Ann: FLLYR: SML: Synlait Milk posts $19.6 million NPAT for FY2014

• Release Date: 22/09/14 08:39
• Summary: FLLYR: SML: Synlait Milk posts $19.6 million NPAT for FY2014
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					SML
22/09/2014 08:39
FLLYR

REL: 0839 HRS Synlait Milk Limited (NS)

FLLYR: SML: Synlait Milk posts $19.6 million NPAT for FY2014

Synlait Milk has posted a $19.6 million net profit after tax (NPAT) for the
year ending 31 July 2014, an increase of 70% compared to the $11.5 million
NPAT for FY2013, and in line with its prospective financial information (PFI)
forecast of $19.7 million.

Revenue was $600 million in FY2014, an increase of 43% compared to $420
million for FY2013, and well ahead of the PFI forecast of $524 million.

Synlait Milk Chairman Graeme Milne said he is pleased with the result and the
continued growth of the business in its sixth year of operation.

"Our focus during the year has been to deliver on the promises we made to
shareholders when we listed on the New Zealand Stock Exchange in 2013.
Profitability was on target with our PFI, driven largely by a favourable
product mix that enabled the business to make the most from the period of
very high world market prices.

"However, achieving targeted premiums and gross margin for specialised
ingredients when world market prices were high proved challenging. Along with
the development of our nutritionals business being set back by regulatory
change in the important Chinese market, it meant the profitability advantages
over and above PFI we experienced in the first half of the year were largely
eliminated.

"Over what has been a challenging year, the progress we have made with our
key customers continues to give us confidence in our future. The ongoing
execution of our growth initiatives to ensure the development of our infant
formula and nutritionals business supports these customers is a key focus
going forward," said Mr Milne.

Synlait Milk's growth initiatives, including a 22,500m2 drystore expansion,
lactoferrin extraction and purification plant and blending and consumer
packaging plant were completed during the year.

Construction has begun on a new administration office and quality assurance
laboratory, as well as a third large scale infant formula capable dryer, due
to be completed in September 2015.

(see PDF for key metrics table)

Synlait Milk's volume of milk grew to 49.9 million kilograms of milk solids
(kgMS) in FY2014, lifting manufactured volumes to 96,492 metric tonnes (MT).
This compares to a volume of milk of 46.8 million kgMS and manufactured
volumes of 91,229 MT in FY2013.

Synlait Milk paid its milk suppliers a total average milk price of $8.31 per
kg MS.

Managing Director Dr John Penno said the focus for the coming financial year
will be on the execution of the current growth initiatives, maximising volume
growth of the infant formula and nutritionals business and ensuring
operational targets are achieved.

"We continue to invest in people, systems, plant and equipment to build
technical capability that supports our strategic development," said Dr Penno.

"Our customer and market development strategy is progressing faster than we
planned. We now produce product for four of the world's leading multinational
infant formula companies and are in discussions with each of them about
increasing volumes, manufacturing higher value products and collaborating on
research and development opportunities."

"China remains an important focus for us. The disruption caused during the
year by the regulatory changes is easing and we are well positioned to take
advantage of improved returns from increased sales in this market."

"It is our desire, as the manufacturing company, to develop a close
association with our Chinese brand owners to reassure consumers that these
brands are produced from a reliable, vertically integrated company that is
prepared to stand behind the quality of the product. This approach has been
signalled by Chinese officials as a future requirement for the export of
retail-ready infant formula to China."

"We are pleased to announce we have entered into a conditional agreement,
subject to certain approvals, for a 25% shareholding in Sichuan New Hope
Nutritional Foods Co., Ltd., the company responsible for the ownership, sale
and distribution of the akaraTM branded infant formula range in China.
Through a small investment, the partnership will create an integrated supply
chain for the manufacture, packaging, supply, distribution and sale of
akaraTM to consumers in China, ensuring transparency back from can to
paddock," said Dr Penno.

In FY2014 Synlait Milk achieved a pre-tax return on capital employed of
11.5%.

In relation to its dividend policy, Synlait Milk confirmed that with its
present focus firmly on growing the business, no dividend will be payable for
the financial year ending 31 July 2014, nor for the immediate future. This is
consistent with statements made in the Investment Statement and Prospectus at
the time of listing.
End CA:00255491 For:SML    Type:FLLYR      Time:2014-09-22 08:39:38