Sanford Limited – Annual Result Announcement
15 November 2017
Name of Listed Issuer: SANFORD LIMITED (SAN)
FINANCIAL RESULTS for the year ended 30 September 2017
Sanford Reports 8% Improvement in Net Profit
Highlights
1. Financials
• Improved Net Profit After Tax of 8% to $37.5m from $34.7m in 2016. Sustained
adjusted EBIT* of $63.7m from $63.4m.
• Net operating cash flows improved by 46% to $50.3m from $34.4m in 2016 on
higher revenues and improved collection timeframes.
2. Sales
• Increased revenue of 3% to $477.9m from $463.5m in the previous year while
volume of greenweight tonne sold was flat year on year, highlighting improved
value extraction.
• Stronger pricing achieved for king salmon from our Stewart Island based farm,
driven by focused channel strategy, introduction of the Big Glory Bay brand and
attention on quality.
• Prices for premium value species such as toothfish, scampi, snapper and orange
roughy strengthened.
• Strong focus on high-end foodservice customer base led to increasing sales into
the domestic market.
3. Innovation
• Acquisition of Blenheim, New Zealand, based mussel powder business Enzaq in
July 2017, giving the Group a platform to launch a high value nutraceutical
business.
• Sanford’s SPAT
NZ
hatchery in Nelson, winner of New Zealand Innovation Award
for Innovation in Agribusiness and Environment 2017, is progressing as planned
with successful hatchery breeding of New Zealand Greenshell
TM
mussel spat at
faster and more consistent growth rate than wild harvested spat.
• Improved utilisation of fish by-product (e.g. skins, swim bladders) and continuing
trials on the new fishing method Precision Seafood Harvesting are progressing
well.
4. Branding
• Launch of the Big Glory Bay brand for Stewart Island king salmon and
Greenshell
TM
mussels into several high-end New Zealand restaurants supported
by a social media awareness campaign.
5. Supply chain
• Kaikoura earthquake (November 2016) led to a two week closure of Sanford’s
Havelock mussel processing plant, but impact on customer deliveries was
successfully avoided through effective supply chain management.
• Prolonged commissioning of the new deepwater vessel San Granit and a
concentration of vessel surveys created shortfalls in fishing capacity.
• The West Coast fishing season for hoki started later than expected, was
inconsistent and finished earlier than planned, resulting in reduced hoki catches.
6. Strategy and capacity building
• The appointment of a new Chief People Officer with focus on culture and
capability, taking responsibility for health and safety and driving cultural change
and remuneration strategy to assist Sanford in becoming an employer of choice.
• Continuing focus on operational efficiency improvements, while adding capacity in
business development, corporate communication, IT and innovation.
7. Sustainability
• Continuing focus on ensuring a sustainable future for our business through active
engagement in the communities we work in and through developing measures to
mitigate Maui dolphin captures by the fishing industry, advancing thinking on
industry’s obligation to safeguard our marine environment for future generations
and taking action on evolving challenges like climate change and plastic pollution
of the oceans.
Summary
We are satisfied with the progress we are making at Sanford in continuing to implement our
strategy of enhancing the value of New Zealand’s beautiful seafood. After a very gratifying
result in 2016 and despite delays in the bedding down of San Granit, we have increased the
level of Profit After Tax by 8% to $37.5m for 2017 (2016: $34.7m) at constant volume.
Adjusted earnings before interest and tax (EBIT) is $63.7m for the 2017 year (2016: $63.4m),
this is before impairments, one-off restructuring and other one-off costs of $3.0m, which is
lower than the one-off adjustments in 2016 ($5.6m). This EBIT performance was maintained
relative to sales growth of 3%.
Progress towards our goal of an EBIT of $1/kg of seafood we catch or harvest is a function of
differentiating our product portfolio through branding and innovation and the degree of
commodity product remaining in our portfolio. The challenge to change this balance towards
differentiation is an exciting one. Sanford stands to benefit from a greater focus on
innovation and branding and from growing middle classes in Asia and ageing populations in
developed countries which point to more seafood consumption per capita.
2017 offered up several challenges including the Kaikoura earthquake and the Bonamia
ostreae outbreak in Stewart Island which were opportunities to demonstrate the resilience of
the Group and the successful operation of relatively new business functions such as supply
chain management. The advantage of Sanford’s diverse product portfolio and our
geographically spread business is highlighted at these times.
The focus on value creation and innovation will continue, as we build on the platform we now
have in the nutraceutical market via the acquisition of Enzaq and the technical expertise in
Greenshell mussel breeding from our SPAT
NZ
hatchery and continue to achieve better prices
for our premium wildcatch and aquaculture products through a focus on quality and branding.
SANFORD LIMITED
Audited results for announcement to the market
Reporting Period 12 months to 30 September 2017
Previous Reporting Period 12 months to 30 September 2016
Amount Percentage change
Revenue from ordinary activities**
$NZ 477.9m 3.1%
Profit (loss) from ordinary activities after tax
attributable to security holder**
$NZ 37.5m 7.9%
Net profit (loss) attributable to security holders **
$NZ 37.5m 7.9%
Final Dividend Amount per security Imputed amount per security
14 cents per share 5.44 cents per share
Record Date 30 November 2017
Dividend Payment Date 8 December 2017
*As this is a Non-GAAP measure, see page 112 of the Annual Report for a GAAP to Non-GAAP
reconciliation.
**Includes both the continuing and discontinued businesses.
P G Norling V Kuntzsch
Chairman Chief Executive Officer
---
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30 November, 20178 December, 2017
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SANFORD LIMITED
DEAN McINTOSHDIRECTORS' RESOLUTION
---
ANNUAL RE PORT
2017
AND
THE POWER OF
NOW
AND
BEYOND
PHOTO COURTESY OF JOHN BENNETT, SANFORD SKIPPER. CHARLIZE (CHARLI) SUSAN BENNETT-SHIELDS
(JOHN’S GRANDAUGHTER), AGE 6, A PASSIONATE THIRD GENERATION RECREATIONAL FISHER
New Zealand has a strong connection with the ocean.
The seas around our islands provide us with riches, as
recreational fisher, tourist or commercial fisherman.
We often take these for granted, not realising that this
immense buffer between us and the rest of the world
contains a truly unique diversity of marine life and so
many more opportunities yet to be discovered.
We, as New Zealanders, want our grandchildren to enjoy
the same affinity and value for the sea. It is our obligation
to ensure that. At Sanford we believe that we can make a
difference now AND into the future. We have embarked
on this journey with care, passion and integrity.
We need to move beyond blaming the past for where
we are and take responsibility to do the right thing now.
We continue creating sustainable wealth by being even
more innovative with our natural resources, in how we
work with our customers and in the way we work together.
We are ready to shape the future of this beautiful
environment with all the support we can get.
The path ahead is challenging, but ultimately rewarding.
Become part of our exciting ambition!
Volker Kuntzsch
CEO, SANFORD LIMITED
LEADING THE WAY
TO HEALTHY FOOD
P. 60
Food safety
and quality
P. 62
Drive value
through brand
creation
P. 65
Supply chain
Welcome to Sanford’s
2017 Annual Report –
THE POWER OF AND.
Here we report on progress
towards delivering on our
vision – to be the Best Seafood
Company in the World,
our journey
AND our 2025
aspirations to deliver on
that vision.
Sanford is committed to profit
AND sustainability, returns AND
reductions, shareholders
AND
representatives of future
generations. We are constantly
looking for ways of working
with our stakeholders to
create enduring value, while
continuing our journey to
deliver on our vision.
THE POWER OF AND is the
notion that with careful planning,
commercial growth and
sustainable decision-making are
not mutually exclusive. This year,
you will see within the Report a
deepened commitment to our
relationship with stakeholders,
our understanding and reporting
of material issues, and a clear
focus on how we have performed,
and our plans for the future.
Full and transparent reporting
lifts our performance and with
the best available international
frameworks, we strive to set a
high standard both across and
beyond Sanford.
This Report is our authentic
report to you, our stakeholders,
on how we are delivering on our
vision, what we have achieved
this year,
AND our plans for the
future. We always strive to do
what’s right, but sometimes we
need to do better still.
Our intention is that this Report
shows
THE POWER OF AND; how
this drives our decision-making in
a balanced and considered way, to
deliver outcomes that ensure we
will continue to add value now
AND into the future.
—
ABOUT THIS
REPORT
—
Sanford & Our Operations04
Reporting What Matters16
Reporting Outcomes & Material Issues26
Corporate Governance104
Financial Statements113
Appendices157
Achieving
Sustainability:
Our Performance
Outcomes
02Sanford Annual Report 2017
PROTECTING AND ENHANCING THE ENVIRONMENTENSURING HEALTHY OCEANS
ENABLING ZERO
HARM AND GREAT
PROSPECTS FOR
OUR PEOPLE
P. 99
Environmental
effects
P. 100
Resource
utilisation
and efficiency
P. 101
Carbon
reduction and
offsetting
SUPPORTING ENDURING COMMUNITIES AND PARTNERSHIPS
P. 46
Health, safety
and wellbeing
P. 49
Developing
our people
P. 53
Strengthening
our workplace
culture
P. 74
Sustainable
fish stocks and
marine farms
P. 77
Marine
conservation
P. 79
Endangered,
threatened
and protected
species
P. 30
Shareholder
value and risk
P. 35
Governance and
communication
P. 37
Innovation and
technology
P. 87
Engagement and
employment
P. 90
Strategic
partnerships and
collaboration
BUILDING A SUSTAINABLE SEAFOOD BUSINESS
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COMMUNITIES
AND PARTNERSHIPS
03
This Report is our value creation story. It
presents our strategy and business model
for the year ended 30 September 2017, how
we performed, the value we created and
our plans for the future. The Report focuses
on what matters most to our stakeholders
and our business, namely the material
issues, in the short, medium and long term.
To provide a business context, we start by
outlining our global presence – the many
places where we operate. We then set out
our business model, illustrating the
processes by which we create value.
The Chairman and CEO Review, ‘Delivering
on our vision’ highlights our performance in
2017, our challenges and our future focus,
on pages 10-13. In Reporting what matters,
on pages 16-21, we set the scene for the
diverse range of stakeholders we touch and
how we engage on what matters most to
them, as identified through our enhanced
materiality and enterprise risk processes.
Our strategy to deliver value to our
stakeholders is based on four business
focus areas: Value, Brand, Quality and
Innovation. This year, we have continued
to use these focus areas to inform our
Business Excellence Framework, which
is made up of six outcomes. These are
the basis of our Sustainability Policy
(www.sanford.co.nz/sustainability), and
the six performance chapters presented
in this Report:
• Sustainable seafood business
• Our people
• Healthy food
• Healthy oceans
• Communities and partnerships
• Protecting the environment
Each of these chapters starts with the
global context, showing how we contribute
towards achieving the United Nations
Sustainable Development Goals (SDGs).
The related material issues AND value
creation are then presented, focusing on
what matters most to our stakeholders and
the business over the short, medium and
long term, alongside progress against our
2017 targets. Case studies and
achievements bring our reported data to
life, describing our challenges and
achievements. Each chapter concludes with
a ‘Future Focus’ setting out our targets for
2018 and beyond, moving us towards our
2025 aspirations and ultimately our vision.
Our key performance indicators are
documented from page 158, and our
financial statements from page 113.
OUR BUSINESS EXCELLENCE
FRAMEWORK
Our Business Excellence Framework
enables us to take a holistic and longer term
view that will position us to deliver on our
vision to become the Best Seafood
Company in the World. It provides a
structured and considered approach to
enable integrated value creation across
our business.
The strength of this approach lies in its
ability to align our operational processes
with our long term vision. The framework
enables each part of our business to
roadmap the process and outcomes to
achieve our vision, by setting measurable
targets towards achieving each goal in
each performance outcome area, as this
Report demonstrates.
Building a sustainable
seafood business
We will deliver sustainable, profitable and
socially beneficial outcomes through our
sector leadership and role in creating a
more innovative and sustainable business
and effective risk management strategies.
Enabling zero harm and great
prospects for our people
We will maximise the prospects of our
people by making ‘Zero Harm’ a key priority,
offering meaningful opportunities for
continual learning and development, and
living our values to ensure we become an
employer of choice.
Leading the way
to healthy food
We will lead the way in driving sustainable
performance across our value chain, and
positioning our brand as the industry partner
and supplier of choice.
Ensuring healthy oceans
We will lead by example in healthy ocean
management, so that future generations
can enjoy and benefit from our biologically
diverse, safe, healthy and dynamic oceans.
Supporting enduring
communities and partnerships
Our leadership in creating employment
and skills opportunities, coupled with
our understanding of the needs of our
communities and partners, ensure we
deliver a significant and positive
contribution everywhere we work.
Protecting and enhancing
the environment
We will work with our people, customers
and suppliers to lead the way in maximising
resource utilisation, minimising our footprint
and protecting the environment wherever
we operate.
—
REPORT
STRUCTURE
—
ANNUAL RE PORT
2017
AND
THE POWER OF
04Sanford Annual Report 2017
INTRODUCTION
UNITED NATIONS SUSTAINABLE
DEVELOPMENT GOALS (SDGS)
Last year we identified the eight SDGs to
which we can contribute the most, and on
which we have the most impact, and aligned
these with the six performance outcomes
of our Business Excellence Framework.
VALUE CREATION: THE SIX CAPITALS
This year we continued to explore in more
detail the value we derive from the six
capitals, as set out in our Business Model
‘How we create value’. Value creation in any
one performance outcome, as set out in our
Business Excellence Framework, will
typically create value across more than one
of the six capitals. As this Report goes on
to show, Sanford has increased its financial,
manufactured and intellectual capital over
the last year, with increased revenue, the
acquisition of a new business, upgraded
vessels, investment in aquaculture and
land-based technologies and considerable
innovation. In the process, we have built our
social and relationship capital as we build
our communications and work more closely
with our stakeholders and the communities
where we operate. We have also seen a
significant gain on our invaluable human
capital – the individual people who make
Sanford what it is, both through the
introduction of new talent and ongoing
development of our people. Finally, we aim
to make sure that everything we achieve
will make a contribution to growing the
natural capital that supports our business,
as well as many others, for the long haul.
REPORTING FRAMEWORKS
This Report has been developed in
accordance with the International
Integrated Reporting Council (IIRC)
Integrated Reporting <IR> Framework.
The new Global Reporting Initiative (GRI)
Standard 2016 was applied to a core level
of compliance, providing a picture of how
we have created value. The GRI index is
provided in Appendix E. For the first time
we have been informed by the AA1000
Stakeholder Engagement Standard
(AA1000SES) 2015, which has supported
us in our commitment to deepen
relationships with stakeholders.
Unless otherwise indicated, the Report covers
performance from all operations, including
North Island Mussels Ltd and Weihai Dong
Won Food Company, operations in which
Sanford has a 50% interest.
Any changes or restatements of previously
reported figures are identified throughout
the Report. Unless otherwise stated, financial
data is presented in New Zealand dollars.
At the request of the Chief Executive
Officer and the Board, we engaged KPMG
to provide independent assurance of this
Report. For details of the combined
independent auditor’s and assurance
report, covering statutory financial and
selected non-financial information, refer
to page 151. Our Report is also available
online at www.sanford.co.nz/investors.
We encourage you to provide us with
feedback about how we can improve
this Report to further meet your needs;
and you can contact our GM Sustainability
at: sustainability@sanford.co.nz.
This Report was authored and produced by
Sanford’s management team and has been
reviewed by our executive team. The final
Report has been signed off by Volker
Kuntzsch, our Chief Executive Officer
and the Board, as a true and accurate
picture of our value creation during
the year.
The Directors are pleased to present
the integrated Annual Report of
Sanford Limited for the year ended
30 September 2017.
For and on behalf of the Board of Directors:
P G Norling
CHAIRMAN
15 November 2017
E M Coutts
DIRECTOR
15 November 2017
1. GRI and UN Global Compact 2017, Business Reporting on
the SDGs – An Analysis of the Goals and Targets.
In 2017, Sanford has taken a step forward
in deepening our understanding of
opportunities the SDG framework
provides to create value for Sanford
and our stakeholders, whilst contributing
towards achieving these global goals.
We completed an impact review of our
value chain and used this to assess the
completeness of our material issues and
strategies identified. In reviewing the SDGs
with reference to international guidance
1
,
we have identified some areas of stretch
that we have incorporated into the ‘Future
Focus’ for each performance outcome,
as reported here. This provides a sense of
our future direction, including how we will
deliver on outcomes that will bring us closer
to our vision to become the Best Seafood
Company in the World.
05
1
SANFORD & OUR OPERATIONS
Indian Ocean
South Pacific
North Atlantic
South Atlantic
Tropic of Capricorn
Equator
Tropic of Cancer
Arctic Ocean
SINCE
1881
¹
– A GLOBAL PRESENCE –
North Pacific
NORTH AMERICA*
17.8
%
2016: 15.1%
EUROPE*
9.5
%
2016: 11.4%
AFRICA*
2.8
%
2016: 2.7%
2
Steeped in history dating back to 1881,
Sanford is proud of its roots and the growth
achieved in its more than 130 years as a
seafood company delivering a diverse range
of quality products to our discerning
customers nationally and globally. Sanford’s
vision is to be the “Best Seafood Company
in the World”; a vision supported by its
dedicated team of 1,717 staff, all of whom
share the company’s core values of Care,
Passion and Integrity.
Sanford’s 23% ownership of New Zealand’s
quota, 211 aquaculture farms and 49 vessels
positions the company as New Zealand’s
largest integrated fishing and aquaculture
business.
The company’s geographical operational
spread spans New Zealand from Stewart
Island to Auckland, with our international
operations including Melbourne, Australia
and Weihai, China.
In 2017, Sanford shipped 3,498 containers
of its products globally, reaching every
continent in the world.
06Sanford Annual Report 2017
OUR GLOBAL OPERATIONS
ProcessingAquacultureFishingFish Market
Processing
Joint Arrangements
Aquaculture
Joint Arrangements
Head OfficeFishing area
Top 50 Export
Countries
*
Percentage of continuing operations revenue from top nine geographical
locations at point of sale
KEY
Auckland
Nelson
Havelock
Timaru
Bluff
Waitaki
Kaitangata
Stewart Island
NEW ZEALAND*
Coromandel
Tauranga
Blenheim
35.4
%
Southern Ocean
Melbourne
AUSTRALIA
(INCL PACIFIC
ISLANDS)
*
14.4
%
1,717
SOUTH KOREA*
JAPAN*
Weihai Dong Won
Food Company
2.6
%
3.8
%
2016: 2.4%
2016: 3.5%
2016: 33.7%
2016: 15.0%
CHINA (INCL
HONG KONG)*
9.4
%
2016: 10.4%
STAFF SERVING
THOUSANDS OF
PEOPLE AROUND THE
WORLD EVERY DAY.
SOUTH ASIA*
2.7
%
2016: 3.6%
2
1 Date of acquisition of first Sanford business
premises on Federal Street; Sanford was
formed into a limited liability company in
1904.
2 The 2016 figures are restated due to
recalculating the geographic split.
07
1
SANFORD & OUR OPERATIONS
SOCIAL & RELATIONSHIP CAPITAL
NATURAL CAPITAL
INTELLECTUAL CAPITAL
MANUFACTURED CAPITAL
HUMAN CAPITAL
FINANCIAL CAPITAL
Pool of necessary funds (equity, debt and grants)
provided by banks, shareholders and bond holders,
or generated through operations or investments
Competencies, capabilities and experience of our
employees, our key asset, and the capacity to add
value through human capital development
Tangible, production-orientated goods and
infrastructure owned, leased or controlled by
Sanford that contributes to the delivery of our
products and services
Stock of natural resources or environmental assets
(water, atmosphere, land, materials, biodiversity
and ecosystem health) that are fundamental to
our future prosperity
Relationships within Sanford, and between Sanford
and its external stakeholders, which are essential to
retaining our social licence to operate including
relationships to maintain quotas and licences
Intellectual property, brand and reputation,
a key element of our future earning potential
and competitive advantage
OPTIMISE VALUE FROM
EVERY RAW MATERIAL
ENHANCED BRAND THROUGH
LIVING OUR VALUES
CAREPASSIONINTEGRITY
OUR VALUES
OUR FOCUS AREAS
Our value creation process is impacted by the external environment in
which we operate, which includes economic conditions, technological
change, societal change and environmental conditions
CONSISTENT QUALITY
SEAFOOD
VALUE CREATION PROCESS OVER TIME
CULTURE OF INNOVATION
AND CUSTOMER SERVICE
— HOW WE CREATE VALUE —
830
M
MEALS PRODUCED
INPUTS
OUR BUSINESS
49
VESSELS
8
PLANTS
700+
CUSTOMERS
211
FARMS
S
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08Sanford Annual Report 2017
OUTPUT
OUTCOMES
We will deliver sustainable, profitable and
socially beneficial outcomes through our
sector leadership and role in creating a
more innovative and sustainable business
and effective risk management strategies
We will maximise the prospects of our
people by making ‘Zero Harm’ a key
priority, offering meaningful opportunities
for continual learning and development,
and living our values to ensure we become
an employer of choice
We will lead the way in driving sustainable
performance across our value chain, and
positioning our brand as the industry
partner and supplier of choice
We will lead by example in healthy ocean
management, so that future generations
can enjoy and benefit from our biologically
diverse, safe, healthy and dynamic oceans
We will work with our people,
customers and suppliers to lead the
way in maximising resource
utilisation, minimising our footprint
and protecting the environment
wherever we operate
Our leadership in creating employment
and skills opportunities, coupled with our
understanding of the needs of our
communities and partners, ensure we
deliver a significant and positive
contribution everywhere we work
BUILDING A SUSTAINABLE
SEAFOOD BUSINESS
ENABLING ZERO HARM AND GREAT
PROSPECTS FOR OUR PEOPLE
LEADING THE WAY
TO HEALTHY FOOD
ENSURING
HEALTHY OCEANS
PROTECTING AND ENHANCING
THE ENVIRONMENT
SUPPORTING ENDURING
COMMUNITIES AND PARTNERSHIPS
UN SDG
BEAUTIFUL
NEW ZEALAND
SEAFOOD
REVENUE IN 2017
$
477.9
M
THE BEST
SEAFOOD
COMPANY IN
THE WORLD
OUR VISION
AND
AND
AND
AND
AND
S
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&
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&
O
P
)
P
R
O
C
E
S
S
09
We are very satisfied with the
progress we are making at
Sanford in implementing our
strategy of enhancing the value
of New Zealand’s beautiful
seafood. In the context of our
great ambition to be the world’s
best seafood company we are
building a strong platform for
future growth and are taking
the company through some
significant changes. These
changes are substantial and
require great organisational
preparation and capability.
San Granit presented us with a number
of challenges during her initial voyages
for Sanford and her performance was
unsatisfactory for several months.
Management and her crew have worked
hard to overcome these commissioning
issues and we are pleased that her latest
trips have finally given us good insight
into her true capabilities in the Southern
Ocean. The next year should bring more
predictable production and value creation
from this significant investment.
Our scampi trawlers and longliners did
an excellent job in delivering high value
product, while our deepwater factory
vessels performed well until they were
challenged with an unexpectedly short
hoki season toward the end of the reporting
period. Hoki is the largest single species in
our quota holding and shortfalls in catches
of this species have a significant impact
on both frozen and fresh fish production.
While New Zealand has an excellent
track record in managing its fisheries
in a sustainable manner and successful
reproduction across year classes naturally
varies, we believe that a prudent approach
in circumstances like these is appropriate
–
DELIVERING
ON OUR
VISION
–
Paul Norling
CHAIRMAN
Volker Kuntzsch
CHIEF EXECUTIVE OFFICER
We are therefore pleased to report that
we were able to continue solidifying our
financial result. After a gratifying result
in 2016 we have increased the level of
Profit After Tax by 8% to $37.5m for 2017
(2016: $34.7m) at constant volume.
Adjusted earnings before interest and
tax (EBIT) is $63.7m for the 2017 year
(2016: $63.4m), this is before impairments,
and one-off cost of $3.0m, which, pleasingly,
is well below last year’s $5.6m. This EBIT
performance was maintained relative to
sales growth of 3%, the result being partly
impacted by a bedding in process for our
new deepwater vessel San Granit.
Cash flows from operations grew 46.3%
over the prior year due to higher revenues
and improved collection timeframes.
VOLUME AND VALUE
The increase in sales revenue is primarily
due to improved pricing in our king salmon
farming business and higher catch volumes
in our fishing business. The commissioning
of our latest vessel, San Granit, and the
contribution from charter vessels
supported most of the volume increase
over the prior year.
10Sanford Annual Report 2017
CHAIRMAN AND CEO REVIEW
when setting total allowable catches (TAC)
for the next season. Stability in setting the
TAC may therefore be the most appropriate
approach at this time.
As we are aiming to increase the value
for every kilogram of fish we catch, we are
moving towards fresh fish of the highest
quality wherever this is practicable. Our
inshore fleet faced a number of challenges
this year, ranging from a series of poor
weather events earlier in the year to
extended vessel survey and maintenance
work. Nevertheless, inshore catch volumes
supplied by our own and the private vessels
we work with exceeded last year’s volumes.
Pelagic catches however, such as mackerels
and tuna, fell well short of expectations.
This was because of a poor showing of
skipjack tuna in New Zealand waters last
summer and decisions taken not to harvest
jack mackerel when it was available due to
uneconomic market prices and demand.
As a result of supply challenges the share
of our wildcatch volume sold as fresh fish
reduced slightly this year.
The focus on increasing the share of fresh
fish in our wild-caught supply will continue,
but the majority of our product will
naturally stay within the frozen portfolio.
These species are often caught far offshore
or in such amounts that a market would be
oversupplied if we were to sell all catches
as they were landed. Ongoing feedback
from customers allowed us to optimise
our frozen product portfolio for them,
thereby reducing the dependency on
undifferentiated commodity items like
fish fillet blocks, which are easily
replaceable from competitive whitefish
species originating in other fishing regions.
It is also noteworthy that product that
has been frozen at sea has an inherently
premium quality, permitting immediate
utilisation without further processing
elsewhere and thus avoiding the
manufacture of twice frozen product,
i.e. thawing a raw material for further
processing into frozen fillets or portions.
Our aquaculture business provided good
reason to be satisfied: although our
Greenshell™ mussel operation was
impacted by the Kaikoura earthquake
in November 2016 and had to shut down
for repairs for two weeks. The team
in Havelock delivered an outstanding
performance and more than made up for
the interruption over the course of the
year. Supply disruptions were avoided
through our supply chain management
team, which demonstrated their growing
capability by implementing appropriate
measures in a timely manner.
The exact extent of the damage to the
Havelock site and the impact of remedial
work on production in FY18 is yet to be
quantified, but it is expected that the
Group has sufficient insurance to cover
any remediation expenditure.
Our teams on Sanford’s King salmon farm
in Stewart Island and the processing plant
in Bluff provided excellent quality fish as
well as improved productivity and yield.
As the total output is restricted to the
water space we currently farm, all focus
is on operational excellence on the farm,
reducing fish mortalities to a minimum
and improving the feed conversion ratio
through targeted feeding. In contrast to
other salmon growing countries, our farm
does not use antibiotics. It delivers the
best fish and highest value product, fresh
or frozen, thus creating the basis for
improved returns through branding.
This enabled improved returns, while
volumes were down almost 5% year-on-
year, following increased harvesting to
satisfy demand towards the end of the
last financial year.
Our share of frozen salmon production
increased this year as the ongoing
emphasis on value by our sales team
identified demand in Asia for this product,
making frozen King salmon a better
returning option for a share of our
volume. The frozen product does allow
us improved market diversification.
Following a strategic review and the
development of a more focused channel
and customer strategy for our key
markets by our sales team, Sanford’s
strong performance in the China market
continued with revenue lifting. This was
driven by the growth of fresh King salmon
and strong pricing on high end species
like toothfish and scampi.
QUALITY AND PROVENANCE
The additions we are making to our fleet
and the changes to our product portfolio
to add greater value through better
utilisation are an example of “the power
of AND” that lies behind the theme of
this year’s Annual Report.
This approach is also visible in our salmon
business, which delivered outstanding
results through greater diversification
in our product portfolio and associated
customer base, leading to improved pricing
cascades. However, the most significant
step undertaken this year was the launch
of a new brand, Big Glory Bay, which
highlights the beautiful Stewart Island
provenance of our King salmon and a
limited volume of our Greenshell™ mussels.
We are very excited to see Big Glory Bay
on the menu of some high end New Zealand
restaurants already and are currently working
on international opportunities in this regard
as well. The launch of this brand is strongly
aligned with our strategy of value creation
through branding and innovation.
INNOVATION AND GROWTH
Our recent acquisition of Blenheim based
company Enzaq is an example of how we
seek to add value through innovation in
our Greenshell™ mussel business. As we
own water space that has considerable
potential for volume growth, we seek to
widen the value opportunities in our
substantial mussel business. Enzaq turns
mussels into powder, which has highly
beneficial anti-inflammatory properties
with respect to joint health in humans
and animals. While the current output of
this strategic investment is rather small,
plans are already underway to increase
production in the near future in line with
customer demand.
Another important innovation milestone
for Sanford has been the excellent results
delivered by
SPATnz, the Nelson based
Greenshell™ mussel hatchery, where the
team are investigating improving reliability
of supply and the quality of the spat from
which we grow our Greenshell™ mussels.
The significant milestone for the
SPATnz
team this year has been the first harvest
of hatchery reared mussels subsequently
seeded onto farms in the Marlborough
Sounds. These mussels are growing faster
and more evenly than those from wild
caught spat. Full results of the growth
rate studies will be released in 2018.
The work of the hatchery is the result of
a seven year Primary Growth Partnership
between the New Zealand Government via
the Ministry for Primary Industries (MPI)
and Sanford and our mussel growers.
We are delighted with progress so far
and congratulate the entire team on their
11
1
SANFORD & OUR OPERATIONS
success at the New Zealand Innovation
Awards, where they took home the award
for Innovation in Agribusiness and
Environment 2017.
Trials with Precision Seafood Harvesting
(PSH) technology continue as part of
another Primary Growth Partnership
Sanford is involved with. This fishing
gear enables greater quality fish while
benefitting the sustainability of the fish
through improved selectivity and survival
of fish returned to the sea. The trials are
ongoing to verify the benefit in shallow
and deep water, on different species and
with a variety of vessels. We strongly
believe that the implementation of PSH
can be a game changer for fishing around
the world and are proud to be at the
forefront of this development.
Increasing emphasis is being placed on
utilising our natural resources for more
than just raw material in the traditional
sense. Our innovation department aims to
identify better opportunities for parts of
the fish that are regarded as by-products
and generally end up as fishmeal and fish
oil. While these are valuable products,
the benefits of particular parts of our fish
are often yet to be discovered. We are
currently working with a company producing
collagen for cosmetic purposes from hoki
skins and look forward to further innovation
in this regard.
Concurrently with the necessary
earthquake strengthening to Sanford’s
Jellicoe Street head office building in
Auckland, we took the opportunity to
renovate the office space during the
course of the year. Following this, an
upgrade to our Auckland Fish Market is
now underway, and is expected to deliver
an attractive destination for customers to
experience Sanford’s beautiful seafood in
a transparent and highly complementary
manner by the end of FY18.
CARING FOR OUR PEOPLE
We are not satisfied with key performance
indicators around the safety of our people
this year. We had 55 Lost Time Injuries (LTIs)
during this financial year (compared to 53 in
2016), 10 of which were notifiable (serious
harm) injuries, against 6 notifiable injuries
in the prior year. We have placed a lot of
emphasis on improving our performance
in this area through the implementation of
systems and processes, risk identification,
raising awareness and addressing health
and safety in all relevant meetings and
team talks. However, it has become
apparent that we need to move beyond
systems and processes to a stronger
people focus in order to change attitudes
towards this important part of all of our
lives. As a result, the health and safety
function now reports to our Chief People
Officer to address this challenge.
Karen Duffy joined as our new Chief People
Officer in February this year and introduced
a strong focus on culture and capability,
transforming the business through leadership
training, front line staff training and
dedicated implementation by all staff
of the company’s values of care, passion
and integrity. Our intention is that we
become an employer of choice and this
transformation is an essential part of
bringing us closer to achieving our vision
of becoming the best seafood company
in the world. A continuing focus on
operational efficiency improvements
will provide meaningful productivity gains
to balance a more advanced approach to
fair remuneration, particularly with our
employees on lower pay rates.
