Operator: Thank you for standing by, and welcome to the Synlait Milk Full Year Results Call. [Operator Instructions] I'd now like to hand the conference over to Synlait Milk. Please go ahead.
Hannah Lynch: Good morning, everybody, and welcome to Synlait's Full Year Results Conference Call. [Operator Instructions] It's great to have so many of you on today's call and a real pleasure to introduce you formally to our new CEO, Richard Wyeth, who joined Synlait earlier this year in May. He's joined, of course, today on the call by our CFO, Andy Liu, who many of you will now know. Rich and Andy will speak today through to our investor presentation released this morning. And then we'll open the line for Q&A. [Operator Instructions] Richard, over to you.
Richard Wyeth: Thanks, Hannah. Good morning to you all. Thank you for joining us on Synlait's Full Year 2025 Results Call. To indulge some sporting analogy, FY '25 was a year of 2 halves with Synlait. We won the first half and celebrated a return to profitability. However, over the second half was challenging on a number of fronts and the impact of those will be cleared in today's presentation. Andy and I will go over those in detail throughout the presentation. But before that, we have some good news. If you please turn to Slide 2. We have entered into a binding conditional agreement to sell our North Island assets to our valued customer and global health care leader, Abbott. These consist primarily of our Pokeno factory and 2 Auckland sites in the blending and canning facility at Richard Pearse Drives and Jerry Green, which is the warehouse. The sale price of the transaction is USD 178 million, which equates to approximately NZD 307 million -- NZD 307 million. Abbott has confirmed it will onboard most of the people who work on these sites, which is a fantastic outcome for both our people and also for the local community. The targeted completion date for the transaction is 1 April 2026. And the sale will be subject to various conditions, including Synlait obtaining shareholder approval and Abbott receiving consent under the Overseas Investment Act 2005 and normal consents such as regulatory consents from the likes of MPI. We released the notice of meeting with detailed information on the sale to inform shareholders before they vote on the transaction at Synlait's Annual Meeting on 21 November 2025. And also note Bright Dairy, our major shareholder, has confirmed it will vote in favor of the transaction, so the requirement for shareholder approval will be achieved. This is a real step forward for Synlait. The proceeds of this sale will be used to pay down debt. It will mean that by the end of FY '26, we are largely debt-free with the exception of working capital facilities. In short, the sale will deliver a stronger, simpler and more secure Synlait. We will have greater space to focus on our South Island operations and the ability to carefully and strategically review our strategy for Dunsandel. Goal is to release an updated strategy at our half year results in March 2026. But in the meantime, we're certainly very excited, and this is an outstanding win for both Synlait and Abbott. Moving on to Slide 3. I've now been in the business for just over 4 months as CEO of Synlait. I was attracted to this role due to the company's strategic strengths. It has world-class assets and its foundations are strong. Dunsandel is located in the heart of Canterbury's dairy sector with good connectivity to global markets and the ability to produce goods at scale. The company also enjoys strong demand from our global customers. Having now spent a short amount of time in the business, I've identified 3 immediate needs that we need to focus on. First and foremost, we need to improve our operational stability at Dunsandel so we can consistently deliver for our customers. I'll talk to you more about that in a moment. Secondly, we need to reduce complexity to deliver a financial uplift. The North Island transactions will assist with that. And finally, there is a need to reset the high-performing culture within the business. Synlait's focus on great people who have been through a huge amount of challenges over the last few years. My observation coming into the business is that it's very much a culture of reactivity driven some of those challenges. I want to reset the business so we can really focus on proactive performance. To that end, our focus for FY '26 will be very much targeted on operational stability. To assist with that, we are recruiting and onboarding a new Canterbury-based Chief Operating Officer who will be responsible for delivering a raft of improvements in that area and also ensuring that we can deliver the North Island transaction by 1 April 2026. We're also embedding our values framework, the Synlait Spirit, in the short term to allow us to improve our culture. Moving on to that focus into Slide 4, you will see focus areas internally that have been done dubbed the Big 6 for '26. Top of that list is operational stability. That should come as no surprise to many of you. As we announced to the market in July, Synlait has had manufacturing challenges earlier this year. The impact of those is clear in today's result with one-off costs totaling $43.5 million. While the manufacturing challenges are largely behind us, operational stability must remain a core focus alongside quality, performance and customer satisfaction. And to focus who are focused on financial resilience, it was great to see the banking facility come through last week and include the North Island sale then strengthening our financial performance has largely complete. We now need