,679 Speaker 3: you're seeing consumption and increase. And here's the start that 452 00:25:39,720 --> 00:25:45,399 Speaker 3: absolutely blew my mind is that the growth required to 453 00:25:45,480 --> 00:25:49,920 Speaker 3: support the increase in demand globally is one point two 454 00:25:49,960 --> 00:25:51,280 Speaker 3: New Zealand's every year. 455 00:25:52,440 --> 00:25:53,480 Speaker 1: There's an opportunity. 456 00:25:54,240 --> 00:25:58,680 Speaker 3: So that's the opportunity that we're leaning into into, right, 457 00:25:59,560 --> 00:26:03,879 Speaker 3: I mean, there is fabulous growth in this global industry 458 00:26:04,600 --> 00:26:06,840 Speaker 3: which we can play a big part in and that's 459 00:26:07,000 --> 00:26:09,960 Speaker 3: the opportunity for Sinny. 460 00:26:10,160 --> 00:26:12,320 Speaker 1: So it sounds like you're just cranking more and more 461 00:26:12,320 --> 00:26:14,480 Speaker 1: out of that plant down in Canterbury. 462 00:26:14,440 --> 00:26:17,080 Speaker 3: Cranking more and more, but also being smarter about it. Right. 463 00:26:17,119 --> 00:26:20,000 Speaker 3: And also, we announced yesterday that we will be retaining 464 00:26:20,080 --> 00:26:24,400 Speaker 3: the Pocono facility. We're not going to process milk there anymore, 465 00:26:24,520 --> 00:26:27,480 Speaker 3: so that milk is all there was still our contracts, 466 00:26:28,119 --> 00:26:31,159 Speaker 3: but open Country will might be basically processing that milk 467 00:26:31,480 --> 00:26:34,680 Speaker 3: and we'll focus on actually adding value to simously advanced 468 00:26:34,800 --> 00:26:37,280 Speaker 3: nutrition through that facility. 469 00:26:37,320 --> 00:26:39,840 Speaker 1: So but that was why there was quite a lot 470 00:26:39,840 --> 00:26:42,439 Speaker 1: of investment in that plant. Once you'd already built at 471 00:26:42,480 --> 00:26:44,760 Speaker 1: sea is still checking a bit of good money after 472 00:26:44,800 --> 00:26:45,440 Speaker 1: bed there. 473 00:26:45,400 --> 00:26:47,800 Speaker 3: No no effect of what we're doing is I think 474 00:26:47,560 --> 00:26:50,520 Speaker 3: we're still have a foot on a home base. So 475 00:26:50,600 --> 00:26:52,400 Speaker 3: we've taken the foot off home base now, so we're 476 00:26:52,680 --> 00:26:55,040 Speaker 3: we're just simply not going to process milk, which means 477 00:26:55,040 --> 00:26:56,960 Speaker 3: we don't spend half the month processing milk and in 478 00:26:56,960 --> 00:27:01,199 Speaker 3: a half a month basically getting into nutrition advanced nutrition 479 00:27:01,320 --> 00:27:03,960 Speaker 3: products now will be one hundred percent focused on advanced 480 00:27:04,000 --> 00:27:07,400 Speaker 3: nutrition products. Was still used dairy, but that dairy would 481 00:27:07,440 --> 00:27:10,280 Speaker 3: be processed some somewhere else and would it simply come 482 00:27:10,359 --> 00:27:12,280 Speaker 3: to us as as an ingredient. 483 00:27:12,600 --> 00:27:14,600 Speaker 1: Was that pretty much the money that's been spent at 484 00:27:14,640 --> 00:27:16,920 Speaker 1: that plant, which you know, anyone that's sort of driven 485 00:27:16,960 --> 00:27:18,720 Speaker 1: out of all plane heading towards coromand or sees this 486 00:27:18,760 --> 00:27:22,639 Speaker 1: sizeab huge piece of stainless steel and concrete on the horizon. 