INDUSTRY AND SUSTAINABILITY
We have continued investing into
organisational capability and functions
aligned with our strategic objectives.
Enhancing value through branding
includes a focus on the Sanford corporate
brand through pro-active reputation
management, and we have therefore
decided to appoint a GM Corporate
Communications. This role has focused on
further developing our relationships with
key stakeholders in the many communities
Sanford is part of, and on sharing the
positive stories that have long been
part of our daily lives here at Sanford,
some of which you can find in the pages
of this Report.
We have also enlarged our capabilities
in environmental management, business
development, IT and innovation. We
expect all of these areas to deliver
significant benefit to the company in
the coming years.
In all our communications, both internal
and external, we are committed to great
transparency, just as we are in this Annual
Report. We were delighted to be the
recipient of the Australasian Reporting
Award (ARA), Gold Award and Integrated
Reporting Category Award; and also proud
to have received the Silver Award at the
Mercomm Annual Report Competition
(ARC), New York, in the ‘Integrated AR
and CSR’ category.
Finally of note in our focus on sustainability
is the work we have done with others in
the seafood industry and WWF to help
preserve New Zealand’s highly endangered
Māui dolphin. Working with fishing company
Moana on the west coast of the North
Island, we have agreed on a pro-active
stance and put in place a comprehensive
plan to transition from current fishing
methods, which present a risk to these
extremely rare mammals, to enhanced
dolphin safe fishing methods. We have
had numerous interactions with fishermen
since the launch of our protection plan in
November 2016, introduced an app to
track fishing trips for the smallest vessels
supplying our auction and have presented
ideas to MPI to support the transitioning
of fishermen from set netting to
other methods.
We welcome the recent announcement
of our newly established Minister of
Fisheries that the implementation of
Integrated Electronic Monitoring and
Reporting Systems (IEMRS) on fishing
vessels will be delayed. While we support
improved tracking, data collection and
transparency around our operations at
sea and have installed cameras on many
of our vessels, we believe that a more
considered approach as to technical
capabilities, the appropriateness of
systems on differently sized vessels
and acknowledging already established
technology will favour more effective
implementation of IEMRS in the
long run.
CHALLENGES AND OPPORTUNITIES
Our farmed Bluff oysters business was
unsuccessful as the oysters had to be
removed when MPI acted to extract all
farmed oysters in the area, following the
infection by Bonamia ostreae. Bonamia
ostreae is a parasite which is not harmful
in any way to humans, but can be
devastating to infected oysters and the
removal measures were quickly complied
with by Sanford and our farming partners
in order to protect the natural Bluff oyster
beds in the region. Compensation for the
removal by MPI is yet to be decided.
12Sanford Annual Report 2017
CHAIRMAN AND CEO REVIEW
It is with regret, however, that we have just
recently (and subsequent to the end of the
financial year) received from Elizabeth (Liz)
Coutts, advice of her wish to retire as a
Director of the company immediately
following the 2017 Annual Meeting,
because of overall work demands.
Liz joined the Board in June 2011 and during
her tenure has provided valuable service
and advice to the company and her board
colleagues both as a Director and as Chair
of the Audit and Finance Committee. We
thank her for her considerable contribution
and wish her well for the future.
I also wish to record my particular
appreciation in respect to the efforts,
skills and passionate enthusiasm that
Volker Kuntzsch, as CEO, and his executive
management team, bring to their leadership
roles every day throughout the year. Their
dedication and the change that they are
driving will see a materially different
company over time delivering considerably
improved returns for our shareholders.
One final, but very special, item that I
wish to comment on relates to our Chief
Executive. In April of this year, Volker was
accorded the very high honour of being
named the recipient of the IntraFish 2017
Seafood Person of the Year Award. This is
viewed as the most prestigious award in
the global seafood industry and it reflects
outstandingly well on Volker personally,
as well as on our company and, in fact,
the entire New Zealand seafood industry.
Congratulations Volker.
Paul Norling
CHAIRMAN
15 November 2017
Volker Kuntzsch
CEO
15 November 2017
Progress towards our goal of an EBIT of
$1/kg of seafood we catch or harvest is a
function of differentiating our product
portfolio through branding and innovation
and the degree of commodity product
remaining in our portfolio. The quest to
change that balance towards differentiation
is an exciting one. The variety of species
in our marine environment, the efforts
undertaken to ensure their sustainability
and the benefits our resources have to
offer beyond their current utilisation readily
enables this shift. In addition, New Zealand
seafood will benefit from the great
attributes the New Zealand brand has
to offer. As growing middle classes in
countries on our doorstep and ageing
populations in developed countries point
to more seafood consumption per capita
we are poised to build a targeted offering
for their future needs.
We are acutely aware of the risks the
future may hold including the possibility
of geopolitical shifts that can impact key
markets for us and the risks presented by
climate change. We never take these for
granted but our diverse product portfolio
and our geographically diverse business
imbue us with a resilience others lack.
That diversity has been a great strength
in the past and we believe it will continue
to be so. In addition to constructively
reducing our environmental footprint
and utilising our mussel hatchery to
ensure future resilience of Greenshell™
mussels to ocean acidification from climate
change, we are also engaged in national
and international fora to create greater
awareness and determined action to the
challenges presented by climate change
and plastic pollution of the oceans. While
New Zealand appears to be remote and
pristine, more needs to be done to ensure
a prosperous future of the New Zealand
brand. The need to ensure resilience
through improved environmental
management ‘from the mountain to
the sea’ to protect the sustainability of
our marine ecosystem through a coherent
approach has to support an improved
understanding of all stakeholders of their
pro-active responsibility in this regard.
DIVIDENDS
While we are mindful of the dividend
history over recent years, acknowledging
that also at our 2016 AGM, the company
has heavy investment needs as we continue
the transition journey from a commodity
fishing company to a value focused
domestic and global seafood supplier.
These investment needs have slightly
delayed the achievement of our DEBT/
EBITDA ratio target. Accordingly your
Board has determined that the dividend
should remain unchanged at 23 cents per
share for this year. The final dividend of
14 cents per share will be payable on 8th
December 2017.
ACKNOWLEDGEMENTS
Much has been asked of Sanford’s people
in the 2016/17 year. They have been called
on to continue to make organisational and
cultural change, all while working hard to
deliver great seafood to our customers
every day. There have been significant
challenges such as the Bonamia ostreae
outbreak and the bedding-in process for
San Granit mentioned above, and every day
we see people across our business rising to
those challenges - embracing the idea of
doing more with what we have and adding
more capability and depth, appreciating
“the power of AND”.
We will continue to evolve our culture at
Sanford to make us an attractive employer,
a reliable partner in achieving compelling
visions and a great investment for our
shareholders. We thank all our staff,
sharefishers, contractors, customers,
suppliers and stakeholders for their
continued support as we transition our
company into one focused firmly on
sustainable wealth creation and doing the
best for our people in the years to come.
THE BOARD AND CHAIRMAN’S
ACKNOWLEDGEMENTS
The 2017 year has been a busy one for
your Board as the company continues its
transformational journey. In this regard the
expanded Board Committee structure has
served the Board and the company very
well and has resulted in a higher level of
efficiency and effectiveness with this
increased level of activity.
I would like to thank my Board colleagues
for their dedication and oversight of the
many matters requiring their attention
throughout the financial year.
13
1
SANFORD & OUR OPERATIONS
286
SEABIRDS CAUGHT DEAD
(9 MONTHS DATA
AVAILABLE AT TIME
OF REPORTING)
2016 372 (12 MONTHS)
101
SEABIRDS CAUGHT DEAD
IN A SINGLE INCIDENT,
INVOLVING CHARTER
VESSEL
47
MARINE MAMMALS
CAUGHT DEAD (9 MONTHS
AVAILABLE AT TIME OF
REPORTING)
2016 73 (12 MONTHS)
Leading
the way to
healthy food
HIGHSLOWS
VALUE CREATION
OUTCOMES
Building a
sustainable
seafood
business
Enabling
zero harm and
great prospects
for our people
Ensuring
healthy
oceans
$63.7
M
ADJUSTED
EBIT $M
▲ 0.6%
2016 $63.4M
$51.7
M
NET PROFIT
BEFORE TAX $M
▲ 4.5%
2016 $49.4M
$37.5
M
NET PROFIT
AFTER TAX $M
▲ 7.9%
2016 $34.7M
$477.9
M
REVENUE $M
▲ 3.1%
2016 463.5M
$21.0
M
DOMESTIC FRESH WILD
CAUGHT SEAFOOD SALES
▲ 6%
2016 $19.8M
$50.3
M
OPERATING
CASHFLOW $M
▲ 46.3%
2016 $34.4M
First
SPATnz HATCHERY
ACHIEVED FIRST FULL
SCALE HARVEST,
PRODUCED 3,732 MILLION
READY TO SETTLE LARVAE
Innovation
PURCHASE OF ENZAQ,
ADDED 1,059MT OF RAW MATERIAL
PROCESSING CAPACITY; PLATFORM TO
LAUNCH OUR NUTRACEUTICAL BUSINESS
Māui
DOLPHIN PROTECTION
PLAN SIGNED
BY SANFORD
IN DECEMBER 2016
2
INSHORE VESSELS USING
PRECISION SEAFOOD
HARVESTING (PSH);
TRIALLED IN 2
DEEPWATER VESSELS
46%
SANFORD’S TOTAL 2017
WILDCATCH BY
GREENWEIGHT WAS
MSC CERTIFIED
2016 37%
Reduce
TARGETED INITIATIVES TO
REDUCE PLASTICS
UNDERWAY, FROM
INNOVATIONS IN
AQUACULTURE TO
PACKAGING
Protect
PUBLIC PROMISE BY THE
NEW ZEALAND SEAFOOD
INDUSTRY TO PROTECT
THE ENVIRONMENT AND
SECURE LONGTERM
SUSTAINABLE FISHERIES
Engage
ONGOING
ENGAGEMENT THROUGH
MULTI-STAKEHOLDER
FORUMS
134
ACC CLAIMS
▼ 4.5%
2016 141
1,032
TOTAL INJURIES
▼
21%
2016 1,300
324
NEAR MISS REPORTING
▲ 12%
2016 289
693
HEALTH AND SAFETY
FOCUSED TRAINING DAYS
DELIVERED
1,717
TOTAL WORKFORCE
▲
11%
2016 1,548
▲
7,484
TOTAL INDUSTRY
TRAINING CREDITS
▲ 18%
2016 6,354
86%
‘VERY HIGH/HIGH’
IMPROVED CUSTOMER
PRODUCT QUALITY RATING
(18 OUT OF 22 CUSTOMERS)
2016 71%
80%
LAND-BASED SITES CERTIFIED
TO FSSC 22000
2016 29%
21,910
POLYSTYRENE BINS
REPLACED WITH
RECYCLABLE
CARDBOARD BOXES
830
M
MEALS PRODUCED IN 2017
(BASED ON 100G OF SEAFOOD)
2016 819M
C.
20
K
PEOPLE ON SOCIAL
MEDIA PLATFORMS
Launch
OF BIG GLORY BAY BRAND
AND TRACEABILITY
SYSTEM
$3.0
M
IMPAIRMENTS, ONE-OFF
VESSEL DISPOSAL COSTS
AND ONE-OFF
RESTRUCTURING COST
2016 $5.6M
$4.0
M
COST TO BUSINESS DUE
TO FACTORY VESSEL
COMMISSIONING
OF SAN GRANIT
Softer
FROZEN MUSSEL PRICES
EARLY IN THE YEAR DRIVEN
BY COMPETITIVE
PRESSURES AND A
REDUCTION IN DEMAND
FOR FROZEN MEAT
$2.1
M
IMPACT TO BUSINESS
DUE TO SHORTER
THAN EXPECTED
CATCH SEASON
FOR HOKI
10 Vessels
WERE IN DRY DOCK FOR MAJOR SURVEY, IMPACTING
ON CATCH CAPACITY (4 DEEPWATER AND 6 INSHORE).
THIS WAS MITIGATED BY INCREASING 3RD PARTY
CONTRACT CATCH AND INCREASING CATCH ON OTHER
SANFORD VESSELS DURING SURVEY PERIODS
14.67
LTIFR STATIC
(BASED ON HOURS WORKED)
2016 14.69
55
LOST TIME INJURIES
▲ 2%
2016 53
10
SERIOUS HARM
(NOTIFIABLE) INJURIES
2016 6
68%
TARGET FOR NUMBER OF
DAYS TO RESOLVE
CUSTOMER COMPLAINTS
NOT MET (TARGET 80%
WITHIN 10 DAYS)
2016 61.2%
Supply
CONTINUITY OF SUPPLY
FOR TIAKI IMPACTED
UPON FURTHER
EXPANSION
14Sanford Annual Report 2017
OUR YEAR IN NUMBERS
▼
29%
COMMUNITY INVESTMENT
LEVELS DOWN BY $89,154
(ALTHOUGH MOSTLY
DUE TO TIMING OF
PARTNERSHIP PAYMENT
SCHEDULES)
Loss
DESTRUCTION OF
BIG GLORY BAY
FARMED OYSTERS
DUE TO THE BONAMIA
OSTREAE PARASITE
24%
RATE OF WASTE
DIVERSION ACHIEVED
(AGAINST TARGET OF 30%)
10%
INCREASE IN
WATER
INTENSITY
(TARGET ▼ 2%)
2
NOTIFIABLE SPILLS
(THOUGH NO NEGATIVE
ENVIRONMENTAL
IMPACT)
HIGHSLOWS
VALUE CREATION
OUTCOMES
ACCREDITATIONS
AWARDS
Supporting
enduring
communities and
partnerships
$218
K+
CONTRIBUTED TO
COMMUNITY AND
CHARITY PROGRAMMES
9,503
STUDENTS SUPPORTED
THROUGH GRAEME
DINGLE FOUNDATION
PARTNERSHIP
2016 6,180
55
SCHOOLS SUPPORTED
THROUGH GRAEME
DINGLE FOUNDATION
2016 39
NCEA
2016 SANFORD ANNUAL
REPORT ON THE NCEA
NATIONAL CURRICULUM
Support
CONTINUED FORMAL PARTNERSHIPS
WITH GRAEME DINGLE FOUNDATION
AND PARALYMPICS NZ
0.77
T CO
2
-E/GWT
CARBON INTENSITY
▼ 4.5%
2016 0.81
9.46
MJ/GWKG
CORE ENERGY INTENSITY
▼ 12%
2016 10.8
0.344
L/GWKG
FUEL INTENSITY
▼ 3%
2016 0.354
$279
K+
SAVINGS FROM
ENERGY TARIFF
IMPROVEMENTS
IDENTIFIED THROUGH
IMPROVED MONITORING
12,508
L
BIODEGRADABLE OIL
CONSUMED IN VESSEL
OPERATIONS, REPLACING
TRADITIONAL OIL
VESSEL OPERATIONS
(6% TOTAL
OIL CONSUMED)
2016 0L
25
ENERGY PROJECTS
IDENTIFIED THROUGH
CONTINUOUS
IMPROVEMENT
PROCESS
Protecting and
enhancing the
environment
ACHIEVED
SanWell Silver Accreditation at Timaru
site and Bronze at Tauranga site for
workplace wellbeing
CERTIFIED
46% of Sanford’s total wildcatch
by greenweight was Marine
Stewardship Council Certified
MAINTAINED
Secondary status in
ACC Partnership Programme
ACHIEVED AND MAINTAINED
FSSC 22000: Food Safety
Management System certification
80% sites
MAINTAINED
ISO14001:2004 Environmental
Management System certification
MAINTAINED
Best Aquaculture Practices (BAP)
certification of Big Glory Bay
King salmon & Greenshell™ mussels
(21 farms)
CERTIFIED
Certified Organic, Big Glory Bay
Greenshell™ mussel farms
CERTIFIED
Marine Farm Association (MFA)
Environmental Certification
Marlborough mussel farms
CAWTHRON
MARLBOROUGH
ENVIRONMENTAL
AWARD
Marine Category,
March 2017, awarded
to Sanford’s Havelock
mussel farming team
INTRAFISH MEDIA
PERSON OF THE YEAR
April 2017, awarded
to Sanford CEO
Volker Kuntzsch
NEW ZEALAND
INNOVATION AWARDS
Innovation in
Agribusiness &
Environment Award,
October 2017,
awarded to SPAT
nz
IN THE AUSTRALASIAN
REPORTING AWARDS
(ARA)
Sanford achieved
the following for our
2016 Report: Gold Award;
Winner Integrated
Report Award;
Finalist Sustainability
Reporting Award;
Finalist Report
of the Year Award
IN THE MERCOMM
ANNUAL REPORT
COMPETITION (ARC)
AWARDS
the 2016 Sanford Annual
Report was awarded
Silver in the Integrated
Report category
NEW ZEALAND
SPORT AND
RECREATION AWARDS
2017 Commercial
Partnerships category
winner (supported our
Partner Paralympics
New Zealand to achieve
this win, alongside ACC
and Cadbury NZ)
15
1
SANFORD & OUR OPERATIONS
Our material issues
OUR APPROACH
Reporting what matters most to our
stakeholders and our business is the basis
of this, our fourth Integrated Annual
Report. We strive to produce a balanced,
accurate and transparent assessment of
our strategy, performance and prospects
in relation to the financial, environment,
social, governance issues and risks that have
a material impact on the long term success
of Sanford, and are important to our key
stakeholders. Our material issues relate to
how Sanford creates value for stakeholders,
our business and our wider operating
environment in the short, medium and
long term. These material issues are our
priorities and are reflected in the Business
Excellence Framework, which provides the
basis for this Report, and a foundation for
Sanford’s strategy.
Our materiality assessment and stakeholder
engagement process (the process)
was carried out in accordance with the
International Integrated Reporting
Council (IIRC) <IR> Framework, the Global
Reporting Initiative (GRI) Standards and
with reference to the AA1000 Stakeholder
Engagement Standard (AA1000SES) 2015.
5 STEP PROCESS
This year, we engaged thinkstep to deliver
an extended and enhanced process,
positioning Sanford to more effectively
identify, prioritise and respond to material
issues, while building deeper, shared
understanding between Sanford and its
stakeholders over time. Our priorities
were to:
• Identify what it means to be the Best
Seafood Company in the World from
the perspective of our shareholders
• Bring Sanford people on the journey
• Balance the need between deepening
stakeholder relationships and impartiality
• Give significant weight to stakeholder
views, while also integrating other
important sources of information (such
as outcomes from our Board Committees).
01
IDENTIFY
STAKEHOLDERS
Our stakeholders include a wide range of groups and individuals that are impacted by
our activities and contribute to our ability to achieve our strategy over time as set out
in ‘Engaging with our stakeholders’. This year, 37 stakeholders (22 external and 15 internal)
were selected and invited to participate in our process. These stakeholders were selected
and ranked using best practice criteria from the AA1000 Stakeholder Engagement
Standard 2015, including dependency, responsibility, tension, influence and diversity.
Several stakeholders were included within the 2016 process, but many are new for 2017.
This provided an appropriate balance between consistency and the injection of new
perspectives into the process.
02
INTERVIEW
STAKEHOLDERS
All 37 stakeholders were interviewed using a semi-structured format based around a set
of open-ended questions. The questions were designed to allow the stakeholders’ views to
be determined on the issues most crucial for Sanford in the short, medium and long term.
By not pre-selecting the list of important issues, the 2017 process provided a much richer
understanding of the stakeholders’ views than previous years. External stakeholders were
offered the opportunity to have a Sanford representative present in the interview to help
deepen the level of engagement.
03
ASK STAKEHOLDERS
TO SCORE EACH ISSUE
A shortlist of 30 issues were prepared from the interview outcomes, and a web-based
questionnaire was sent to all stakeholders, allowing them to rank each issue across all that
had been raised by all stakeholders. These questionnaire results were used to populate the
materiality matrix and radar. The business then reviewed the matrix to validate and ensure
the internal business results gave a true and fair view of material issues, and at this time,
moderation of several issues occurred.
04
PRODUCE A MATERIALITY
MATRIX AND RADAR
The results of the questionnaires were then conveyed in a materiality matrix and radar
(refer to pages 17 and 18).
05
THROUGHOUT THE PROCESS
CONTINUE TO SENSE-CHECK
The issues were reviewed during and at the end of the process. Sources of information to
check for completeness included the UN Sustainable Development Goals (SDGs), outputs
from the Audit and Risk Committee and global best practice in sustainable seafood
and reporting.
16Sanford Annual Report 2017
REPORTING WHAT MATTERS
Health, safety and wellbeing
Shared vision
Getting the most out of the catch
Transparent and effective communication
Maximising $/kg of fish
Market access risks
Future protein competition
Food safety and quality
Biosecurity
World-class
brand
Product traceability
Benefits for local communities
Minimising Sanford's environmental footprint
Constructive relationship
with recreational fishers
Collaboration
Regulatory risk
Social licence to operate
Making Sanford a world-class employer
Innovation in products and markets
Innovation in operations
Operational
excellence
Sustainable seafood
Address lack of trust in seafood industry
Sanford sets example
Public stand on healthy oceans
NZ Inc. brand
Reforming the QMS
Impacts due to climate change
Marine conservation
Profitability
6.0
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
6.57.07.58.08.5
9.0
9.510.0
EXTERNAL STAKEHOLDER CONCERN
BUSINESS IMPACT
IMPORTANT
IMPORTANT
MATERIAL
MATERIAL
Materiality matrix
PERFORMANCE OUTCOMES
HEALTHY OCEANS
PROTECTING THE
ENVIRONMENT
SUSTAINABLE
SEAFOOD BUSINESS
HEALTHY FOOD
OUR PEOPLE
COMMUNITIES AND
PARTNERSHIPS
Out of the 30 issues raised by
stakeholders, two ranked the highest by
both internal and external stakeholders:
HEALTH, SAFETY
AND WELLBEING
FOOD SAFETY
AND QUALITY
THE TOP ISSUESThe next most highly ranked issues across
the stakeholder groupings were:
• BIOSECURITY
• PROFITABILITY
• SUSTAINABLE SEAFOOD
• TRANSPARENT AND EFFECTIVE
COMMUNICATION
• SHARED VISION
• SOCIAL LICENCE TO OPERATE
• WORLD CLASS EMPLOYER
The focus on these issues in the Report
reflects the importance both the
business and external stakeholders
placed on these issues.
17
2
REPORTING WHAT MATTERS
Materiality radar
Health, safety
and wellbeing
Food safety
and quality
Biosecurity
Profitability
Sustainable seafood
Tr ansparent and
e ective communication
Shared vision
Social licence to operat
e
Making Sanford a
world-class employer
Maximising $/kg of fish
Getting the most
out of the catch
Innovation in
products and markets
Marine
conservation
NZ Inc.
brand
Benefits for
local communities
Innovation in operations
Public stand on
healthy oceans
Minimising Sanford’s
environmental footprint
Sanford sets example
Operational excellence
Collaboration
Product
traceability
Address lack of trust
in seafood industry
World-class brand
Impacts due to
climate change
Reforming the QMS
Regulatory risk
Constructive relationship
with recreational fishers
Market access risks
Future protein
competition
6.0
7.0
8.0
9.0
10.0
STAKEHOLDER CONCERN
BUSINESS IMPACT
All issues in the matrix are important to
us and our stakeholders. The issues placed
in the top right of the matrix are most
material and accordingly receive more
focus in this Report. Each materiality
issue is linked to its corresponding
performance outcome in the Business
Excellence Framework.
There are a few changes to the material
issues identified by stakeholders compared
to last year. Future protein competition has
been raised for the first time (albeit as the
lowest ranked issue), which highlights a new
competition to seafood predominantly in
the plant based area. Some issues have
fallen off stakeholders radars, such as pirate
fishing and management of foreign charter
vessels. This makes sense as actions have
been taken by Sanford (and the wider
seafood industry in relation to the Ross Sea)
to address these issues. While a number of
issues were ranked comparatively low,
stakeholders commented that these
rankings were ascribed not because the
issues were considered unimportant, but
rather because they were considered not
urgent, a long term priority (future protein
competition and climate change impacts),
or already perceived as well managed by
Sanford through diversification and good
corporate citizenship (market access and
regulatory risks).
Changes in terminology from previous years
come as a direct result of the issues being
identified by the stakeholders themselves.
The materiality radar presents the results of
the process in a different way. The red and
blue lines show the business and external
stakeholders’ views, and illustrates the
synergy for most of our issues. However,
some issues show a divergence between the
business and external stakeholders’ views
that requires more attention, particularly
where they are more important to external
stakeholders than they are to the business.
In 2017, these diverging issues included
Contributing to NZ Inc Brand, Reforming the
Quota Management System (QMS) and Public
Stand on Healthy Oceans.
We regularly review our material issues in
the context of the rapidly changing
business and societal context, as well as
stakeholder feedback and emerging trends.
We seek to collaborate, both to address
challenges and capture opportunities within
our industry. We also seek to ensure that
our reporting continues to reflect our
response to the material issues raised by
our stakeholders.
NEXT STEPS
For the first time, Sanford are planning
an external stakeholder workshop to
feedback to stakeholders on the process
and action plan for the issues raised. It is
also an opportunity for the Executive to
hear stakeholder views on the process,
and understand their needs more. By
bringing different stakeholder groups
together, we can gain a better insight into
each other’s views, how they are different,
and the opportunities for partnership and
collaboration. We refine our materiality
process each year as it becomes more
mature and welcome feedback from
our stakeholders.
18Sanford Annual Report 2017
REPORTING WHAT MATTERS
Engaging with our stakeholders
Implicit within Sanford’s vision of being the
Best Seafood Company in the World is our
commitment to a sustainable New Zealand
brand, and a sustainable future for the
seafood industry globally. Such a bold
vision requires us to work collaboratively
and have deep relationships with our key
stakeholders; generating the social capital
and licence to operate needed.
This is why we take stakeholder
engagement so seriously and invest heavily
in continuing to improve engagement
processes, supporting positive relationships
founded on shared understanding. We
recognise that the individual stakeholders
within the groups are diverse, often with
different interests and concerns and so we
work hard to address this challenge within
our engagement. Further details of the
roles of our respective stakeholder groups,
including principal memberships and the
key roles that Sanford representatives
contribute are set out in Appendix C.
The table below outlines the main groups of
stakeholders we engaged with through our
stakeholder engagement and materiality
process in 2017, together with the issues
they ranked as most material.
STAKEHOLDERTOP MATERIAL ISSUES
Our People
• Health, safety and wellbeing
• Food safety and quality
• Social licence to operate
• Maximising $/kg of fish
Shareholders
and Investor
• Food safety and quality
• Innovation in products and markets
• World class brand
• Profitability
Government
and Regulators
• Benefits for local communities
• Transparent and effective
communication
• Biosecurity
• Social licence to operate
Industry and
business
associations
• Health, safety and wellbeing
• New Zealand Inc brand
• Sustainable seafood
Suppliers
• World class brand
• Transparent and effective
communication
• Making Sanford a world class employer
• Address lack of trust in the seafood
industry
STAKEHOLDERTOP MATERIAL ISSUES
Customers
• Health, safety and wellbeing
• Food safety and quality
• Transparent and effective
communication
• Shared vision
Communities,
Scientific partners,
NGOs
• Sustainable seafood
• Sanford sets an example
• Health, safety and wellbeing
• Transparent and effective
communication
• Social licence to operate
Civil Society
including
recreational fishers
• Sustainable Seafood
• Reforming Quota Management System
- QMS
• Transparent and effective
communication
• New Zealand Inc Brand
Iwi
• Iwi, as included in this process,
considered almost all the issues as
highly important
19
2
REPORTING WHAT MATTERS
Addressing material issues through our
Business Excellence Framework
Addressing our most material issues is our priority. This is achieved with the six performance outcomes in the Business Excellence
Framework. This Report contains six performance chapters, one for each of the performance outcomes, where each relevant material
issue is discussed.
VISION: TO BE THE BEST SEAFOOD COMPANY IN THE WORLD
PERFORMANCE
OUTCOME AREA
Building
a sustainable
seafood business
Enabling zero
harm
and great
prospects
for our people
Leading
the way to
healthy food
Ensuring
healthy oceans
Supporting
enduring
communities and
partnerships
Protecting and
enhancing the
environment
OPPORTUNITIES
FOR SHARED
VALUE
• Governance and
communication
• Innovation and
technology
• Shareholder
value and risk
• Health, safety
and wellbeing
of our people
• Developing
our people
• Strengthening
our workplace
culture
• Food safety and
quality
• Drive value
through brand
creation
• Supply chain
• Sustainable fish
stocks and
marine farms
• Marine
conservation
• Endangered,
threatened and
protected
species
• Engagement
and
employment
• Strategic
partnerships
and
collaboration
• Environmental
effects
• Resource
utilisation
and efficiency
• Carbon
reduction
and offsetting
SDG
ALIGNMENT
KEY ENABLING
RELATIONSHIPS
• Business
subsidiaries and
joint ventures
• Crown Research
Institutes
• Government
departments
• New Zealand
stock exchange
(NZX)
• Shareholders/
investors
• Sustainable
Business
Council
• Accident
Compensation
Corporation
(ACC)
• Education
providers
• Employees
• Maritime
New Zealand
• Sharefishers
• Unions
• WorkSafe
New Zealand
• Cawthron
Institute
• Crown Research
Institutes
• Customers and
consumers
• Government
departments
• Suppliers
• Government
departments
• Industry groups
• Non-
governmental
organisations
• Regulators
• Iwi
• Graeme Dingle
Foundation
• Iwi
• Media
• Paralympics
New Zealand
• Recreational
Fishers
• Industry groups
• Sustainable
Coastlines
• Local and
central
government
departments
• Maritime
New Zealand
• Non-
Governmental
Organisations
• EECA
20
Sanford Annual Report 2017
REPORTING WHAT MATTERS
UN SUSTAINABLE DEVELOPMENT GOALS
In 2017, Sanford has taken a step
forward to more clearly understand
the opportunities the United Nations
Sustainable Development Goal (SDG)
framework provides to create value for our
stakeholders, whilst contributing towards
achieving the goals.
We have undertaken an internal impact
review based on our value chain, and
this has assisted us to identify the
SDGs that are most relevant to our
business and inform our review of the
completeness of the material issues
and strategies identified.
In reviewing the SDGs with reference
to the international guidance
1
, we have
identified some areas of stretch that we
incorporated into the ‘Future Focus’ for
each performance outcome, as defined
in our Business Excellence Framework.
We reviewed the priority SDGs identified
in 2016, and confirmed that those eight
continue to be the areas that Sanford can
most positively impact, and provide the
greatest opportunity to contribute toward
a sustainable global future. Appendix D,
page 163, highlights some of the initiatives
we have undertaken this year to contribute
toward the achievement of these SDGs.
Currently there is a gap in central
government leadership regarding
the implementation of the SDGs for
New Zealand. We have therefore relied
on international guidance and our own
organisational commitment to work
towards achieving the SDGs. We will
continue to look for opportunities to
work with others to improve not only
our own performance in relation to the
SDGs but that of New Zealand Inc., and
on an international scale, the wider
oceans community.
21
2
REPORTING WHAT MATTERS
1. GRI and UN Global Compact 2017, Business Reporting on the SDGs
– An Analysis of the Goals and Targets
This provides a snapshot summary of performance against our 2017 sustainable business targets. For further detail refer to the
Material issues AND value creation table at the start of each Outcome section.
MATERIAL ISSUESSTRATEGIC GOALSTERM
1
2017 TARGETSPROGRESS
2
OUTCOME 1 – BUILDING A SUSTAINABLE SEAFOOD BUSINESS
Shareholder
value and risk
Improve our business margins
and create shareholder value in
a sustainable way. Demonstrate
sector leadership by creating a more
innovative and sustainable business.
Lead the way in understanding and
managing our risk profile.
S
Continue to implement and support a comprehensive enterprise risk
management approach across our business.
L
Continue to achieve improvement in our $/kg return.
M
Drive continuous improvement at all sites through our 2020 Culture of
Continuous Improvement programme.
L
Utilise innovative asset management tools and processes to facilitate the
effective upkeep of Sanford’s physical assets.
Governance and
communication
Be recognised as a company which
lives its values in all our activities,
demonstrates an ethical approach
across all areas of corporate
responsibility, proactively
engages with key stakeholders and
communicate with clarity and as
much transparency as possible.
S
Review Corporate Governance practices to ensure that we continue to
apply best practice, and comply with the requirements of the 2017 NZX
Corporate Governance Code (NZX Code).