to deliver on culture, operational stability and quality, and that will lead to strong overall financial performance. We'll move through now to Slide 5 to look at our results at a glance. We are reporting total group EBITDA of $50.7 million today, which is an increase of $54.8 million on FY '24. Our bottom line was a net loss after tax of $39.8 million, which is an improvement of 78% year-on-year. As mentioned, this reflects costs associated with challenges at Dunsandel. Adjusted bottom line is a net profit after tax of $0.8 million, which shows you Synlait's recovery was on track. Pleasingly, Synlait's debt level has decreased by 55% during FY '25. Of course, most of this was courtesy to last October's equity raise, but an uplift in our trading performance has added to that with net debt now down at $250.7 million. As mentioned, the proceeds from the North Island transaction will largely bear. Group revenue increased to a record $1.8 billion or 12%. Operating cash flow was up 451% to $165.5 million and gross profit increased to $105.3 million. I'm delighted to confirm that our final milk price for the 2024, 2025 season is a record $10.16 per kilo of milk solids. Add to that Synlait's incentive program, which averages out to $0.30 per kilo of milk solids and our secured milk premium of $0.20 per kilo of milk solids for our South Island farmers, and you could see that our Synlait suppliers will be very happy. However, our average milk price or payment to South Island farmers will sit $0.50 above the farm gate milk price. That should result, as I said, in some very good Christmas presence for many of our farming staff. I will now hand over to Andy Liu, our CFO, who will take you through some more detail on the financials.
Lei Liu: Thanks, Richard. Good morning, everyone. Let me take you a go through to Synlait's financial results for the year '25. This year's results shows a very strong improvement and a fresh sense of progress across our main business areas, even though we faced some manufacturing challenges at Dunsandel. Let me begin by outlining the key highlights on Slide 7. The Advanced Nutrition segments experienced robust customer demand and demonstrated strong growth in new product development. This success sales translated into a $21.1 million increase in underlying gross profit, underscoring the strength of our customer relations and our ability to innovate and bring new products to market. Our ingredients business achieved a notable turnaround from FY '24, recording a $26.6 million improvement. This was driven by effective foreign exchange management and a strategic shift to value over volume. Although stream return did not always favor our current product mix, our enhanced risk management approach proved beneficial. The Consumer and Foodservice segment achieved a $9.3 million increase in our gross margin. This was largely attributed to the outstanding performance of Dairyworks and ongoing growth in our UHT print portfolio in existing and new markets. We successfully reduced SG&A costs through disciplined cost control measures and a strong focus on eliminating wastage. Financing costs also reduced significantly, supported by better cash flow management and the recovery in trading performance. On to Slide 8. In FY '25, Synlait's total revenue increased 12% to $1.8 billion after a flat FY '24. Growth was broad-based. Advanced Nutrition up 8% on high volumes and a new Nutrabase powder successfully launched in Southeast Asia. Ingredients revenue increased by 7% on pricing and favorable foreign exchange. Our consumer base business unit reported a 12% revenue increase, with growth in export markets helping to offset ongoing pressures in the domestic market. Revenue and volume from Foodservice, driven by UHT cream, almost doubled compared to the prior year, with growth extending into Asia and the Pacific. Underlying gross profit increased to $142.5 million due to disciplined execution and strategic improvements company-wide. On Slide 9, you can see that our focus on operational efficiency and working capital management has resulted in a remarkable recovery in cash flows. Our operating cash flows increased by $213 million, reflecting improved trading performance and optimized working capital management. CapEx investment remains at a low level, a further 23% reduction compared with prior year with a focus on business continuity, growth initiatives and regulatory compliance as well as strategic digitalization, AI, cybersecurity to manage risk and opportunities. Net debt decreased by $300.9 million or 55% due to capital injection and improved cash flow performance. Financing costs contributed $48 million to net debt. That is a $7 million improvement on FY '24. These costs are expected to reduce further in FY '26 with the completion of our refinancing. Our balance sheet is much stronger, and we are targeting a net senior leverage ratio below 2.5x in FY '26. In summary, Synlait's FY '25 results reflect the company regaining its strength, simplifying its operations and establishing a platform for sustainable and profitable growth. The sale of North Island assets marks an improved turning point, significantly strengthening our balance sheet by reducing net debt, improving leverage ratios and restoring our creditworthiness. With a streamlined business model and a solid financial foundation, Synlait is well positioned to invest in strategic growth, pursue new opportunities and deliver sustainable value to our shareholders. Financially, Synlait is now equipped to support and execute a new future strategy with confidence and resilience. Thank you. I will hand you back to Richard now.
