Good afternoon, everyone. Thank you for joining us. I'm Hannah Lynch, Synlait's Head of Corporate Affairs and Brand. Before our Chair, John Penno, opens today's meeting, I will explain how to participate in Synlait's annual meeting, which is being held in person here in Christchurch and online. Voting today will be conducted via poll for all items of business. To provide online attendees with enough time to vote, we will now open the online voting for all resolutions. To vote online, click on the Vote tab, select your preferred option, and once your vote has been cast, a tick will appear. You can vote for all resolutions at once or by each resolution. There is no submit or send button. Once you have selected an option, your selection is automatically recorded, and you can change it at any time up until voting closes.
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All right. Thank you, Hannah. As Hannah said, my name's John Penno, and I'm the chairman of the company. A very warm welcome to everybody in the room, and particularly those online. This is one of our modern AGMs, where we have a hybrid now. Last year's was completely online. This year is going to be, we'll have many people joining us online, we hope. Of course, thank you for coming to those who are in the room. Before I begin, I would like to confirm there are no new announcements today or changes to Synlait's guidance that are going to occur during the course of the day. I'm pleased to confirm that we have a quorum and I declare Synlait Limited's 2022 annual shareholders meeting open. All right. We'll just go to...
I'll get my clicker going. It's the big green button for anyone who's coming later. All right. A quick summary of today's meeting. In a moment, I'll give the Chair's address, then we'll hear from Grant Watson, our CEO. There's a small number of resolutions that we'll work our way through, and then there'll be a final opportunity at the end of the meeting for any general questions. But first, let me introduce our board. No, I'm going back. First, let me introduce our board. So, right over here on my right, your left, we have Sam Knowles. Sam has served as a Director of the company for 9 years, and he's standing down by rotation today.
We'll say a few thanks to you a little later on, Sam, for all the work you've put in. Next to him, we have Paul Washer. Paul Washer stands as an independent chair today during the course of the meeting. Next we have Chief Executive, Grant Watson, who you'll be hearing from in a few minutes. Paul McGilvary, who is an independent director who was appointed to the board in January of this year, but will also be up for election, this being the first AGM for him. We have Simon. Simon is going to take over as chair later today. He has been on our board for two years now and is an independent director. To his left, we have Ruth Richardson.
Ruth has served for a long time as a director of the company and is a New Zealand domiciled, of course, but Bright appointed director. Up on the screen, we have joining us from Shanghai, Sihang Yang. Yang, again, is a long-standing director of the company, has been involved from the outset of Bright's investment, so good to have you with us. I'm looking at an angle. We've actually got, I think it's Gracie. So Gracie is there. Was appointed during the year, I'll talk to the changes that have happened amongst the Bright directors a little later in the program. We will also be joined by Joyce. Yes, Joyce, who is, we had them up at a board meeting this morning, which was 4:00 A.M. their time.
They did the meeting, and then they've traveled to the office. You'll see her join the meeting when she arrives in the office. With that lit, I'm gonna progress to my chairman's report. Look, there's no hiding from the fact that FY 2021, not last year, but the year before, was a really difficult year for the company. We ran into COVID. There were a number of things we had come off of a period of very high capital expenditure. There were a number of things in the company that perhaps were working against us. Our loss that year was one that after 9 years of continuous profit was not a year that we were proud of.
I'm pleased to say that the directors and the executive have put in a huge amount of work over that last 12 months, FY 2022 was a much better year. It was a year where we addressed the issues we needed to turn the company around. That year, operating cash flows were NZD 232 million. That enabled us to pay back NZD 135 million worth of debt, reducing the company's net debt position by year-end by 30%, bringing our debt ratios back to something that, from the board's point of view, is still high, but from a listed company point of view, perhaps something more normal.
We, the cash that was freed up from operations also enabled us to complete what was a fairly heavy capital expenditure program, completing both the large CapEx at our Pōkeno site, which we'll talk to in a moment, preparing for Customer S. And also, completing the implementation of our SAP ERP system, which again, was a very large piece of CapEx and completed for implementation on the first of August this year. In addition to that, we paid our farmers really well. It was a period of very high commodity price, but our average price paid to farmers at NZD 9.59, including all the incentive programs that are part of our payment structures, meant that they were paid well above industry average.
Important that they're well rewarded for all they do, but also as we look forward and look to fill our plants and procure a little more milk in what is a competitive milk market. Part of that turnaround program was getting the right people in place. We are really pleased to have found Grant, someone who you'll hear from in a moment, who is absolutely focused on what the priorities are, and then working with his team to make sure we execute and deliver against those priorities. He's been in the role for 11 months.
In January, it'll be a full year, and it's been my absolute pleasure to work with Grant over the last over that time and watch him very quickly come to terms with the key things that need to be done and the key actions that need to be undertaken down in the business to deliver that. He's worked with the board and his team to refresh the strategy, make sure we're thinking about that we are doing the right things and we have the right things in place to deliver. Important, critical to that is making sure we've got the right people in place at a senior level in the business. He will talk to his team a little later on.
The board are very comfortable that the right sort of people are coming into the business, and we're looking forward to the last candidates joining us in January this year. There's one last appointment that is in progress, and that is for a key role in the all-important China market for us, where we're looking to put a senior person in place to lead our sales and business relationships up in that part of the world. Perhaps even more important though, than the financial position we find ourselves back in, which is one of strength, is that we continue to believe that the business is very well strategically positioned for where we find ourselves. Synlait has been working effectively for 15 years now to carve out a niche for ourselves in this area of advanced nutrition.
You'll note I'm not saying infant formula, I'm saying advanced nutrition, where we bring components together, manufacture them into high-quality, sophisticated products, often for consumers or working with companies who work with their consumers. I actually believe absolutely that we are now one of the world leaders in this place. I'll come to Customer S in a moment. The customer and the relationship we're developing with them is an absolute mark that we are regarded globally as one of the leaders. It underpins our very strong and enduring relationship with A2, where we are the manufacturer of the vast majority of the products that generate them the revenues that are generated. All of their infant formula products come from our factories at this point in time. The China market is critical, particularly to infant formula.
It is by far the biggest infant formula market in the world, and it is a market that, as it should, is controlled by very tight regulations. Infant formula is the most regulated food product in the world, and you access these markets through licenses with the local authorities in tandem with the authorities here in New Zealand, our party being MPI. The Chinese authority is SAMR, the State Administration for Market Regulation, and that license is owned by Synlait. With the team is deep into renewing that license. We have, we're seeing very good engagement. The board this morning, we're receiving another review. We're seeing great progress.
We're very confident that that license will be renewed on the timelines that we've indicated, and that'll set us up with A2 to continue to supply that very important product for the two businesses into the market for the next five years. The arrangement between ourselves is covered by an evergreen exclusive supply arrangement for those products. We're completely comfortable with the strength and the importance of that relationship and the agreement that it covers. We've seen significant growth, recovery of those volumes over the last 12 months to the extent that Grant and his team have needed to bring on board three new shifts for our canning lines to keep up with the supply and demand opportunities that are there.