S
Develop communications strategy and structure that enables the
sharing of how we live our values with our stakeholders, and supports
the active management of our reputation.
S
Produce a high-standard, world-class, transparent integrated Annual
Report that supports integrated thinking across the business and the
creation of value over the short, medium and long term.
Innovation and
technology
Remain competitive on a global scale,
and lead the industry in the creation
of value through innovation and
technology in collaboration with
leading research partners.
S
Continue the development and implementation of the product
development process, from concept to commercialisation.
M
Foster and promote new ideas for value creation that lead to innovative
and viable business proposals.
L
Research and identify innovation partnership and equity opportunities
in alignment with our value-add strategy.
M
Continue with the 7 year Primary Growth Partnership between
Government and Sanford Limited introducing a selective breeding
programme to produce a wide range of high performing mussel strains.
M
Continue with the 7 year Primary Growth Partnership between the
Government, Moana and Sealord Group Limited, trialling new harvest
technology resulting in more precise catch, less incidental catch, lower
mortality rates, more selectivity and higher quality landed fish.
M
Continue to build IT capacity with incremental improvements and new
tactical solutions whilst continuing to build our foundational technology.
Progress on our 2017
sustainable business targets
22Sanford Annual Report 2017
PROGRESS ON OUR 2017 SUSTAINABLE BUSINESS TARGETS
MATERIAL ISSUESSTRATEGIC GOALSTERM
1
2017 TARGETSPROGRESS
2
OUTCOME 2 – ENABLING ZERO HARM AND GREAT PROSPECTS FOR OUR PEOPLE
Health, safety
and wellbeing
Through the way we work and
behave, and the initiatives we
implement to continually enhance
our work environments, we will strive
to protect our people from the risks
of occupational injury or ill health.
M
From 1 October 2014, achieve a 50% reduction in Lost Time and
Notifiable (Serious Harm) Injuries by 30 September 2017.
S
Continue to increase and monitor near miss reporting, utilising learnings
to inform and reduce risk profiles.
S
Implement health and safety focused training across all levels of
Sanford operations.
S
Implement a SanWell wellness programme at all Sanford sites by end of
2017 financial year.
M
Build a leadership driven culture across health, safety and wellbeing to
continuously improve the levels of engagement and performance.
M
Implement programmes to identify, effectively manage and mitigate the
most critical risk work activities.
S
Maintain a secondary status in the Accident Compensation Corporation
(ACC) Partnership programme.
Developing
our people
Maximise the prospects of our
people, offering meaningful
opportunities for continual learning
and development to ensure that each
and every one of our employees can
reach their full potential.
S
Leverage literacy and numeracy programme to build and improve skills,
confidence and engagement in the workplace.
S
Introduce the front line leadership programme to develop leadership
capabilities across front line and middle management.
S
Progress the Senior Leadership Programme to improve our senior
leader’s understanding of their own style and impact to improve
their effectiveness.
M
Continue to invest in Primary Industry Training to build core capabilities
in occupational health and safety, seafood processing, risk management,
and seafood vessel operations.
M
Deliver targeted learning and support to build capability in
strategic priorities.
Strengthening
our workplace
culture
Build a culture of high engagement
and performance across our
workforce to optimise people and
business outcomes.
S
Increase the visibility of the senior leadership group and communication
with employees to improve the opportunities for engagement.
S
Develop and deliver a values connection programme to deepen the
understanding and demonstration of our values.
S
Design a recognition programme that engages employees in key business
outcomes and recognises great achievements against the framework.
M
Increase employee engagement in improvement activities to achieve a
step change in people and business results.
OUTCOME 3 – LEADING THE WAY TO HEALTHY FOOD
Food safety
and quality
Be recognised as a global leader in
providing safe, high quality seafood
that delights our customers
and represents our love for the sea.
S
Engage with customers through a quality satisfaction survey annually.
M
All sites and vessels with less than 1 complaint frequency per million
kilogram processed.
S
Action and close out 80% of quality complaints within 10 working days.
S
Implement and maintain FSSC 22000 in all land based processing sites
by February 2018.
S
Complete full review of customer specifications.
S
Ensure all new vessels are registered and approved by the Ministry for
Primary Industries (MPI).
23
2
REPORTING WHAT MATTERS
MATERIAL ISSUESSTRATEGIC GOALSTERM
1
2017 TARGETSPROGRESS
2
Drive value
through brand
creation
Be the brand of choice worldwide for
our prized New Zealand seafood, by
building a portfolio of brands that
engage with consumers.
M
Build consumer engagement and understanding of our brand.
S
M
Develop the portfolio of brands that grow our dollar per greenweight
kilogram:
– Launch Big Glory Bay Brand.
– Launch Tiaki Brand.
S
Develop the content plans for our social media platform.
M
Packaging review and update.
S
Develop a method for customers to trace products that are from Big
Glory Bay.
Supply chain
Work with our supply chain
to deliver mutually sustainable
solutions that deliver value for
money, and support our focus on
health and safety, product quality,
sustainability, continuous
improvement and innovation.
M
Continue to embed the sales and operational planning process (S&OP)
and distribution strategy to increase the variety and value of fresh
products into the market.
S
Achieve at least $2 million of savings through delivering key
procurement projects.
M
Create a cultural change within the business to better align supply and
demand to meet customer expectations.
OUTCOME 4 – ENSURING HEALTHY OCEANS
Sustainable fish
stocks and marine
farms
Ensure clear commitment to comply
with all applicable laws and regulations
governing our operations, including
relevant international conventions,
recognising the importance of
healthy ocean management including
zero tolerance for overfishing,
underreporting and discarding catch.
S
Maintain third party certifications across Sanford aquaculture
farms, validating our commitment to farm efficiently and deliver
sustainable seafood.
L
All fishers to record and report their catch to ensure maximum
transparency of the fish stock status.
L
Continue engaging with New Zealand’s Deepwater Group to maintain
and support MSC sustainability certification for deepwater species in
New Zealand’s Exclusive Economic Zone.
Marine
conservation
Embrace our role as a change leader
in the seafood industry, applying
influence on the sustainability of our
oceans, leading to better practice and
more sustainable outcomes, while
making a positive impact on the
communities and coastal ecosystems
where we operate.
L
Take a strategic long term view of the vision, risks and opportunities
relating to sustainability aspects of fisheries and work with others
to operationalise best practice adaptive planning, management
and response.
M
Identify, define and deliver targeted initiatives to achieve a measurable
reduction in the use of plastics across Sanford operations.
Endangered,
threatened and
protected species
Ensure protection of marine species,
including seabirds, sea lions, dolphins
and sharks through delivering best
practice farming and fishing
practices, implementing protection
measures and participating in ongoing
robust research programmes.
M
Implement ongoing initiatives to minimise seabird and marine mammal
interactions through research, technology and best practice mitigation.
M
Develop and implement a plan to progressively remove fishing-related
threats and enable the Māui population to recover and expand.
24Sanford Annual Report 2017
PROGRESS ON OUR 2017 SUSTAINABLE BUSINESS TARGETS
MATERIAL ISSUESSTRATEGIC GOALSTERM
1
2017 TARGETSPROGRESS
2
OUTCOME 5 – SUPPORTING ENDURING COMMUNITIES AND PARTNERSHIPS
Engagement and
employment
Respect and support our local
communities in line with our
social licence to operate. Where
possible, we will create local
business, employment and skills
development opportunities.
M
Implement targeted strategies and plans to support local business,
employment, and skills development.
M
Continue to grow the engagement across the communities that
we operate in through a range of initiatives, from open days to
communication through multiple forums.
Strategic
partnerships and
collaboration
Establish strategic partnerships
that create value for the community,
our partners and Sanford in the short,
medium and long term.
L
Continue to foster existing strategic partnerships and establish
new ones where appropriate in line with our overall business strategy
and priorities.
L
Contribute towards the New Zealand Inc brand and key sustainability
initiatives through collaborating with others to deliver outcomes that
make a difference.
OUTCOME 6 – PROTECTING AND ENHANCING THE ENVIRONMENT
Environmental
effects
Minimise our impact on the
environment when carrying out our
business operations, avoid pollution
or contamination of land, air and
water and enhance the environment
in which we operate through sound
management and mitigation.
S
Maintain ISO 14001:2004 across Sanford’s operations.
S
Maintain legal compliance through 100% compliance monitoring,
thereby receiving no punitive regulatory action.
S
Develop and implement environmental risk mitigation plans across
identified critical risk areas and have up-to-date aspects and
impacts registers.
Resource
utilisation and
efficiency
Do more with less by maximising
efficient use of resources,
including optimising the utilisation
of all fish and mussels harvested,
and ensuring waste minimisation,
re-use and recycling.
S
Improve water intensity by 2% at all land-based processing sites and
report all available water consumption data.
S
Reduce the core energy intensity at our land-based processing sites
by 3%.
M
Achieve 30% waste diversion rate across all of our operations.
Carbon reduction
and offsetting
Demonstrate our commitment to
climate change response by actively
reducing our energy consumption
and emission of greenhouse gases
and seeking to introduce low carbon
solutions into our value chain,
where practicable.
S
Reduce our carbon emission intensity by 2.5% across all of
our operations.
M
Save 5GWh of energy or renewable energy conversion potential by the
end of FY18 across all operations in line with the Energy Efficiency and
Conservation Authority (EECA) agreement.
L
Actively engage in collaborative, multi-stakeholder initiatives to support
climate change agendas and actions.
1 S = Short term (1 year or less); M = Medium term (2-5 years); L = Long term (5-10 years, or more)
2 Where 2017 targets are ongoing, work will continue with the targets carried forward into 2018
Achieved Ongoing Not Achieved
25
2
REPORTING WHAT MATTERS
UN SDG 8
DECENT WORK AND ECONOMIC GROWTH
The seafood industry is well placed to supply a growing population
with a source of protein. Sanford is committed to providing
employment opportunities across New Zealand and creating
sustainable wealth on the basis of innovation and branding without
increasing the reliance on our natural resources. This has
progressed well and we have managed to decouple economic
growth from environmental degradation.
UN SDG 9
INDUSTRY, INNOVATION AND INFRASTRUCTURE
Technological progress is the foundation to achieve sustainability
objectives such as increased resource and energy efficiency and
resilient infrastructure. Without technology and innovation,
environmentally sound industrialisation will not happen meaning
opportunities for growth and development of the seafood industry
will not be optimised. Sanford’s investment in scientific research
and technology is key to its ability to contribute to sustainable
development. Value is added to our products through taking this
more innovative approach resulting in an increased return per
kilogram of product.
BUILDING A SUSTAINABLE
SEAFOOD BUSINESS
We will deliver sustainable, profitable and socially beneficial outcomes
through our sector leadership and role in creating a more innovative
and sustainable business and effective risk management strategies.
AND
26Sanford Annual Report 2017
PHOTO: DAWN AT AUCKLAND FISH MARKET
27
MATERIAL ISSUESSTRATEGIC GOALS2017 TARGETS*PROGRESS AGAINST TARGETS**
Shareholder
value and risk
Improve our business margins
and create shareholder
value in a sustainable way.
Demonstrate sector
leadership by creating
a more innovative and
sustainable business. Lead
the way in understanding
and managing our risk profile.
Continue to implement and
support a comprehensive
enterprise risk management
approach across our
business.
(S)
Achieved. Enterprise risk process plans in
place with ongoing review and reporting
(refer Appendix B).
Continue to achieve
improvements in our $/kg
return.
(L)
Achieved. EBIT $0.521 per GWKg, a marginal
increase on 2016 ($0.520 per GWKg).
Drive continuous improvement
at all sites through our 2020
Culture of Continuous
Improvement programme.
(M)
Achieved. Senior management and cross
functional teams have developed initiatives.
Sanford 2020 improvement programme in
place, 90 projects identified and underway
across six outcome areas.
Utilise innovative asset
management tools and
processes to facilitate the
effective upkeep of Sanford’s
physical assets.
(L)
Ongoing. Appointed a Group Asset Manager,
and selected and started the implementation
of a best practice asset management system.
Governance
and
communication
Be recognised as a company
which lives its values in all
our activities, demonstrates
an ethical approach across
all areas of corporate
responsibility, proactively
engages with key
stakeholders and
communicates with clarity
and as much transparency
as possible.
Review Corporate Governance
practices to ensure that we
continue to apply best
practice, and comply with the
requirements of the 2017 NZX
Corporate Governance Code
(NZX Code).
(S)
Achieved. Reported against the recommendations
of the NZX Code earlier than required. Refer to
www.sanford.co.nz/investors/governance
Develop a communication
strategy and structure that
enables the sharing of how we
live our values with our
stakeholders, and supports the
active management of our
reputation.
(S)
Achieved. Appointed a General Manager
for Corporate Communications. Established
a structure on how we manage media
communication, improve internal
communications and manage our reputation.
Continue to produce a
high-standard, world-class,
transparent integrated
Annual Report that supports
integrated thinking across the
business and the creation of
value over the short, medium
and long term.
(S)
Achieved. The Sanford 2016 Annual Report,
Uncompromising Care, received a Gold Award,
the Australasian Integrated Report of the year,
was a finalist in the Australasian Sustainability
Award and Annual Report of the Year, and
received a Silver award at the ARC awards
in New York in the ‘Integrated AR and
CSR’ category.
This table summarises Sanford’s material issues relating to building a sustainable seafood business, the
strategic goals defined through our Business Excellence Framework, our targets for 2017, and our
progress against these targets in contributing to value creation. At the end of this section, we also
define our future targets and vision to 2025.
Material issues AND value creation
28Sanford Annual Report 2017
BUILDING A SUSTAINABLE SEAFOOD BUSINESS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
MATERIAL ISSUESSTRATEGIC GOALS2017 TARGETS*PROGRESS AGAINST TARGETS**
Innovation and
technology
Remain competitive on a
global scale, and lead the
industry in the creation of
value through innovation and
technology in collaboration
with leading research
partners.
Continue the development
and implementation of the
product development
process, from concept to
commercialisation.
(S)
Achieved. The new process is cross functional,
collaborative, with ideas and projects being
scoped, investigated and completed in a
timely manner.
Foster and promote new ideas
for value creation that lead to
innovative and viable business
proposals.
(M)
Ongoing. Several proposals for diversification
made to the business. Hosted an annual
innovation day in April, and attended and
hosted conferences and workshops to bring
and share innovative ideas nationally.
Research and identify
innovation partnership and
equity opportunities in
alignment with our value-add
strategy.
(L)
Ongoing. Sanford purchased Enzaq business
during the year, which manufactures and
exports Greenshell
TM
mussel powder for use
in a range of human and animal products.
Continue with the 7 year
Primary Growth Partnership
between the Government and
Sanford Limited introducing a
selective breeding programme
to produce a wide range of
high performing mussel strains.
(M)
Ongoing. A significant milestone this year was
achieved with the first harvest of hatchery
reared mussels subsequently seeded onto farms
in the Marlborough Sounds, with excellent
growth results realised to date.
Continue with the 7 year
Primary Growth Partnership
between the Government,
Moana and Sealord Group
Limited, trialling new harvest
technology resulting in more
precise catch, less incidental
catch, lower mortality rates,
more selectivity and higher
quality landed fish.
(M)
Ongoing. Precision Seafood Harvest and
Modular Harvest System (MHS) has been
progressively adopted by Sanford and other
partners. The new nets are in place on a
number of inshore vessels, and have been scaled
up to a number of deepwater vessels. The Tiaki
brand continues to sell and is supported by
social media platforms, a website and a
traceability application.
Continue to build IT capacity
with incremental
improvements and new tactical
solutions whilst building our
foundational technology.
(M)
Ongoing. Improved communications for vessels,
production integration with partners, and
integrated contract manufacturing for customers.
VALUE CREATION – OUTCOME:
We will deliver sustainable, profitable and socially beneficial outcomes through our sector leadership and role
in creating a more innovative and sustainable business and effective risk management strategies
* S = Short term (1 year or less); M = Medium term (2-5 years); L = Long term (5-10 years, or more)
** Refer to ‘Progress on our 2017 sustainable business targets’ for full updates across all targets defined
Further information on data and trends is provided in the Key Performance Indicator (KPI) table, contained in Appendix A of this Report.
29
Prices for our high value species of the
wild caught category including toothfish,
scampi, snapper and orange roughy
continued to strengthen during 2017.
This is offset by weaker commodity prices,
in particular jack and blue mackerels.
Operationally, the newly acquired factory
vessel, San Granit, took longer than
expected to commission, which impacted
unfavourably on the cost of catching of our
deepwater species. The fishing operation
was also impacted by a higher than usual
number of vessels undergoing surveys
during the year, which impacted on the
vessel capacity utilisation and hence cost
of catching. A relatively slow hoki season
at the end of the financial year rounded
out a year of challenges from an operations
point of view.
The frozen mussel category was impacted
by softer prices in the beginning of the
year, driven by competitive pressures and
a reduction in demand for frozen meat
product during the year.
Sanford’s profit after tax for FY17 of
$37.5m is an improvement of 7.9% vs FY16
of $34.7m as we move away from losses
from discontinued business incurred last
year. Adjusted EBIT of $63.7m remained
relatively flat to last year ($63.4m) with
improvements in the salmon business
and high value wildcatch species being
offset by challenges in the pelagic species
and operations.
The change in management and
subsequent refocus toward
increasing $/kg made Tribeca
reconsider Sanford as an
investment. Tribeca likes the
journey Sanford is on as a
business.
—
Simon Brown
PORTFOLIO MANAGER & INVESTMENT ANALYST,
TRIBECA INVESTMENT PARTNERS
While the USD exchange rate remained
consistently above 0.70 throughout the
year with the average spot rate of 0.71
(FY16: 0.69), we benefited from our hedge
position to give an effective achieved rate
this year of 0.68 (FY16: 0.71). When the
opportunities existed through the year,
we increased hedging levels to provide
ongoing certainty for the company’s
export earnings.
In this section, we provide overviews of our
financial, operational, people and customer
and commercial performance for FY17.
FINANCIAL OVERVIEW
2017 saw a continuation of our journey
towards de-commoditising our product
portfolio. The launch of the Big Glory Bay
brand around our premium pacific King
salmon has delivered significant gains in the
pricing of that category overall, and it was
pleasing to see the support and uptake of
that brand by high end restaurants, some of
which had specifically called out Big Glory
Bay King salmon on their menus.
The successful acquisition of the Enzaq
mussel powder business based in Blenheim
was another highlight of the year. We are
very excited about this acquisition,
providing us the platform from which to
launch our high value nutraceutical
business. Enzaq is a successful and well
established business with a good customer
base and manufacturing platform. Sanford
brings significant synergy to bear with the
integration of our 211 mussel farms and
SPAT
nz hatchery expertise, which will
enable the selection of the highest quality
raw material into the process. Whilst the
production capacity is currently limited to
1,000T of raw material input, this business
is highly scalable to supply the growing
mussel powder market (refer Innovation and
Technology in this section).
Shareholder
value and risk
Improve our business margins
and create shareholder
value in a sustainable way.
Demonstrate sector leadership
by creating a more innovative
and sustainable business. Lead
the way in understanding and
managing our risk profile.
GOAL
INCREASED NET PROFIT AFTER TAX
▲
7.9%
30Sanford Annual Report 2017
BUILDING A SUSTAINABLE SEAFOOD BUSINESS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
resulting in more uniform growth, and
also improves our food conversion rates.
A new harvest barge with the latest
technology incorporated is currently
under construction.
Our ongoing commitment to sustainability
continues with our farms passing the annual
Best Aquaculture Practices (BAP)
certification audit. This is an internationally
recognised standard around operational
performance that is audited by a third party
to the highest standard (refer Outcome 4
– Healthy oceans).
We continue our efforts to grow this part
of our business to meet the growing world
demand for King salmon.
Mussel farming
In 2017, mussel farming capitalised on the
increased volumes of spat (baby mussels)
supplied from the previous year. This crop
provided our processing plants with a
mainly uninterrupted supply of quality raw
material. Once again, the geographic
spread of our farms allowed optimised
growing capability through matching farm
sites with appropriate seed types and size.
Hatchery spat from our investment in
SPAT
nz has continued to flow into our
Marlborough operations and the first full
scale harvest of this crop was conducted
during the year. We are continually
enhancing our understanding of hatchery
spat in the wild, with the preliminary results
being extremely encouraging; this crop is
showing rapid growth, high yields and
uniformity in size (refer Innovation and
Technology in this section).
In Stewart Island, we renewed our
international BAP certification for our
21 mussel farms, reflecting our desire to
continue to build respect for our products
around the globe. This progress was
underpinned at a national level through a
continued commitment to the A+ NZ
Sustainable Aquaculture Programme and
the continuation of the Marine Farming
Associations (MFA) environmental
certification initiative. During the year we
continued to build on our positive
relationships with council and government
through a number of forums. The National
Direction Working Group has engaged
effectively with the Ministry for Primary
Industries (MPI) to create a set of draft
aquaculture provisions that will provide
more consistent aquaculture plans across
regional councils. Engagement with
legislators will remain a key focus for the
team in the lead up to the 2024 marine
farm licence renewal process.
Fishing
The Tauranga purse seine fleet experienced
a very good English mackerel season, but
weak skipjack and jack mackerel seasons,
which performed below expectations. The
results were rather unexpected as the water
temperatures were generally within the
favourable range for these highly mobile
species.
Our Inshore fleet exceeded last year’s
catch level but fell short of the volumes
expected. The mix of species landed was
sub-optimal and weather events were
disruptive. The North Island East Coast
inshore operations generally worked further
afield from Auckland and in deeper waters
to avoid the prolific small snapper present
in the fishery this year. A very strong
recruitment into the East Coast snapper
fishery bodes well for the future of this
fishery for both commercial and
recreational sectors. The San Tengawai
completed a significant refurbishment
programme this year with improved
propulsion systems, electronics and
crew accommodation; after decades
of continued use, she is ready to serve
us for several more.
The Deepwater fleet (which includes our
scampi vessels) had a good year, the only
exception being the West Coast hoki fishery
which got off to a good start but finished
earlier than predicted, with most operators
in that fishery not catching their available
quota for the year. The squid season
delivered excellent volumes with market
prices holding up well. World demand
could not be satisfied from the traditional
fisheries such as the Falkland Islands,
which experienced their second
consecutive poor season.
This year we commissioned the San
Aramand, a Tauranga based scampi vessel
that was purchased and refitted to replace
the Christmas Creek. The San Aramand is
now our top performing scampi vessel
Optimising Value Creation through
Continuous Improvement
This year, 90 continuous improvement
projects were identified and progressed,
covering all aspects of our operations.
These projects range from process
optimisation to energy efficiency, and
include improvement projects that support
the health and safety of our people, and
enhance the efficiency of our supply chain.
PERFORMANCE OUTCOMENUMBER OF
PROJECTS
Sustainable seafood business35
Our people15
Healthy food16
Healthy oceans11
Communities and
partnerships
3
Protecting the environment10
TOTAL90
OPERATIONS OVERVIEW
The year has been another very busy one
for the operational teams with a lot of
change happening within the business
and more than our normal share of
challenges across the operations. Their
resilience, teamwork and passion for the
company is obvious in the reports below,
and is to be commended.
Salmon farming
Sanford’s Stewart Island salmon operation
had a steady year with production in line
with expectations and market demand
continuing to grow strongly. The key
focus is now on placing this production
into the appropriate sales channel to
maximise the returns from this highly
sought after species.
Investments in replacing and upgrading our
on-water infrastructure have continued
during the year, and further investments
will be made over the next two years to
improve both productivity and the quality
of fish from the farm. A new counting and
grading barge was purchased to enable the
efficient size grading of the salmon through
their life cycle. Separating a single intake of
salmon into like sized groups as they grow
ensures fish have better access to feed,
31
exceeding our pre-purchase expectations.
The San Waitaki (our frozen at sea vessel
that typically focuses on orange roughy and
oreo dory) also made positive contributions
to both the hoki and squid landings for the
year, whilst still meeting her planned
volumes of orange roughy and dory. Our
deepwater long line vessels (San Aspiring
and San Aotea II), continued their excellent
record of operations in the Ross Sea and
South Georgia waters. The importation,
conversion and commissioning of the San
Granit was a significant project this year,
although completion took longer than
projected. The vessel’s performance
improved consistently throughout, and
ended the year with a record setting voyage
on southern blue whiting.
Mussel processing
The new season started with the Kaikoura
earthquake, which resulted in the plant
losing two weeks early in the season to
carry out repairs and restore the hygiene
envelope. Despite the lost time, the
Havelock team capitalised on the new
initiatives introduced last year and set a
new processing record for the plant at
20,500 greenweight tonne (GWT), with the
best ever year previously at 18,300 GWT. A
superlative effort from the Havelock team.
The farming team provided mussels in good
condition throughout the year with the
plant only taking one week off in the winter
for scheduled maintenance. The focus this
year has been on processing improvements,
which has led to enhancements in yield,
de-byssing efficiency and optimising
freezing capacity.
Fish processing and salmon processing
Our wetfish teams in Auckland, Tauranga,
Timaru and Bluff did a great job of
optimising the volume of fish available to be
sold as fresh throughout the year.
Considerable work was done this year to
identify opportunities to reduce manual
handling; these initiatives will be rolled out
in FY18. Tauranga introduced a new layout
for packing whole fish, which has improved
productivity. Timaru is halfway through
building a multi-purpose room to provide
better capacity and flexibility for processing
toothfish and fresh fish.
Further improvements to the Bluff salmon
processing plant were undertaken this year
with the introduction of a new filleting
machine which has provided improved
quality, yield, and productivity (refer
• CASE STUDY •
The century old Head Office building at
22 Jellicoe Street, Auckland was subject
to a major refurbishment project from
January through to October 2017.
Following on from the large scope
of work, including earthquake
strengthening, residue asbestos removal
from ceiling void spaces and a full open
plan conversion of the office space
meant that all staff were required to
temporarily relocate to a different office.
The layout changes created more
meeting spaces and an excellent kitchen
and staff canteen facility. The
refurbishment also allowed the heating,
ventilation, fire protection and air
conditioning systems to be upgraded,
and a new digital security system to be
installed. We consciously decided to
leave some of the walls and floors
untreated. The exposure of the original
brick work and timber floors has
provided a link from the history of the
building as the home of the Sanford
factory to its new purpose as an office
environment. Large decals of Albert
Sanford and the original fish market give
a sense of where the company has come
from and its journey over the last
100 years.
The next stage of the project will be
undertaken in the next financial year, and
will see the Auckland Fish Market being
transformed into a destination for
fantastic seafood to take home or enjoy
on the spot (refer Outcome 3 –
Healthy food).
—
Head Office Refurbishment
—
32Sanford Annual Report 2017
BUILDING A SUSTAINABLE SEAFOOD BUSINESS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
Outcome 2 – Our people). The Bluff team has
continued to build on optimising the daily
production to meet customers’ needs and
maximising returns for Sanford, whilst
achieving the appropriate balance between
fresh and frozen requirements.
Supply chain
FY17 has been a busy year for the supply
chain team with the principal focus being
on supporting the sales team with their
objective to grow value added seafood and
further understand and optimise the cost
base of our supply chain processes. The
costs have been well managed in all
activities including storage, transport and
export freight, seeing a 12.6% reduction in
overall cost per kg ($/kg) compared to
FY16. This has been managed principally
by reducing the number of suppliers,
focusing on quick stock turns, further
optimising storage and handling processes
and the lowering of global freight rates.
Further progress has been achieved with
the Sales & Operational Planning (S&OP)
process, with closer alignment between
demand and supply. Where supply
constraints occur, this process has ensured
that the best return for the business is
achieved. The launch of new products adds
further complexity to our supply chain as
we continue to grow new customers; a
foundation of ensuring an agile and process
driven supply chain is becoming key to
delivering ongoing value to the business
(refer Outcome 3 – Healthy food).
Asset management
The appointment of a Group Manager
responsible for Engineering and
Infrastructure Assets signifies a new focus
on company-wide asset management. In
addition to facilitating improvements and
aligning policy, process and best practice
this shift will allow the business to have
greater control over repairs and
maintenance and capital expenditure.
Though the change is in its infancy, the
sharing of engineering knowledge and
experience across the diverse range of
businesses that Sanford operates is already
showing real benefit. We successfully
delivered a mid life update of one of our
vessels San Hauraki, the first of many
projects that will be undertaken under
the new model.
PEOPLE OVERVIEW
Developing our people
Our investment in people has continued
to strengthen and be a strong contributor
to improved people and business results.
In FY17 our focus has been on building
capability and workplace culture to increase
engagement and overall performance.
This has seen more than a quarter of our
employees and sharefishers participate
in formal learning and development
programmes to improve literacy and
numeracy skills, leadership capability
and role specific technical skills.
Our key training interventions have been
our ‘Keeping it Fresh’ communication
programme, our newly launched San
Activate and San Ignite people leadership
programmes, and the on-going core skill
development provided by the Primary
Industry Training Organisation (PITO)
(refer Outcome 2 – Our people).
As our learning framework requires all
trainees to utilise their new knowledge
and skills to improve the way we do things
across the business, there has also been
great improvement made across a range
of business and people processes. These
include the introduction of safe behaviour
observations, process improvement teams,
coaching and peer to peer support.
We also had two Sanford team members
attend the Sustainable Business Council
(SBC) Future Leaders Programme where
they researched and developed
recommendations for action on five of the
United Nations Sustainable Development
Goals (refer Outcome 5 – Communities and
partnerships). Through ongoing learning and
development we are not only improving
how we do things in our own business, but
having a real impact on global concerns
and opportunities.
Health and safety
The health, safety and wellbeing of our
people is a priority of the Board and
management and we continue to make
progress against our three year 10 point
Health and Safety Action Plan. The diversity
and physical nature of our operations
presents many significant challenges and
employee engagement remains a critical
element of managing health and safety
across the business. We have seen positive
improvements in lead indicators such as
training delivered, wellbeing initiatives
implemented and near miss reporting. Our
ongoing investment in critical risk
management has delivered substantial
upgrades in the management of chemicals
across the business and traffic management.
Our focus on safe work processes and design
has also helped to eliminate some of the
repetitive tasks that have the potential to
impact the wellbeing of our people.
This year we engaged external professionals
to assess our opportunities to improve as we
have been disappointed by relatively static
lag indicators such as a Lost Time Injury
Frequency Rate (LTIFR) of 14.67/million
hours worked (FY16: 14.69) and a 2%
increase in Lost Time Injuries. As a result of
feedback received, we are investing further
in safety leadership, culture and wellbeing, in
addition to maintaining our strong focus on
managing critical risks and hazards across
our operations in FY18. We will also focus
more on identifying the shared hazards and
solutions we have across our operations
while not losing identification and effective
management of the unique hazards inherent
across our diverse operations. The Board
expects great improvement across all
measures of performance and will monitor
this through the Health and Safety &
Regulatory Compliance Committee.
PHOTO: UTKIR KHUSANOV, WHOLESALE SUPERVISOR, AUCKLAND
33
key communications platforms and
launched new ones around our branded
portfolios, ensuring that we are set up to
engage directly with our consumers
through social and digital channels to build
knowledge and understanding of what
drives them when it comes to purchasing
and consuming seafood.
Looking ahead, we are developing plans to
extend our branded offerings via range
extensions and growing our customer base,
and plans to reimagine and reinvigorate the
Auckland Fish Market are well underway.
We aim to build a world class destination
that is a true celebration of Sanford’s
beautiful New Zealand seafood.
Innovation
In 2017 we achieved tangible improvements
in the value of the fish that we harvest
through better utilisation, product
diversification, sales into higher yielding
markets and improved processes. We also
acquired Enzaq, a significant highlight for
the year (refer Innovation and Technology in
this section).
In order to achieve our goal of
being the Best Seafood Company
in the World we need to deeply
embed the culture of innovation,
always looking for ways of adding
value to the precious resource
we harvest. Our purchase of
Enzaq this financial year is an
exciting move toward the
nutraceutical market, a natural
area of diversification for an
innovation led company. Expect
more movement from us in
this area.
—
Andre Gargiulo
CHIEF CUSTOMER OFFICER, SANFORD
deliver the maximum return to Sanford.
Increased time in market from key Sanford
personnel will continue to add value to our
customers, awareness of our brands and
ultimately the bottom line.