Richard Wyeth: Thanks, Andy. I'll now go through an update on each of our business units. If you turn to Slide 11, firstly, Advanced Nutrition. So for FY '24, we saw an overall uplift in volumes due to strong customer demand. Our achievements for that year include an expansion of our customer base. We also had a new record in lactoferrin sales volumes, which were up 12 metric tons. And we also had the successful launch of our Nutrabase powders, which has secured multiple customers in Southeast Asia. Our focus going forward for this financial year will include working with The a2 Milk Company to support growth in China, further expanding the Nutrabase range and looking to deepen relationships with our Ingredients customers so they're more aware of our Advanced Nutrition capability and exploring new sales channels and value-add products to uplift returns on lactoferrin. So that's Advanced Nutrition. Moving through to Slide 14 and the Ingredients business. For those who know the Synlait story, you will recall we strategically moved away from fresh milk processing at the North Island assets last year. This obviously impacted our ingredients overall volume, which decreased to 108,000 metric tonnes. However, offsetting that was improved premiums over the last 12 months, which was an outstanding achievement. And obviously, we had increased revenue due to strong ingredient pricing. We also saw progress in customer and market diversification with expansion into the Middle East. Looking ahead, our focus areas for ingredients will be further uplifting the premiums we achieved last year, continued expansion of our ingredients portfolio and amplifying market awareness of our high level of quality and consistency. Moving now to Slide 13. You will see an overview of our Foodservice business performance. This is for UHT cream, obviously, a very popular product, certainly in China. For FY '25, it saw us successfully launch our second-generation cream, which has further increased product stability in market. To deliver record volume last year of 8.4 million 1-liter bottles manufactured at our Dunsandel site, every single one of these was sold. We had demand remains exceptionally strong for this product in multiple global markets, and our focus will be to continue to grow that into next year. We're looking to grow margins, although that has been challenging. The real unlocker for our Foodservice business is to continue to drive volume. And it's really pleasing to see we've picked up a new distributor, which is sending product into Fiji, and we're working more broadly to increase that volume overall for that Foodservice business. Moving on to Slide 14, the Consumer business. FY '25 was another outstanding year the Dairyworks which drives our consumer business. I'd just like to acknowledge Tim, who is the CEO of that business, who was acting CEO of Synlait and also Aaron, who stepped into his shoes for a period of time. They've done an outstanding job once again for FY '25. The solid performance was driven by offshore markets with softer growth in New Zealand due to obviously cost-of-living pressures and increased milk prices. Overall gross profit for our consumer business was $39 million, up from $30.6 million in the prior year. And offshore Dairyworks saw a 53% growth in cheese export volumes with a lot of success across the Tasman. Dairyworks is now the fastest-growing cheese brand in Woolworths, Australia. The Alpine brand has also launched in foodservice then, and both Alpine and Dairyworks products ranges are now in Costco Australia. The focus for FY '26 is to continue delivering value in new product lines to domestic companies and further growing our export volumes. So a real standout for this year. Moving now to Slide 15, which is milk supply. As I mentioned earlier today, we have confirmed a record milk price, which is significantly up on the season's opening forecast. This should deliver some very happy farmers, which has been an important focus for Synlait across FY '25. Earlier in the year, our on-farm team did an excellent job of securing our milk supply for the current season after working to encourage farmers to withdraw their case and onboarding 11 new farms. This is helped by -- this was helped by additional secured milk premiums along with new guarantees around the milk price at advance rates. We will continue to focus on finding new ways to add value on farm. One of the focus areas will be improving our digital offering and continuing to support our on-farm through Whakapuawai program, which helps Riparian planting on farm. We will also look to launch our fixed milk price offering in FY '26. Now on to Slide 16. FY '26 presents a valuable reset for Synlait, as you well know. As we've already said, the sale of our North Island assets will strengthen Synlait's financial position considerably with the proceeds used to significantly reduce debt. Given the scale of the strategic reset, we will not provide further financial guidance for FY '26. Our focus is on executing the North Island sale and building a simpler and more focused Synlait in Canterbury. We are committed to making the most of this opportunity and aim to have an updated strategic plan in place by March 2026. So moving through to Slide 17, key takeaways from today. As was noted, the sale of our North Island assets will see Synlait become a stronger, simpler and more secure business. Financially, we will deliver a full and final balance sheet reset ending the company's survival phase. And strategically, it simplifies our focus and opens the door for us to explore new opportunities here at Dunsandel. Andy and I will now take questions.
Hannah Lynch: [Operator Instructions] Your first question comes from Sean Xu with CLSA.
Sean Xu: My first one is around your manufacturing challenge in your Dunsandel facility. It seems to be a reocurring issue now. I'm just very interested though in what specific processing improvement can be prioritized in FY '26 to prevent these kind of operational disruption going forward?
Richard Wyeth: Sorry, I just didn't quite hear the second part of the question.
Hannah Lynch: Prioritize this in FY '26 to prevent this happening going forward.
Richard Wyeth: Yes. So I appreciate there has been a number of manufacturing challenges for a period of time and certainly coming in and being relatively new to the business is a focus for me. So as I mentioned, for our Big 6 for '26, that focus on operational stability is key. What I can say is that there are a number of one-off issues, and we just need to work through those systematically root cause analysis and fix those issues. I'm now comfortable with we're largely through that. But as I say, the next 6 months is very important for us.
Sean Xu: My second question is around the a2, the China label digital production. My understanding is that requires a new -- registration renewal in calendar year 2027. I know that might be early stage, but as I remember, the last time registration with SAMR takes a long time. I'm just curious to know if you can give us some indication on the time line of when to start prep for this process.
Richard Wyeth: Yes. So we've already started that process. You're quite right, FY '27 is key. And so we've been working on that already for a fairly long period of time. There's a bit of capital required going forward, and we're working with both a2 and SAMR quite closely to make sure we're ready for that.
Sean Xu: If I may just quick check in a very quick question. Last one. With Bright being your largest shareholder, I'm just curious to know, is there any further collaboration you can leverage their connection distribution channel in China to expand your market there?
Richard Wyeth: Yes. I mean, Bright are obviously a very supportive shareholder of us, and we are working with them. And I think there's good opportunities. I mean, we've got a very strong working relationship with Bright. So I think as part of our strategy reset, we will certainly be looking at what opportunities we have to work with Bright.
Hannah Lynch: Your next question comes from Stephen Ridgewell with Craigs Investment Partners.
Stephen Ridgewell: And first of all, congratulations on the sale of Pokeno. I know that's a big win for shareholders. With that the equity raise a year ago, 2 of the big 3 challenges that have been facing Synlait have been overcome. So well done on progress. My first question is on the use of proceeds from the North Island asset sales, and it could be either for management or potentially for the Chair. If you use the proceeds, $30 million of proceeds to pay back debt, Synlait could be in a position where it's got $74 million thereabouts of debt on the balance sheet. But the comments today also talk to the proceeds providing an opportunity to -- an opportunity to strategically diversify. And I realize it's an early stage, but I'm just interested in the sort of early thoughts the company has on the extent to which those proceeds will be used to pay down debt and the extent to which Synlait thinks it's got capacity to make acquisitions or other growth investments that may be more organic? And then related question is post the sale proceeds, will the company end up operating a lower net debt-to-EBITDA ratio than the 2.5x kind of flagged today?