Recently, we saw the announcement of the new volumes or the new opportunity into the U.S.A. where the products, A2's product, has been granted market access into the U.S.A. Again, that product is linked to manufacture at our Dunsandel site. Of course, we've been talking for some time about the need to not move away from A2, but to build on the volume that we have to utilize the capability, not just in stainless steel, but in the teams that we have. Deep where we've built deep capability in all of the things you need to be doing to be making these advanced nutrition products. I say advanced nutrition, particularly in relation to customer risk, because it's not just infant formula. These are products that are aimed not only at infants, but also adults and aging, and indeed, clinical nutrition products.
This relationship has taken a long time to build. They are truly a world-class, first-tier consumer company who has a globally leading position in the products that we're manufacturing for them. We will go from being a large supplier to a small, innovative, and growing company in A2 to being a very small supplier with very large and meaningful volumes for us to a truly global multinational business. That relationship is already very strong and building. There is a team of senior executives out with our company next week. Our people have been up with them in manufacturing plants and indeed, Grant Watson and his team with the head office over recent weeks as we build that relationship towards commercial production that is due to start in early 2023. Those markets are already expanding.
We're really pleased to say that we'll be supplying those products into the New Zealand and Australian markets, which were not in the original scope. That'll be starting towards the end of calendar 2023. There are additional product trials already underway for clinical products through our processes and plants in Pōkeno. We believe that not only will this relationship go on to probably be the largest relationship for the company, but it will, in time, probably use all of the capacity that we have available at the Pōkeno site. We believe that Pōkeno site will end up being more or less devoted to that customer. Grant and his team have already been talking about potential expansion opportunities into the future with that customer. We've built a world-leading Lactoferrin business. Lactoferrin is a detailed milk protein.
It's actually the number... It's the second most prevalent protein in human breast milk. It's carved out a very important place in infant nutrition. We're seeing very strong demand for this product, partly because in an independent study that we didn't even know was going on at UC Davis up in North America, a professor went out and looked at all the lactoferrins that were available and placed the Synlait lactoferrin right at the top of the list, as one of the leading lactoferrin products available based on the bioactivity of the product, because of some of the unique manufacturing systems and processes that we use that are proprietary information to our company and that we guard very jealously.
We're seeing good demand for this product because as the Chinese infant formula market matures, we're seeing much more Lactoferrin beginning to be included not only in the products we send, but in the products that everybody uses up in that market. There are key formulation changes happening at the moment that'll come into force after the 23rd of February, which are driven by regulation, that we'll see increased levels of Lactoferrin included in many products. That's driving up demand and holding up prices. We've seen prices recover over the last 6 months after a small dip. Our production capacity sits at about 40 tons. It doesn't sound like very much, but the spot price for this product is at about NZD 900,000 a ton right at the moment.
We see ourselves as well-positioned as the Chinese infant formula market changes shape. Two things are happening in China. One is that birth rates are down, and they're down recently significantly. The jury is out as to how much of that is structural change, families simply deciding to not have babies or delay having children, and how much of it is to do with the COVID situation, as time will tell. We would like to think that we'll see some recovery in birth rates in China as COVID passes through and they return to normal. There are also several government initiatives underway to try and lift their birth rates across that country.
It's fair to say that the, probably the biggest thing that's happened is that there has been a building in confidence of local manufacturers and local brand owners over the past three or four years. We're seeing the Chinese consumer buying local more readily than they had been over the last decade. As that's happened, our team has engaged with those key parties. If you list out the top eight brand owners and manufacturers of infant formula into the Chinese market, we're actively involved with each of them. What I mean by that is we're selling them products. We're not just turning up and having chats.
We actually sell them products from time to time, a whole range of things, mostly ingredients, but some finished products, and certainly Lactoferrin, and quite a lot of discussion going on with base powder. In fact, the team were this year, had seen Synlait become the only external party to be an approved third-party manufacturer for base powder products, for this particular customer who is one of the leading China-based, infant formula brands. I mentioned before that we're seeing very good progress with the SAMR licensing process.
It's fair to say that Grant and the board see for the first time, perhaps in a couple of years, that it is really quite likely that as we move through this process, rather than just having the one brand position for our Dunsandel sites, that there'll be opportunity to gain more. The process is that there's a whole lot of detailed information goes in about each brand, and then the factories are inspected, in this case by New Zealand authorities, but in close association with the Chinese authorities. We expect that process to move through. Once we're an approved factory, that'll open up the opportunity for us to add more brands, something that we've been wanting to do for many years, but had been constrained for a number of reasons. We see those things freeing up at the moment.
I would like to point out that we've seen considerable help from Bright, our shareholder in China, as we've moved through this process, remembering that under COVID, we haven't been able to travel there and they haven't been able to travel here for about three years. That's not only our customers, but also the regulators. We think we're really well-positioned to gain more licenses into the future, and I, we think that's very, very exciting for the company. You've also heard us talk for years about making sure that we have a diversified customer channel category and geographical location by market. We're making good progress on that, particularly in the last year or so.
We talked before about the multinational customer that we see coming, that is about to start up at Pōkeno, and that they will use most of the capacity there in time. That customer is producing products that are focused not on the China market, but on the broader Southeast Asian market and products into Oceania as well. We see that as important in terms of bringing geographical diversity away from a not a sole reliance, but a heavy reliance on China for our highest value products. We're seeing very strong demand from multinational customers for our UHT facility. Again, this is really important. One of the things that was going wrong a couple of years ago is we'd invested in the plant, we'd done the R&D, but we had just hadn't onboarded the customers.
That line has multinational customers on it today, we can see a pathway to that line being reasonably full in the next year or so. One of the customers, of course, is ourselves. The Joyhana brand that you see there is a long-life cream product that's been developed by our team. We have a partnership with Savencia, who is a leading food service company up in China. They're a European company, they occupy the number 2 space in these products. We're very confident in their ability to carry on and work with us as we develop that enormous opportunity, which is a high-margin product away from the protein and powder products that we've been developing in the cream space, where traditionally all of our cream has gone into AMF.
We see enormous opportunity for us to be adding value to that product into the future. Dairyworks, which you probably know best for the cheese that you buy, hopefully every day in the supermarket. The brands are Rolling Meadow and Alpine. Make sure you, be, you know, they're the ones to buy. That, we're also seeing considerable opportunity at the moment for working in partnership with others to be moving some of those cheese products into China and Southeast Asia in selective markets. The last thing I wanna touch on is. That talks about some of the things that are going on and how we position Grant. We'll talk more about the strategy and the things we're needing to focus on to get that done and how he's thinking about it.
I do wanna talk... The last part of the puzzle, I guess, in terms of turning the company around, is making sure we've got the right board in place. There has been considerable change over the last 18 months around the board table, and there's going to be more today, and we think we're setting up a board to lead the company forward in the right way. For a start, as I mentioned before, Simon Robertson will be taking over as Chair later today, and we'll hear from him late in the meeting. We've got Simon, sorry, Sam is retiring today after 9 years. It's been an absolute privilege working with Sam. We've been very fortunate to have a director of his caliber.