Domestic sales
Sanford’s domestic wholesale and
foodservice customer base is continuing to
grow, particularly through incorporating Big
Glory Bay ocean farmed King salmon and
premium whitefish species through retail
and restaurant consumer markets. During
FY17, we observed an increased
contribution of fresh species supplied from
Tauranga and the South Island to ensure
continued supply through the Auckland Fish
Market, domestic foodservice and domestic
wholesale. Foodservice fresh fish expansion
will be implemented in the South Island
before Christmas 2017, servicing customers
with Sanford fresh fish supply. Revenue
increases have been initiated across
Sanford’s King salmon, as well as across a
number of premium whitefish species. Also,
lesser known species have been promoted
through channels such as My Food Bag,
which has accumulated both growth and
recognition of the opportunity that these
species can provide moving into FY18,
where we can expect to see continued
growth demand through these channels.
Aligning Sanford with the shared vision of
customers such as The Langham Hotel
Auckland (now the Cordis), and My Food
Bag are crucial in our journey to continue
this growth. This includes ensuring we
deliver on sustainability outcomes, aligned
with our vision to become the Best Seafood
Company in the World.
Marketing and branding
A little over a year into our journey to get
closer to our consumer, and we have a very
full report card. From a brand perspective
we redeveloped all of our existing
packaging materials, updated every site
with the new Sanford logo, had successful
domestic trials for our polybin replacement
programme, developed promotional plans
for the Auckland Fish Market and Seafood
School, and launched our first brand, Big
Glory Bay Seafood, into highly acclaimed
restaurants in Auckland (refer Outcome 3
– Healthy food). We also reconfigured our
CUSTOMER AND
COMMERCIAL OVERVIEW
International sales
Focus on fresh is still a key focus and sales
of salmon and fresh white fish were steady
year-on-year. This is a significant area of
opportunity for Sanford to realise value
growth as we continue to deepen our
understanding of consumer trends and
evolve our strategies accordingly. We
expect value to continue to improve as we
move into Sanford and Tiaki brands and as
global demand and supply balances swing in
our favour. This year we launched a live
mussel business in key markets; focusing on
live in export markets will provide a
premium consumer experience, and enable
us to access new segments of the market
and diversify from our reliance on frozen
half shell. Salmon will be a key driver of
growth in export sales as we move into Big
Glory Bay branded sales, increase our focus
on higher value markets, and move up the
value chain in line with market specific
strategies (refer Outcome 3 – Healthy food).
This year has seen a continuation of strong
performance in the China market with
revenue lifting slightly, despite some
toothfish sales expected for the 2017 year
being delayed to 2018 by a slower season.
The China market has been driven by the
growth of fresh King salmon, strong
toothfish pricing and continued strength in
orange roughy and scampi. Opportunity for
growth remains as we identify premium
niches in market.
The USA remains our biggest international
market by value at 17.8% of revenue led by
mussels and orange roughy, which have
strong consumer demand. Other key
markets of note were Japan and Europe
who both grew on the back of the
availability of hoki fillet as we continue to
add value by moving away from lower value
commodity lines.
Strategic reviews of all these key markets
have been undertaken to develop a more
thorough species, channel and customer
strategy by market. We have re-allocated
sales resources behind this direction to
allow for appropriate focus on growth
markets and to deliver on the goal of
driving Sanford branded products to end
customers and consumers. Further market
intelligence is being gathered to identify
potential high value end customers who can
34Sanford Annual Report 2017
BUILDING A SUSTAINABLE SEAFOOD BUSINESS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
Sanford continues to show
leadership in communicating
value creation through their
international award-winning
Annual Integrated Report. I
welcome their most recent
report, Uncompromising Care
2016 and recognize their efforts
to evolve their approach towards
balanced and transparent
reporting. I encourage other
businesses to follow the example
set by Sanford and others,
learning from their journey, to
evolve their corporate reporting.
I congratulate and thank Sanford
for always being willing to
support, encourage and lead
others on their integrated
reporting journey.
—
Richard Howitt
CEO, INTERNATIONAL INTEGRATED
REPORTING COUNCIL (IIRC)
INVESTOR RELATIONS
We remain committed to meeting our
obligations to shareholders, communicating
through our Annual and Interim reports and
at our Annual General Meeting; we will
highlight any news likely to affect our
operations, share price or financial standing.
We provide these updates to the
New Zealand stock exchange and on our
website www.sanford.co.nz. Our Chief
Executive Officer (CEO) and our Chief
Financial Officer (CFO) have also made
several presentations to investor groups
in FY17.
CORPORATE GOVERNANCE
Sound corporate governance through
having the right structure, people,
practices and policies in place is
fundamental to ensuring Sanford’s ability
to create maximum value over the short,
medium and long term. An overview of
our Corporate Governance Framework,
including an introduction to our Board,
Executive Team and the key practices
and policies that are in place is set out
under Corporate governance (refer
pages 104 – 109). Consistent with our
commitment to best practice corporate
governance, Sanford has chosen to adopt
and report against the recommendations of
the 2017 NZX Corporate Governance Code
(NZX Code) in advance. Our Corporate
Governance Statement 2017, which details
the extent to which Sanford has followed
the recommendations of the NZX Code,
is available here: www.sanford.co.nz/
investors/governance.
Our Combined Independent Auditor’s and
Assurance Report, issued by our external
auditor KPMG in relation to this Report, is
included on pages 151 – 156.
Governance and
communication
Be recognised as a company
which lives its values in all
our activities, demonstrates
an ethical approach across
all areas of corporate
responsibility, proactively
engages with key stakeholders
and communicates with
clarity and as much
transparency as possible.
GOAL
ANNUAL REPORT
– 2016 –
UNCOMPROMISING
PHOTO: SANFORD ANNUAL REPORT 2016
35
MANAGING OUR COMPLIANCE:
INTERNAL AND EXTERNAL AUDITS
Sanford has a comprehensive internal
audit programme in place, which covers
food safety, quality, health and safety,
environmental, asset management and
maritime compliance aspects. This includes
audits carried out by specialist third party
auditors on behalf of Sanford. For example,
in FY17 Ernst & Young (EY) conducted
comprehensive Food Safety & Quality
and Health & Safety reviews to support
governance and inform strategy. In addition,
91 external compliance audits were conducted
on Sanford’s operations, an increase of 16%
from FY16, as set out below:
OPENING UP: BUILDING OUR
COMMUNICATIONS NETWORKS
Sanford has made 2017 a year of
transformation in its communications
approach. The industry worked hard to
correct negative misconceptions, but the
rapidly changing world of 24 hour news,
faster news cycles and ubiquitous social
media increases the pressure on companies
to respond faster and ensure they have a
voice. We employed a General Manager
for Corporate Communications, a new role
for the business. Her focus has been putting
a structure around how we manage our
media communications, improve our
internal communications and proactively
manage our reputation.
Sanford has continued to actively engage
with non-governmental organisations
(NGOs), regulators and industry, but it
has widened the conversations in 2017
to include more active engagement
with government on issues such as
technology on our vessels, sustainability,
using science to make the best decisions
for the environment and for business,
and our commitment to benefiting the
communities we operate in.
We have pro-actively told some of our
Sanford stories to key media outlets
including the story of a dolphin rescue
operation carried out by one of our purse
seine skippers (refer Outcome 4 – Healthy
oceans), the story of our longest serving
staff member (Lloyd TeNgaio who has
worked for 52 years in the Auckland
factory) (refer Outcome 2 – Our people)
and two stories which reflect our
commitment to helping New Zealand
birdlife (our support for black petrel
monitoring and for public education about
these birds and our ongoing donation of
fish to feed rescued penguins in a sanctuary
in Dunedin) (refer Outcome 4 – Healthy
oceans). Discovering these stories within
our own business has also been a boost for
the staff involved, who were all humbled
but grateful for the recognition.
Sanford has some great stories
to tell. The symbol of a skipper
letting a $55,000 catch go to
save dolphins is very significant.
That’s something that changes
people’s perception of the
fishing industry.”
—
Lou Sanson
DIRECTOR-GENERAL
DEPARTMENT OF CONSERVATION
We remain committed to multi-stakeholder
forums where the best decisions can be
made by all key stakeholders working
together, and further details of the initiatives
Sanford is involved in are provided in
Outcome 4 – Healthy oceans and Outcome 5
– Communities and partnerships.
Beyond our obligations to investors, we
have had a regular stream of visitors to
every one of our sites from members of the
public keen to learn more about Sanford.
These ranged from school groups to visits
by government officials from Vietnam keen
to discuss our approach to aquaculture.
As much as possible, Sanford aims to
operate with an open door policy. Whenever
we can share news from our business, we do,
within the common sense constraints of
commercial sensitivity. We believe that by
being as open and transparent as possible,
we are in the best position to answer any
criticism of commercial fishing, and we set
an example about how fishing can be a
sustainable, values-based business with
great stories to tell.
Sanford’s reporting is world-class
and this is influencing the way
other organisations report.
—
Abbie Reynolds
EXECUTIVE DIRECTOR
SUSTAINABLE BUSINESS COUNCIL (SBC)
EXTERNAL
COMPLIANCE
AUDIT
NUMBER OF
AUDITS
COMPLETED
20172016
MPI Food Safety
Performance Based
Verification Audits (PBV)
5745
MPI National Shellfish
Sanitation Programme
(NSSP)
86
Marine Stewardship Council
Chain of Custody
21
A+ NZ Sustainable
Aquaculture Programme
00
Best Aquaculture Practices
(BAP)
11
Organic Certification10
ISO 14001 Environmental
Management Systems
11
FSSC 22000 Food Safety
Management Systems
73
Accident Compensation
Corporation (ACC)
66
Maritime Audits (MOSS)511
Customer Food Safety
Audits
32
Total Audits Conducted9176
36Sanford Annual Report 2017
BUILDING A SUSTAINABLE SEAFOOD BUSINESS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
INNOVATION – A KEY GROWTH
STRATEGY
Sanford has made multiple tangible
investments in innovation, and through
some effective partnerships, we have
focused our efforts in key areas including
Precision Seafood Harvesting (PSH),
SPAT
nz, and the recent acquisition of Enzaq.
Sanford has also made significant
investments in people, culture, networks,
partnerships and research to enable
continued growth and value creation.
HATCHING PLANS – THE GROWTH
OF SHELLFISH PRODUCTION AND
TECHNOLOGY (SPAT
nz)
SPAT
nz is a Sanford owned company and a
Primary Growth Partnership (PGP) that
started in 2012; it has turned research into
a commercial reality by developing methods
to breed spat in a purpose built hatchery at
a fully commercial scale. Finding enough
baby mussels (spat) to grow on our farms
has been a challenge for mussel farmers
and until now, Sanford has been entirely
dependent on wild spat washed up on 90
Mile Beach or caught on collectors mainly
in Golden Bay. The farmers had no certainty
of supply and little control over the
characteristics of the mussels growing on
their farms; SPAT
nz is our attempt to solve
that problem.
Sanford’s aquaculture interests represent
29% of our business by revenue in 2017 and
21% of the total revenue is mussels, where
our focus is on the New Zealand
Greenshell™ mussel. Greenshell™ mussels
are increasingly appreciated in both export
and domestic markets for their anti-
inflammatory properties as well as their
taste and positive environmental profile.
The PGP grew out of the pioneering
science done at the Cawthron Institute in
Nelson and five years later, SPAT
nz has had
a milestone year. In FY17, the first spat bred
in the SPAT
nz Nelson hatchery were
harvested with excellent results.
Recognition of the great work done by the
team came in October at the New Zealand
Innovation Awards in Auckland where
SPAT
nz won the Innovation in Agribusiness
and Environment Award.
The SPAT
nz Programme Manager, scientist
Dr Rodney Roberts said that “It has been a
great year for the hatchery. It is extremely
satisfying to see years of hard work and
solid science pay off like this. We know our
results can change the game for mussel
farmers and can produce robust, faster
growing and more consistent mussels, and
because we have much more control over
our processes, the hatchery will also
smooth out fluctuations in spat supply.”
SPAT
nz is breeding better mussels by
choosing parents that have naturally
desirable characteristics; the FY17 breeding
run produced 100 mussel families adding
to the wide range available from earlier
cohorts. SPAT
nz will release the results of
its growth rate comparisons to wild spat
in 2018, with the results so far looking
very promising.
The SPAT
nz team still has significant
challenges to address in the remaining
two years in the PGP. With the hatchery
performing very well, SPAT
nz has turned its
attention to increasing the spat retention
following transfer to farms, which is
currently highly variable, in order to
maximise spat supply from the hatchery.
This tricky stage in the life cycle is also
a challenge for wild spat.
Innovation and technology
Remain competitive on a global
scale, and lead the industry in
the creation of value through
innovation and technology
in collaboration with leading
research partners.
GOAL
PHOTO: HATCHERY BRED MUSSELS READY TO HARVEST
IN THE MARLBOROUGH SOUNDS
PHOTO: BAGS OF ALGAE USED AS MUSSEL FOOD AT SPAT
nz
37
SPATnz AND THE PGP PROGRAMME
• The PGP enables partnerships between
MPI and New Zealand’s primary industries.
• Investing in a PGP programme provides
the opportunity for the primary
industries to carry out ambitious, and
often risky, innovation programmes that
can deliver significant long term growth.
The risks associated with these
programmes are often too large for
individual companies.
• Sanford is the sole private sector investor
in SPAT
nz and SPATnz has the exclusive
use of its products and intellectual
property until November 2024.
• When the SPAT
nz programme is fully
operational, it will add around
NZ$80 million/year to the economy and
when the spat are taken up across the
New Zealand industry it will add nearly
NZ$200 million/year.
Hatchery spat opens up all sorts
of opportunities around selective
breeding and product
development in high value areas
like nutraceuticals and
superfoods. New Zealand
mussels are already world
famous but the hatchery unlocks
a new level of innovation to take
our industry to another level.
—
Gary Hooper
CHIEF EXECUTIVE OFFICER,
AQUACULTURE NEW ZEALAND
SUPPORTING A CULTURE
OF INNOVATION
To build and foster a creative innovation
culture, and inform the development of
processes and strategy, we conducted
our second annual Innovation Day. The
innovation style that Sanford is promoting
is cross functional and team oriented.
Our approach involves taking the time
to more accurately define the nature of
the problem being solved using creative
problem naming techniques, with the goal
being the development of elegant solutions.
RESEARCH AND DEVELOPMENT
We continue to lead a number of
commercially oriented research
programmes including market research,
product science and process optimisation
research. Government funded programmes
with MPI, Callaghan Innovation, Ministry
of Business, Innovation and Employment
(MBIE) and High Value Nutrition provide
excellent financial and scientific leverage to
build and maintain a competitive advantage
through an evidence based approach.
ENZAQ
Sanford recently purchased the
Marlborough based Enzaq business, which
manufactures and exports Greenshell
TM
mussel powder for use in a range of human
and animal products. There are many
studies that describe the unique anti-
inflammatory properties of Greenshell
TM
mussel extracts and Enzaq’s powder has
been shown to have some of the highest
levels of bioactivity compared with other
powders. The Enzaq process utilises a fully
automated flash drying technique to make
the powder instead of cooking or freezing
it. Enzaq can ensure its long term high
quality Greenshell
TM
mussel supply and
realign their commercial plans to that of a
large New Zealand company with global
markets. Sanford benefits from diversifying
its product range and utilising additional
harvest volumes with the best producer of
mussel powder in the country.
PHOTO: SPAWNING SPAT MUSSELS
38Sanford Annual Report 2017
BUILDING A SUSTAINABLE SEAFOOD BUSINESS
SPATnz
KEY STATISTICS
21
PERSONNEL
(STARTED WITH
4 STAFF
IN 2012)
5/7
5 YEARS
INTO
A 7 YEAR
PROGRAMME
3,732M
6,540
$100 TO
$230M
POTENTIAL REVENUE
INCREASE
READY TO SETTLE
LARVAE PRODUCED
LITRES PER DAY OF MUSSEL FOOD,
CONTAINING 64 TRILLION CELLS
PER DAY OF MICROALGAE
FUNDING
50% ($8.6M) SANFORD
50% ($8.6M) MINISTRY FOR PRIMARY
INDUSTRIES
EXPECTED ECONOMIC BENEFITS
INCLUDE AN ADDITIONAL $100-
$230M PER ANNUM IN INDUSTRY
REVENUE BY 2026 IF THE ENTIRE
INDUSTRY INVESTS IN THE
PROGRAMME’S TECHNOLOGY
3
REPORTING OUTCOMES
& MATERIAL ISSUES
• CASE STUDY •
PHOTO CREDIT: STEVE HUSSEY
PRODUCT DEVELOPMENT
Our dedicated product development function provides the capability and
framework to enable the capture of new market opportunities using a cross-
disciplinary approach and team project management practices to deliver new
product formats, packages and products. Sanford continues to look for additional
partners and opportunities to add further value and utilise our valuable resources.
To deliver our precious Greenshell
TM
mussels overseas, the innovation
team had to make sure they were
comfortable and at the right
temperature; mussels are the
Goldilocks of the bivalve world –
they like the temperature to be not
too hot and not too cold. Mussels
also like to be nestled in protective
packaging, so the team trialled and
developed a set of handling and
packing specifications to ensure
they thrive en-route and arrive in
perfect condition to our international
foodservice customers. We have
opened up a new market in a creative
way, whilst looking after one of our
most iconic New Zealand species.
—
Live Mussels
—
PRODUCT UTILISATION – FUTURE STATE
37%
HEADS AND FRAMES
26%
FILLETS
14%
NUTRACEUTICALS
11%
MINCE AND
TRIMMINGS
9%
FISHMEAL
AND OIL
3%
ROE
39
INFORMATION
TECHNOLOGY INITIATIVES
The Information Technology (IT) strategy
is centred on flexibility, core capability,
customer engagement and business values.
Execution of the strategy continued in
FY17 with a focus on incremental
improvements and new tactical solutions
whilst continuing to build our foundational
technology. Key deliverables included
improved communications for vessels,
production integration with partners, and
integrated contract manufacturing for
customers. Managing risk and security
remained a focus, along with operational
efficiency and improved sustainability.
In FY18 we will focus on transitioning from
addressing tactical needs to delivering
major technology components, stronger
strategic alignment across the business,
and standardisation of technology in our
branches and vessels. A significant change
programme (SanCore) has been launched
and will be phased across several years to
ensure our information systems provide
the business capability required to support
the achievement of Sanford’s vision.
The initial focus is on discovering current
challenges and technology gaps, and
developing a future state operating model
and technology requirements. Additional
tactical initiatives in 2018 include electronic
reporting and monitoring for vessels (IEMRS)
(refer Outcome 4 – Healthy oceans),
providing business continuity solutions for
factory vessels, and improving reporting
and analytics with additional data sets.
PRECISION SEAFOOD
HARVESTING IN ACTION
Precision Seafood Harvesting (PSH) is
a technology that aims to deliver better
quality seafood while reducing incidental
catch. It’s an all-kiwi innovation, and is
supported by three local fishing companies,
Sanford, Moana and Sealord. The PSH
programme began in 2012 and has two
more years to run. The supporting
companies are contributing funding
of $24.02m over seven years and the
Government matches that amount
through a Primary Growth Partnership.
In 2017, new lightweight and high-strength
materials were tested and are now used at
sea; they are more sturdy and easy to use
than the previous PVC construction.
Sanford also led the way in the installation
of new onboard handling systems that keep
the fish in the water for longer to improve
the survivability for the fish that must
legally be returned to the sea. Validation
testing of a bigger Modular Harvest System
(the carefully designed nets used in PSH)
has been completed in line with its intended
use in deepwater fishing.
Sanford is using PSH on two of our inshore
vessels and we plan to introduce it to two
more. Following the successful preliminary
trials on the San Discovery, we are exploring
further opportunities to deploy PSH in the
deepwater fillet vessels San Enterprise and
San Granit.
DELIVERING INNOVATIVE
TECHNOLOGY
Sanford continues to utilise technology to
support our drive to deliver an innovative
approach across our operations. In addition
to our continued investment in electronic
monitoring with Snapper 1 (SNA1)
Commercial and Trident Systems, the Māui
Dolphin Protection Plan (refer Outcome 4 –
Healthy oceans) has required Sanford,
along with our project partners, to think
innovatively. This has included developing
a vessel tracking app, scoping the
development of a dolphin-safe trawl net,
and building on the existing Trident System
FishEye electronic monitoring system to
include Māui dolphins.
PHOTO: PRECISION SEAFOOD HARVESTING IN USE
SanCore
OUR SIGNIFICANT CHANGE
PROGRAMME HAS BEEN
LAUNCHED AND WILL BE
PHASED ACROSS SEVERAL YEARS
40Sanford Annual Report 2017
BUILDING A SUSTAINABLE SEAFOOD BUSINESS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
MATERIAL ISSUESSTRATEGIC GOALS FUTURE TARGETS 2018 AND BEYONDOUR 2025 VISION
Shareholder
value and risk
Improve our business margins
and create shareholder value
in a sustainable way.
Demonstrate sector leadership
by creating a more innovative
and sustainable business. Lead
the way in understanding and
managing our risk profile.
Continue to improve our $/kg return
with a view to achieving the long term
goal of an average return of $1/kg
(greenweight equivalent).
Sanford has achieved sustainable,
profitable growth year-on-year and
sector-leading management of our
risk profile, ensuring measurable
value creation as a best practice
sustainable business.
Drive value creation through the
ongoing and proactive identification of
continuous improvement opportunities
across the business.
Be recognised as an industry leader in the
use of innovative asset management tools
to facilitate the effective upkeep of
Sanford’s physical assets.
Governance and
communication
Be recognised as a company
which lives its values in all our
activities, demonstrates an
ethical approach across all
areas of corporate
responsibility, proactively
engages with key stakeholders
and communicates with
clarity and as much
transparency as possible.
Deliver a corporate governance structure
and framework that continues to support
best practice, including ongoing
compliance with the NZX Code.
Sanford is an exemplar of a
responsible, ethical, transparent
well-governed organisation that
leads with care, passion and integrity.
Our performance is communicated
on a proactive basis, and is valued by
our stakeholders.
Establish and support continuous
stakeholder engagement processes to
ensure we continue to deepen shared
understanding between Sanford and
its stakeholders.
Continue to operate a robust
communications structure and processes
to ensure that together with our
stakeholders, partners and our people, we
are working collaboratively to deliver on,
and communicate our values and vision.
Innovation and
technology
Remain competitive on a
global scale, and lead the
industry in the creation of
value through innovation and
technology in collaboration
with leading research partners.
Implement innovative approaches,
optimise the utilisation of all materials,
and diversify product offerings.
Sanford is competitive on a global
scale, leading the seafood sector in
the creation of value through robust
research, innovation leadership, and
the use of technology.
Continue to build and foster a creative
innovation culture through building
internal and external collaborative
networks, and incorporating innovation
into all aspects of Sanford’s operations.
Implement the SanCore business system
transformation programme to provide
the business capability required to
support Sanford’s vision.
These targets for 2018 and beyond have been informed by Sanford’s strategy, and a thorough review of international guidance
1
on business
commitments to support achievement of the UN Sustainable Development Goals.
1. GRI and UN Global Compact 2017: Business Reporting on the SDGs – An Analysis of the Goals and Targets.
AND our future focus
41
UN SDG 3
GOOD HEALTH
AND WELLBEING
Ensuring healthy lives and promoting
wellbeing at all ages is essential to
sustainable development. From a global
perspective our workforce are relatively
healthy and well, but there are always
opportunities to add value to our people
over and above our economic contribution.
As a key material issue to our business, the
health, safety and wellbeing of our people,
as well as those in our supply chain,
represent key focus areas that we are
actively working on.
UN SDG 4
QUALITY
EDUCATION
Continuous investment in our people is
critical to ensure that the business is always
learning. We invest in our people from the
frontline, through vocational training and
formal qualifications, through to our
company-wide talent pool for senior
management, who are deepening their
understanding of leadership and personal
development. Due to our active
commitment towards education, we are
enriching the lives of our people as well as
adding value to the business.
UN SDG 8
DECENT WORK AND
ECONOMIC GROWTH
Sanford can improve the economic
outcomes of the local communities through
the jobs it creates (particularly in the areas
that would otherwise have limited
employment opportunities) and the
associated local employment through the
supply chain. It is critical that all work is
safe; our people’s wellbeing is very
important to us. The growth targets Sanford
has for the future are aimed at contributing
toward this outcome.
ENABLING ZERO HARM
AND GREAT PROSPECTS
FOR OUR PEOPLE
We will maximise the prospects of our people by making ‘Zero Harm’
a key priority, offering meaningful opportunities for continual learning
and development, and living our values to ensure we become an
employer of choice.
AND
42Sanford Annual Report 2017
PHOTO: LLOYD TeNgaio, FACTORY ADMIN AT OUR AUCKLAND
PROCESSING PLANT HAS WORKED 52 OF HIS 74 YEARS AT SANFORD
43
This table summarises Sanford’s material issues relating to our people, the strategic goals defined through our
Business Excellence Framework, our targets for 2017, and our progress against these targets in contributing
to value creation. At the end of this section, we also define our future targets and vision to 2025.
MATERIAL ISSUESSTRATEGIC GOALS2017 TARGETS*PROGRESS AGAINST TARGETS**
Health, safety
and wellbeing
Through the way we work
and behave, and the
initiatives we implement to
continually enhance our work
environments, we will strive
to protect our people from
the risks of occupational
injury or ill health.
From 1 October 2014, achieve a
50% reduction in Lost Time and
Notifiable (serious harm) Injuries
by 30 September 2017.
(M)
Not achieved. Improved Lost Time Injury
Frequency (LTIFR) at 14.67/million hours
worked (FY16: 14.69, FY14: 18.09). Ten
notifiable (serious harm) injuries occurred
(FY16: 6, FY14: 6), which was an increase of
67%. The number of Lost Time Injuries (LTI)
increased to 55 (FY16: 53), which was up 2%
(FY14: 56). Lost Time Injury Severity Rate
measure was established. The total injuries were
1,032 (a 21% reduction) from 1,300 in FY16.
Continue to increase and monitor
near miss reporting, utilising
learnings to inform and reduce
risk profiles.
(S)
Achieved. 12% increase to 324 (FY16: 289).
Raised 799 Health and Safety System
Improvement Notices (SINs), of which 83%
were closed out within the defined timeframe,
as at 30 September 2017 (target 75%).
Implement health and safety
focused training across all levels
of Sanford operations.
(S)
Ongoing. The programme of training was
rolled out across all levels of the business,
delivering 693 training days in FY17, covering
general health and safety management,
targeted risk assessments and vessel level
health and safety management.
Implement a SanWell wellness
programme at all Sanford sites
by end of 2017 financial year.
(S)
Achieved. Implementation on all sites, with
Timaru achieving SanWell Silver accreditation
and Tauranga achieving Bronze accreditation.
Build a leadership driven culture
across health, safety and
wellbeing to continuously
improve the levels of
engagement and improve
performance.
(M)
Ongoing. There was an overall improvement
in cultural maturity based on an internal
governance review and audit. There were
increased Health and Safety Committee
meetings (489, up from 317 in FY16) and
workplace inspections (1,708, up from 1,361
in FY16).
Implement programmes to
identify, effectively manage and
mitigate the most critical risk
work activities.
(M)
Ongoing. Risk assessments and controls are
in place for ammonia containment, traffic
management, working on vessels and
contractor management, and improvement
programmes. During FY17, 228 risk assessments
were completed.
Maintain a secondary status
in the Accident Compensation
Corporation (ACC) Partnership
programme.
(S)
Achieved. Realised a 5% reduction in ACC
accepted claims to 134 (FY16: 141). Average
0.12 claims per employee (FY16: 0.14), with
a 56% reduction in the average cost per claim
to $1,524 (FY16: $3,439).
Material issues AND value creation
44Sanford Annual Report 2017
ENABLING ZERO HARM AND GREAT PROSPECTS FOR OUR PEOPLE
3
REPORTING OUTCOMES
& MATERIAL ISSUES
MATERIAL ISSUESSTRATEGIC GOALS2017 TARGETS*PROGRESS AGAINST TARGETS**
Developing
our people
Maximise the prospects
of our people, offering
meaningful opportunities
for continual learning and
development to ensure that
each and every one of our
employee can reach their
full potential.
Leverage literacy and numeracy
programmes to build and improve
skills, confidence and engagement
in the workplace.
(S)
Achieved. 80 staff across 4 processing sites
participated in the Keeping it Fresh programme.
Introduce the front line
leadership programmes to
develop leadership capabilities
across front line and middle
management.
(S)
Ongoing. Launched the San Activate and San
Ignite training programmes to 81 people leaders.
Progress the Senior Leadership
Programme to improve our
senior leader’s understanding
of their own style and impact
to improve their effectiveness.
(S)
Ongoing. 46 senior leaders concluded a
leadership behaviour identification programme.
Continue to invest in Primary
Industry Training to build core
capabilities in occupational health
and safety, seafood processing,
risk management, and seafood
vessel operations.
(M)
Achieved. 273 employees and sharefishers
have completed level 2 and 3 New Zealand
Qualifications Authority programmes.
Deliver targeted learning and
support to build capability in
strategic priorities.
(M)
Ongoing. 45 people participated in an
innovative thinking workshop. 48 people
participated in a fish to plate integrated supply
chain management workshop.
Strengthening
our workplace
culture
Build a culture of
high engagement and
performance across
our workforce to optimise
people and business
outcomes.
Increase the visibility of the
senior leadership group and
communication with employees
to improve the opportunities for
engagement.
(S)
Ongoing. 6-14% improvement in organisational
culture measures of senior leadership visibility
and connectivity.
Develop and deliver a values
connection programme to
deepen the understanding and
demonstration of our values.
(S)
Ongoing. Leader-led programme launched
in September.
Design a recognition programme
that engages employees in key
business outcomes and recognises
great achievements against the
framework.
(S)
Achieved. 6 pillar framework designed and to
be launched November 2017.
Increase employee engagement
in improvement activities to
achieve a step change in people
and business results.
(M)
Achieved. Leveraged the Keeping it Fresh
programme to deliver 23 improvement
projects. Established a joint employee-union
delegate committee in Bluff and plan to extend
this model across other processing sites.
VALUE CREATION – OUTCOME:
We will maximise the prospects of our people by making ‘Zero Harm’ a key priority, offering meaningful
opportunities for continual learning and development, and living our values to ensure that we become an
employer of choice
* S = Short term (1 year or less); M = Medium term (2-5 years); L = Long term (5-10 years, or more)
** Refer to ‘Progress on our 2017 sustainable business targets’ for full updates across all targets defined
Further information on data and trends is provided in the Key Performance Indicator (KPI) table, contained in Appendix A of this Report.
45
Health, safety and
wellbeing
Through the way we
work and behave, and the
initiatives we implement to
continually enhance our work
environments, we will strive to
protect our people from the
risks of occupational injury or
ill health.
GOAL
Health and safety is one of Sanford’s top
two materiality issues, and our programme
is evolving beyond compliance to a
leadership driven culture; we have done
a lot of work to improve our people’s
health, safety and wellbeing. Two internal
governance reviews in 2017 noted
improvements in Sanford’s health and
safety maturity, as we continue our journey
towards a mature, leadership driven culture.
We recognise that our culture is still
developing, and we will continue to
focus on our targeted improvement
programmes in 2018.
In 2017, we continued to focus on the
implementation of our 3 year 10-point
Health and Safety Action Plan. We focused
particularly on employee awareness,
management visibility, staff skills and
systems for reporting and following up on
incidents and near misses. We recognise
that we must maintain a strong focus on
base compliance as we still have injuries
and incidents that harm our people and
business. Guiding our health and safety
initiatives are the businesses Health and
Safety Plan 2016-2018, Environment,
Health and Safety management system
(reviewed in 2017), Corporate Health and
Safety Risk Register (reviewed in 2017), and
formal avenues for worker participation.
WHAT WE’VE BEEN DOING
Staff training
• NZQA certified health and safety training
to levels 3, 4 and 5
• Toolbox training delivered daily at the
start of work on everyday health and
safety issues
• Targeted training, including Permit-To-
Work, Lock Out Tag Out systems, and
contractor management
• Senior management training.
Not On My Patch course
Workplace programmes
• SanWell, our in-house commitment to
being a workplace that ‘works better
though wellbeing’
• Keeping it Fresh, a Tertiary Education
Commission communication programme
• SiteWise, a new system for pre-qualifying
our contractors to ensure their health
and safety
• ACC Partnership Programme, enabling
Sanford to actively support our
employees’ rehabilitation
693
TRAINING DAYS
DELIVERED IN FY17
Audits, assessments and reporting
• Sanford has undergone six external
health and safety audits
• We have carried out two internal health
and safety governance reviews
(carried out by EY and Impac)
• We present a monthly health and safety
report to the Board and a detailed
performance improvement report to the
Board Health, Safety and Regulatory
Compliance Committee every two months.