Richard Wyeth: Yes. Thanks. I'll take probably the first part and Andy may chip in on that. So certainly, initially, we'd look to obviously pay down as much debt as sensible. In terms of the longer term, that will be clearer through the strategic review that we can update in March. And just, I guess, my final comment, a personal perspective, which I'll share with the Board is that, I mean, I'd like to see our debt-to-debt equity ratio sitting at about 20% to 25%. I think that's prudent. We're seeing that as a good balance. When it gets to 45%, 50%, it doesn't really work. So that would be my intention going forward. Andy, if you want to add anything further?
Lei Liu: No. I said actually that for our refinancing, we just finished it last Friday. That's why we still think it too early stages just to talk about regarding when we get the funds what we will do. But as Richard already mentioned, yes, principally definitely to just reduce our debt in order to just to keep it at a very reasonable levels and also seeking further opportunities. So this is the key point. And Stephen, just to try to make sure what's your second question regarding the debt-to-EBITDA level?
Stephen Ridgewell: Yes. Just whether the company would look to operate at a lower net debt-to-EBITDA ratio, lower than 2.5x going forward, in particular, if we kind of look through a2 Milk's English label volumes migrating to the Pokeno site in the next year or 2?
Lei Liu: Yes. Let's say that for the moment, we still think the 2.5x is still a reasonable one. That's why we don't think that we will change it for the moment.
Stephen Ridgewell: Okay. Yes, look, if you keep it at 2.5x, it does suggest potentially quite a lot of firepower for acquisitions. But as you say, maybe we need to wait a bit longer to see where we land there. Yes. And then, I guess, as well, just on the -- in terms of the impact of the asset sales, we can see the proceeds of $307 million coming through, which is great. But can you give us -- can you hear me?
Lei Liu: Yes.
Hannah Lynch: Yes.
Stephen Ridgewell: Yes, great. Can you just give us a sense of the kind of the EBITDA being generated from those assets in the -- I feel like on a normalized basis in the year just gone. My understanding was Pokeno was kind of burning $35 million a year at the EBITDA level. But just can you to give a rough steer as to the EBITDA loss that those assets generated in the year just gone?
Lei Liu: Yes. So I can quickly jump to this question. So based on our FY '25 numbers that they said, once we get rid of the North Island, we are thinking about $5 million to $10 million kind of the EBITDA to be improved because definitely FY '25 that -- the plant is more filled, have more demand. That's why the level is not as high as what we said before. So $5 million to $10 million EBITDA impact.
Stephen Ridgewell: Okay. No, that's helpful. And then just one last one for me. Just on the impact of a2 Milk's planned migration of English label volume from Dunsandel to its soon to be acquired Pokeno plant. Can you give us a rough estimate of the EBITDA impact that Synlait is kind of planning for? Is it reasonable simply to take the gross margin per tonne by the volume? Or are there other things to consider, for example, is there cost out the company connection or other factors such as the diseconomies of scale at lower production volumes in formula? Because I think that is obviously a key issue as the market kind of looks into the FY '27 and beyond time period. I mean some thoughts on that would be quite helpful. How you -- what the impact is and then the mitigation factors, the ways that you can mitigate that impact?
Lei Liu: Yes. So Stephen, sorry, that's because these kind of numbers can be really very commercial sensitivity. So yes, I can't answer that very directly.
Stephen Ridgewell: Okay. Well, I guess just as an opportunity to make some comments. I guess, as analysts, we have to take a view on their own numbers.
Lei Liu: Maybe let me take it offline and just think about which kind of information we can provide.
Operator: Your next question comes from Adrian Allbon with Jarden.
Adrian Allbon: Maybe just a follow-on from Stephen's question. 4 months since the drill, Richard, what sort of cost opportunity do you kind of see in the Dunsandel asset going forward, both initially and as you sort of deal with the transition of acreage and recycle volumes?
Richard Wyeth: Sorry, Adrian, it's just a bit hard to hear. Can you have another go at that, please?
Adrian Allbon: Sure. Is that better?