Sam was awarded Director of the Decade during his time with us. He has been an enormous asset to the board over time. He leaves as a great friend of the company. I'd like us just to pause and put our hands together to thank Sam for the contribution that he has made. We're equally as pleased. No, we're not pleased to be losing Sam, but we are very pleased to be bringing on Paul Washer. I'll talk to Paul's credentials in a moment, but Paul stands for election. We're looking to appoint Paul to the Chair of Audit and Risk, and you'll see from his CV that he's imminently qualified to do that. Deep industry experience. Very pleased to have Paul joining us. We see him making a big contribution going forward.
Paul McGilvary has been with us for some time. Graeme stood down in January, as was signaled at the last AGM. Paul, again, deep industry experience, ex-CEO of Tatua, arguably, New Zealand's second-best dairy company. Great to have you around the table. Paul has already made a big contribution in the time that he has been with us, we look forward to working with him into the future. There's also been change at the Bright Dairy end. Our structure is that Bright appoint four directors. One of them must be a New Zealand domiciled director, sort of person you would expect to show up on a New Zealand-listed company, that role is filled by Ruth. During the course of the year, we had Min Chen, who we call Joyce, join us.
She replaced a previous director, Min Ben. Joyce's internal audit as the head of internal audit at Bright Dairy plays an important role on our Audit and Risk Committee and is making an increasing contribution to the board. Dr. Gui Min, who we call Gracie, replaced Qikai (Albert) Lu, who was a long-standing director for us. Dr. Grace , or Gracie, brings particular experience in infant formula and in the regulatory pathways in infant formula in China. Bright have their own infant formula brands. They've been through the regulatory processes. She's made an enormous contribution to our team as we've worked our way through.
With that, I would just like to pause and acknowledge, while he's not in the room, I'll ask my Bright colleagues to pass on the vote of thanks I'd like to put on to Albert Lu. Albert, as a young man, we met him in 2010. He was very involved in the initial transaction when Bright came on board and became a significant shareholder. Some years later, he became a director of the company, and he served, I think, for about 7 years as a director of the company. He was ex-KPMG. He's very well connected inside Bright. He was a very capable director, a big friend of the company. He remains engaged.
He's now in a senior level at Bright Food, which is the parent of Bright Dairy, and he sits on the board of Bright Dairy, which is a Shanghai-listed company. We stay involved with him. He's no longer a director, but he served us very, very well. Again, I'd like you to put your hands together for Albert and for all the work. I would ask Mr. Yang if you would pass on our thanks to Albert when you next see him. All right, we'll come back to the resolutions that are required, and you'll hear from those directors who are standing a little later in the meeting. Before we do that, I'd like to invite Grant to come to the stage and provide his address.
Grant joined us in January, as I've already said, he has made an enormous contribution. He very quickly figured out what the priorities were, he focuses on them absolutely relentlessly. Some of his team are sitting in the front row here. They're nodding and smiling. I'm glad they're still smiling. There's been a lot of work to do. He's worked extremely hard. We are going to be very well-served into the future by you, Grant. I have no doubt of that. Please come to the stage and we'll any questions for me or Grant we'll take at the end of Grant's presentation. Thank you.
[Kia ora koutou]. Good afternoon. Firstly, John, thank you to you during the last 11 months for helping to onboard me into the business, for your mentoring and for your very, very strong leadership. Thank you very much. I'd like to just take a little bit of time to share our strategy. We went through a refresh process earlier this year. At the annual results, we gave you a very, very high level overview. To just give you a little bit more flavor, also to take you through our leadership team, our priorities, and to give you a bit more of a sense as to what things should look like in terms of our ambition for Synlait in 5 years' time.
In terms of the process we've gone through, this year from March through until about June, we had a really good hard look at where the business was at, and worked with the leadership team and the Board to refresh the strategy. That was signed off in June. In July, we moved our attention to making sure we were set up to execute against that really well. Shared the strategy at our annual results. I'll give you a bit more of a flavor, again, as I said today, around the next level of detail. We kick into an annual strat refresh process April to June next year. There's a really neat opportunity in May next year for us to spend time with investors and analysts.
That'll be up at the Pōkeno site, to take you into a further level of detail and also to introduce you to our leadership team for Synlait. You don't need to read these graphics. Let me just take you through the structure, and then there's some further slides that you will be able to read. This strategy is over five years, financial years 2023-2027. This is Synlait's rolled-up strategy, and what I mean by that is that there are four business units that sit beneath this, and I'll give you a bit more of a sense for that. Here's the best way to think about our strategy on a page. It's broken into seven buckets. The first bucket is around...
I'll, I will take you through this so you can see it, but just to explain the structure. The first bucket is around ambition. What does success look like in 5 years? The second is around right to play, and what we mean by that is these are the things that give us the strong foundations, that give us the credibility to be a world-class global player in the areas that we choose to play in. The next 3 buckets, channels, categories, and geographies really speak to the core of the strategy. The sixth area is right to win. That's the stuff that we do with farmers and with customers that give us competitive advantage.
Whether it be number one or number two in terms of our position in a category or in a market, or maybe it helps to drive better than average margins as a result from what we do. The last area doesn't look so interesting, but it relates to execution. It's the things as an organization we all get behind to ensure that we deliver great execution, and therefore have the best possible chance of delivering against those ambitions. Let me give you a little bit more of a flavor as to what that means. This is the first bucket. Hopefully, you can read this, but if you can't, I'll explain it. What we're talking about here, we've got B Corp, which is a sustainability framework. It's very, very hard to get into B Corp. We're into B Corp.
We want to lift our performance up even further over time, and it speaks to people, it speaks to planet, and it speaks to profit. That's sustainability. We've got a few metrics up here that speak to the engagement we have with our staff, with our customers and our farmer suppliers. How satisfied are they to be with Synlait? Those are three of the metrics that are up there. IWS Phase Three, bit of a technical term. What we're talking about there is continuous improvement operationally in our factories and in our supply chain to get us to being world-class over time. The last is return on capital of 15%, or as the board often reminds me, or better. That's ambition. Right to play.
These are the things that we have fantastic capability in. When we present our strategy deck to the customer, it's exactly the same deck. These are the things they really value about Synlait also. Food safety, quality, traceability of our product. Regulatory. John spoke about getting this new license renewal up into China. Our regulatory function play a really key role in ensuring that we do that. Nutritionals know-how, absolutely world-class. As John mentioned, the requirements when you make infant formula are the highest of standards. Surety of supply, that becomes even more important in the world that we live in today. It's making sure that we contract our milk, we can process it, we can ship it, and our customers have real certainty around the delivery of that. Efficient manufacturing, clearly very important for us.