46Sanford Annual Report 2017
ENABLING ZERO HARM AND GREAT PROSPECTS FOR OUR PEOPLE
3
REPORTING OUTCOMES
& MATERIAL ISSUES
IMPROVING NOTIFIABLE (SERIOUS HARM) INJURIES
In 2017, we reduced the total number of injuries to 1,032 (FY16: 1,300), and realised a
slight improvement in our LTIFR at 14.67 (FY16: 14.69). However, the number of notifiable
(serious harm) injuries increased to 10 (FY16: 6), and our LTIs increased to 55 (FY16: 53).
Aspects such as poor judgements, behaviours and practice issues have contributed to this
increase. Such issues have and are being addressed locally and nationally as required to
reduce these injuries; the ongoing implementation of our risk management programme
remains a key priority.
TOTAL INJURIES BY SITE
Comparing the types of injuries that occur across our sites highlights some key
opportunities to improve the type and number of injuries. The bar chart shows that our
Havelock and Timaru processing sites have more injuries than our other sites; this is also
reflected in Tauranga and Auckland processing sites to a lesser degree. These injuries
largely reflect the higher numbers of staff at the respective sites as well as the nature of
the work done. In terms of the type of injury, it is clear that sprains and strains are an
issue for our Havelock and Timaru processing operations, while lacerations, stings and
punctures are the main injuries for Tauranga. We are focusing on delivering targeted
injury reduction programmes across these areas.
TOTAL INJURIES BY TYPE
Many of the injuries that occur are
preventable. In 2017, we significantly
improved our rate of injuries involving skin
irritations (43% reduction), bodily functions
(83% reduction), and we increased our
focus on sprains and strains due to this
being a leading LTI type; we realised an
improvement of 28% (369 reported
injuries, including first aid cases) compared
with 511 in FY16. Process design is at the
heart of good manufacturing practice and a
major step in minimising injuries is designing
the process steps that optimise ergonomics
and decrease repetitive manual handling
(particularly lifting). We will continue to
focus on a consistent set of injury
prevention improvements in 2018.
Type of injury by site
Total number of injuries by type
TYPE OF INJURY
TOTAL NUMBER OF
INJURIES
20172016
Sprains and strains
369511
Laceration, puncture,
sting
326357
Crushing, bruising
142142
Slips, trips or falls
119115
Foreign body (in orifice
or eye)
3961
Skin irritation
(chemicals, burns)
2544
Bodily function
(discomfort, breathing,
physical or mental
illness)
1270
TOTAL1,0321,300
AKL Inshore
Fishing
Auckland
Blu
Factory
Blu
Farming
Coromandel
Deepwater
Operations
Havelock Factory
Havelock Farming
Sanford Fish
Market Limited
Tauranga
TGA Inshore
Fishing
Timaru
0
50
100
150
200
250
5
135
30
34
21
75
13
195
2
224
69
229
Bodily function (discomfort, breathing, physical or mental illness) Crushing , bruising
Foreign body (in orifice or eye) Laceration, puncture, sting Skin irritation (chemicals, burns)
Slips, trips or falls Sprains and strains
AKL = Auckland TGA = Tauranga
1,032
TOTAL NUMBER OF INJURIES
FY16: 1,300
47
• CASE STUDY •
MORE TO DO
We are working towards having user
friendly IT platforms to encourage
higher reporting levels, increased
reporting accuracy, better aligned LTIFR
indicators to allow direct benchmarking
with industry peers, and an improved audit
and verification programme. Making these
changes will provide us with accurate and
consistent information to drive health,
safety and wellbeing priorities across
the business.
NEAR MISSES ARE A
LEARNING OPPORTUNITY
Every near miss is a prime opportunity to
identify preventive and corrective action.
A strong reporting culture is vital for this.
We need to thoroughly explain the value of
reporting near misses, making it more likely
that an incident is reported further down
the track. We will work with our health and
safety committees to identify common near
misses and have developed a set of simple,
specific posters illustrating them and
encouraging everyone to report them.
This will make the concept of near misses
more meaningful and enable us to all learn
from them.
To address one of our critical risk areas,
we have implemented a health and
safety traffic management plan with
each Sanford processing site having
controlled areas to ensure that people
and vehicles are separated.
Controlled site access, people flows,
and separate forklift operational areas
have been identified, and as seen in the
photo, it’s clear where people need to
be to remain safe.
—
Traffic management
—
—
Bluff improvements
reduce manual handling
—
The layout of the salmon processing line in Bluff was reconfigured to simplify
the process and reduce the risk of injuries. There were 11 manual handling steps
eliminated by streamlining the process area, utilising simple conveyors, and a
new Marel MS2730 filleting machine was commissioned. In addition to injury
minimisation, staff were engaged to explain the improvements that could be
made including increased throughput, quality, and cost effectiveness. With precise
cutting and trimming ability, the new machine has minimised the production of
second grade fillets during processing and reduced manual handling. The next steps
will include introducing vacuum lifting systems, which will eliminate up to 1,000
heavy lifting movements by the processing teams each day.
PHOTO: THE TRAFFIC MANAGEMENT SYSTEM
FOR ALL SANFORD SITES
PHOTO: RECONFIGURED SALMON PROCESSING
LINE IN BLUFF
PHOTO: DEMONSTRATION TO REDUCE
MANUAL HANDLING
• CASE STUDY •
48Sanford Annual Report 2017
ENABLING ZERO HARM AND GREAT PROSPECTS FOR OUR PEOPLE
3
REPORTING OUTCOMES
& MATERIAL ISSUES
Developing
our people
Maximise the prospects of our
people, offering meaningful
opportunities for continual
learning and development to
ensure that each and every one
of our employees can reach
their full potential.
GOAL
The people of Sanford reflect many
different countries, cultures, languages,
ages, years of experience, enthusiasms and
potential. Harnessing the wealth of this
diversity across our many different locations
and vessels supports both our individual
and business success. Our diversity is also
a source of ongoing positive challenges
and we have focused on building capability
and creating a strong values-based culture
that encourages and supports high levels
of engagement and performance.
Stakeholders told us that Sanford being
a world-class employer was amongst
the top ten issues to them. We have
addressed the importance of this through
initiatives to develop our people and
strengthen our workplace culture.
WHO WE ARE:
SANFORD DEMOGRAPHICS
Our total workforce has grown by 169
people since last year as we have increased
our investment in deepwater fishing
(commissioning of San Granit) and extended
our skill base to include new expertise and
roles in fields such as communications,
environment, legal, brand, information
systems and commercial analysis. This new
talent will drive overall business growth and
add to our workforce diversity by increasing
the general spread of people across most
age groups and maintaining the number of
women in senior management positions.
In July, we celebrated the service of our
longest term employee, Lloyd TeNgaio.
Lloyd has been a great mentor for many
in the business, and his insights into the
evolution of Sanford encourage us to
keep focused on our values of care,
passion and integrity as we continue
to grow and develop our people.
Being in the business for
52 years has been relatively
smooth going. Being ex-army,
I’m here half an hour before
everyone else. I tidy up, get
everything organised and spot
on for when my staff arrive. I’m
very fortunate in having good
staff. I also keep myself pretty fit
sorting all the different species
onto freezer racks every day in
zero temperatures. After 50 odd
years you get used to it! In fact,
I’d go crazy if I had nothing
to do at home!
—
Lloyd TeNgaio
FOREMAN, FISH PROCESSING, AUCKLAND
Working
TOWARDS BEING A
WORLD-CLASS EMPLOYER
49
OUR WORKFORCE IN OVERVIEW
This year, our workforce increased by 11% to 1,717 (FY16: 1,548). Our gender diversity
remained relatively stable, with the proportion of females across our overall workforce
being 29% (FY16: 30%), and 27% across our Senior Management Team (FY16: 27%).
CONTRACT TYPE
TOTAL
2017
1
(2016)
FEMALE
2017 (2016)
MALE
2017 (2016)
GENDER
UNDECLARED
2017 (2016)
Permanent Full-Time914 (882)38% (37%)62% (63%)–
Permanent Part-Time29 (37)52% (59%)48% (41%)–
Fixed Term Full-Time 95 (53)51% (55%)49% (45%)–
Fixed Term Part-Time1 (0) 100% (0%)0% (0%)–
Casual and Seasonal95 (102) 39% (36%)61% (64%)–
Independent Sharefishers583 (474)9% (10%)89% (85%)2% (5%)
Total employees1,717 (1,548) 29% (30%)70% (69%)1%
1. As at 30 September 2017
The age distribution of our workforce remains relatively well balanced across all age groups
between 20 and 59 years.
Our workforce in age groups
Our workforce in ethnic groups
NUMBER OF WORKFORCE
<2020-2930-3940-4950-5960+D.O.B Not stated
0
100
200
300
400
500
AGE GROUP
New Zealand European
44%
Pacific Island Peoples
19%
Māori
13%
Not stated
12%
Other
5%
Asian
4%
European
3%
2016 2017
OUR NEW HIRES IN AGE GROUPS
AND GENDER
This year, the spread of new hires by age
group remained relatively consistent to last
year. Percentage changes are included in
KPI table (refer Appendix A).
In absolute terms, new hires
2
consisted of
236 males and 160 females (1 not declared),
with the breakdown being:
AGE GROUP
2
TOTAL
Under 2048
20-29177
30-3968
40-4951
50-5938
Over 6015
Total 397
2. New hires by gender and age includes land-based
permanent, fixed term, casuals and seasonal
workers. New employee by age calculations in the
KPI table (refer Appendix A) are based on annual
quarterly averages.
11%
INCREASE IN
OUR WORKFORCE
TO 1,717 (FY16: 1,548)
50
Sanford Annual Report 2017
ENABLING ZERO HARM AND GREAT PROSPECTS FOR OUR PEOPLE
3
REPORTING OUTCOMES
& MATERIAL ISSUES
KEEPING IT FRESH
The Keeping it Fresh programme is a
numeracy and literacy initiative provided
to our frontline employees to increase
their confidence in working with numbers
and communicating with others. The
programme is supported by Government
funding and was initially rolled out in
Tauranga in 2016. This year we rolled it
out to our other land-based processing sites
in Bluff, Timaru, Havelock and Auckland.
There was an initial degree of nervousness
entering the programme, however over
time, our people have grown confident
in contributing their ideas and sharing
their talents with their teams.
The Keeping it Fresh programme has helped
progress some incredible project work
and ideas, including shift changeover check
sheets, a water conservation project and
effective ways to deliver safe behaviour
conversations. The strength of our ethnic
diversity has also shone through with teams
translating our values into their mother
tongue and creating posters to share our
values in other languages across the business.
In Auckland, one of the teams introduced
a short exercise routine at the start of their
shift to highlight being fit for work, looking
after yourself and your workmates. It was
enthusiastically embraced with the music
selection becoming more important
by the week!
The learnings have extended well beyond
the workplace, with one of the stand out
changes being in people’s confidence to
manage their money through numeracy
skills training.
The Keeping it Fresh programme has been
very well received by staff. Part of our
project included a dynamic stretch routine
we perform every day. The movement
improves posture, flexibility, blood flow and
best of all, the group interact, laugh and
even sing as they do it. Humans need joy,
laughter and movement. “Motion is lotion”
they say and I’m so happy to see that these
healthy habits are really taking hold. Now
that we have the health ball rolling,
“WATCH THIS SPACE” for more great
health and fitness initiatives.
—
Arleen De Veyra
OPERATIONS SUPPORT, AUCKLAND FACTORY
SENIOR LEADERSHIP
DEVELOPMENT
In 2017, we progressed the Human
Synergistics Senior Leadership
programme to deepen our senior
leader’s understanding of their style
and the impact it has on their team
and its performance. Through this
programme, 43 senior leaders received
360 degree feedback on their leadership
style across 12 patterns of thinking that
can contribute to or detract from their
personal effectiveness. After a debrief
session from a Human Synergistics’
consultant, each leader identified
opportunities to improve, sharing
these with their manager, and creating
a personal development plan.
Identifying areas to improve and then
making significant progress against this
is a real human challenge, and we have
had a range of experiences and positive
behavioural shifts from this programme.
As part of the senior team leadership
development, I participated in the
Circumplex/Life Style Inventory
assessment with Human Synergistics.
In the first part of the assessment you
answer 240 questions about yourself,
and in the second part of the process
you receive feedback from 12 other work
colleagues that include direct reports,
peers, and the leader you report to.
From these two assessments your profile
is formed on how you view yourself, how
your colleagues perceive you and how
your leader perceives you. From this
process, I developed a personal
development plan.
So far, through this process, I have
managed to significantly shift my
behaviour into the constructive styles
with very positive feedback from the
people I work with, but with some
more work to do on my thinking styles.
This development has been a great
learning that has been very good for
me personally and has helped improve
the way we do things in Sanford.
—
Ted Culley
GENERAL MANAGER AQUACULTURE
SHIFT CHANGEOVER
CHECK SHEETS
—
A WATER CONSERVATION
PROJECT
—
SAFETY
CONVERSATIONS
—
CELEBRATING
ETHNIC DIVERSITY
—
GROUP EXERCISE
ROUTINES
—
NUMERACY
& SKILLS TRAINING
Semisi Losaki wasn’t very confident in
his ability to speak English and had not
taken his driving test. However, over
the course of the programme, Semisi
grew confident to not only sit but pass
his driving test. After learning some
new budgeting skills in the course,
Semisi went on to save up enough
money to buy his first car, which has
had a big impact on his life.
—
Lynette Nikoloff
LITERACY & NUMERACY PROJECT MANAGER
& TUTOR, RISK MANAGEMENT GROUP
PHOTO: SEMISI LOSAKI, CHILLER HAND
• CASE STUDY •
51
MANAGEMENT, SUPERVISOR AND
TEAM LEADERSHIP DEVELOPMENT
We engaged NZ Facilitators to help develop
our leadership capabilities across the
business. Two programmes were designed
to meet the different needs of team leaders
and supervisors (San Ignite) and middle
managers (San Activate). The feedback
has been positive with skippers, vessel
managers and other operational people
leaders coming together and learning how
to give feedback, deal with conflict, manage
variations in learning styles, coach their
direct reports, and manage their time
better. The training sessions have been
structured to include leaders from across
our many sites and vessels, and therefore
encouraged everyone to share their ideas
and learn from each other, which is a
great strength of the programme. Both
programmes rely heavily on the support of
senior managers to meet with their staff in
between workshops to ensure their people
apply their new knowledge directly to their
job. Specific resources to help support the
senior managers were designed to embed
this element of the training.
San Activate has made me aware
of myself, how I operate, and
how my team and others
perceive me. Along with the
tools provided it has enabled
me to change the way
I communicate to suit different
situations and people making for
more effective sessions.
It was very enjoyable and
enlightening to meet others
from around the business,
especially the guys out at sea
from which the company is built
on. It’s good to be able to share
each other’s experiences and
give each other a good
understanding and appreciation
of how we all contribute to the
success of Sanford.
—
Sophar Rach
MANAGER, GROUP QUALITY SYSTEMS
NEW ZEALAND QUALIFICATIONS AUTHORITY (NZQA)
CREDITS AND QUALIFICATIONS
Our partnership with the Primary Industry Training Organisation (PITO) has continued to
strengthen. This year we have seen an increase in Sanford people gaining level 2 and 3
NZQA credits and qualifications. Gaining these credits and qualifications are a fundamental
part of our core training in occupational health and safety, food safety and risk management
and seafood vessel operations. The quality of training and on-the-job application of newly
learnt skills adds great depth to the talents of our people and drives business improvement.
NZQA credits and qualifications awarded through PITO
3
201720162015
Completed PITO programmes273189176
Total credits awarded7,484
3
6,3545,021
Formal qualifications received (National Certificate)21413553
End of year enrolments 72138186
3. Figures may change; new or completed enrolments may be backdated to the period when they were submitted to the
PITO database.
In 2017, the number of completed PITO programmes increased by 44.5%. The most
significant increase in completed qualifications was for Seafood Vessel Operations, which
increased by 80% (79, FY16: 44). The total credits awarded to Sanford employees increased
this year by 18%
4
. The formal qualifications received (National Certificates) also increased by
59%. This does not include internal training which is delivered across all levels of the
business.
4. One credit is approximately 10 hours of training. The different
levels of credit are: Level 1: Basic awareness by all staff (Certificates);
Level 2: Competent operator (Certificate); Level 3: Supervisor
(Certificate); Level 4: Management (Certificate); Level 5: Specialised
business function (Diploma); Level 6: Specialised business function
(Diploma).
Credits achieved by level and gender
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Level 2 Level 3 Level 4
Male Female
44
.5%
INCREASE IN
COMPLETED PITO
PROGRAMMES
52Sanford Annual Report 2017
ENABLING ZERO HARM AND GREAT PROSPECTS FOR OUR PEOPLE
3
REPORTING OUTCOMES
& MATERIAL ISSUES
Strengthening our
workplace culture
Build a culture of
high engagement
and performance
across our workforce
to optimise people and
business outcomes.
GOAL
CULTURAL CHANGE
Sanford has introduced considerable
change in its strategic direction over
the past three years, resulting in strong
commercial performance. However, with
change comes new challenges. Insights
from our culture surveys have indicated
that we need to improve communication
with our people, and recognise the
contributions they are making. To improve
in these areas, we have focused on visible
leadership, communication, recognition
and ensuring our values are brought to life
in all of our decisions and interactions.
The culture is incredibly different
since Volker’s tenure began.
The people we deal with are now
engaged rather than just doing
their job. They talk about the
future of their product with
excitement. Sanford has a vision
for the future”.
—
Tony Mildon
SALES DIRECTOR, MAERSK LINE
VISIBLE LEADERSHIP
Building a culture of high engagement
and performance is an ongoing and
very rewarding priority for the business.
The strengthening of culture has meant
an increased focus on ensuring our people
understand our vision for the future,
and their role in bringing this to life.
This has been an important part of
our improvement journey, and new
opportunities for engagement have been
created to make this happen. These include
more regular site visits by the executive
team and senior managers to engage with
our people, for example, through attending
training graduation ceremonies to learn
about the progress being made and
opportunities explored.
We got feedback that Volker’s
speech was one of the best many
people had heard given in the
industry, full stop. I’d agree. We
couldn’t have been prouder of
our selection this year, and the
audience was clearly unanimous
that we’d made the right choice.”
Drew Cherry
EDITORIAL DIRECTOR, INTRAFISH MEDIA
—
Intrafish Media Person
of the Year
—
Sanford’s CEO Volker Kuntzsch, won
the prestigious international IntraFish
media person of the year in April for
crafting Sanford’s vision as a world
leader through investment in its
employees, sustainability and products
that add value to New Zealand’s
fisheries resources. IntraFish Media
is the world’s largest provider of news
and information to the global seafood
industry and the award recognises
seafood executives who demonstrate
exceptional leadership, innovation
and inspiration.
PHOTO CREDIT: STEVE HUSSEY
PHOTO: ZANE CHARMAN AND GRANT BOYD INSPECTING MUSSEL LINES IN THE MARLBOROUGH SOUNDS
53
VALUES
To continue leveraging the richness and
strength of our values to build pride in our
business, we have developed tools to hold
values discussions at any time and place
with commitments to improve locked in.
In Havelock, the story of Kūtai, the Perna
canaliculus (Greenshell™ mussel) was
created by a team to highlight the care,
passion and integrity the team at Sanford
demonstrates towards protecting the
New Zealand mollusc throughout its life,
until it is enjoyed by the consumer. By
creating and sharing the story of Kūtai
through our values, the power of employee
engagement delivering positive business
outcomes is clearly evident.
Sanford’s focus on empowering
its own people is the right focus.
Companies must be people-
orientated – our principles
should be no different for
governing a company as for
caring and growing our families.
Companies don’t exist in
isolation of their people. These
people are or need to be seen as
the caring family to Sanford”.
—
Harry Haerengarangi Mikaere
NGATI PUKENGA, NGATI MARU,
NGATI KAHUNGUNU
RECOGNITION
Recognition was an opportunity for improvement identified in our last employee
survey, and most of our sites have responded with site specific forms of recognition
and celebration. We are proud to have many long serving employees in our business,
and this year we have taken the opportunity to celebrate milestones more formally
with the executive and site leadership teams at half year and full year site updates.
We have also created a total business recognition framework to strengthen the
demonstration of values and achievements across health and safety, food safety and
quality, business improvement, business excellence and sustainability. When this programme
is launched fully, it will not only drive the achievement of key business outcomes, but
improve our ability to recognise great achievements collectively across the business.
STAFF MOVEMENTS
This year, voluntary turnover was 16% across the total workforce (FY16: 18%); involuntary
turnover was 7% (FY16: 6.6%); and absenteeism averaged 5% across the group (FY16: 4%).
AGE GROUP
VOLUNTARY
TURNOVER
2017 (2016)
INVOLUNTARY
TURNOVER
2017 (2016)
TOTAL
TURNOVER
2017 (2016)
Male128 (112)53 (35)181 (147)
Female68 (59)28 (13)96 (72)
AGE GROUP
VOLUNTARY
TURNOVER
2017 (2016)
INVOLUNTARY
TURNOVER
2017 (2016)
TOTAL
TURNOVER
2017 (2016)
Under 2014 (14)2 (1)16 (15)
20 to 2969 (62)31 (13)100 (75)
30 to 3934 (38)16 (5)50 (43)
40 to 4944 (28)14 (5)58 (33)
50 to 5926 (17)3 (7)29 (24)
60+9 (12)15 (17)24 (29)
Total196 (171)81 (48)277 (219)
CARE
AND
PASSION
AND
INTEGRITY
54Sanford Annual Report 2017
ENABLING ZERO HARM AND GREAT PROSPECTS FOR OUR PEOPLE
3
REPORTING OUTCOMES
& MATERIAL ISSUES
MATERIAL ISSUESSTRATEGIC GOALS FUTURE TARGETS 2018 AND BEYONDOUR 2025 VISION
Health, safety
and wellbeing
Through the way we work and
behave, and the initiatives we
implement to continually enhance
our work environments, we will strive
to protect our people from the risks
of occupational injury or ill health.
Achieve LTIFR of <5/million
hours worked. Review LTIFR
indicators, with reference to
benchmarking our performance
with industry peers.
Zero harm to our people. Wellbeing
valued and fully supported. Zero
harm performance is aligned with
operational excellence, and how
we do business.
Build a leadership driven health,
safety and wellbeing culture
to enable high engagement
and performance.
Introduce the Worksafe health
and safety toolkit (formerly
known as SafePlus) in 2018.
Progressively work to achieve
and maintain ACC Tertiary status
across all Sanford operations.
Achieve Silver accreditation across
the SanWell wellness programme,
as a minimum, across all Sanford
sites, and ensure that each site is
progressing to the Gold standard.
Developing
our people
Maximise the prospects of our
people, offering meaningful
opportunities for continual learning
and development to ensure that
each and every one of our
employees can reach their full
potential.
Develop and deploy a company-
wide learning and development
framework that meets the learning
needs of our people and business.
Sanford delivers tailored and effective
learning and development activities
that inspire employees to consistently
reach their full potential. Performance
appraisals are aligned with our values
and six performance outcomes.
Extend and embed our leadership
development programmes to lift
leadership effectiveness across
the business.
Strengthening our
workplace culture
Build a culture of high engagement
and performance across our
workforce to optimise people and
business outcomes.
Be recognised as an employer of
choice via established awards in
New Zealand.
Sanford has created an engaging
workplace where people want to join,
stay and contribute their best. We are
widely recognised in the industry as a
true leader and employer of choice.
These targets for 2018 and beyond have been informed by Sanford’s strategy, and a thorough review of international guidance
5
on business
commitments to support achievement of the UN Sustainable Development Goals.
5. GRI and UN Global Compact 2017: Business Reporting on the SDGs – An Analysis of the Goals and Targets.
AND our future focus
55
UN SDG 12
RESPONSIBLE CONSUMPTION AND PRODUCTION
Sanford supports the health of its customers and consumers in
New Zealand and around the world. We work in partnership with
our stakeholders to ensure that we responsibly consume and
produce seafood; there are many examples in this section to
highlight how Sanford is working towards responsible seafood
consumption and production.
UN SDG 14
LIFE BELOW WATER
Careful management of the ocean is critical to Sanford’s
sustainable success in delivering value to its stakeholders. Our goal
of leading the way in healthy food requires us to constantly
consider our impact on the oceans and Sanford are actively looking
for ways to minimise its environmental footprint, and continue
toward sustainable ocean management both locally and globally.
LEADING THE WAY
TO HEALTHY FOOD
We will lead the way in driving sustainable performance across our
value chain, and positioning our brand as the industry partner and
supplier of choice.
AND
56Sanford Annual Report 2017
PHOTO: BARBEQUE SMOKED MUSSELS WITH HONEY BUTTER FROM THE NEW ZEALAND SEAFOOD
COOKBOOK BY AUCKLAND SEAFOOD SCHOOL, PUBLISHED BY THE PENGUIN GROUP NZ.
PHOTO CREDIT: SEAN SHADBOLT
57
MATERIAL ISSUESSTRATEGIC GOALS2017 TARGETS*PROGRESS AGAINST TARGETS**
Food safety
and quality
Be recognised as a global
leader in providing safe,
high quality seafood that
delights our customers
and represents our love
for the sea.
Engage with customers
through a quality satisfaction
survey annually.
(S)
Achieved. The survey was completed by 22
customers; 18 customers rated the quality of
Sanford’s products high, and 17 customers rated
the quality of customer service positive.
All sites and vessels with less
than 1 complaint frequency per
million kilogram processed
overall.
(M)
Achieved. Overall, the sites and vessels are below
the 1 complaint frequency per million Kg target.
Action and close out 80%
of quality complaints within
10 working days.
(S)
Not achieved. 68% of quality complaints closed out
within 10 working days, and 88% were closed out
within 15 working days. Overall, there was a 14%
decrease in customer complaints.
Implement and maintain
FSSC 22000 in all land
based processing sites by
February 2018.
(S)
Ongoing. 80% of Sanford’s sites have finished the
audit process and received certification. The last
processing site is currently being certified. Full
certification of all sites will be completed by
February 2018, and we continue to standardise and
consolidate quality systems across the company.
Complete full review of
customer specifications.
(S)
Ongoing. Processing specifications for all product
lines were completed early 2017. Work continues on
creating a complete set of customer specifications
for sales and marketing (target completion by end
of 2018).
Ensure all new vessels are
registered and approved by
the Ministry for Primary
Industries (MPI).
(S)
Achieved. Two replacement vessels, the San Granit
and the San Aramand, were commissioned by
Sanford during FY17. All country registrations and
MPI requirements were completed before they
could go fishing.
This table summarises Sanford’s material issues relating to leading the way to healthy food, the strategic
goals defined through our Business Excellence Framework, our targets for 2017, and our progress
against these targets in contributing to value creation. At the end of this section, we also define our
future targets and vision to 2025.
Material issues AND value creation
58Sanford Annual Report 2017
LEADING THE WAY TO HEALTHY FOOD
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
5
APPENDIX
& REFERENCE
MATERIAL ISSUESSTRATEGIC GOALS2017 TARGETS*PROGRESS AGAINST TARGETS**
Drive value
through brand
creation
Be the brand of choice
worldwide for our prized
New Zealand seafood, by
building a portfolio of
brands that engage with
consumers.
Build consumer engagement
and understanding of our
brand.
(M)
Ongoing. Consumer engagement and demographics
reviewed monthly to track the performance of
brands in social media across multiple platforms
(nearly 20,000 followers on social media).
Develop the portfolio of brands
that grow our dollar per
greenweight kilogram:
• Launch Big Glory Bay
Brand
(S)
• Launch Tiaki Brand. (M)
Achieved. The Big Glory Bay brand was launched on
the local market with a full brand immersion and
experience at the source. Website and social media
platforms developed. Product on menus of key
Auckland restaurants
Ongoing. The Tiaki brand was trialled with
key customers and is for sale at the Auckland
Fish Market.
Develop the content plans for
our social media platform.
(S)
Achieved. Content plans developed with key
communications pillars for all platforms. Big Glory
Bay Instagram and Facebook platforms were
launched, and the Auckland Fish Market and Seafood
School Facebook pages were merged. Sanford
continues to gain strong year on year growth in both
the number of followers and the level of engagement.
Packaging review and
update.
(M)
Ongoing. All packaging has been developed for
Sanford Black. The review of the Sanford packaging
has been completed and rolled out for 37 of the 45
existing Sanford Black and Blue products.
Develop a method for customers
to trace that products are from
Big Glory Bay.
(S)
Achieved. Through a partnership with Oritain, we
have developed a dedicated traceability system for
Big Glory Bay products.
Supply chain
Work with our supply
chain to deliver mutually
sustainable solutions that
deliver value for money,
and support our focus on
health and safety, product
quality, sustainability,
continuous improvement
and innovation.
Continue to embed the sales
and operational planning
process (S&OP) and
distribution strategy to
increase the variety and value
of fresh products into the
market.
(M)
Ongoing. Executing the strategic ambition to
optimise value and deliver customer expectations
for salmon has been achieved, while for other
business areas it is ongoing. Implementing
forecasting processes and introducing business
management teams will govern execution
against strategy.
Achieve at least $2 million of
savings through delivering key
procurement projects.
(S)
Achieved. Engaged competitive markets in
key spend categories and investing in business
intelligence tools to better understand our base
costs, suppliers, products and services to meet
our business needs.
Create a cultural change within
the business to better align
supply and demand to meet
customer expectations.
(M)
Ongoing. There has been active collaboration
between the supply and demand teams.
VALUE CREATION – OUTCOME:
We will lead the way in driving sustainable performance across our value chain, and positioning our
brand as the industry partner and supplier of choice.
* S = Short term (1 year or less); M = Medium term (2-5 years); L = Long term (5-10 years, or more)
** Refer to ‘Progress on our 2017 sustainable business targets’ for full updates across all targets defined
Further information on data and trends is provided in the Key Performance Indicator (KPI) table, contained in Appendix A of this Report.
59
Food safety
and quality
Food safety, security and quality is
one of Sanford’s top two materiality
issues, and we have continued to
invest in management systems to
ensure we deliver best practice food
safety and quality.
The most internationally recognised
food safety standard is FSSC 22000,
and being certified to this standard
demonstrates that we have robust food
safety management systems and are
exceeding market expectations. Our
customers are aware of and concerned
about food quality and safety, and they
have continued help us to understand
our performance through surveys,
feedback, and complaints.
CUSTOMER FEEDBACK ON
PRODUCT QUALITY
Sanford undertook another survey
to gauge our performance with our
customers, with 22 being answered by
our largest global customers in Asia,
Europe and North America. The 2017
outcomes show an improvement in
engagement and results from last year.
Be recognised as a global
leader in providing safe, high
quality seafood that delights
our customers and represents
our love for the sea.
GOAL
How would you
rate the quality of
Sanford’s products?
How would you rate the quality of
your customer service experience
about food safety and quality?
20172016
Very high quality
4.76%21.43%
High quality
80.95%50.00%
Neither high nor low quality
14.29%28.57%
Low quality
0.00%0.00%
Very low quality
0.00%0.00%
20172016
Very positive
42.86%64.29%
Somewhat positive
38.10%28.57%
Neutral
14.29%0.00%
Somewhat negative
4.76%7.14%
Very negative
0.00%0.00%
PHOTO: KING SALMON PREPARED BY BIG GLORY BAY CUSTOMER,
PHOTOGRAPH COURTESY OF WHITE AND WONG
60Sanford Annual Report 2017
LEADING THE WAY TO HEALTHY FOOD
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
5
APPENDIX
& REFERENCE
—
Havelock Sanitation
Improvements
—
To ensure that good quality mussels
continue to be delivered to our
customers, the Havelock factory
team embarked on a process to
improve the efficiency of the cleaning
and sanitation process. This initiative
had two objectives: to standardise
the cleandown process between the
shifts, and identify how to make the
cleandown between shifts more
efficient. Each step of the cleaning
process was evaluated by staff to
establish whether there were more
efficient methods to reduce the time
and effort required, whilst having no
negative impact on the product’s
quality or microbiological requirements.
The night shift production team
successfully developed the new
30 minute cleandown regime, after
completing multiple trials, which had
to be just as effective as the 60 minute
regime. The result is continued high
hygiene standards that can be achieved
with greater certainty, flexibility and
higher productivity.