Richard Wyeth: Yes, it's a little bit better.
Adrian Allbon: I was just -- as a follow-on to Stephen's question, I was just wondering what the cost out opportunity -- is it better?
Richard Wyeth: Yes, that's great.
Adrian Allbon: Yes. Just as a follow-on to Stephen's question, I was just wondering what the opportunity you see for cost out at Dunsandel actually is.
Richard Wyeth: Yes. Look, I think, as I say, when we reset the business with a focus just on Dunsandel, there will be some opportunity in that, again, too early to get into the specifics, unfortunately, but certainly, we'll be able to provide more of an update at the March announcement.
Adrian Allbon: Okay. Would it be useful as a starting point for us to kind of look to sort of FY '18 as a sort of -- as some sort of benchmark?
Richard Wyeth: Andy, I don't know whether you want to comment on that. I haven't got the FY '18 numbers in my head at the moment.
Lei Liu: Yes. So Andrew, that's regarding FY '18, it's really long time ago. So what I can propose is that let me work out some numbers and try to provide you some, let's say, some reasonable figures. For example, based on FY '25, we said we are saving about $10 million, just -- we're still including the North Island. That's why we think about definitely the number should be higher than $10 million. But let me just work out some numbers, come back to you regarding how you can simulate it.
Richard Wyeth: Yes. What I can say in terms of -- I'm not sure what you to look back, but what I do know, given I've only been in the business a short time is what happened sort of even 2 or 3, 4 years ago in terms of throughput on the dryers at Dunsandel is that we won't get as much throughput. So as we're focused on higher quality, it means we have to derate the dryers somewhat. Now in terms of the specifics, I haven't got those in front of me today, but it does mean we can't just go look at the past as a precursor to the future necessarily because the standards have improved and China's requirements continue to improve. And all of those things mean we have to -- it does take some capacity out, not a lot, but it does take some capacity out of the dryers.
Adrian Allbon: Okay. Just related to that, can you kind of give us a steer on what your sort of milk pool or what your contracted milk pool is for next year.
Richard Wyeth: Circa 70.
Adrian Allbon: Okay. And then I guess like in a broad question, are you expecting -- are you actually expecting EBITDA to be higher this year? And I'm presuming that the net debt is probably going to go higher as well because you've got all these premium payments to farmers coming up shortly.
Richard Wyeth: Andy?
Lei Liu: So let's say, for this year compared with FY '25, yes, you are right that we will pay some additional incentive to the farmers. It can be some challenge for the EBITDA. But as I said, regarding the FY '26 that we are more focused on selling the North Island, we will try our best, firstly, to focus on production stabilities and that's why -- that we didn't share any kind of our targets for the moment.
Adrian Allbon: Just if you assume that the North Island business was in the numbers, which is probably what most of us are going to have to do, would you expect the net debt to be higher this year, like given your farmer incentive payments are due?
Lei Liu: I should say about the similar level than this year because, yes, farmers payment, but also do remember, we have the EBITDA to generate the cash. So that's why we still think the net debt should be, let's say, a bit better than this year theoretically.
Operator: Your next question comes from Matt Montgomery with Forsyth Barr.
Matt Montgomerie: Maybe just start on manufacturing issues, Richard. I suspect it's unlikely you'll provide detail on what they were. But there's sort of a footnote around them being largely resolved. It'd be interesting if you could just maybe talk to that, what largely means, what you need to see to get them resolved? And yes, just any further color, I guess, to give us confidence that they have been isolated to the period that you've outlined previously?
Richard Wyeth: Yes. Thanks, Matt. Good question. That was my fault. Look, I said that to Hannah, look, the nature of these businesses is that they're very complex, right, making Advanced Nutrition, for example, you've got ingredients from 10 to 40 different ingredients. You've got complex processing. So I'm relatively conservative by nature. So I said largely because while the issues we had from January to July are largely behind us. To say they've gone forever is you just can't do that. And look, in terms of the nature of those things, they are a combination. We've got people, process systems, engineering, there's a whole raft of things that can go wrong. A rotary valve can be put in some -- it might be an ingredient issue or supplied incorrectly. So there's so many things that can go wrong in making this advanced nutrition. So the issues we've had in the first half of the calendar year are largely behind us, but that's why I'm tuning up the focus on operational stability going forward. So I am very comfortable with the issues we had in the first half of the year. We have largely dealt with all of those, but you just never know what can be around the corner. So the way you deal with that in a processing operation like we are is you have very good systems, processes and you have well-trained people. So that is the area that I'm focused on at the moment.