Again, having really strong sustainability credentials. These are the things that give us strong foundations right to play. In terms of channels, this is where our products are either sold to customers or consumed. It could be, for example, when we talk about the consumer channel, that would be in the supermarkets. When we talk about food service, that would be a chef using our food service cream in a bakery environment as an example. Categories, I think you'll all be familiar with these, but just a reminder, we've got milk powders, whole milk powder, skim milk powder, from a beverages and cream perspective, the milk that we produce, the foodstuffs in the South Island or the cream that we've just launched up into China. AMF and butter.
AMF being effectively purified butter in a liquid form. Cheese, the Dairyworks product that Tim Carter and the team produce at Dairyworks. In terms of infant and adult nutrition, the A2 product is a really good example of that. When we talk about adult nutrition with this mystery customer that we will share with you soon, that ranges from infant all the way through to active living, healthy aging. Of course, Lactoferrin, as John mentioned, lower volumes, but really high sales price and very good profitability. Geography, we sell product to about 50 countries around the world, roughly. What we're talking to here when we when we have this in our strategy is where do we focus our efforts and our resources?
Our efforts and resources will go more into China, more into Southeast Asia, continuing our really strong position in Australia and New Zealand, and of course, we will continue to service the balance of the world without putting too much investment behind it. Right to win. We talked about right to play. Right to win gives us our competitive advantage, and I will touch on this briefly because it is so critical in the environment we're in that we have fantastic relationships with our farmers. If you think about the New Zealand industry, arguably, we're at peak cow. We're not expecting more numbers of cows in New Zealand. If anything, it might come down over time. At some stage, we'll be at peak milk.
What we need to do is make sure we've got great relationships with our farmers so that we've always got the amount of milk we need to produce the products that we need to produce. What we talk to here in this competitive advantage model is a system of 8 things. Our competitors do some of them, we will do all of them. When you put all of those together as a system, it will give us a competitive advantage. It's worth noting, in the South Island, we actually have a really strong position already. We need to lift that. In the North Island, we have a good position, and there's more and more competition coming into the market, so we really need to get ahead of the game.
It speaks to things like a competitive farm gate milk price that has transparency to its calculation. The cash flow profile throughout the season is equal and will be better over time than our competition. That we give really good support on farm. We provide good digital tools to allow our farmers to focus on farming, not admin and bureaucracy. We work really hard on behalf of our farmers and the industry to advocate for the industry and for our farmers. Making sure that specialty milk premiums are on offer. When John talked before about NZD 0.29 extra in terms of our farm gate milk price, part of that comes from the A2 milk premiums we pay.
Part of it comes from the next bit, which is Lead With Pride, making sure that we incentivize our farmers, to deliver leadership behaviors on farm as it relates to sustainability. Made With Better Milk really just packages up all that we do from a sustainability position end to end, from farm through to factory. The most important thing, the thing that I hear the most when I talk with our farmers, is our purpose and how it resonates, the culture of our business, the way we engage. That just gives you a little bit of a sense as to how we will look to drive our competitive advantage with our farmers. We have something very similar. I've literally just changed the page here. This relates to customers.
Again, things like surety of supply, base range of product, value add products. We can customize products. Channel expertise really speaks to us investing into understanding their businesses even more. Again, the top of the pyramid is around purpose and culture. Lastly, executional excellence. This speaks to those key things across our business that if we all get behind, will deliver great execution and therefore great results. I'm moving through this quickly. This information is all now available to you online if you'd like to go back and look through the detail. Strategy, structure, execution. Briefly on structure. As we finished completing the strategy fit for purpose structure, we worked through that July, August. We've made some changes. Really delighted to have a number of our long-standing core folk remain in the business.
We've got some additional people from outside coming into the business. Noting there Charles Ferguson, Paul Mallard, Naiche Nogueira, all start mid to late January. As John mentioned, we're on the home straight to employing someone that will really focus on China as a market generally, and then the food service opportunity that plays out in our strategy. What we've got in the pack are the business units. I won't spend too much time going through the business units. We've got ingredients, again, similar look and feel. There are differences when it comes to channels and categories. The ambitions can change a little bit also. Just worth mentioning, if there's, if there's one that's that I'll pause on and spend maybe just a minute on.
If you think about advanced nutrition, this gives you a sense as to that detail, that next level of detail channels. In the supermarkets, specialty retail, for example, up in China, that might be mother and baby stores, e-commerce, of course, online. Medical speaks to products that are sold either through prescription or in pharmacies, of course we have manufacturing. From a category perspective, infant formula base powders, big 25 kg bags of base formula, infant formula consumer in cans, nutritional beverages, customers that would prefer to have a ready-to-go consumer product delivering nutrition. Lactoferrin, we've talked about. Clinical nutrition. Think medical and life stage nutrition, again, coming back to customer is the mystery customer from pediatric all the way through to active living and healthy aging.
That just gives you a bit of a sense as to one of the business units and, and the detail that comes through when you look at each of the four. What I will do now is just briefly take you through the priorities that we have for the business right now. In no particular order, the re-registration for access up into China, a critical priority we're working really, really hard on. Continuing to enable our key customer partner in A2, and also shareholder of Synlait, enable their growth agenda. Onboarding this new customer up in Pōkeno, just south of the Bombay Hills there, a really, really exciting opportunity for us there.
Focusing on the food service opportunities of cream and the consumer opportunities of beverages, and making sure that that asset we've invested a lot of money in is utilized and creates value really quickly down in Dunsandel. Stabilizing SAP. We had the absolute pleasure of introducing that on the 1st of August. Boy, oh boy, really challenging implementations for anyone that implements SAP. It's effectively the technology platform that sits across our business. A business of our size, NZD 1.65 billion now, lots of complexity, really important that we invest in the foundations. We've done that through SAP. It'll take a bit of time to bed in, and then it will provide fantastic value back to the business.
Look, the last one, which is a little bit of a catch-all, think about the last two or three years, we've had so many one-off challenges that have impacted our business. As we know, these one-off challenges aren't really feeling like one-off challenges anymore. Whether it be around high inflation, slowing demand, low unemployment, geopolitical challenges throughout the world, climatically a lot more volatility. These are all things that we need to, and we are getting our heads around and positioning them as the new norms rather than the one-offs. Lastly, just to close out, I talked before when I went through the strategy, we had these quite technical views under the ambition box that speaks to what success could look like in five years' time. For us, it's getting...
This is an ambition, it's not an update on our guidance. It's about getting this business up to north of NZD 2.5 billion in 5 years' time. Again, return on capital of 15% or better. That we have diversification across customer, across channel, across category, and across geography, really to ensure that we've got the best quality of earnings over time. Additional China market access absolutely is an opportunity for us, especially off the back of the work that we're doing at the moment. Again, not to underestimate the importance of having a compelling competitive advantage with our suppliers so that for them, we are their preferred partner of choice in terms of processing their milk. Thank you for your time.
I'm now going to hand back to John, and we're happy to take any questions a little bit later on.
All right. Thank you, Grant. I'm moving the computer up here because there are some, it gives people the opportunity for online questions as well. Firstly, I'll ask you to join with me in thanking Grant for his presentation before we move to questions. All right. We'll move to the formal part of the meeting shortly, but we do want to create the opportunity for those online, a reminder, that there's a system there to do that. They pop up magically on the computer in front of me. Before we do that, are there any questions in the room for myself or for Grant lifting out of those two presentations that we've just heard?
