9 Red ...Tomorrow Green ..., page-20

Synlait typically experiences weak cash flows in H1 due to the milkproduction curve:

- Operating cashflow has reduced inHY19 to $31.5 million, down from$75.0 million in HY18, which was somewhat of an anomaly year
- Whilst down on HY18, HY19 operating cash flows remain strongrelative to previous half years
- The reduction in operating cash flows is primarily due to:
- Inventory balances of both finished goods and raw materials havebuilt on higher than expected production volumes, and to meet forecast IFC sales in H2 FY19
- Increase in overhead expenditure to support the business
- We anticipate strong operating cashflow generation in the secondhalf of the year due to the sell down of carry over inventory and increased canned infant formula sales

A2M have drained Synlait's cash flow big time due to the build up of IF production and inventory. Huge rubber band has been pulled which will be snapped by the time we hit A2M's FY19 results.