PRODUCT QUALITY AND
CUSTOMER COMPLAINTS PROCESS
In 2017, Sanford complied with all
regulatory and market access requirements.
Sanford has continued to develop and
improve the customer feedback analysis
process with the circulation of monthly
quality dashboards to all areas of the
business. Most customer complaints are
triggered by quality defects such as texture,
bruising, sensory issues or poor trimming
of fish fillets. In the past year we have
monitored our progress on improving
product service levels and achieved:
• 5% fewer product grading and missing
product errors in FY17 compared
with FY16.
• 3% fewer product quality defects in
FY17 compared with FY16.
• 68% of quality complaints were closed
out within 10 working days, and 88%
were closed out within 15 working days
PHOTO: BRUCE EARNSHAW CHECKING THE COOKED
MUSSEL TEMPERATURES POST THE STEAM COOKER
AT HAVELOCK
FOOD SAFETY CERTIFICATION
Sanford has committed to adopting FSSC
22000 for all of its land-based processing
sites, and has made major progress towards
this goal, being 80% through the process.
This standard is part of the Global Food
Safety Initiative (GFSI) and is widely
recognised across all markets as world
best practice with respect to third party
food safety certification.
FSSC 22000 provides customers with
increased confidence, and it increases
food safety awareness across the company
through having a system in place that
encourages frequent meetings and
reporting not only on issues but also
on progress being made.
Having the FSSC 22000 in the
Auckland factory for over a year
now has really brought to light
its positive impact. Not only have
we got commitment from the
factory floor to management,
we are more systematic in our
processes and we have greater
communication within the
factory, and between the sites.
—
Ranjith Wijesinghe
AUCKLAND QUALITY ASSURANCE MANAGER
PRODUCT TRACEABILITY
AND RECALLS
All of Sanford’s products can be traced
from their origin to the customer. Sanford
undertakes two practice product recall
and traceability exercises a year, and we
had no product recalls in 2017.
Quality complaints
breakdown
2017
Quality defects
38%
Foreign material
17%
Labelling error
8%
Product missing
8%
Bone
6%
Under delivered
4%
Other
4%
Wrong product
4%
Weight control
4%
Date coding error
3%
Product grading error
1%
Temperature abuse
1%
Parasites
1%
30min
CLEANDOWN REGIME
(PREVIOUSLY 60 MINS)
• CASE STUDY •
61
Drive value
through brand creation
Be the brand of choice
worldwide for our prized
New Zealand seafood, by
building a portfolio of brands
that engage with consumers.
GOAL
WORLD CLASS BRANDS
Having a world class brand is important to
our stakeholders and is aligned both with
our commitment to building our stocks of
intellectual capital AND our strategy of
adding value to our seafood by developing
Sanford branded offerings.
For Sanford to be the leader
in the seafood industry, it needs
to become more of a branded
company. In this way, our
stakeholders learn what we stand
for – quality, sustainability
and care.
—
Peter Kean
BOARD MEMBER
We have gained great momentum this
year through the launch of our premium
aquaculture brand, Big Glory Bay Seafood
onto the domestic market. The launch
started with a group of highly accomplished
Auckland chefs being immersed into all that
Big Glory Bay in Stewart Island has to offer.
We flew them into the region for a memorable
few days attending the Big Glory Bay farms
and tasting all the beautiful King salmon,
mussels and oysters that make up this brand.
Unfortunately shortly after the launch the
region’s farmed Bluff oysters were struck
with the Bonamia ostreae parasite (refer
Outcome 5 – Communities and partnerships),
resulting in the destruction of the oyster
farms. This put a temporary halt to the
further roll out of the brand. We are now
focusing on building the brand through
social media channels with our partner
restaurants and looking at extending our
customer base both domestically and
internationally. Check us out at
www.bigglorybayseafood.co.nz.
SAMPLE MENU FROM ONE OF OUR CUSTOMERS,
HARBOURSIDE OCEAN BAR AND GRILL ILLUSTRATING
THE BIG GLORY BAY BRANDING IN ACTION.
fl fi
fl fi
FIRST COURSE
Oyster Selection, Shallots, White Balsamic & Red Wine Vinegar
Scampi Sashimi, Chili, Coriander & Olive Oil
Selection Of Big Glory Bay Salmon, Snapper & Kingfish
Sashimi, Nigiri, Pickled Ginger, Organic Soy, Wasabi
A glass of 2014 Yealands Pinot Gris
SECOND COURSE
Crayfish Cocktail, Crème Fraiche, Baby Cos, Chives
Grilled Crayfish Tails, Garlic, Parsley & Pernod butter
Miso Glazed Toothfish
Chargrilled Big Glory Bay Salmon, Green Goddess
Shoestring Fries
Green Salad, Avocado, Cucumber, lemon dressing
THIRD COURSE
Selection of Petit Fours
NZ & International Cheeses
A flute of Perrier-Jouët
BANQUET
LONG LUNCH
Our Big Glory Bay farm is Best Aquaculture
Practices (BAP) certified; BAP certification
is one of the world’s most trusted,
comprehensive and proven third party
aquaculture certification programmes
and gives our customers further assurance
of our commitment to the environment
and having healthy seafood.
We have been working with Sanford
for a little over a year now, and in
April I was invited to attend the
launch of their Big Glory Bay brand
down in Stewart Island. It was a
fantastic experience, the place, the
people and the product were all
outstanding. As a chef it’s great to
see firsthand where the product
comes from, and have confidence in
serving this to our customers.
—
Stuart Rogan
GROUP EXECUTIVE CHEF – GOOD GROUP
62Sanford Annual Report 2017
LEADING THE WAY TO HEALTHY FOOD
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
5
APPENDIX
& REFERENCE
ENGAGING WITH CONSUMERS
FROM SEA TO PLATE
As a company that harvests and farms
its own seafood, we have a breadth of
species to offer and our vision is to engage
consumers on everything from where,
when, and how their fish was harvested,
and by whom. Our goal is to enable
consumers anywhere in the world to go
online, order a product and get electronic
updates about where their seafood is and
when it will be delivered to their door.
We are not quite there yet but it’s something
worth working towards because part of
being the best seafood company in the
world is ensuring that people can enjoy the
finest seafood we have to offer wherever
they may be.
Our brand will increasingly be
associated with provenance and
the story we can tell about the
origin of the product and the
special care taken to farm it,
harvest it and process it for
discerning customers.
—
Volker Kuntzsch
CHIEF EXECUTIVE OFFICER – SANFORD
Because Sanford controls so much of
the supply chain, we have a competitive
advantage in being able to trace fish from
our vessel to when the consumer purchases
it. We are investigating methods to do that
and have already put in place a system for
one of our brands, Big Glory Bay.
Already, for each product finished in
any of the Sanford processing sites
we can provide the information below.
The next step is to make that information
available to consumers through
partnerships and technology.
1. WHERE CAUGHT – fishing area
2. WHEN CAUGHT – fishing trip
3. BY WHOM – our fishers
4. WHAT SPECIES – weight and tasting
information
5. QR/PRODUCT CODE – for more
in-depth information on how to
cook and prepare the food
For Big Glory Bay we partnered with
Oritain, the world leaders in scientifically
verifying the origin of food. This means
our products can always be traced back
to Big Glory Bay, protecting our reputation
and protecting our customers from food
fraud. Look for the ‘Origin Fingerprint’
for our Big Glory Bay King salmon and
Greenshell
TM
Mussels. To find out more
visit www.oritain.com.
We know this is just one facet of how
consumers interact with brands, and we’re
working on our communication, education
and accessibility to drive value. Over the
next few years, consumers will see Sanford’s
name on all of our consumer facing touch
points (for example, the Auckland Fish
Market and Seafood School will have
Sanford incorporated into the logo). A roll
out of new look packaging with stronger
brand identifiers, and a shift to consumer
facing offerings (whether that be on a menu
in a restaurant or on a pack at a high end
retailer) will align the brand. Our underlying
principle is that the Sanford brand will
appear on all brands whether it be as the
primary or endorser brand.
FOCUS ON FRESH
A key strategy for the business is focussing
on the sale of fresh seafood. We have
invested heavily this year in defining
markets and channels based around the
ability of these to support our focus on
fresh. This will result in a shift in who the
ultimate Sanford customer is, where they
are based and the channel through which
they purchase our product. Sales through
restaurants will grow in focus and aligning
Sanford with shared-vision customers such
as The Langham Hotel (now Cordis) and
The Good Group is part of this strategy.
The geographic spread of our customers
has remained relatively consistent
and detail about that mix is included
in ‘Our Global Presence’ pages 6-7.
PHOTO: A BIG GLORY BAY KING SALMON
WITH ORITAIN PROVENANCE INFORMATION
Focus
ON GROWING OUR FRESH SALES
TO RESTAURANTS
63
AUCKLAND FISH MARKET AND
SEAFOOD SCHOOL
The Auckland Fish Market and Seafood
School remain our strongest consumer
facing assets, and have the ability to
influence consumption behaviour about
what species to buy, how to prepare and
cook them, and how many times consumers
eat seafood. Our vision is for our Market
and School to be the ultimate celebration
of New Zealand seafood and be the full
Sanford brand immersion that enables us
to tell all of our stories from sea to plate.
Seismic strengthening work has been
required this year, meaning that the
hospitality function has closed but this
has given us the opportunity to re-visualise
the space and there are exciting plans
underway to redevelop the area to become
a destination for local and international
consumers. The plans include multiple
hospitality outlets, a revamped courtyard,
a stage for events, and seating for more
than 500 people. At the heart of it will
be a modern and vibrant showcase for
our brand (with a nod to our heritage),
and the wonderful array of beautiful
New Zealand seafood that we harvest
and farm on a daily basis.
We have made some changes to our
Seafood School class formats by offering
a broader variety of classes in both style,
length and cost. We’ve partnered with
Goody to launch a loyalty programme
that rewards consumers for their
purchases across both the school and
the market, and we’ve revamped the
seafood school website. See us at
www.aucklandseafoodschool.co.nz.
HOW WE ENGAGE WITH CONSUMERS
Social media is at the heart of our consumer
communications strategy, delivering
relevant and engaging content across all
of our social media platforms. This year we
merged the Seafood School and Auckland
Fish Market Facebook pages to capture a
greater audience; we used the platform
to promote our offerings and educate
consumers about how to prepare seafood.
With the launch of the Big Glory Bay brand,
we developed a new website, Instagram
and Facebook page. We captured the brand
generated content and worked with our key
restaurant partners to cross promote the
brand on their pages too.
The Sanford Facebook page continues
to go from strength to strength through
building a highly engaged community.
This platform enables us to showcase our
company to a greater audience with the
numerous stories we have from across our
business including celebrating Lloyd
TeNgaio who has worked at Sanford for 52
years (refer Outcome 2 – Our people) to
our technological advancements and
partnerships such as SPAT
nz (refer Outcome
1 – Sustainable seafood business).
INDUSTRY CAMPAIGN
We were proud to be involved in The
Promise Campaign, which was led by
Seafood NZ and supported by industry.
The campaign consisted of five TV
commercials played both on broadcast
and social media, and were all underpinned
by a code of conduct that we have signed
up to. The TV commercials highlighted
four key themes around Innovation,
Guardianship, Communities and World
Leading. All of these can be seen online
at www.seafoodnewzealand.org.nz.
PHOTO: AUCKLAND SEAFOOD SCHOOL
CONSOLIDATING AND
GROWING OUR
FACEBOOK PRESENCE
F
PHOTO: STEVE JONES ON BOARD THE ANA,
FOR SEAFOOD NEW ZEALAND CAMPAIGN
64Sanford Annual Report 2017
LEADING THE WAY TO HEALTHY FOOD
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
5
APPENDIX
& REFERENCE
Supply chain
Work with our supply chain to
deliver mutually sustainable
solutions that deliver value
for money, and support our
focus on health and safety,
product quality, sustainability,
continuous improvement
and innovation.
GOAL
The supply chain function has continued
to mature at Sanford to achieve greater
transparency in capturing our customer’s
requirements, and balancing that against
our harvest and catch plans. By taking a
more end-to-end value chain approach,
we can ensure our processing plants are
optimised throughout the year, while
continuing to meet our customer’s needs.
The sales and operational planning process
(S&OP) continued to build on the
foundation that was established in 2016.
There has been a companywide change in
mind set, with cross functional people now
actively coming together to share
information and design collaborative
solutions to align supply and demand.
Uncertainty around high impact events
(for example, the Bonamia ostreae
biosecurity response), an expanded
customer base, increasing product mix
complexity and a future change in our
core business systems are some of the
reasons that S&OP will continue to
transform in 2018.
In the next financial year, S&OP will
continue to focus on creating more value
for every kilogram of raw material we
harvest, and creating a stronger customer
driven culture. Crucial to the success of
this strategy is our ability to gain demand
and supply insights. S&OP provides the
framework for collaboration, but requires
reliable up-to-date future focused
information to be effective. Forecasting
time phased demands, production
capabilities, inventory status and available
harvest enables effective decision making.
In 2018, the Sanford forecasting roadmap
will introduce the phased roll-out of
building forecasting capabilities across
harvesting, supply and demand functions.
The initial focus will be on mussels and
frozen at sea hoki forecasting, spanning
over the longer term horizon. For fresh wild
harvest, the S&OP team will firstly focus
our forecasting on the shorter term
operational horizon.
In 2018, S&OP will no longer aim to be
purely a supply chain process. It will tie into
delivery of the operating strategy through
integrated business planning, and will be
championed by cross-functional business
management teams.
DELIVERING SUSTAINABLE VALUE
Savings from procurement initiatives
totalled more than NZ$2.5million in 2017
across the wide range of supply partners
we engage with. This was achieved through
working with key supply chain service
providers of commodities such as marine
fuel and electricity, and included the
wide range of packaging and consumable
products required to bring our products
to market. We have continued to partner
with suppliers who can deliver sustainable
value and expertise to Sanford, enabling
us to focus on core activities and drive
sustainable outcomes which support
seafood harvesting and sales.
Because Sanford relies on a
number of people to get the fish
to the consumer, you need to get
these other stakeholders on-
board and find the right partners
who are going to live those same
values. It only takes one person
in the value chain to drag the
whole chain down.
—
Mike Smith
HEAD OF CUSTOMER RETENTION AND GROWTH
NEW ZEALAND POST
65
• CASE STUDY •
You can’t farm fish without getting wet! Divers are needed for all sorts
of underwater tasks on our salmon farm: weighing and configuring nets,
harvesting fish, underwater camera work, and maintenance of farm
structures and assets.
The remote location and cold waters of
Big Glory Bay, Stewart Island may be
ideal for producing world class King
salmon, but it does pose some unique
operational challenges, especially
engaging in highly technical and skilled
services such as commercial diving.
Most of all, the remoteness demands
that health and safety be engrained in
the working culture. Hazards must be
identified and managed with detailed
response plans, and operations must be
performed and equipment maintained in
strict compliance with the regulations.
This year, Sanford has partnered with
New Zealand Dive and Salvage (NZDS)
to perform diving operations in Big Glory
Bay. NZDS manages and provides a dive
team based full time on Stewart Island
with the team being supplemented
by fly in contractors and supervisors
as required.
The partnership with NZDS is an
important investment in the health
and safety of our farming operations,
and Sanford is pleased it has resulted
in one of New Zealand’s leading dive
companies having a permanent presence
and providing employment pathways
on Rakiura (Stewart Island).
PHOTO: PETER BAIN MAKING SURE THE SALMON ARE SAFELY IN THEIR PENS
PHOTO CREDIT: THOMAS HINTON
ADDING VALUE FOR
OUR CUSTOMERS
Sanford’s supply chain, like many others,
had to show resilience following November’s
earthquake in Kaikoura (South Island).
Despite the significant disruption from road
and rail closures, we were able to work with
our suppliers to provide alternative routes
without impacting on customer deliveries.
Our mussel processing plant in Havelock
used Port Nelson for container shipments
(in place of rail) from Blenheim with the
support of our shipping lines; during the
hoki season, fresh hoki was landed into
Westport and transported to Timaru
(rather than through Picton).
We have also tested our responsiveness to
developing a new sales channel, working
alongside a customer to export live mussels
from Havelock, Marlborough to Asia. There
are certainly challenges to delivering live
mussels, but working with supply chain
partners who have the scale and networks
for rapid domestic and international
transport has enabled us to grow this
business successfully.
LIVE
MUSSEL EXPORTS
FROM HAVELOCK
TO ASIA
—
Diving services – supplier partnership
—
66Sanford Annual Report 2017
LEADING THE WAY TO HEALTHY FOOD
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
5
APPENDIX
& REFERENCE
• CASE STUDY •
Sanford operates a fleet of chilled
and frozen vehicles to move
wet fish between the wharf and
processing plants, and packaged
seafood for customer deliveries.
A significant volume of fresh chilled
seafood is delivered to Auckland Airport
from Tauranga and Auckland on a daily
basis, connecting to flights to all corners
of the globe. Meeting tight airfreight
deadlines is extremely important, and
dependent on having efficient and
reliable transport. A review of the
Auckland and Tauranga transport fleet
was recently undertaken to ensure the
equipment was safe, fit for purpose,
and to confirm that capacity matched
requirements. As an outcome, the fleet
has been rationalised, but with new
equipment introduced, and greater
flexibility achieved through using third
party logistics suppliers to support the
seasonal peaks.
PHOTO: NEW BRANDING ON SANFORD VEHICLES
SUSTAINABLE PACKAGING
INITIATIVE: REPLACING
POLYSTYRENE BINS AND
PLASTIC PACKAGING
Sanford has a target to replace 100% of
polystyrene bins (polybins) used for fresh
seafood for both domestic and export
sales; an important sustainability initiative
as the business used more than 290,000
polybins last year to transport fresh seafood
around New Zealand. Following extensive
trials and packaging development, we
replaced approximately 21,910 polybins
with a purpose designed cardboard
alternative. Further commercial scale
trials will be completed with controlled
implementation during 2018. Replacing
the polybins destined for export carries
significantly more complexity due to the
longer supply chains involved, but we are
continuing to work through potential
solutions with key partners.
Sanford has also used a variety of plastic
materials to package fresh seafood at our
retail stores across New Zealand. Our goal
is to move to packaging made from 100%
renewable resources, while continuing to
ensure our high standards of food safety
and quality are maintained. A project team
has been established to identify priorities
and implement initiatives to replace
these plastic items with more sustainable
solutions. Another project objective is
to ensure that whatever packaging is
chosen complies with the New Zealand
infrastructure for waste collection,
recycling and/or composting standards
to minimise environmental impacts.
DAILY FREIGHT
FRESH CHILLED SEAFOOD
Having a transparent and
traceable supply chain is
key – from cradle to grave,
or door to door. All the way
through from where the
fish is caught to the plate.
—
Nic Kay
NATIONAL GROUP SALES MANAGER,
NEW ZEALAND – MAINFREIGHT
PHOTO: NEW RECYCLABLE CARDBOARD CARTON,
BIG GLORY BAY SALMON
—
Optimising our distribution fleet
—
67
AND our future focus
MATERIAL ISSUESSTRATEGIC GOALS FUTURE TARGETS 2018 AND BEYONDOUR 2025 VISION
Food safety
and quality
Be recognised as a global
leader in providing safe,
high quality seafood that
delights our customers
and represents our love
for the sea.
Maintain FSSC 22000 food safety across
all five land-based processing sites.
Sanford is recognised and respected as a
global leader that is responsible, engaged
and empowered with the necessary culture,
tools and training to provide safe, high quality,
and sustainable New Zealand seafood that
meets the expectations of our increasingly
sophisticated customers and consumers.
Trial and implement commercially
available rapid microbiological testing
technologies for Greenshell™ mussels
at Havelock, with the view to use this
technology at other sites. Improve the
testing service to other Sanford sites
and increase the speed of results,
meeting market access and customer
specific requirements.
Support every worker to be a quality
inspector who owns their products
and processes.
Work with fishing, processing and supply
chain to monitor and improve the
quality of fresh fish and service delivery
via specific quality monitoring systems
and feedback loops from sea to plate.
Drive value
through brand
creation
Be the brand of choice
worldwide for our prized
New Zealand seafood, by
building a portfolio of brands
that engage with consumers.
50% of NZ consumers are aware of
Sanford and buy their products.
Sanford is the worldwide brand of choice for
New Zealand seafood, built on a reputation of
authenticity, trust and expertise. Our customers
and consumers place significant value on the
provenance of our seafood.
Relaunch the Auckland Fish Market
with 1 million consumers per year.
Relaunch the Sanford Seafood School
with world class offerings, and a
75% occupancy rate for all Seafood
School classes.
Drive value growth in key markets with
Sanford branded products.
Amplify and extend consumer
engagement across social media
platforms with 50,000+ consumers
in our online communities.
Launch consumer led innovation.
Extend the branded product and
market footprint of Big Glory Bay.
Develop the system and technology to
trace products from sea to plate across
all Sanford consumer facing brands.
68
Sanford Annual Report 2017
LEADING THE WAY TO HEALTHY FOOD
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
5
APPENDIX
& REFERENCE
MATERIAL ISSUESSTRATEGIC GOALS FUTURE TARGETS 2018 AND BEYONDOUR 2025 VISION
Supply chain
Work with our supply chain to
deliver mutually sustainable
solutions that deliver value
for money, and support our
focus on health and safety,
product quality, sustainability,
continuous improvement
and innovation.
Continue the emphasis on adding value
to our customers through delivering
ongoing supply chain improvements.
A world class, sustainable supply chain that
enables the company to achieve its vision of
being the best seafood company in the world;
bringing beautiful New Zealand seafood to
customers all around the world.
Integrate the strategic ambitions of
the company into supply chain activities
by actively engaging in business
management teams.
Develop and use tools to build
forecasting capability across harvesting,
supply, demand and inventory functions.
Continue to contribute positively
to Sanford’s bottom line by actively
managing key suppliers. Implement
best practice procurement, embedding
sustainability into our selection and
management of suppliers and continue
to grow influence and reduce complexity
across all third party expenditure.
These targets for 2018 and beyond have been informed by Sanford’s strategy, and a thorough review of international guidance
1
on business
commitments to support achievement of the UN Sustainable Development Goals.
1 GRI and UN Global Compact 2017: Business Reporting on the SDGs – An Analysis of the Goals and Targets.
69
UN SDG 14
LIFE BELOW WATER
The oceans – their temperature, chemistry, currents and life – drive global systems
that make the earth habitable for humankind. They are the natural capital that
Sanford’s business relies upon to provide value to our stakeholders. It is therefore
imperative that we do everything in our power to ensure their health. The biggest
difference we can make is by sustainably utilising fish stocks and our aquaculture
operations, ensuring that we don’t pollute the resource we rely on for our product.
Sanford is also taking a leadership role, both within New Zealand and globally to
support sustainable ocean management.
We will lead by example in healthy ocean management, so that
future generations can enjoy and benefit from our biologically
diverse, safe, healthy and dynamic oceans.
ENSURING HEALTHY
OCEANS
AND
70Sanford Annual Report 2017
PHOTO: BIG GLORY BAY, STEWART ISLAND
71
This table summarises Sanford’s material issues relating to ensuring healthy oceans, the strategic goals defined
through our Business Excellence Framework, our targets for 2017 and our progress against these targets in
contributing to value creation. At the end of this section, we also define our future targets and vision to 2025.
MATERIAL ISSUESSTRATEGIC GOALS2017 TARGETS*PROGRESS AGAINST TARGETS**
Sustainable fish
stocks and
marine farms
Ensure clear commitment
to comply with all applicable
laws and regulations
governing our operations,
including relevant
international conventions,
recognising the importance
of healthy ocean
management including zero
tolerance for overfishing,
underreporting and
discarding catch.
Maintain third party
certifications across Sanford
aquaculture farms, validating
our commitment to farm
efficiently and deliver
sustainable seafood.
(S)
Achieved. Four certifications maintained,
including Best Aquaculture Practices (Big Glory
Bay King salmon and Greenshell
TM
mussel farms);
Certified Organic (BGB mussel farms); Marine
Farm Association Environmental Certification
(mussel farms Marlborough); A+ Sustainable
Aquaculture in progress (mussel farms
Marlborough, Banks Peninsula).
All fishers to record and
report their catch to ensure
maximum transparency of the
fish stock status.
(L)
Achieved. Full and compliant catch monitoring.
AIS (GPS tracking), Cedric and cameras in use
by Sanford operations. Progressive roll out of
IEMRS will further increase data collection and
transparency in FY18.
Continue engaging with
New Zealand’s Deepwater
Group to maintain and support
MSC sustainability certification
for deepwater species in
New Zealand’s Exclusive
Economic Zone.
(L)
Ongoing. Sanford continues to actively engage
with and support MSC certification for
deepwater species. In 2017, 46% of our total
wildcatch by greenweight tonne (GWT) was
MSC certified (FY16: 37%). Two MSC chain of
custody audits were carried out in relation to
Sanford operations in FY17.
Marine
conservation
Embrace our role as a
change leader in the seafood
industry, applying influence
on the sustainability of our
oceans, leading to better
practice and more
sustainable outcomes,
while making a positive
impact on the communities
and coastal ecosystems
where we operate.
Take a strategic long term
view of the vision, risks and
opportunities relating to
sustainability aspects of
fisheries and work with
others to operationalise best
practice adaptive planning,
management and response.
(L)
Ongoing. We continue to take a multi-
stakeholder approach to co-creating a vision for
New Zealand and the world’s oceans, working to
research and implement leading edge sustainable
fisheries and aquaculture management.
Identify, define and deliver
targeted initiatives to achieve
a measurable reduction in
the use of plastics across
Sanford operations.
(M)
Ongoing. A range of initiatives are in progress,
from packaging innovations to the development
and introduction of eco-ties in our aquaculture
operations. Also participated in multi-stakeholder
forums focused on marine plastics reduction.
Material issues AND value creation
72Sanford Annual Report 2017
ENSURING HEALTHY OCEANS
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
5
APPENDIX
& REFERENCE
MATERIAL ISSUESSTRATEGIC GOALS2017 TARGETS*PROGRESS AGAINST TARGETS**
Endangered,
threatened and
protected
species
Ensure protection of marine
species, including seabirds,
sea lions, dolphins and sharks
through delivering best
practice farming and fishing
practices, implementing
protection measures and
participating in ongoing
robust research programmes.
Implement ongoing initiatives
to minimise seabird and marine
mammal interactions through
research, technology and best
practice mitigation.
(M)
Ongoing. We continue to focus on research,
technology and training to reduce our
interactions with endangered, threatened
and protected species, through a range of
industry initiatives. We recognise the
importance of transparent reporting, and
are focusing on targeted initiatives as we
strive to improve our performance.
Develop and implement a Plan
to progressively remove
fishing-related threats and
enable the Māui population to
recover and expand.
(M)
Ongoing. Plan co-developed and signed by
Sanford and Moana. A range of measures to
remove threats over time have been identified,
with initial budget of $500k allocated to 2019.
Requirement for vessel tracking systems in
place; app developed and rolled out; set netting
ceased; supporting transition to long lining.
VALUE CREATION – OUTCOME:
We will lead by example in healthy ocean management, so that future generations
can enjoy and benefit from our biologically diverse, safe, healthy and dynamic oceans
* S = Short term (1 year or less); M = Medium term (2-5 years); L = Long term (5-10 years, or more)
** Refer to ‘Progress on our 2017 sustainable business targets’ for full updates across all targets defined
Further information on data and trends is provided in the Key Performance Indicator (KPI) table, contained in Appendix A to this Report.
73
Sustainable fish stocks
and marine farms
Ensure clear commitment to
comply with all applicable laws
and regulations governing our
operations, including relevant
international conventions,
recognising the importance of
healthy ocean management,
including zero tolerance for
overfishing, underreporting
and discarding catch.
GOAL
Sanford and our key partners actively
innovate, research and develop the optimal
ways to use fishery resources while
supporting sustainable fish stocks and
marine farms. Science and technology have
a big role to play, but we remain vulnerable
to external environmental conditions and
events, ranging from ocean acidification to
sea level rise. Innovations such as
SPATnz
and Precision Seafood Harvesting (refer
Outcome 1 – Sustainable seafood business),
reflect our ongoing commitment to
adaptation, as well as delivering ongoing
improvements in the way we fish and farm.
When the parasite Bonamia ostreae was
detected in two Stewart Island oyster farms
in 2017, Ministry for Primary Industries
(MPI) used scientific evidence to inform the
decision to remove all farmed oysters in the
area. Sanford and our partners co-operated
with MPI’s requirements immediately and
were one of the first to remove all the
oysters from the area (refer Outcome 5 –
Communities and partnerships).
The capability and willingness of our staff,
crew, contractors and suppliers has enabled
Sanford to respond to new initiatives and
unexpected challenges. At any one time,
Sanford has hundreds of people at work on
land and at sea, and they deliver great
results for our sustainable business.
SUPPORTING THE EASIER
COLLECTION OF DATA
Thirty years ago, New Zealand’s Quota
Management System (QMS) was hailed as a
global breakthrough in sustainable fisheries
management. However, the increasing
sophistication of our science, technology
and customers’ expectations make it timely
to review how recreational, customary and
commercial fishing can be accommodated
in a QMS.
We supported, in principle, the review
of New Zealand’s fisheries management
framework that was presented by MPI
in their November 2016 consultation
document, The Future of Our Fisheries, but
thought it could be bolder. We believed the
review should have occurred within a wider
Oceans Policy framework. New Zealand has
such rich natural capital, and there is an
obligation for all ocean users to be involved
in taking responsibility for managing it.
Already New Zealand’s commercial fishers
are legally required to report their catch;
recently, MPI has introduced a mandatory
Integrated Electronic Monitoring and
Reporting System (IEMRS) to provide more
data about commercial fishing activity,
including more timely catch reporting,
real-time vessel location monitoring and
video collection of onboard fishing activity.
1. https://www.beehive.govt/release/digital-monitoring-
commercial-fishing-rollout-be-slowed-down,
10 November 2017
Integrated
ELECTRONIC MONITORING
AND REPORTING CONTINUES
TO DEVELOP
Sanford supports increasing data collection
and transparency about what happens on
the water, and welcomes the new Minister
of Fisheries, Stuart Nash’s announcement
1
that the timeframes for its rollout will be
reviewed to ensure systems are robust
by the due dates for implementation.
We estimate that the cost of IEMRS on
our business will be around $1million in
additional vessel hardware in the next
financial year (FY18).
Sanford is already well advanced in our
integration of electronic monitoring and
reporting; we have voluntarily been doing
this for many years, including through the
use of cameras and GPS tracking.
74Sanford Annual Report 2017
ENSURING HEALTHY OCEANS
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
5
APPENDIX
& REFERENCE
583
INDEPENDENT
SHAREFISHERS
2016: 474
23
DEEPWATER &
INSHORE VESSELS
2016: 24
5
8
PROCESSING SITES
INCLUDING JOINT
OPERATIONS
2016: 7
313
2
FISHSTOCKS
2016: 313
TONNES OF FISHMEAL
AND OIL PRODUCED
11,644
2016: 9,927
WILDCATCH
GREENWEIGHT TONNES
91,936
3
2016: 83,495
4
87
2
SPECIES
2016: 87
1. Quota ownership based on New Zealand annual catch entitlement (ACE) equivalent
2. Figures relate to Sanford’s New Zealand quota only
3. Total wildcatch GWT comprises Sanford fleet, including contracted ACE fisher’s landings
4. 2016 figure reported as 81,245; restated as 83,465 to exclude spat. 2017 figure excludes spat
5. 2016 figure restated as 24 vessels, following reclassification of vessel type
• CASE STUDY •
In August 2017 the New Zealand
seafood industry launched OpenSeas,
an innovative portal to inform about
the environmental, social and
production credentials of the
New Zealand seafood industry.
The portal brought together over 20
industry experts and five regulatory
agencies to collate information about
New Zealand’s approach to the
sustainable use of its extensive marine
environment. It describes the systems
and processes used to ensure supply
chain integrity and the legal
protection of the welfare of workers
and indigenous communities involved
in seafood production. It features
individual species profiles, which
include the most up-to-date harvest
details and independent
environmental certification or risk
assessment scores and will be
continually extended and updated.
Sanford supports making
transparent and traceable supply
chain and sustainability information
available to meet the needs of all
stakeholders through the portal at
http://www.openseas.org.nz/.