John,
Now, for someone in the audience, we'll just wait, cause the microphone will let those online hear as well as those in the room.
John, just a question. I've driven past your plant at Pōkeno, looks very impressive. I'm just wondering, you've got this mystery Customer S, and you've made quite a bit of it over the last couple of reports, and I realize there's commercial confidentiality. For shareholders, when do you think we'll be in a position that we can evaluate what you're saying about the importance of that particular customer?
I'll pass that to Grant.
I did have this discussion with them just a few weeks ago because we know that you're very curious and keen to understand more about the customer. We expect the natural time for us to share that information is when we complete effectively the first full commercial production run for them. You know, make the product all in spec, ready to ship, and roughly at about that time that we start to let you know exactly who that is. From our perspective, March, April, May next year, give or take. Not too far away.
Ultimately, you'll see the performance flowing through the business in the numbers, in the volumes of product we make for them, the margins that we make from those products, which offset costs that have been front-loaded, both capital costs and a lot of operational costs in terms of preparation for that customer. They are carried within the business, have been for a couple of years. We're all looking forward to the other side of the equation coming in as well. More important in some ways than who they actually are, ultimately. Any other questions in the room? All right, I'm gonna go to one online here. I'll ask a really tough one first from, I won't read out his full name, but from a gentleman named George.
He's complimented us on the upbeat nature of the presentations, says, "When are you gonna pay a dividend? If there's not capital gain, what's the point in your venture?" He's come straight to the point. Look, the directors are very conscious of the share price performance of the business over the last 2 years, as we've gone through a very significant challenge. It's why you've seen us put so much effort into making sure we got the fundamentals right in terms of strategy, getting the debt back to where it should be for a company of this nature, getting the team in place to carry the business forward. We've worked very hard on those things. Today, really, we're saying we believe the business is very well-positioned.
We have put together, shareholders and the company over time, a very valuable strategic asset. The replacement costs of the assets that we have in place at the moment are about $1.5 billion. If someone was to build out that infrastructure, just the buildings and plant would cost about $1.5 billion today, let alone the investment that would have to go into building the capability, the teams, the people, the know-how to be able to do what we're doing. We believe that's why we are confident about the future. It's why the presentation is upbeat because we think a lot of things are coming in now. Grant and the team are managing a lot of things, and that will see the company perform much better into the future.
There's a second question here for you, Grant. The question is: What do you mean by challenges with SAP? Are you talking additional costs? Who's paying for these costs? What should we expect to see?
Yeah, really good question. What I'm talking about there is generally with any SAP implementation, it takes time for the staff to change to a new way of working. And then, of course, with any form of complex technology, you think you've got it right when you go live, and there are areas that still need to be adjusted and to be tweaked. We're not talking about any CapEx overruns. What we are talking about is smoothing things through the value chain in terms of receiving milk, processing product, and shipping it. There's been a few hiccups along the way. It's par for the course.
We're managing it, and we've got a really good program in place to ensure that not only do we get back to where we were, but off the back of the SAP investment, we can get the value, the business case benefits that were always intended for SAP. Bumpy, par for the course, we're making sense of it. We're looking forward to realizing the value.
There's a question here from Kevin, I think it is. There is an investor day coming up for institutional investors that we've talked to some of those investors about up in Pōkeno. The question is, will retail investors be invited to that? I think we just take that offline and consider that question. The team will note that question's been asked and decide what to do about that. I think it's fair enough that shareholders get access to come and have a look at some of these big investments over time. Let's think about whether we do that at that time or at another time, invite people to come and see. Question: What is the cost recovery timeframe for Customer S?
There's been upfront costs that the business is carrying. When will we see this being net positive to the business?
Roughly speaking, when the business case was put together, and based on our current view of volume, gross margin, growth over time, the IRR, roughly speaking, sits in that 25%-30% range. It's a compelling return for invested funds over time.
Are there any other questions in the room? Everyone's happy?
What does SAP stand for?
Question in the front here was: What does SAP stand for? SAP is a brand name of a large, German-based, software company. That software company puts together enterprise management programs. It's really, think about it as the operating system for the whole company. Everything from figuring out what we're going to quote to customers, to customers being, orders being placed, ingredients being ordered into the business, tracks all the product through the business, all the way through to sales and invoicing. Then dovetails up into the financial management system so that we can manage the business. The key thing about SAP for anyone, it's German.
It's a very rigid system, which is a very good thing if you're running a big, complex business cause it means people have to follow rules, and that's what you want. It's often a bit of a painful transition as people move from doing things the way they've always liked to do them to doing them the best possible way. In the long run, it's always a very good thing, particularly as businesses become large and complex. There's no question that Synlait has gone from, you know, a small, simple company some years ago to a much more complex company now. This implementation, to be fair, is long overdue, and the team are working pretty hard at getting it in place. It has been a big investment. It's been a big investment in time, energy, and capital.
My question is, sorry. Thank you. Does it go?
Yep.
Okay. My question is to do with peak cow, possibly. That's unconvincing anyway, I think. Assuming there is peak cow, and assuming that this company is a specialist in nutrition values and future food, are you building linkages with the goat milk industry and the sheep milk industry, and will that become a part of the future once you get past your priorities?
I'll get Grant to think about the future of goat and sheep in a moment. One thing that we are doing is that we have always looked to diversify our ingredients that we use beyond milk. Our infant formula program at Dunsandel sees a lot of ingredients imported. For example, we use a lot of vegetable oils to provide the fatty acids in the infant formulas rather than cream. It's not new to us to be bringing ingredients from other sources rather than dairy farms to our factories, and that's why we talk about as, ourselves as an advanced nutrition manufacturer rather than a dairy company per se. Of course, dairy farmers are very important. Milk's a key ingredient for many of our products.
That's at, that's in the North Island with Customer S, that's at, the key thing about that opportunity is it's non-milk. The ingredients into that are largely plant-based. There are some dairy ingredients, but they don't come from New Zealand dairy farms. On the days we're manufacturing, the team has to displace the milk, sell it to somebody else, so we can be manufacturing those products. I think that we're reasonably well positioned strategically if there are changes. Also, we'll always be able to get the milk we want. Grant talked in the strategy about the importance of being the manufacturer of choice to New Zealand dairy farmers, and we're only a small proportion, very small proportion, less than 5% of New Zealand's milk.
We add a lot of value to it with the things that we do. Even if milk does decline, it should leave us in a good position over time to attract the milk that we need to serve our customers. Sheep and goat?
Very good question. If we look at where we're at today, we're 1 year into a 2-year recovery, and we're making very, very good progress. The way that we've framed up our strategic thinking is that this year is very much around stabilizing the business. Next year is about accelerating the business. In years 3 to 5, that's where we're framing up the possibility of extending into new opportunities. Whether that be around category, whether it be around capacity, it's a little bit further down the track, but that will be the time for us to really think about other opportunities above and beyond what we've got with Pōkeno, which is non-dairy and the core dairy products we've got.