487 00:27:23,640 --> 00:27:25,679 Speaker 1: That's been the millstone around the neck as it. 488 00:27:27,960 --> 00:27:30,440 Speaker 3: Yeah, that's basically it was. That was that was that 489 00:27:30,520 --> 00:27:33,600 Speaker 3: was a four hundred and fifty million dollars roughly facility 490 00:27:34,240 --> 00:27:35,800 Speaker 3: which sentially has never made a cent. 491 00:27:37,280 --> 00:27:37,560 Speaker 1: Wow. 492 00:27:38,240 --> 00:27:42,600 Speaker 3: Yep, yeah, look again context right, So you go back 493 00:27:42,640 --> 00:27:47,160 Speaker 3: and you look at that that that business was kind 494 00:27:47,160 --> 00:27:51,480 Speaker 3: of conceived probably sixteen seventeen, eighteen, nineteen twenty was was 495 00:27:51,560 --> 00:27:55,640 Speaker 3: kind of built, and our infant formula business was literally 496 00:27:56,600 --> 00:27:58,720 Speaker 3: going off the charts at that stage, right, I mean, 497 00:27:58,800 --> 00:28:00,720 Speaker 3: it had been in just relent this growth and it 498 00:28:00,800 --> 00:28:03,760 Speaker 3: was doing extremely well. Analysts were kind of looking in 499 00:28:03,760 --> 00:28:05,600 Speaker 3: our business going, ooh, you've got a bit of risk 500 00:28:05,680 --> 00:28:08,480 Speaker 3: around that done saddle facility because you know Chrysier's earthquakes 501 00:28:08,480 --> 00:28:12,240 Speaker 3: blah blah blah. You've got a single facility site risk. 502 00:28:12,720 --> 00:28:16,520 Speaker 3: So can you basically put some money into somewhere somewhere else, 503 00:28:16,560 --> 00:28:20,760 Speaker 3: which the business did, and then of course COVID happened. 504 00:28:21,400 --> 00:28:24,520 Speaker 3: Infant Forma dropped off a cliff for our period and 505 00:28:24,560 --> 00:28:28,520 Speaker 3: it's unlikely to recover to that same levels. The Diagoo 506 00:28:28,600 --> 00:28:32,400 Speaker 3: channels basically have evaporated, and so it never really got 507 00:28:32,400 --> 00:28:35,600 Speaker 3: around to producing what it was intended for, so you know, 508 00:28:35,640 --> 00:28:38,760 Speaker 3: you'd have to say that was just really bad luck, 509 00:28:39,080 --> 00:28:42,560 Speaker 3: I mean, super bad timing. Then the business basically invested 510 00:28:42,600 --> 00:28:45,480 Speaker 3: a further ninety two hundred million dollars basically converting it 511 00:28:45,520 --> 00:28:51,000 Speaker 3: to advanced nutrition, but it was still producing or protesting milk, 512 00:28:51,840 --> 00:28:54,240 Speaker 3: and the problem with that was it's too far really 513 00:28:54,280 --> 00:28:59,840 Speaker 3: from the center of milk production. So the actual on 514 00:29:00,160 --> 00:29:03,320 Speaker 3: cost for us to get milk from farms to poconol 515 00:29:04,160 --> 00:29:06,440 Speaker 3: was more than we could bear as an ingredient manufacturer, 516 00:29:06,440 --> 00:29:09,720 Speaker 3: as opposed to infant milk from the manufacturer, which can 517 00:29:09,760 --> 00:29:14,000 Speaker 3: absorble lot more overhead, and so that was losing fortune. Frankly. 518 00:29:14,160 --> 00:29:17,920 Speaker 3: Then we were commissioning the facility for the last year 519 00:29:18,400 --> 00:29:22,440 Speaker 3: to produce advanced nutrition. That's a three hundred day commissioning 520 00:29:22,440 --> 00:29:26,560 Speaker 3: process early year, so ultimately, you know, we were losing 521 00:29:26,640 --> 00:29:29,920 Speaker 3: best part of the million dollars a week, which is 522 00:29:29,920 --> 00:29:31,680 Speaker 3: not much you've said, if you said fast. 523 00:29:33,080 --> 00:29:34,720 Speaker 1: I'm just thinking, if I'm setting there trying to make 524 00:29:34,760 --> 00:29:36,560 Speaker 1: a decision about whether or not as Beck a company 525 00:29:36,600 --> 00:29:39,160 Speaker 1: like that, that's that's pretty material information that I'd want 526 00:29:39,160 --> 00:29:40,600 Speaker 1: to be building up as I. 527 00:29:40,960 --> 00:29:43,640 Speaker 3: And that's yeah, that's and we just yeah, that's so 528 00:29:43,680 --> 00:29:48,280 Speaker 3: that's in the accounts. You'll you'll see that's pretty straightforward. So, yeah, 529 00:29:48,280 --> 00:29:50,920 Speaker 3: we had a final solution for that, and so essentially 530 00:29:50,960 --> 00:29:56,760 Speaker 3: eliminating dairy processing, going boots and all in to the 531 00:29:56,800 --> 00:30:00,920 Speaker 3: adult nutrition and advanced nutrition business moves the way forward 532 00:30:00,960 --> 00:30:03,160 Speaker 3: for that for that site. And literally we just announced 533 00:30:03,160 --> 00:30:03,920 Speaker 3: that two days ago. 534 00:30:04,200 --> 00:30:06,920 Speaker 1: So you're actually holding the vote at that Dune Sandal plant. 