Matt Montgomerie: Awesome. That's very clear. Just on Dairyworks, I think EBITDA of around 23. Clearly, it's been a good business over the last 5, 6 years since you've owned it. And I think from memory at the time, I think the target was around 20 of EBITDA. So maybe just from you, Richard, how you think about that business going forward, maybe anything where you see it, say, 3 to 5 years from an earnings point of view?
Richard Wyeth: Yes. Thanks, Matt. Andy might be able to put some numbers around it. In a general comment, I'd say I think it's got massive opportunity. I think the team there are fantastic. Tim and his leadership team have done a great job. So I think there's a real opportunity. The thing about that business is that we can just continue to scale it up. There's no sort of restrictions on growth. And I think that's what's exciting. They can procure product, they can add value to it, and they can just put it into different markets. They've got good market share in New Zealand. They're now targeting Australia, and I'd like to get to look even beyond that. So that's sort of my general comment in terms of the numbers around that. Andy, I don't know if you've got any more flavor to add to that.
Lei Liu: Yes. So let's say, for FY '25, our revenue for the Dairyworks is about 12% increase, but gross profit is about $28 million. So it really shows that other than the volume growth, it's also internally, let's say, from the focusing always the strength for the efficiencies, productivity, also supported these numbers. That's why we still said this is a very good business that's in a good trend and also expected to have further growth.
Matt Montgomerie: I might go one more, just a small one, Andy, the depreciation associated with the North Island assets, like what's the EBIT drag?
Lei Liu: Sorry, can you repeat your question? What do you mean the EBIT drag?
Matt Montgomerie: So just following up from Stephen's question, what's the D&A sitting over the North Island assets in FY '25?
Lei Liu: It's around about $1 million per month.
Operator: Your next question comes from Nick Mar with Macquarie.
Nick Mar: Could you just talk through the net debt number? I think the trading update right at the end of your financial year, you were sort of guiding towards $300 million and you came in at $250 million. How did that change so much?
Lei Liu: Yes, sure that I can just take this question. So what changes is mostly because of we have the higher customer demand and the customer demand also triggers some additional deposits. So this is how it comps regarding one of the reasons. Another reason is that, as you know, that Nick, we also have the receivable assignment. So end of the month, there is some kind of additional kind of deliveries, which we get the receivable assignment earlier. That's why this is mostly the 2 kind of the main drivers for the $50 million just reduced.
Nick Mar: Yes. That's good. And in terms of what you're selling with the North Island divestment, sort of you mentioned the kind of lease warehouse as well. Does that sort of line up to what the North Island CGU was when it was impaired at the end of FY '24? Just trying to work out the price relative to the holding value? And also, do you have any sort of breakdown of the value by sort of PP&E versus working net working capital?
Lei Liu: Yes. So to answer your question, yes, it's roughly the same regarding our CGU for North Island last year when we shared the numbers. So what I can propose you is that you can take the last year annual report numbers. And yes, this is kind of be the baseline regarding the CGU in the net asset value for the moment.
Nick Mar: Yes. And the sort of mix between the PP&E and net working capital?
Lei Liu: So working capital one, because here, what we said is regarding the total $178 million, it's $170 million for the PPE and $80 million for the working capital, let's say, just inventory.
Operator: There are no further questions at this time. I'll now hand back to Mr. Richard Wyeth for closing remarks.
Richard Wyeth: Thanks, everyone, for joining the call today. I look forward to meeting with many of you over the coming days. And in the meantime, if you've got any questions, you can just follow those up with Hannah. And that concludes our call for today.
Operator: Thank you. That concludes the conference for today. Thank you for participating. You may now disconnect.