At this stage, I can't answer the question because of what's in front of us, but certainly there will be scope down the track to consider other opportunities.
I'm going to a question online here. The question is: With the ongoing energy security concerns in Europe and environmental push that could result in less animal farming in Europe, there's a bit in the media at the moment about the Netherlands. Could the company benefit from that, Grant?
Yeah. Really, relevant question. I was up in Europe about three weeks ago visiting customers. Some key themes came through from that trip. Milk price in Europe, record prices, well above New Zealand. As we know, cost of processing with energy, through the roof. Potentially pressures to significantly reduce cow numbers. With a number of the customers that I visited, there was real interest in them partnering up with us to produce products for them, whether it be cream, and we've seen that with Savencia, potentially cream cheese, potentially cheese. It was good to get a really clear understanding as to what's going on up in the market.
I think one of the things that positions Synlait well, but actually New Zealand well, is that we're so well positioned when it comes to provenance, especially up into the Asian region. We've got great market access. Geopolitically, we're in pretty good shape at the moment. Let's hope it stays that way. And climatically, although we have our challenges and we're seeing this at the moment with weather patterns, we're not seeing the extremities in New Zealand to the extent we are offshore. There's some things happening up in Europe that are favorable for us in relative terms, but there's actually some really strong positions we have here in New Zealand regardless.
There's a question here from Paul, saying, "Are we looking at any acquisitions now or in the future?" Look, I think the board's strategic view at the moment is our focus continues to be on debt repayment, making sure that we get our debt down to low and sustainable levels. We have plenty of capacity within our strategy and plant for growth for the foreseeable future. At this stage, we don't have any acquisitions in mind. As the business matures over the years, as we pay down debt, as we fill up plants, we have been a company focused on growth, and we'll assess those opportunities as they come. Nothing immediate. Focused on continuing to repay debt, putting us in a strong position so we have choices later. Plenty of room for growth with existing assets and capability.
There's a question here on the Lead With Pride investment, our investment with Lead With Pride over the years, you mentioned Grant, the amount that we pay farmers in addition to the milk price that they receive. How do we think about investment recovery? What's the split between, you know, internal gains and how we position ourselves with customers? That's actually from Malcolm at the New Zealand Shareholders' Association.
Yeah, really good question. In terms of our investment behind sustainability, we do it because it's the right thing to do. It lines up with our values as an organization. There is a growing level of demand with consumers to back to buy from organizations that are truly sustainable. Without question, whether it is, we get a foot in the door and get an opportunity to sell product, or actually we get a premium for our product. At this stage, it's more the former than the latter. The inflationary pressures at the moment, for all food producers is making it very hard for them to pay extra for sustainability programs. Definitely foot in the door.
Again, we got that very, very clear feedback visiting a number of multinational customers over the last few weeks. We pay roughly NZD 0.14 to our farmers on average for their sustainability programs. There is other value attached to that their loyalty to us has to be valued. Look, on balance, it's the right thing to do. We will look to gain more commercial benefit from it over time. Let's be really clear. At some stage in the future, having demonstrated genuine sustainability positions will just be a ticket to the game. We are well ahead of the game.
Leading on from that, there was a question here, and I'll come to yours next. Could the company average its superior ESG profile to attract larger investors or funds? Look, this is a key topic. The way that companies are engaging with environment, with sustainability issues, with the people in their businesses and in their communities, continues to be a key issue for investment companies. I think as Grant just outlined, we're seeing, you know, we are well-positioned when it comes to that. It's something we're focused on for many, many years. It's one of the things we always put forward as we're working with potential investors and something that potential investors are often interested in. Question at the back here.
My question was just about the site in Temuka. Are there any plans for that? I know it was put on hold for a couple of years. Is it likely to be recommissioned or will it be something that will be potentially sold?
Grant.
Yeah. We're working our way through that at the moment. As John said, earlier on, our focus right now is to pay down debt. We could invest more money behind that site, which is in fact what it needs if we get it up and running again. First and foremost, continue to pay down debt. Secondly, as we work our way through the strategy, do we want to invest further in cheese and will it give us the return that we need from it? If we get the return we need from it, is that still the best opportunity in terms of how we allocate capital? That's our thinking at the moment.
The other factor that we're monitoring closely is, with the energy prices going through the roof in Europe, will that see a mix shift away from the use of dryers and more cheese being produced? We don't think that's going to play out. It certainly was a concern at the time when we were thinking through getting the Temuka site back up and running again. We will make sense of that decision certainly before the end of this financial year is out.
All right. Last question on here, and then I'll draw it to a close. Again, there's a comment there. Are there any investor days, opportunities for investors to tour our facilities? I'll just leave that with management to take away. I think that's a reasonable thing for people to ask for, and we're really proud of, the facilities that we've got there. I'll draw questions to a close at that point, and we'll move shortly into the formal part of the meeting. Thank you for the questions and the engagement. You're welcome to stay afterwards. There'll be a cup of tea. In addition to the directors, make sure you talk to Grant. We've got three of his senior team in the front row here. We've got our CFO, Rob Stowell.
We've got Adam Maxwell, who looks after our ingredient sales, which is our skim milk powders, our whole milk powders, engages with many of those multinational customers we were talking about before. We've got Tim Carter, who runs our Dairyworks business. Making sure you know which products to buy when you go to the supermarket, talk to Tim. Any questions about the price of cheese, Tim will be pleased to answer over a cup of tea. All right. Look, I'm gonna ask you again to thank Grant. You've got a little insight there into why the board are so enjoying working with him so much.
It is a pleasure to sit with a CEO who calls a spade a spade, calls out the issues as they are very focused on the things that need to change, but with a very clear view of where he's going to take the business over time. Thank you again for the contribution you've made and the amount of work you've put in over the last 12 months. I won't promise you'll be able to work any less in the next 12. If you join me thanking Grant. All right. We'll now move into the formal part of the day. Firstly, as I mentioned before, Simon, let me give you a little context on the changes in chair. Graeme Milne served the company very well for a long time as our chairman.
He signaled three, four years ago now that he was going to stand down at the last AGM, and he did. It found us in terms of timing at a moment when we were going through some very significant change, perhaps laying the groundwork for some of the things that we're able to talk to you about today. We came to you as shareholders and asked for permission for me to stand in to chair and work with Grant over the last 12 months as we transitioned him into that role. That time has now come to a close. It's appropriate that we have an independent chairman taking the helm again. We're very fortunate to have Simon there available to do that. He has a good understanding of the business after two years.
He's a very effective chairman. He's been chairing our Audit and Risk. We saw him yesterday. I think I saw him work through more papers than I'd ever seen in an Audit and Risk meeting with very substantial issues there. He does his homework. He makes sure everybody is involved. He's got a great chairing style, and the board has absolute confidence in his ability to lead the company, work with Grant and the board as we continue to work our way through the challenges that are in front of us, but also take the opportunities that are clear and that we're talking about today. I'd like you to join with me and congratulate Simon in taking up that role. Again, you'll hear from him a little later in the day. Thank you, Simon, for taking up that work.