535 00:30:07,240 --> 00:30:07,719 Speaker 3: Yes, we are. 536 00:30:08,240 --> 00:30:12,520 Speaker 1: The shareholders Association has been pretty active, but I think 537 00:30:12,520 --> 00:30:15,240 Speaker 1: that it's open disclosure was that we still haven't quite 538 00:30:15,240 --> 00:30:17,480 Speaker 1: made up our minds about whether or not we want 539 00:30:17,480 --> 00:30:18,960 Speaker 1: to back this, So we're not giving that kind of 540 00:30:18,960 --> 00:30:19,880 Speaker 1: guidance to people. 541 00:30:20,760 --> 00:30:27,160 Speaker 3: I respect the Shoulder Association's use conscious that when you 542 00:30:27,280 --> 00:30:31,880 Speaker 3: leave a minority group out off a caprears, you know, 543 00:30:31,960 --> 00:30:35,040 Speaker 3: that's that's pretty much a red flag for them, and 544 00:30:35,080 --> 00:30:36,240 Speaker 3: so they're not kind to be happy with that. 545 00:30:36,240 --> 00:30:37,720 Speaker 1: You can get a kicking from that, aren't you. 546 00:30:37,720 --> 00:30:39,000 Speaker 3: You're going to get a bit of a kicking for that. 547 00:30:39,040 --> 00:30:40,800 Speaker 3: And you know, I mean, and I've certainly learned to 548 00:30:40,800 --> 00:30:43,640 Speaker 3: take my legs frankly when you're since since I've been 549 00:30:43,680 --> 00:30:49,600 Speaker 3: doing this job. But ultimately I hope that minority shoutdles 550 00:30:49,640 --> 00:30:51,920 Speaker 3: will read through the documentation and we'll understand that this 551 00:30:52,040 --> 00:30:55,960 Speaker 3: is a rational decision. It hasn't been a decision I've 552 00:30:55,960 --> 00:30:58,160 Speaker 3: taken because I don't like minority shareholders, or the board 553 00:30:58,160 --> 00:31:02,480 Speaker 3: doesn't like minority shuffles were really late minority shareholders. It's 554 00:31:02,600 --> 00:31:06,560 Speaker 3: just this is the only one that for us makes sense, 555 00:31:07,160 --> 00:31:09,720 Speaker 3: texts all the boxes for us to move forward with. 556 00:31:09,840 --> 00:31:14,720 Speaker 3: So look, ultimately, I acknowledge the Shoulder Association always have 557 00:31:14,760 --> 00:31:17,280 Speaker 3: a challenging job on these on these things, it's it's 558 00:31:17,320 --> 00:31:20,480 Speaker 3: not easy, but I think there also will they'll be 559 00:31:20,520 --> 00:31:24,280 Speaker 3: sufficiently nuanced in terms of there's probably a headline which 560 00:31:24,280 --> 00:31:29,920 Speaker 3: says dead rut, which I think was the headline, But 561 00:31:30,080 --> 00:31:32,120 Speaker 3: below that I think, as I said, even a dead 562 00:31:32,160 --> 00:31:33,520 Speaker 3: rut can be nutritious. 563 00:31:35,240 --> 00:31:36,280 Speaker 1: It's a tasty thought. 564 00:31:36,600 --> 00:31:38,640 Speaker 3: Well, apparently was a big thing in medieval times. Right 565 00:31:38,680 --> 00:31:40,840 Speaker 3: on a stick. Barbecued rut on a stick in London 566 00:31:40,880 --> 00:31:41,920 Speaker 3: apparently was a real thing. 567 00:31:43,480 --> 00:31:46,040 Speaker 1: George Enams, thank you very much. You're welcome, right, and 568 00:31:46,080 --> 00:31:48,760 Speaker 1: thank you for joining us. Also, you can watch Shared 569 00:31:48,840 --> 00:31:51,760 Speaker 1: Lunch on YouTube or listen on your favorite podcast. Why 570 00:31:51,800 --> 00:31:53,640 Speaker 1: not rate us and shoot us a comment about what 571 00:31:53,680 --> 00:31:57,080 Speaker 1: you'd like to hear about in the future. 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