Ann: Renewal of Foodstuffs Agreement, page-24

1. Original $7.1m agreement - It is more than reasonable to assume it was based on spot prices at the time. If you believe differently then please tell us how you think it was estimated. HLF have no derivatives in their accounts so they aren't hedging future purchases. Secondly milk prices have increased a lot since the original contract was announced so if the volumes were delivered, revenue over the 2 years would be much higher than the $7.1m estimated.

2. The original agreement had indefinite extension after the first 2 years, with monthly termination rights. So to extend it for another 2 years starting in 7 months isn't a major benefit, and it seems to be a non-binding agreement.

3. Volume - it is clear the estimated volume in the renewal has decreased due to milk powder increases. This isn't HLF's fault though it illustrates the nature of contract manufacturing. Ultimately they are at the mercy of their client's customers and market prices.

4. Start of contract extension - isn't for 7 months, so will only impact HY2 of 2023. Given the increase in milk prices and original agreement volumes it may not even increase the Q'ly revenue they get now from the agreement.

It all begs the question, of why announce this now?