—
OpenSeas – An Open
Information Source
—
SANFORD IS NZ’S LARGEST
– QUOTA HOLDER –
23%
1
2016: 23%
OpenSeas is your gateway to the
most comprehensive set of facts
and references underpinning
the environmental, supply chain
and workforce credentials of the
New Zealand seafood industry.
Get in touch: hello@openseas.org.nz
The Story of
New Zealand
Seafood
Starts Here.
The Source for
New Zealand Seafood
Information.
openseas.org.nz
Our Quota: How do we use it?
How have we performed?
75
SUSTAINABILITY CERTIFICATIONS
Joining with independent audit and
certification programmes is a way that
Sanford can receive external feedback on,
and validation of, our commitment to
delivering sustainable seafood. Sanford
uses five certification programmes to
support and validate our commitment to
sustainable seafood; one for our wildcatch
and four for our marine farms.
Sanford are longstanding and active
members of the Deepwater Group (DWG)
Fisheries Certification Programme which
has seen all of New Zealand’s key deepwater
fisheries receive third party certification.
The DWG has adopted the Marine
Stewardship Council (MSC) certification
as the highest independent standard for
sustainable fishing. Currently, 99% of
New Zealand’s key deepwater fisheries
are in the DWG Fisheries Certification
Programme, and 75% are either MSC
certified or undergoing a formal
MSC assessment.
There are now six MSC certified species
(which equates to 15 fisheries) in the
New Zealand Exclusive Economic Zone
(EEZ), as well as the toothfish fisheries
in the Ross Sea and South Georgia region.
In 2017, 46% of Sanford’s total wildcatch
by GWT was MSC certified. MSC supports
our strategic goal of marine conservation
through embracing our role as a leader in
our industry, influencing the sustainability
of our oceans.
Sanford’s King salmon and Greenshell™
mussel business in Stewart Island’s Big
Glory Bay demonstrate our commitment
to sustainability through certification to
the international Global Aquaculture
Alliance’s Best Aquaculture Practices (BAP)
programme. We are in our second year
of BAP certification, which verifies our
commitment to the environment, social
integrity, and the health of the animal and
consumer through third party verification.
Our Big Glory Bay Greenshell™ mussel
farms are also certified organic by Asure
Quality, providing further evidence that
these products meet high standards of
safety, ethics and sustainability.
Over the last two years we signed up many
of our farms, including all of those in
Canterbury to Aquaculture New Zealand’s
A+ New Zealand Sustainable Aquaculture
programme. During 2017, Grant Boyd,
Floating and Farm Development Manager
at Sanford Havelock has been involved in
supporting the updating of the data entry
model and ground testing the new software.
In Marlborough, our mussel farms have
also continued certification to the Marine
Farming Association’s (MFA) environmental
programme, which focuses on farm
management, vessel operations and
crew behaviour on the water.
NATIONAL ENVIRONMENTAL
STANDARD FOR MARINE
AQUACULTURE (NES)
In New Zealand, licences are needed for
growing of all types of shell fish and fin
fish. Sanford holds over 490 licences
across our 211 aquaculture farms, and
these are core to the ongoing success of
our aquaculture business. Sanford has
continued to inform development of the
proposed NES, which is intended to provide
national guidance to regional councils on
how they should process the re-consenting
of existing marine farm licences. Ted Culley
(General Manager, Aquaculture at Sanford)
is a member of the multi-stakeholder NES
Working Group tasked with developing
the NES.
The NES is proposed by the Ministry for
Primary Industries in partnership with the
Ministry for the Environment and the
Department of Conservation. It was put out
for public consultation in the third quarter
of 2017, and the Working Group is now
reading and considering the submissions.
Sanford has also worked with Aquaculture
New Zealand, our sector representative
body, on an industry submission, as well as
lodging a company submission. These types
of processes create a good forum for
marine farmers to come together and have
robust debate on how our industry should
move forward on a collaborative basis.
The opportunity to create more value
from this industry by taking a measured
approach to further growth, and ensuring
that we focus on investments in value
creation – and not mere increases in
volume – is significant.
BAP, MFA, A+ & CERTIFIED ORGANIC
CERTIFICATION LOGOS
* BASED ON SANFORD’S TOTAL WILDCATCH
(BY GWT) FOR 2017. DEVIATIONS REFLECT
FLUCTUATIONS WITH SEASONALITY, ANNUAL
CATCH ENTITLEMENTS, SPECIES COMPOSITION
AND CLIMATE EVENTS SUCH AS EL NIÑO/LA NIÑA.
39%
2014
41%
2015
37%
2016
46%
2017
Wild caught MSC certified catch*
490
LICENCES ACROSS OUR
211 AQUACULTURE FARMS
76Sanford Annual Report 2017
ENSURING HEALTHY OCEANS
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
5
APPENDIX
& REFERENCE
Marine
conservation
Embrace our role as a leader
of change in the seafood
industry, applying influence
on the sustainability of our
oceans, leading to better
practices and more sustainable
outcomes, while making
a positive impact on the
communities and coastal
ecosystems where we operate.
GOAL
The New Zealand government manages
protected species and marine conservation
in line with a number of international and
regional agreements, and through several
recognised international bodies. Sanford
supports such measures; the commercial
seafood industry is worth over $2 billion/
year to the New Zealand economy.
Collectively, we provide work for over
20,000 New Zealanders and around
600,000 of us are recreational fishers.
Sanford believes that New Zealand has a
unique opportunity to be world leaders in
how we protect our oceans and everything
in them. We are already proactive, early
adopters of the fisheries management
system that are regarded internationally
as amongst the best. At the same time we
are facing the urgent need for protecting
our Exclusive Economic Zone (EEZ), the
4th largest in the world, to preserve a
magnificent environment that provides
value for every New Zealander into
the future.
While as a nation we are dependent upon
the ocean for a huge range of economic
activities; currently there is no cohesive
approach across business, science, and
government that we can unite behind to
manage our marine environment. Sanford
is exploring ways to effect positive change.
With plastic pollution, ocean acidification,
and runoff from land-based farming
currently threatening the health of our
marine areas, it is now more important
than ever for us to turn our obligation to
act into the ambition to lead by example.
Sanford advocates shared responsibility
for enhancing our marine environment so
that its use is sustainable, enriching and
accessible to all. We are a strong supporter
of multi-stakeholder processes that span
all ocean-related activities, and ultimately
have the ability to link with terrestrial
activities that affect the ocean, such as
sedimentation and water quality.
As set out in Outcome 5 – Communities
and partnerships, Sanford are actively
involved in a range of multi-stakeholder
forums and initiatives, from advising on
global forums on ocean stewardship to
providing leadership and operational input
into a range of industry forums, such as
the Southern Seabird Solutions Trust,
Fisheries Inshore New Zealand, Deepwater
Group and the Convention for the
Conservation of Antarctic Marine Living
Resources (CCAMLR).
VISION AND ACTION:
WHAT ARE WE DOING FOR
MARINE CONSERVATION
Sanford calls on New Zealand to:
• Co-create an ambitious vision for
the ocean with a wide range of
users and lovers of the sea
• Set up a Ministry for the Oceans
to address the many diverse
and interrelated issues about
our oceans
• Manage fisheries in a wider
ecosystem approach
• Reinstate New Zealand as a
world leader in marine and
fisheries management
• Support excellent research
and monitoring to inform
better understanding, policy
and management of our oceans
and fisheries
• Take a multi-stakeholder approach
to how we work with and sustain
our fisheries, with science at the
centre of what we do
NZ
77
• CASE STUDY •
Sustainability sits at the core of our
business – it is fundamental to our survival,
and is the foundation for our growth. Our
vision is to be the best seafood company in
the world through the sustainable growth
of our business; founded on our belief that
we owe a responsibility to the environment
we operate in, and the society that grants
us the licence to operate.
Some sustainability challenges arise from or
affect how and where we fish, and Sanford
is committed to continuing to work with
others to do whatever we can in response.
Our key priority areas include:
• Interactions with seabirds, marine
mammals and other species and how
to avoid and/or reduce these
• Transparency and accountability
assurance from accurate data collection
systems on fishing vessels
• Biodiversity and biosecurity issues
• Marine reserves and the science, policy
and engagement around their coverage
and location
• Climate change and the real threat
it poses
• The effects of land use on fresh and
marine water quality
• The effects of other uses of the sea
and sea floor
• Bottom trawling and how to avoid or
reduce its adverse ecosystem effects
Sanford has been working on some of
these challenges for some time, and is
committed to continuing to work with
other stakeholders in open conversations
that help to co-create new solutions.
New Zealand may end up being the
last place in the world where we can
truly demonstrate sustainable
fishing. Sanford have a responsibility
to do everything they can to ensure
this happens. They have taken some
courageous steps already, but there
is much more to be done to ensure
New Zealand can, in fact, provide a
sustainable seafood sector for
generations to come.
—
Chris Morrison
CO-FOUNDER, ALL GOOD ORGANICS
Initiatives to reduce the use of plastic across
Sanford operations are gaining momentum:
a cross-functional team is working on
packaging innovations across our retail
stores and fresh produce supply chains
(replacing polybins) (refer Outcome 3 –
Healthy food); our mussel farming
operations are focused on developing an
eco-farm concept incorporating a range
of solutions to replace plastic-based
equipment (for example, compostable
eco-ties) (refer Outcome 6 – Protecting
the environment); and investigations are
underway to identify systematic solutions
to support re-using and recycling key plastic
waste streams (such as fish bins, ropes and
nets beyond repair) as a proactive step
towards supporting a circular economy.
SEAFOOD BUSINESSES FOR
OCEAN STEWARDSHIP
Eight of the world’s largest seafood
companies issued a ten-point statement
in December 2016 committing to action
on ocean stewardship. Their action
followed the first keystone dialogue
between scientists and business leaders.
The initiative was a unique meeting between
CEOs and senior leaders of major seafood
companies together with leading scientists
from the Stockholm Resilience Centre.
There were also several advisors from
prestigious organisations from around the
world, including the CEO of Sanford,
Volker Kuntzsch.
The keystone dialogues is a new approach
to getting major international businesses
to engage on the global sustainability
challenges. The eight seafood companies
committed to improving transparency,
traceability, and reducing illegal,
unreported and unregulated fishing
in their supply chains. They will also
prioritise action to reduce antibiotic use
in aquaculture, greenhouse gas emissions,
plastic pollution and eliminate any products
in their supply chains that may have been
obtained through modern slavery including
forced, bonded and child labour.
In describing the experience, Volker
concluded, “It was a great honour to be
invited to support the keystone dialogue.
These large companies understand the role
they play in our ocean ecosystems and are
taking action to ensure that their role
benefits our oceans to promote the long
term sustainability of our industry and a
healthy global food supply.”
The effect of plastics on the marine
ecosystem is under increased
international focus. A new report from
the World Economic Forum
1
estimates
that, by weight, the world’s oceans will
contain more plastic than fish by
2050. Sanford’s General Manager of
Sustainability (Lisa Martin) was invited
by the Ministry of Foreign Affairs and
Trade (MFAT) to attend the East Asia
Summit in Bali in September 2017, an
international forum focusing on the
challenges in managing marine plastic
debris. Lisa presented on the impact
plastic has on our industry, shared
practical insights into Sanford’s
commitments towards marine plastic
reduction to date, and informed
discussion on how local and national
governments can support further
innovation and practical solutions.
The summit was attended by
diplomatic and private sector
representatives from 19 countries in
East Asia, the United States, Australia
and New Zealand, and the attendees
are now working to agree on a Regional
Plan of Action on marine plastics.
Sanford was one of several
New Zealand players at the conference
that have taken the initiative to
develop world-leading technology to
grapple with the massive and growing
problem of plastic pollution in the seas
of our region. This will help clean up
our own maritime environment, but if
much larger countries follow suit, this
also offers the prospect of achieving
scale and impact that can roll back this
problem over time.
—
Stephen Harris
DIRECTOR FOR SOUTH AND SOUTH EAST
ASIA, MINISTRY OF FOREIGN AFFAIRS
AND TRADE
1. World Economic Forum and Ellen MacArthur
Foundation, 2016: The New Plastics Economy:
Rethinking the Future of Plastics
—
Our supporting activities:
taking action on marine
plastics
—
78Sanford Annual Report 2017
ENSURING HEALTHY OCEANS
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
5
APPENDIX
& REFERENCE
Endangered, threatened
and protected species
Ensure protection of marine
species, including seabirds,
sea lions, dolphins and sharks
through delivering best
practice farming and fishing
practices, implementing
protection measures and
participating in ongoing robust
research programmes.
GOAL
New Zealand is rich in marine species of all
kinds, and many of them are endangered,
threatened and/or protected. All seabirds
and marine mammals, including many
species of sharks, are fully protected by our
laws, and Sanford strives to minimise our
interactions with them when carrying out
all operations.
While we do invest significant effort in crew
training, implementing best practice
mitigation devices, continually improving
our monitoring systems, data collection,
and interpretation to provide information
on the effectiveness of these devices,
incidental catch remains a challenging issue
to address.
The best practice mitigation measures we
employ include bird scaring devices, sleds,
weights on long-line hooks and escape
holes in nets. We are also continuing to
work with scientists and a wide range of
other stakeholders to carry out ongoing
research, trials and innovation to reduce
injuries and mortality of both seabirds and
marine mammals, through our involvement
in a range of initiatives, including:
SEABIRDS
• Endorse and follow the MPI National
Plan of Action for Seabirds (NPOA)
to reduce the incidental catch of
seabirds, implementing requirements
in crew training and on water practices
and procedures
• Signatory and member of the Black
Petrel Seabird and Fisher Working Group,
committed to reduce fishing-related
mortalities through enhanced mitigation,
observation and monitoring methods,
and supporting relevant research
• Board and management committee
involvement in Southern Seabird
Solutions Trust, working to develop
and implement targeted initiatives to
protect 24 seabird species
MARINE MAMMALS
• Endorse and follow the Deepwater Group
Marine Mammals Operational Procedures
to reduce the incidental catch of marine
mammals, implementing requirements
in crew training and on water practices
and procedures
• Co-leadership of the Māui Dolphin
Protection Plan, a proactive and
collaborative initiative to progressively
remove fishing-related threats and
enable the Māui population to recover
and expand
• Endorse and follow the MPI and
DoC Sea Lion Risk Threat Management
Plan, implementing requirements in
crew training and on water practices
and procedures
79
• CASE STUDY •
The skipper of the San Columbia, Gum, was praised for releasing
30 tonnes of jack mackerel to save half a dozen dolphins
surrounded by the boat’s net.
The Sanford vessel was purse seine
fishing off the Tauranga coast in March
when a pod of dolphins were surrounded
by the net. The crew lowered the sides,
but the dolphins didn’t swim out. The
skipper faced a choice: to risk losing the
30 tonnes of catch by trying to free the
dolphins, or to see the dolphins die.
Gum wanted to save the dolphins, so he
decided to release one end of the net,
enabling all the dolphins to swim away
unharmed; this allowed all the jack
mackerel to escape too.
Sanford fully supported the skipper’s
decision, and despite releasing all of
the fish alive, we were legally required
to report the fish as catch: it counts
against our annual catch entitlement
for this species. Gum believes that any
New Zealander in his position would
have done the same and Sanford agrees
with him. With Sanford’s focus on
sustainability, in a situation like this,
we all agree that cost comes second.
Sanford is investing in identifying how
to avoid similar situations in the future;
we are trialing a dolphin dissuading
device on the Ana and the crew have
reported that it works well.
Every crew and skipper working for Sanford should know that you will
always have our support when you do the right thing and if you’re
ever in any doubt about whether the public cares and appreciates
this, take a look at some of the emails that we’ve received.
—
Volker Kuntzsch
CEO OF SANFORD
BY THE NUMBERS
During 2017, Sanford harvested 91,936
GWT of fish, compared with 83,495 in
2016. Regrettably, despite our ongoing
focus on operational measures to minimise
the risk of interaction with seabirds and
marine mammals, we experienced a number
of unintended interactions during our
increased activity on the water. All such
incidents were thoroughly investigated,
and we remain committed to implementing
and continuing to explore new mitigation
measures to improve our performance
towards an ultimate goal of zero interactions.
In overall terms, the mortality rate for
seabirds increased from 66.3% in 2016 to
75% in 2017, although the number of birds
that we released during operations
increased slightly to 94 (2016: 90). Sadly,
a significant incident occurred with one
of our charter vessel operators that
resulting in a loss of 101 seabirds. After full
investigation, appropriate remedial action
was taken, as set out in the Continual
improvement case study. There were 286
seabird losses during the nine months of
data (October to June) available from
MPI at the time of preparing this Report,
an increase from last year (FY16: 177) for
the same period. This data tells us the
number of unintended interactions by
type and outcome, recorded by species
and by vessel.
MPI SUMMARY OF SANFORD’S
—
Praise for Sanford skipper’s
dolphin release
—
Action
FOLLOWING A SIGNIFICANT
INCIDENT WITH A LOSS OF 101
SEABIRDS, A FULL INVESTIGATION
AND FULL REMEDIAL ACTION
WAS TAKEN
PHOTO: SANFORD’S CHIEF OPERATING OFFICER,
GENERAL MANAGER OF FISHING AND GENERAL
MANAGER OF CORPORATE COMMUNICATIONS
THANKED GUM AND HIS CREW BY PRESENTING
THEM WITH SANFORD MERINO JACKETS.
PHOTO: THE SAN COLUMBIA DOCKED
IN TAURANGA
80Sanford Annual Report 2017
ENSURING HEALTHY OCEANS
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
5
APPENDIX
& REFERENCE
Sanford is being brave around
transparency, e.g. the number
of seabirds and marine
mammals caught.
—
Abbie Reynolds
EXECUTIVE DIRECTOR, SUSTAINABLE
BUSINESS COUNCIL (SBC)
REPORTED INCIDENTAL CATCH DATA
SEABIRDS
5
MARINE MAMMALS
5
2017201620172016
Uninjured 868460
Injured 8600
Dead2861774727
Total3802675327
Mortality Rate (%)
6
75%66.3%89%100%
5. 2016 and 2017 data covers the 9 month period 1 October to 30 June, which reflects the data set available from MPI at
the time of reporting. Based on 12 months of data for 2016 (as subsequently supplied by MPI in relation to 2016
dataset), the mortality rates for seabirds and marine mammals are 77% and 96% respectively.
6. Mortality rate is calculated as the ratio between total species caught and species caught dead.
The mortality rate for marine mammals
reduced from 100% in 2016 to 89% in 2017,
although we unfortunately recorded 47
marine mammal deaths for the 9 month
period of October 2016 to June 2017. The
majority of these interactions occurred in
June, which is the beginning of the hoki
spawning season, when New Zealand fur
seals gather to take advantage of the fishing
activity. The New Zealand fur seal is a hoki
predator, with a growing population. We are
continuing to work towards putting in place
special measures to address this challenge.
While this year we caught and recorded the
successful release of six uninjured mammals
(five fur seals and one pilot whale), it is not
currently possible to record live escapes
directly from the mitigation measures
deployed. However, as technology advances
we will aim to capture more information in
relation to the efficacy of the mitigation
measures deployed, and this will assist in
the enhancement and development of
our mitigation measures.
Sanford operates within and strongly
advocates the various industry operational
plans, codes of practice and procedures
referred to above, which are over and
above the regulatory requirements.
• CASE STUDY •
In April 2017, one of our deep sea
charter vessels experienced gear
failure while deploying its net to
fish for squid on behalf of Sanford.
The crew tried to correct the failure
as quickly and safely as possible, but
while the empty net was sitting on
the surface, a large number of small
seabirds flew into the net and
unfortunately drowned, despite bird
mitigation gear being deployed on
the vessel itself. The MPI observer
on board counted 101 birds in total;
76 sooty shearwater (mutton birds)
and 25 white-chinned petrels.
Sanford reviewed the incident using
the Deepwater Group (DWG) industry
agreed environmental risk reduction
procedures and standards, and noted
that despite the extensively observed
fishery and gear type involved
(including the experience of the
charter vessel operator working in
this area over 28 years), nothing of
this nature or scale had occurred.
Above all, the findings demonstrated
the need for mitigation procedures
to be regularly reviewed and updated,
and for crews to be constantly
vigilant and responsive. Mitigating
the risk of re-occurrence of such
an incident of this nature is a high
priority, and learnings have been
shared with all deepwater fleet
operators through the issue of a
DWG Advisory Note.
Sanford continues to communicate
with its crews that they must
constantly be aware of seabird
activity and unusual behavior, and
that in the event of operational
failure, they must urgently remove
nets from the water while working
to solve the problem. We have
agreed with the charter vessel’s
management that if a gear failure
incident happens again, they must
deploy one person to solely watch
for any unusual bird activity and
initiate urgent action, while others
focus on fixing the gear.
—
Continual improvement
—
PHOTO: FUR SEAL ON BUOY IN MARLBOROUGH SOUNDS
PHOTO CREDIT: STEVE HUSSEY
81
SANFORD AND THE MĀUI DOLPHIN
PROTECTION PLAN
The world’s tiniest and rarest dolphin, the
Māui dolphin or popoto (Cephalorhynchus
hectori maui), is found in the shallow waters
off the west coast of New Zealand’s North
Island. Currently, there are estimated to
be only 63 dolphins over one year old, and
with the population so dangerously low,
this species is on the brink of extinction.
This is a conservation emergency requiring
concerted and collaborative action, and
Sanford have responded.
While the New Zealand government
has permanently protected the Māui
core habitat with fishing prohibitions,
Sanford and Moana, together with WWF
New Zealand, worked to identify a set
of actions that would remove the human
induced residual risk to Māui dolphins from
commercial fishing on a broader scale,
recognising that larger companies have
a responsibility to lead and collaborate.
The Māui Dolphin Protection Plan (the Plan)
took us several years to develop; both
companies signed it in December 2016.
We have also reached out to other fishers
and invited them to join us. Margret Hall,
the Project Coordinator, has been working
with these fishers and is impressed with
their willingness to come on board. We are
also working to develop a dolphin-safe trawl
net that can be used across New Zealand
fishing waters on all dolphin species.
Sealord, Maruha, Pegasus Trawling and
Raglan Trawling have also joined the
project. Sanford CEO Volker Kuntzsch said,
“We can’t do it all on our own, but we’ve
made a good start with a joint 2017-2019
budget of $500,000.”
From April 2017, all harbour set netters
that are catching or landing Sanford
or Moana’s fishing entitlements were
required to use vessel tracking systems.
From October 2017, no Sanford annual
catch entitlements (ACE) have been leased
to fishers using set nets in the coastal
fishery north of New Plymouth. From
December 2022, we aim to have a
dolphin-safe trawl net, or we will stop
trawling in the Māui habitat.
Good progress has been made on the Plan’s
commitments; over 50 harbour set net
fishers have agreed to use a mobile app that
we developed to track their fishing effort.
Trident Systems will aggregate all of the
fishers’ tracks and overlay these with
locations where Māui dolphin have been
sighted. If there is a risk to dolphins, we
have committed to go back out to fishers
and find a solution. Sanford has also
supported coastal set net fishers to
transition to long lining, and we are
pleased to report that over the last year,
two fishers have completed this process.
Find the plan at http://www.sanford.co.nz/
assets/Sanford-and-Moana-Maui-
Protection-Plan-2016.pdf.
Maunganui Bluff
MAUNGANUI
WHANGANUI
Kaipara
Harbour
Manukau
Harbour
Kawhia Harbour
Aotea Harbour
Waiwhakaiho River
NEW PLYMOUTH
Raglan Harbour
Waikato River
NEW ZEALAND
MĀUI DOLPHIN
PROTECTION
PLAN
MOANA & SANFORD
MOANA & SANFORD
ALL FISHERS (proposed transition)
NO SET NETTING
VIDEO MONITORING ON VESSELS
NO CONVENTIONAL TRAWLING
MĀUI DOLPHIN
PROTECTION PLAN
1
No catching rights leased to
coastal set netters within
100m depth contour north of
New Plymouth from 2017.
2
No conventional trawling within
100m depth contour after 2022.
3
Video cameras and electronic
tracking on all vessels.
4
2017/18 companies to spend
$500,000 on research and
compliance to support
‘Māui-safe’ fishing.
Whanganui River mouth
CURRENT - ALL FISHERS
NO SET NETTING
SANFORD AND MOANA
2017 - NO SET NETTING
2017 - VIDEO MONITORING ON VESSELS
2022 - NO CONVENTIONAL TRAWLING
MAUI DOLPHIN HABITAT
100m Depth Contour
KEY
• CASE STUDY •
—
Black Petrel visit to
Great Barrier Island
—
Wildlife Management International has
taken several of our staff to the top of
Great Barrier Island to see the petrels
close up, and in early 2017, Steve
Jones, one of our skippers who
regularly fishes in the Hauraki Gulf and
our General Manager of Sustainability,
Lisa Martin, went on just such a trip.
While there, our staff were shown
where the black petrels nested,
told more about their life cycle and
habits, and over two days helped the
conservation team band juvenile birds.
Steve described this trip as an
experience that reinforced his
perspective and encouraged him
to do even more to help the black
petrels. He feels inspired to continue
spreading the word about the
mitigation measures Sanford uses,
and that he has on his vessel. While
on this trip, he worked with a film crew
to make an informative video to share
with his peers. For Lisa, it reinforced
why Sanford works to educate both
staff and share fishers about seabird
care, and brought to life the
commitment that Sanford, and others,
have made to protect the Black Petrel
through the Black Petrel Working
Group Pledge.
PHOTO: STEVE JONES, SKIPPER OF SANFORD
VESSEL THE SAN ANA HOLDS A BLACK PETREL AS
PART OF A BANDING EXERCISE WITH WILDLIFE
MANAGEMENT INTERNATIONAL ON GREAT
BARRIER ISLAND
82Sanford Annual Report 2017
ENSURING HEALTHY OCEANS
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
5
APPENDIX
& REFERENCE
MATERIAL ISSUESSTRATEGIC GOALS FUTURE TARGETS 2018 AND BEYONDOUR 2025 VISION
Sustainable fish
stocks and
marine farms
Ensure clear commitment
to comply with all applicable
laws and regulations
governing our operations,
including relevant
international conventions,
recognising the importance
of healthy ocean
management including zero
tolerance for overfishing,
underreporting and
discarding catch.
Actively continue to explore
opportunities to achieve and maintain
appropriate third party certifications of
wildcatch and marine farms, considering
a common certification platform.
Sanford leads the industry to ensure, through
its operations, that fish stocks and marine farms
are verified as sustainable on the basis of
robust, scientific research, monitoring and
transparent reporting.
Actively engage with leading players
to develop and roll out accurate
recording and reporting systems for
both target catch and incidental catch
to ensure maximum transparency of
fish stock status.
Marine
conservation
Embrace our role as a
leader of change in our
industry, applying influence
on the sustainability of our
oceans, leading to better
practices and more
sustainable outcomes,
while making a positive
impact on the communities
and coastal ecosystems
where we operate.
Continue to collaborate with multiple
stakeholders through targeted
research and partnership projects
to advance sustainable marine
conservation outcomes.
Sanford contributes significantly to ensuring
the sustainability of our oceans, leading
industry best practice, leaving a positive
and lasting legacy on the communities and
coastal ecosystems where we operate.
Actively promote the multi-stakeholder
co-creation of a shared vision for our
oceans and the establishment of a
Ministry for the Oceans.
Endangered,
threatened
and protected
species
Ensure protection of marine
species, including sea birds,
sea lions, dolphins and sharks
through delivering best
practice farming and fishing
practices, implementing
protection measures and
participating in ongoing
robust research programmes.
Continue to engage in robust research
and development initiatives to advance
best practice species avoidance and
protection techniques, such as the
trial of a dolphin dissuading device
on the Ana.
Sanford is an industry leader in the delivery
of best practice marine species avoidance
and protection techniques, and a significant
contributor to ongoing innovation, scientific
research and development initiatives.
Actively implement and promote
industry, public and government
support for the Māui Dolphin Protection
Plan and extend this to other dolphin
species and marine mammals as soon
as possible.
Actively work with scientists, fishing
crews and key stakeholders to
progressively reduce fatal interactions
with seabirds and marine mammals.
These targets for 2018 and beyond have been informed by Sanford’s strategy, and a thorough review of international guidance
2
on business
commitments to support achievement of the UN Sustainable Development Goals.
2. GRI and UN Global Compact 2017: Business Reporting on the SDGs – An Analysis of the Goals and Targets.
AND our future focus
83
UN SDG 8
DECENT WORK AND
ECONOMIC GROWTH
Under-employment affects communities around New Zealand, and
we need decent work opportunities if we are all to share in our
progress as a country. Sustainable economic growth creates the
conditions that enable people to hold down decent jobs that
stimulate the local and national economy. We are committed to
creating productive employment opportunities for our local
communities and we value living and working in them. The
increasing diversity in our product portfolio through innovation and
with the aquaculture sector having a high potential for growth, we
believe we can create long term employment in our communities
through our growth goals.
UN SDG 17
PARTNERSHIPS
FOR THE GOALS
To achieve all of our sustainability goals, Sanford needs to
work in partnership with our stakeholders to ensure that
we have sustainable outcomes for the future. Our
strategic partnerships, both local and global, help us
create the most value that we can for current and future
generations. We invest significant time and energy
collaborating with stakeholders to help shift the dial in
areas where we can make the most difference.
SUPPORTING
ENDURING COMMUNITIES
AND PARTNERSHIPS
Our leadership in creating employment and skills opportunities, coupled with
our understanding of the needs of our communities and partners, ensure we
deliver a significant and positive contribution everywhere we work.
AND
84Sanford Annual Report 2017
85
MATERIAL ISSUESSTATEGIC GOALS2017 TARGETS*PROGRESS AGAINST TARGETS**
Engagement
and
employment
Respect and support our
local communities in line with
our social licence to operate.
Where possible, we will
create local business,
employment and skills
development opportunities.
Implement targeted strategies
and plans to support local
business, employment, and
skills development.
(M)
Ongoing. At the regional level, support various
educational and employment initiatives, from
university and school visits to internships. Worked
with the Graeme Dingle Foundation’s Career
Navigator programme in Southland to support
the delivery of a ‘Ready-for-Work’ programme.
Continue to grow the
engagement across the
communities that we
operate in through a range
of initiatives from open days
to communication through
multiple forums.
(M)
Ongoing. Implemented a wide range of
community initiatives from planting to coastal
clean-up events, fundraising activities and open
days. The Sanford Annual Report 2016 was a case
study in the NCEA national curriculum, with
visits from four school groups, and presentations
from Sanford representatives. Engagement
tracked through social media metrics. In-house
GM Communications function established,
further extending outreach.
Strategic
partnerships
and
collaboration
Establish strategic
partnerships that create
value for the community,
our partners and Sanford
in the short, medium and
long term.
Continue to foster existing
strategic partnerships and
establish new ones, where
appropriate in line with our
overall business strategy
and priorities.
(L)
Achieved. Formal partnerships with the
Graeme Dingle Foundation and Paralympics
New Zealand continue. Active memberships
across a range of organisations (refer Appendix
C). Signatory to a range of initiatives, such as
Climate Action, Māui Dolphin Protection Plan,
and Black Petrel Pledge.
Contribute towards the
New Zealand Inc brand and
key sustainability initiatives
through collaborating with
others to deliver outcomes
that make a difference.
(L)
Ongoing. Active involvement in a wide range
of multi-stakeholder forums and initiatives at
industry, national and international levels.
VALUE CREATION – OUTCOME:
Our leadership in creating employment and skills opportunities, coupled with our understanding of the
needs of our communities and partners, ensure we deliver a significant and positive contribution everywhere
we work
* S = Short term (1 year or less); M = Medium term (2-5 years); L = Long term (5-10 years, or more)
** Refer to ‘Progress on our 2017 sustainable business targets’ for full updates across all targets defined
Further information on data and trends is provided in the Key Performance Indicator (KPI) table, contained in Appendix A of this Report.
This table summarises Sanford’s material issues relating to supporting enduring communities and partnerships, the
strategic goals defined through our Business Excellence Framework, our targets for 2017 and our progress against these
targets in contributing to value creation. At the end of this section, we also define our future targets and vision to 2025.
Material issues AND value creation
86Sanford Annual Report 2017
SUPPORTING ENDURING COMMUNITIES AND PARTNERSHIPS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
Engagement and
employment
Respect and support our local
communities in line with our
social licence to operate.
Where possible, we will create
local business, employment
and skills development
opportunities.
GOAL
Strong local communities are critical to
our success and we take it seriously to
actively make a positive contribution.