As I mentioned before, we're sadly losing Sam Knowles from his position as an independent director as he retires by rotation today. We're pleased to be bringing forward with the board's recommendation. I'm just gonna get the order right here. Paul Washer, and that is, we're going to be voting on that. As I mentioned before, ratifying Paul McGilvary as well. If we move to the resolutions, the first resolution, I should have my slides. Can you run the slides from there for me? All right. The first resolution is that the board is authorized to determine the auditor's fees and expenses for the 2023 financial year.
I'd like to move that the board is authorized to determine those fees and expenses for the 23 financial year. Are there any questions to this resolution? No questions or online? All right. If there's no more questions, I'd invite you to mark on your voting papers, the, your approval if you so choose, and then we'll move on. I'll give you a moment to do that. All right. Resolution 2. Resolution 2 is the election of Paul Washer. In a moment, I'll ask Paul to come to the stage so that you can meet Paul. Paul's a senior executive with extensive experience in planning operations, finance, and information technology. He's currently the chief financial officer for the ASX-listed Pact Group, so he's still an executive.
We believe that actually adds to the role, and he assures us he's got plenty of time to spend with us. He's a Kiwi, even though he's working out of Australia. Before this, Paul spent 17 years with Fonterra, in very senior finance roles, including acting CFO of the whole group for a time. He then moved to Shanghai, where he was the CFO for Fonterra's Greater China business, with responsibility for Mainland China, Hong Kong, and Taiwan across consumer, food service, ingredients, and Fonterra's China farming business. Broad experience in a very important market to us and very well qualified to lead our Audit and Risk function, which is one of the things we were looking for.
Now, the board's assessed Paul to be an independent director within the meaning contained within the NZX Listing Rules and NZX Corporate Governance Code. I think it's absolutely clear he's can fill that independent role. The board absolutely supports Paul's election as a director, and I invite you up, Paul, now to give a few to address the meeting.
[Kia ora, hello, nǐ hǎo]. Thank you for the opportunity to speak to you today. I'm very much looking forward to reconnecting with the New Zealand dairy industry through this appointment and bringing to the table the experiences I can share from working within the industry for 17 years. I'm a big believer our responsibility for the dairy story starts at the farm gate, and every decision from that point focuses on adding value to every drop of milk. Synlait follows the footsteps of New Zealand milk pioneers who introduced dairy to consumers around the world. We have an obligation to hold up that tradition by delivering safe, high quality, and great tasty products to the generations of consumers who want dairy in their diet. New Zealand milk is special. It looks good, it's nutritional, and most importantly, it tastes great.
We should all stand proud of an outstanding New Zealand product. I learned early on during my time in China that delivering New Zealand provenance was just the start of the journey, and by no means a guarantee to success. Those companies prepared to adapt their products to local customs and traditions, aligned with festivals and special family occasions, have a much greater chance of sustainable returns on their investments. I am very pleased to see Synlait is keen to develop its food service channel, further diversifying its product range and building a bridge between its ingredients and its consumer offerings. Food service is an important channel which is used to highlight the benefits and goodness of New Zealand dairy across a wide range of applications, touching a large amount of consumers in a very short time through digital marketing.
We need to sell dairy not only as a product, but as a social experience. I also wanted to touch on the topic of sustainability. We all have a significant role to play in making sure we, as individuals, do our part to make our planet inhabitable for the next generations. As the Chief Financial Officer of an Australian public company focused on leading the circular economy in rigid plastics, I firmly believe we all have an obligation to ensure multiple use plastics is our future, whether in a milk bottle or in a nutritional pack. I was very pleased to see Synlait treating sustainability as a core value, and you can be assured I will do everything possible to make sure we understand our obligations and deliver to our promise.
I thank you for your time today and look forward to an exciting journey with Synlait if you endorse my election. Thanks, and xie xie.
All right. Thank you very much, Paul. I'd like to move that Paul is elected as a director of Synlait Milk. Are there any questions to this resolution or any questions of Paul? All right. Well, with that, I invite you to vote by marking on your voting option for resolution two, either on your printed form or electronically. With that, we'll move to resolution three. Resolution three relates to the election of Paul McGilvary as an independent director. Paul has been sitting, as we've said, with us as a board since January 2022, when he was appointed by the board to replace the position that became vacant as Graeme stepped down from the board. Since joining, Paul has also been a member of our People, Environment and Governance Committee around the board table.
He brings very strong sector experience. He is currently Chair of AsureQuality and Chair of BVAQ Australia, and a non-executive director of Waikato Milking Systems. He has previously held several senior executive roles in the industry and beyond, including CEO of the Tatua Dairy Company, CEO of HortResearch, which is the CRI now known as Plant & Food Research, and Managing Director of Fonterra Europe after many years working in various roles through Fonterra and the Dairy Board before that. The board of, sorry, the board has assessed Paul to be an independent director within the meaning contained within the NZX Listing Rules and the NZX Corporate Governance Code. The board of Synlait firmly supports Paul's election as a director to the board of directors. I'd invite Paul to come and address the meeting now.
Thank you. Thank you, John. So pleased to be here this year in person rather than through a screen. I can assure shareholders that you don't have to be called Paul to be an independent director. Look, I really thank you for this opportunity to be formally appointed to the Synlait board. As John said, I've been a director since January this year, and I filled their casual vacancy created when Graeme Milne stepped down from the board. I'm a member of the People, Environment and Governance, as John said, but I'm also a member of the Audit and Risk Committee, so I've been on both committees this year. In addition to Synlait, I'm chairman now of AsureQuality, which is probably the biggest food...
It is the biggest food testing and certification and inspection business in New Zealand. I also chair the Australian joint venture of that company, which is the biggest food testing business in Australia. I'm also on the board of dairy technology company, Waikato Milking Systems. We make rotary milking systems mostly, but also the associated technology that goes with that, all the collars and the technology that goes with those type of systems. They're mostly composite, it comes from our sailing industry, to be honest, the ideas for it did. I've also recently joined the board of New Zealand Hops, which I'm quite fond of their product too. That's, that's useful.
In my previous life, as John noted, I was managing director for Fonterra in both Australia and Europe for the ingredients business. I also was CEO of Plant & Food Research. Plant & Food Research, I think has about 1,000 people now, with something like 300 of them with PhDs, but it's probably one of the most advanced plant-based research organizations in the world. As also mentioned, almost most recently in my executive career, I was managing CEO of Tatua Dairy Company . I think a lot of you will know Tatua, but Tatua is kind of the epitome of a value add company, and I've always thought that Synlait has the capability to replicate the returns that Tatua generates, but can do it at scale.
Tatua is a very small company, often runs out of milk when it comes to big customer possibilities, Synlait will not do that. Look, I'm really excited by the Synlait opportunity. There are many, many unique and compelling advantages of this company. You know, we've talked about some of them today, but, you know, we've got deep nutritional knowledge and capability. Frankly, I don't know a company in the world that's got more nutritional knowledge than we have. We've got modern plants that can meet the very, very complex and stringent requirements in this area. Strong relationships with a number of cornerstone customers underpinning our growth ambitions. Very strong leadership under our new CEO, Grant, and his executive team.
We've got very high quality milk pools in both the North and the South Island. We're just implementing and, you know, very current and up-to-date operating systems. Yes, we've got some issues to bed those in. That is going to underpin a lot of what we do going forward. We have strong leadership in the sustainability space, which Paul's just alluded to. Look, we have a very committed and capable board. I believe we can really return Synlait to previous levels of profitability and perhaps go beyond that. Should you confirm my ongoing appointment to the board, I assure you that I will continue to bring passion and energy to the task. A high level of challenge and testing around the decisions that we make.
Within a framework of strong cooperation with management, with shareholders, with other directors. I will also be relentless in my focus on our people, our customers, and our company performance. Thank you for hearing me out, and I look forward to putting my name forward for this appointment again. Thank you.
All right. Thank you, Paul. I move that Paul be elected as a director to the company board. Are there any questions to this resolution? All right. With that being the case, I invite you to vote by marking your voting options, again on resolution 3, either on your printed or your electronic card. As we do that, I'm gonna ask Computershare to collect up, the in-room voting papers.
If you have those, there's a couple of people moving around the room to collect the papers now. And those of you who are online, we'll be closing off the voting shortly, so please finalize your voting. And once the boxes have gone around the room here, we'll officially bring voting to a close. All right. I think that's done. Look, thanks everybody for engaging, for voting, particularly those online and those who have made it to the meeting here. That does conclude the formalities of the meeting. And we'll bring the voting to a close online. And the results will be published tomorrow, where you won't see the results today, but they'll be published tomorrow. Watch out for those. And I thank you in advance for the support.
I'm sure the shareholders will support the directors who have come forward, which is the most important part of the day today. Now is an opportunity, before we close the meeting, for any final questions. Are there any other questions from the room under general business or online? All right. That being the case, everyone must be keen to move to afternoon tea. Look, I'd like to conclude by saying, firstly, acknowledging the very hard work of the team. As we talked about earlier, the company has needed a lot of work and attention in the last couple of years. That falls to staff. It falls to people who work in the business every day.
I'd like to acknowledge, not only Grant's leadership, over the last 12 months, but also the senior team who have been there for throughout this period. One person I would like to call out in particular is Rob Stowell.
When I went back in as CEO, Rob stepped up as the Chief Financial Officer for the business. He has worked relentlessly over that period. In fact, the work started immediately. I told him early in the morning that I was wanting him to stand into this role. "Get ready. We're gonna go and see the bank tomorrow." At 5:00 that evening, I said to him, "What did Deb say when you told her that you were in this role?" He said, "Oh, I haven't had time to tell her yet." That has been the approach that Rob has taken throughout. Thank you very much, Rob. I enjoyed working closely with you through that time we were working together.
It's been fantastic watching you build a relationship with Grant over time. Now, the next thank yous I would like to make are to the board during the time that I've been chairing, both working as the CEO back in the business, which is not always easy to go from sitting around the board table to sort of donkey deep in the business. Thank you for the support. The board have done a huge amount of additional work over the last 12 months. Lots of meetings, either together or on the phone. Lots of Zooms during the period that we all were locked down with COVID. There has never been a moment when there hasn't been a need to get together and talk about an issue or make a decision when everybody hasn't moved around their diaries to come together.
Thank you very much. The board really has worked as a great team. The final thing for me to do is to hand to Simon. I've been promising through the day that Simon's gonna come forward. I think it's appropriate that he has the last word as the incoming Chair. Simon, it's with great pleasure that I invite you. Not pleasure cause I wanna stand away from the role, but we'll enjoy the extra time. It's with great pleasure, Simon, that we bring you to lead the company and work with Grant and the team forward in the role of Chairman of this great company.
Thank you, John.
Please join with me in welcoming Simon.
It's actually quite a privilege for John to allow me to have the final word of the day. As usual for me, I won't focus on 1 final word. I just wanna focus on 2, and you'll see some themes here actually, cause my first final word of this meeting is thanks. Much like John, I really, really appreciate the work that our employees have actually gone through, in particular over this last calendar year. Without them, we wouldn't have been able to reshape this company that we have done in the last 12 months. The change, the effort, the appreciation for what we need to do, and the attitude to get on and get it done has been exemplary. I really want to make sure that they understand the appreciation from the board to all our employees.
My second thank you goes to the wider board. I do certainly appreciate your support for me and your endorsement for me as chair. My third thank you goes to Sam Knowles, who departs us at the end of today, and others have thanked him before, but I just want him to know in this setting that I have personally very much enjoyed his efforts and contribution to Synlait's story. Last, but certainly not least, my thank you goes to John Penno. John loves Synlait. His passion for Synlait is undeniable. The fact that we went through a rocky period, and he stepped up to the acting chief executive role from the board. He's a busy man. He's got a lot of other things going on in his life. That tells the story of just how passionate he is for this business.
To ensure a steady transition to a new Chief Executive with Grant, he stood into the Chair's role with shareholders' blessing. Again, he brought that passion and love for Synlait to that role. Without him, we wouldn't have been able to do half as much as I think we have achieved in the very short time that he's acted as the Chair. I wanted to make sure in this setting that we had a great opportunity to thank John Penno for his huge efforts over the last little while, and if we could just do that in the normal way. I said there would be two final words. My second final word I wish to leave you with is excitement. I really hope that you have got that flavor from us today.
It really has been a case over the first year of the 2-year recovery that the building blocks to a truly successful company have been put in place. It sets us up for an exciting future. I hope you have got that feeling. For instance, we have got a new strategy under a CEO. It is determined. The leadership team is largely in place to execute and support that strategy. Our balance sheet is stronger, giving us options in the future to how we can allocate capital to the best returns for our shareholders. We've invested significantly in an ERP system, which is live and sets a platform for our future growth. We are close, very close to the technical completion of our SAMR license. We've talked extensively about the potential of Customer S progressing to be a significant customer for us into the future.
I hope, as shareholders, you appreciate, as I do, that sense of excitement about what's coming next into our future. Those two words, thanks and excitement. If you've got those themes in your mind, then we have done our job today. Thank you.
All right. Not quite the final word. Yeah, you see I couldn't do it. That brings the meeting to a close. The final thanks goes to you as shareholders. We do acknowledge that we've needed your patience through the last period, and we hope that in the coming months and years you'll see the reward for that patience. We acknowledge that to be in the room, to be with us, after what has been a difficult period, has taken patience. Thank you for your ongoing support, and we hope that we earn the right to ongoing support from you and from others, heading forward. That ends the meeting. There is a cup of tea available.
Please take the opportunity to grab either the directors or the executive who are here and ask any more questions you would like to, well, in the next hour or so. Thank you very much for coming.