Our 2017 stakeholder engagement and
materiality process confirmed that our
social licence to operate is important to
Sanford’s stakeholders – in fact it ranked
as the eighth most important material
issue overall.
The extent to which a community grants
a company such as Sanford a ‘social licence
to operate’ essentially reflects the degree
to which we share a trusted and enduring
regard for each other’s interests
1
. The same
is true for our regulators, tangata whenua,
and governing bodies.
Here we describe some of the ways in
which we express our regard for the social,
environmental and economic wellbeing
of the local communities where we live
and work.
Our operations benefit many regions in
New Zealand, from Auckland to Stewart
Island (refer A global presence). In this
section we have focused particularly on
Marlborough and Southland, the regions
that stood out in the number of highlights
achieved in 2017.
It’s local people that fish for
Sanford. It’s local revenue going
into their communities.
—
Tony Mildon
SALES DIRECTOR, MAERSK LINE
OUR CONTRIBUTION TO THE
MARLBOROUGH COMMUNITY
Sanford is committed to the Marlborough
region and we are honoured to have
received the prestigious Marlborough
Award in 2016 in recognition of the
leading role the marine farming sector
plays there. We remain committed to
creating a strong future for the region
through our sustainable marine farming
business and ongoing investments. Our
recent acquisition of Enzaq in Blenheim
(refer Outcome 1 – Sustainable seafood
business) reinforces this commitment, and
Sanford continues to make key
contributions to advance marine farming
innovation (refer Outcome 6 – Protecting
the environment) and new product
innovation (refer Outcome 1 – Sustainable
seafood business).
We currently operate a large number of
aquaculture farms in the Marlborough
Sounds and are the largest holder of marine
farming licences there. We harvest a
significant proportion of all the Greenshell
TM
mussel production in Marlborough, and
employ around 300 people in the region.
The combination of farming and processing
enables Sanford to keep the Havelock
plant open all year round, making us a
strong and stable business for Marlborough.
The Sanford team remains highly
committed to supporting our local
Marlborough communities, and we are
involved in a range of local support and
partnership initiatives from volunteering
to fund raising. This includes providing
assistance to the harbour master for oil
spills, support to our volunteer fire fighters
and engaging with our key partnerships
such as the Graeme Dingle Foundation.
There has been real willingness to
create a shared understanding
and shared solutions. Because of
Sanford’s investment in and
engagement with the community,
the people of Marlborough are
much more willing to work
together with the company rather
than in opposition to it.
—
John Leggett
MAYOR OF MARLBOROUGH
1. Quigley, R. and Baines, J. (2014) How to improve your
social licence to operate. Wellington: Ministry for
Primary Industries.
PHOTO: ZANE CHARMAN TRAVELLING IN THE MARLBOROUGH SOUNDS
PHOTO CREDIT: STEVE HUSSEY
87
OUR CONTRIBUTION TO THE SOUTHLAND COMMUNITY
The social and economic benefits associated with Sanford’s
aquaculture operations in Southland are well documented,
providing positive outcomes for both Stewart Island and Bluff.
Our teams actively contribute to the local community, for
example, our ongoing support of the Graeme Dingle Foundation.
In 2016, we reported on our future aspirations for the growth of
aquaculture in Southland and the ongoing benefits that we seek
to contribute to. The growth and investment in our Big Glory Bay
branded ocean farmed King salmon and Greenshell™ mussels
continues (refer Outcome 3 – Healthy food), and with it, the
economic and social benefits for Southland.
• CASE STUDY •
BONAMIA’S IMPACT
The Ministry for Primary Industries
(MPI) reported in May that it had
detected the parasite Bonamia
ostreae in two flat oyster farms
on Stewart Island.
One of those farms was a joint venture
farm run by Sanford and local company
Tio. While Bonamia ostreae presents no
risk to humans, MPI decided to remove all
farmed oysters from the area to reduce
the risk of spread to the wild oyster
population. Sanford and our partners at
Tio cooperated with MPI’s requirements
immediately and we were one of the first
farming operations to remove all our
oysters from the area.
The overall impact on Sanford’s business
is not significant, but for the people who
worked on our farms, the Bonamia ostreae
incursion has been a personal and
professional blow.
Sanford is a significant quota holder in the
wild oyster fishery. We are committed to
the health of this fishery and wish to see
its preservation through decisions and
actions that are supported by the best
available science and ongoing testing.
MPI will offer compensation for losses
incurred by farmers directly affected,
but as of November 2017, the amounts
in question are yet to be settled on.
88Sanford Annual Report 2017
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3
REPORTING OUTCOMES
& MATERIAL ISSUES
• CASE STUDY •
TOMMY FOGGO VALEDICTORY
Sanford is proud to be woven into the fabric of the communities
in which we work. Tommy Foggo in Bluff is an exemplar of this.
SOUTHLAND – HELPING STUDENTS
GET READY-FOR-WORK
Sanford partner, Graeme Dingle Foundation
run Career Navigator, a ’Ready-for-Work’
programme for secondary school students.
The initiative supports teens in their
decision making around future employment
and provides a platform for employers to
share real-world knowledge, and offer
mentoring and active learning opportunities.
In September, fifteen Career Navigator
students from Te Wharekura (a full
immersion Māori school) visited our
Sanford team in Bluff.
The students learned a great deal
on the day and the Sanford team
were incredibly engaging. Many
students had never been into a
workplace before, so it was an
invaluable experience for them
to understand how a local
business ticks. I’d be surprised if,
based on their experience today,
some of them don’t end up
becoming future Sanford
employees!”
—
Scott Bowden,
REGIONAL MANAGER, SOUTHLAND
GRAEME DINGLE FOUNDATION
PHOTO: SANFORD TEAM MEMBERS TOGETHER WITH
SCOTT BOWDEN (GRAEME DINGLE FOUNDATION) AND
CAREER NAVIGATOR STUDENTS FROM TE WHAREKURA
PHOTO: TOMMY FOGGO, PHOTO CREDIT: AQUACULTURE NEW ZEALAND
After 37 years Tommy is retiring from
Sanford in December 2017. His career
has been the story of a local man
who rose to be a leader in a proudly
New Zealand business, which balances
a global focus with a strong sense of
belonging in its home base.
Tommy started his career with Sanford
in Bluff as a Production Manager in
1980 with just six staff. The salmon and
aquaculture business he leaves behind
now has 190 employees, farming and
processing around 6,000 metric tonne
of New Zealand seafood every year.
This seafood is one of Sanford’s premium
offerings - our beautiful Big Glory Bay
salmon passes through the Bluff factory,
en route to some of New Zealand’s
finest restaurants.
Tommy has also made his mark outside
Sanford. He established the Youth
Development Southland Regional Trust
to oversee Kiwi Can in Southland and he
worked to kick start the funding for the
programme locally.
He was also involved in setting up the
Bluff Oyster Festival and has served on
the boards of many different companies
over the years, including the Invercargill
Airport (where he is the current Chair)
and South Port.
Marie McDonald, the Quality Assurance
Manager in Sanford’s Bluff factory said,
“Tommy is a real Bluff boy made good.
He has experience like no one else and
he is great at dealing with people at
every level - anyone can wander into
his office for a chat.”
In turn, Tommy says he will miss the
team very much. “My heart will always
be with Sanford and I’ll certainly just be
on the other end of the phone if they
ever need anything. I have worked with
some wonderful people and I wish them
all the best.”
From the start of 2018, Tommy will be
focusing on the community involvement
he built during his time at Sanford as he
looks to increase his work with a number
of local boards and organisations.
89
Strategic partnerships
and collaboration
Establish strategic
partnerships that create
value for the community,
our partners and Sanford
in the short, medium and
long term.
GOAL
Partnerships continue to be important to us
because we believe we have a responsibility
to improve social, environmental and
economic outcomes as part of being in
business. We have continued to focus on
two community partnerships this year
where we believe we can make the most
significant and sustainable difference.
Contributing towards the New Zealand Inc
brand, and a sustainable global seafood
industry have been the drivers behind
the many multi-stakeholder engagements
we have undertaken this year, both locally
and globally.
ADDING VALUE TO LOCAL COMMUNITIES
Sanford contributed significantly to community and charity programmes in 2017; although
it was $89,154 below our 2016 contribution, this was because the timing of scheduled
payments to our key partners fell outside FY17. This does not include the significant in kind
support our teams have contributed through volunteering and fund raising efforts within
our local communities.
PROGRAMMECOMMUNITY INVESTMENT
Community Programmes $37,731.40
Paralympics New Zealand and the Spirit of
Gold® Initiative
$119,579.77
Graeme Dingle Foundation $52,569.93
Other Charities$8,535.13
2017 Total $218,416.23
2016 Total $307,570.00
$218,416
CONTRIBUTED TO COMMUNITY AND
CHARITY PROGRAMMES IN 2017.
PHOTO: NEW ZEALAND DELEGATION TO EAST ASIA SUMMIT ON MARINE PLASTIC DEBRIS
PHOTO CREDIT: MINISTRY OF FOREIGN AFFAIRS AND TRADE
90Sanford Annual Report 2017
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REPORTING OUTCOMES
& MATERIAL ISSUES
Partnership 1
Sanford and
Paralympics
New Zealand
We are very proud to have extended our
partnership with Paralympics New Zealand
(PNZ). By doing so, we continue to care
for the community, championing diversity
and inclusion and promoting the best
seafood in the world. Our shared ambition
is to provide opportunities for Sanford
employees to get behind PNZ and to meet,
hear and learn from the Paralympians who
represent New Zealand.
In May, our work with PNZ was acknowledged
at the 2017 New Zealand Sport and
Recreation Awards, when alongside
two of PNZ’s other partners, we won
the Commercial Partnerships category.
The award recognised the tremendous
achievements that connected Sanford
employees, stakeholders and customers
with PNZ and the Paralympic Movement
before, during and after the Rio 2016
Paralympic Games, and commended
Sanford for its support of the successful
New Zealand Paralympic Team.
In September, our employees dressed in
gold for the PNZ Spirit of Gold
®
Mufti Day,
raising vital funds to support the team
going to the PyeongChang 2018 Paralympic
Winter Games in South Korea. Paralympian
Anna Grimaldi joined the Auckland office
for morning tea and a short video was
produced to share her story with the wider
organisation. To encourage everyone to
take part in the 2017 Sanford Employee
Survey, we are making a donation to PNZ
for every completed survey.
We are working hard to develop other
initiatives aimed at connecting Sanford
with aspiring Para athletes in our local
communities and to share the achievements
of our Winter Paralympians at the
PyeongChang 2018 Paralympic Winter
Games. At the time of writing, the Games
are now less than five months away and we
are excited once again to be supporting the
team, every step of the way.
PHOTO: PARALYMPIAN ANNA GRIMALDI IN
ACTION AT THE RIO 2016 PARALYMPIC GAMES
PHOTO: THE INITIAL SELECTION OF ATHLETES FOR
THE PYEONGCHANG 2018 PARALYMPIC WINTER GAMES
FROM LEFT TOP: CARL MURPHY, ASHLEY LIGHT (CHEF
DE MISSION), ADAM HALL. FRONT ROW: AARON EWEN
AND COREY PETERS
PHOTO: NZ’S GOLD MEDALLISTS AT THE RIO 2016
PARALYMPIC GAMES
91
Sanford has had a long running partnership with Graeme Dingle
Foundation and is proud to be impacting young people through our
support of their Kiwi Can programme.
9,503
STUDENTS
55
SCHOOLS
–
POSITIVE IMPACT TO LOCAL COMMUNITIES
–
WE’RE HELPING TO SUPPORT
SCHOOLS IN FIVE REGIONS,
POSITIVELY IMPACTING:
TIMARU
MARLBOROUGH
BAY OF PLENTY
COROMANDEL
3
13
9
18
12
373
2,878
1,667
2,787
1,798
SOUTHLAND
SCHOOLS
STUDENTS
Partnership 2
Sanford continues to
support the Graeme
Dingle Foundation
Sanford is delighted to partner with the
Graeme Dingle Foundation, an established
charity and leader in positive child and
youth development. The Foundation has
a vision for ‘New Zealand to be the best
place in the world for children to grow up
in’. It is a vision that we are proud to be
associated with.
In 2017, Sanford contributed towards
supporting 9,503 students in five regions
across 55 schools through the Foundation’s
four school based programmes. On top
of our financial support, our regional
teams around the country got stuck into
supporting their local communities – often
getting their hands dirty in the process!
GRAEME DINGLE
FOUNDATION VISION
—
‘New Zealand to be
the best place in the
world for children to
grow up in’
—
92Sanford Annual Report 2017
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& MATERIAL ISSUES
HAVELOCK ESTUARY CLEAN UP
IN MARLBOROUGH
Students from Havelock School were joined
in June by volunteers from our Sanford
team, who helped them keep a local beauty
spot rubbish free by collecting debris from
the nearby Havelock Estuary. The students
are part of the Graeme Dingle Foundation
Kiwi Can programme, which runs in the
school every week of the year. A key aspect
of Kiwi Can is the ‘Community Project’,
which allows the children to think and take
action beyond their classroom or school
gate and gives children an opportunity to
put the values they learn through Kiwi Can
into practice.
PHOTO: KIWI CAN CLEAN-UP AT HAVELOCK ESTUARY WITH HAVELOCK SCHOOL, JUNE 2017
TIMARU – PLANTING DAY AT
CAROLINE BAY
The Graeme Dingle Foundation liaised with
the Timaru District Council to find a project
that was genuinely needed. The Council
suggested planting the sand dunes at
Caroline Bay and Sanford was keen to get
involved because the dunes are near the
factory and the project had a seafront
environmental focus. In September,
parents, staff, and 125 pupils from Kiwi Can
schools, 20 Sanford staff, and four Kiwi Can
staff took part in the weekday planting,
where 3,000 trees were planted to protect
the foreshore.
There was great teamwork and
co-operation. As the planting
took place everyone
systematically cleaned up after
themselves. Children learned
about the ecology of their beach,
which is very important in their
community. Members of the
public walking along the beach
came and got involved and
positively commented and
supported the children and their
work that profiled both the
schools and the programme
positively.
—
Noeline Allan
REGIONAL MANAGER, CANTERBURY
GRAEME DINGLE FOUNDATION
Sanford have been a big player in helping
us get off the ground in Marlborough
and have provided ongoing support.
We started in Marlborough four years
ago with four schools and 400 kids. In
2017, we’ll be working with almost 1,700
kids in nine schools across the region.
That’s 40% of kids in the region that
we’re working with and empowering
them with the skills to interact positively
with each other, take on challenges,
bounce back and give things a go.
The difference we are making in the
community is huge; we are 99% funded
from our own community and the
support of the aquaculture industry
is vital.
—
Kelvin Watt
REGIONAL MANAGER, MARLBOROUGH
GRAEME DINGLE FOUNDATION
1,700 KIDS AND
NINE SCHOOLS IN 2017.
PHOTO: TIMARU STUDENTS PROUDLY SHOW THEIR
PLANTS FOR THE CAROLINE BAY FORESHORE
PLANTING DAY
93
• CASE STUDY •
FUTURE LEADERS PROGRAMME
This year we had two Sanford
team members take part in the
Future Leaders Programme
led by the Sustainable Business
Council (SBC) and Catapult
(leadership trainers).
The programme aims to develop future
leaders in business who understand
the sustainability challenges in their
own companies and society. There
were 23 participants from companies
around New Zealand for a series of
three workshops over four months.
The participants researched and
developed recommendations for
action on five of the United Nations
Sustainable Development Goals using
adaptive leadership frameworks.
The Sanford members presented on
SDG12: Responsible Consumption and
Production, and SDG13: Climate Action.
The SDG12 group highlighted
opportunities for collaboration through
building awareness, SBC facilitated
workshops, and strengthening reporting
requirements and transparency. The
SDG13 group identified that the main
barrier to getting businesses on board
to tackle climate change was a lack of
a compelling vision of the future and
a positive narrative on what businesses
stand to gain.
The recommendations will be shared
at the SBC ‘(How to) Push Go on the
Global Goals’ event in November.
Collaboration
RECREATIONAL
FISHING COMMUNITY
Collaborative relationships between
the commercial and recreational fishing
sectors are critical if, as a nation, we
are to responsibly manage fish stocks.
For the first time, as part of our formal
stakeholder engagement process,
Sanford met with recreational fisher
representatives. Tensions and challenges
were present, but we know that we
share a commitment to a future where
all New Zealanders can catch a fish.
Recreational fishing was raised as an
issue by some stakeholders such as
John McDonald; stakeholders who
happen to enjoy recreational fishing
and want to ensure that these rights
are not compromised.
I am a recreational fisherman.
I, like many other Auckland
people can go a tiny distance to
catch snapper over the summer.
I love the fact that I can do that.
Every year there are snapper
there and it’s important that
that doesn’t change.
—
John McDonald
HEAD OF IN-HOUSE PRODUCTION
MEDIAWORKS NZ
WORKING WITH OTHERS
TO SHARE IN VALUE CREATION
This year we have focused on the role
that partnerships play in helping us achieve
our vision of becoming the Best Seafood
Company in the World. We’ve invested a
considerable amount of time and energy
in collaborating with other stakeholders
to help shift the dial in areas that make
a real difference to achieving our vision,
and contributing positively towards the
UN Sustainable Development Goals (SDGs).
Some examples of key multi-stakeholder
forums and initiatives that Sanford has
actively contributed to this year include:
• Acting as an advisor to a ‘keystone
dialogue’ in the Maldives between
scientists and seafood industry leaders;
an engagement process for major
international seafood businesses in
global sustainability challenges, which
created a breakthrough commitment
to action on ocean stewardship in the
form of a ten-point statement (refer
Outcome 4 – Healthy oceans)
• Contributing to a national forum of
public and private sector leaders
focused on creating a new ambition and
platform for action on sustainable wealth
creation for our natural assets, providing
a unique opportunity for New Zealand to
lead by example
• Advising, informing and providing
leadership to peer businesses across
a range of sustainability topics, from
climate issues to integrated reporting,
through both national and international
forums such as the Sustainable Business
Council (SBC), International Integrated
Reporting Council (IIRC) and Australasian
Reporting Awards (ARA) (refer Reporting
what matters and Outcome 6 – Protecting
the environment)
• Presenting to and informing policy
development across 19 countries on
marine plastic debris at the Asia-Pacific
Economic Cooperation (APEC) and
East Asia Summit (EAS) in Indonesia
(refer Outcome 4 – Healthy oceans)
• Providing leadership and operational
input into a wide range of industry
forums from the Southern Seabird
Solutions Trust, to Fisheries Inshore
New Zealand, Deepwater Group and
the Convention for the Conservation
of Antarctic Marine Living Resources
(CCAMLR)
• Developing and implementing the Māui
Dolphin Protection Plan in conjunction
with WWF-New Zealand and Moana to
ensure Māui dolphin safe fishing (refer
Outcome 4 – Healthy oceans).
94Sanford Annual Report 2017
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REPORTING OUTCOMES
& MATERIAL ISSUES
MATERIAL ISSUESSTRATEGIC GOALS
FUTURE TARGETS
2018 AND BEYONDOUR 2025 VISION
Engagement and
employment
Respect and support our local
communities in line with our
social licence to operate. Where
possible, we will create local
business, employment and skills
development opportunities.
Develop a strategic approach to
engagement with communities of
interest, including through social
media and other communication
channels as well as face to face.
Sanford is recognised for
leaving a positive legacy
for our communities, as
a significant contributor
to community initiatives,
employment generation
and skills development.
Continue to roll out targeted
initiatives, such as the Graeme
Dingle Foundation Career
Navigator ‘Ready-for-Work’
programme, to create local
and wider employment
opportunities and attract
youth into our industry.
Strategic partnerships
and collaboration
Establish strategic partnerships
that create value for the
community, our partners and
Sanford in the short, medium
and long term.
Continue to work at the national
and international level in formal
and informal partnerships to
collaboratively progress the
vision and outcomes for a truly
sustainable fishing industry in
New Zealand and globally.
Through leveraging our
strategic partnerships, tangible
value is realised and clearly
communicated by our partners,
Sanford and the wider national
and international community,
all of whom share in the value
creation opportunities.
Continue to review our strategic
partnership and collaboration
activities to align and move
towards our vision of being
the Best Seafood Company in
the World.
These targets for 2018 and beyond have been informed by Sanford’s strategy, and a thorough review of international guidance
2
on business
commitments to support achievement of the UN Sustainable Development Goals.
2. GRI and UN Global Compact 2017: Business Reporting on the SDGs – An Analysis of the Goals and Targets.
AND our future focus
95
UN SDG 12
RESPONSIBLE CONSUMPTION
AND PRODUCTION
Sanford can responsibly consume and produce food by efficiently
using resources and growing the aquaculture industry. Our efforts
to do more and better with less, and the growth of our aquaculture
sector’s comparatively small environmental footprint (relative to
other protein sources) contributes positive, sustainable outcomes
for New Zealand. We are formalising our approach towards
improving our resource efficiency, and driving innovation.
UN SDG 13
CLIMATE
ACTION
Climate change is affecting every country and the disruption is
likely to have a significant impact on all of our stakeholders.
We are conscious of the impact that climate change could have
on the oceans and the inherent risk to our business model. We can
reduce climate change impact through our operations and are
striving to reduce our greenhouse gas emissions to
30% below 2005 levels by 2030.
PROTECTING
AND ENHANCING
THE ENVIRONMENT
We will work with our people, customers and suppliers to lead the way in
maximising resource utilisation, minimising our footprint and protecting the
environment wherever we operate.
AND
96Sanford Annual Report 2017
PHOTO: BIG GLORY BAY, STEWART ISLAND
97
MATERIAL ISSUESSTRATEGIC GOALS2017 TARGETS*PROGRESS AGAINST TARGETS**
Environmental
effects
Minimise our impact on
the environment when
carrying out our business
operations, avoid pollution
or contamination of land,
air and water and enhance
the environment in which
we operate through sound
management and mitigation.
Maintain ISO 14001:2004
across all of our operations.
(S)
Achieved. ISO 14001:2004 certification
maintained across all in scope operations.
Maintain legal compliance
through 100% compliance
monitoring, thereby receiving
no punitive regulatory action.
(S)
Achieved. No punitive regulatory action.
Monitoring of compliance and increased visibility
through reporting. A regulatory compliance
management programme is underway across
mussel farming operations.
Develop and implement
environmental risk mitigation
plans across identified
critical risk areas and have
up-to-date aspects and
impacts registers.
(S)
Ongoing. New systems and risk mitigation
plans are developed for four key land-based
processing sites with remaining sites planned
for 2018. A new aspects and impacts assessment
process is being developed that considers the
full lifecycle of our operations.
Resource
utilisation and
efficiency
Do more with less by
maximising efficient use
of resources, including
optimising the utilisation
of all fish and mussels
harvested, and ensuring
waste minimisation, re-use
and recycling.
Improve water intensity by 2%
at all land-based processing
sites and report all available
water consumption data.
(S)
Not achieved. There was a 10% increase in
water intensity due largely to a change in
processing requirements in Bluff. Realised a
4% efficiency improvement in Auckland and
Tauranga. All water consumption data that is
available is now reported.
Reduce the core energy
intensity at our land-based
processing sites by 3%.
(S)
Achieved. There was a 12% improvement in core
energy intensity. Monthly energy and carbon
plant level monitoring in place.
Achieve 30% waste diversion
rate across all of our
operations.
(M)
Ongoing. The waste diversion rate was 24%.
Waste data is now captured more accurately
and we are less reliant on estimates.
Carbon
reduction and
offsetting
Demonstrate our
commitment to climate
change response by
actively reducing our
energy consumption and
emission of greenhouse
gases and seeking to
introduce low carbon
solutions into our value
chain, where practicable.
Reduce our carbon emission
intensity by 2.5% across all of
our operations.
(S)
Achieved. There was a 4.5% improvement in
carbon emission intensity across all operations.
Save 5GWh of energy or
renewable energy conversion
potential by the end of FY18
across all operations in line with
the Energy Efficiency and
Conservation Authority (EECA)
agreement.
(M)
Ongoing. Energy programme initiatives actively
managed and reported internally and to EECA.
Increased focus on intensity metrics and
renewable energy conversion potentials.
The proposed biomass boiler project in Timaru
is a key project.
Actively engage in
collaborative, multi-
stakeholder initiatives to
support climate change
agendas and actions.
(L)
Ongoing. Signatory to open letter to NZ
Government on climate action. Leadership role
with Sustainable Business Council on climate
action. Developed and delivered pre-election
briefings, informing political discussions and
peer businesses on climate action.
VALUE CREATION – OUTCOME:
We will work with our people, customers and suppliers to lead the way in maximising resource utilisation,
minimising our footprint and protecting the environment wherever we operate
* S = Short term (1 year or less); M = Medium term (2-5 years); L = Long term (5-10 years, or more)
** Refer to ‘Progress on our 2017 sustainable business targets’ for full updates across all targets defined
Further information on data and trends is provided in the Key Performance Indicator (KPI) table, contained in Appendix A of this Report.
This table summarises Sanford’s material issues relating to protecting and enhancing the environment, the strategic
goals defined through our Business Excellence Framework, our targets for 2017, and our progress against these targets
in contributing to value creation. At the end of this section, we also define our future targets and vision to 2025.
Material issues AND value creation
98Sanford Annual Report 2017
PROTECTING AND ENHANCING THE ENVIRONMENT
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
5
Environmental effects
We recognise that our operations have
the potential to impact on New Zealand’s
natural coastline, sea, biodiversity and
climate change. The environment we
operate in provides the natural capital
that is fundamental to Sanford’s
future prosperity, and is an important
foundation for our growth. We also
recognise that we owe a responsibility
to the environment we operate in, and
the society that grants us the licence
to operate.
Our most significant environmental
effects are the risk of pollution through
fuel or oil spills and the contribution to
debris in the marine environment from our
operations. Our approach to environmental
management is therefore aligned with
ensuring we actively look for new and
innovative ways to not only protect, but
positively impact the environment.
ENVIRONMENTAL MANAGEMENT
THROUGH SYSTEMS AND
RISK MITIGATION
In 2017, we initiated a programme to
identify, establish priorities, and implement
targeted programmes to manage our most
critical environmental risks. Some of the
key aspects of this programme included:
• Site assessments across four of our key
operations to identify and ensure the
effective management of critical
environmental risk areas.
Minimise our impact on the
environment when carrying
out our business operations,
avoid pollution or
contamination of land, air
and water and enhance
the environment in which
we operate through sound
management and mitigation.
GOAL
• The development of a comprehensive
environmental impact assessment
process, accounting for the full lifecycle
of all of Sanford’s operations.
• A compliance database implemented
across all farming operations to
streamline how we track and manage our
environmental compliance obligations.
INNOVATION TO DELIVER POSITIVE
ENVIRONMENTAL OUTCOMES
Our pilot ‘Eco-Farm’ project is underway
in the Pelorus Sound, which aims to
develop New Zealand’s lowest impact and
technically smart mussel farm. The farm is
the hub of all the ideas the mussel farming
team have brought together with a vision to
create a multi-trophic, fully biodegradable
smart farm that is a complete, self-reporting
ecosystem. The farm is still being developed
and the team are investigating options for
load cell reporting (to identify when to
harvest or fix a line), cameras to monitor
interactions with sea life, and the potential
for symbiotic farming with other species.
ENVIRONMENTAL MANAGEMENT
THROUGH POLLUTION CONTROL
The nature of our fishing operations and
the proximity of our land-based processing
sites to the marine environment puts us at
risk of pollution through fuel and oil spills
during our everyday operations. To reduce
the risk to the environment, in 2017 we
used 12,508L of biodegradable oil across
our vessel operations, replacing traditional
hydraulic oil. We have put a greater focus
on documenting and tracking spill events
based on actual and potential risks to the
environment; we previously reported
diesel spills only. Now we have classified
a notifiable spill as any fuel or oil spill
regardless of the amount, that has entered
the land or a body of water or is greater than
100 litres. In 2017, we had two significant
spills one 150 litre spill of hydraulic oil on
San Granit in Timaru Port that was contained
onboard, and one small spill of 1.8 litres of
diesel that seeped into Napier Port when
refuelling San Tangaroa. In both cases we
implemented pollution control measures
and neither incident resulted in a negative
environmental impact.
While there is always a desire
from NGOs to move faster,
Forest and Bird does appreciate
Sanford’s commitment to
improving their environmental
performance. There is still a long
way to go, but the company is
out in front of the New Zealand
fishing industry.
—
Kevin Hackwell
CHIEF CONSERVATION ADVISOR
ROYAL FOREST AND BIRD PROTECTION SOCIETY
OF NEW ZEALAND INC.
99
Resource utilisation
and efficiency
Do more with less by
maximising efficient use of
resources, including optimising
the utilisation of all fish
and mussels harvested, and
ensuring waste minimisation,
re-use and recycling.
GOAL
A focus on resource utilisation and
efficiency helps us achieve our
environmental and economic outcomes.
Performance is managed through our 2020
continuous improvement programme and
our Environment, Health and Safety (EHS)
Management System. Obtaining robust
data on the use of resources, product
utilisation and waste production has been
a focus for this year, giving us one source
of truth and enabling us to understand
opportunities for environmental
improvement in greater detail. We have
also continued our focus on maximising
resource efficiencies across key metrics
including water, electricity and fuel.
FUEL EFFICIENCY
We improved our wildcatch vessel fuel
efficiency by 3% from 0.354L/GWkg in
2016 to 0.344L/GWkg mainly because
we installed more fuel efficient engines,
introduced new vessels into our fleet, and
increased the greenweight landed in our
wildcatch fishing operations. Around 96%
of our liquid fossil fuels are consumed by
our vessels, which highlights the ongoing
need to focus on vessel energy consumption
reduction initiatives. We have continued to
progress the engine replacement project
on our mussel farming vessels, installing six
additional motors in 2017, with three more
planned for 2018. Based on engines
replaced to date, we estimate that a total
reduction of 26,000L of diesel per year
will be realised, saving approximately 5%
per vessel.
PRODUCT UTILISATION
We have continued our focus on full
product utilisation in 2017, for example
producing fish oil and fish meal from hoki
(refer Outcome 1 – Sustainable seafood
business), and our ongoing investigation
into sustainable uses for Greenshell™
mussel shells.
CLIMATE FRIENDLY REFRIGERATION
Active Refrigeration have conducted
a companywide assessment of the cargo
and domestic refrigeration systems on
all of Sanford’s vessels and land-based
processing sites. This project focused on
making improvements to the safety of our
ammonia refrigeration plants and reducing
our refrigerant gas consumption. In 2017,
we achieved a significant reduction in
refrigerant gas loss across our land-based
processing sites and vessels. This was
achieved through the implementation
of the Active Refrigeration assessment
recommendations, including the
improved maintenance of our systems
and the ongoing phase out of hydro
chlorofluorocarbon (HCFC) gases.
Active Refrigeration and
Sanford’s journey together has
been rewarding and extremely
valuable. It started out with a
guiding principle with an end
goal to improve the overall
safety and compliance of every
Sanford land based site and
fishing vessel.
Embarking on a collaborative
approach to effective
measurement and benchmarking
health and safety aligns Active
Refrigeration’s ISO14001
compliant vision with Sanford’s
sustainability and safety policies.
The pragmatic approach taken
has proven to be beneficial with
ongoing improvements that are
continuing to develop with our
energy saving concepts, ongoing
plant maintenance support, risk
reduction and future
improvements for ammonia
containment.
—
Craig Duff
OWNER – ACTIVE REFRIGERATION
100Sanford Annual Report 2017
PROTECTING AND ENHANCING THE ENVIRONMENT
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
5
Carbon reduction
and offsetting
GOAL
Demonstrate our commitment
to climate change response by
actively reducing our energy
consumption and emission of
greenhouse gases and seeking
to introduce low carbon
solutions into our value chain,
where practicable.
Climate change is a key business risk for
Sanford; it could change the distribution
and abundance of fish stocks, increase
the number of biosecurity incursions,
and increase the ocean’s acidity, affecting
marine ecosystems and causing a loss
of income to our industry. Sanford is
committed to responding to the impacts
of climate change to our business. We have
a jointly funded SPAT
nz Primary Growth
Partnership Programme with the Ministry
for Primary Industries (MPI), which has
been highly successful, yielding a wide
range of high performing mussel strains
selected for traits valued by farmers,
processors and consumers (refer Outcome 1
– Sustainable seafood business). The benefits
of SPAT
nz also include protecting Sanford
from the future insecurities of spat supply,
which could be created by climate
change impacts.
We are taking a leadership role alongside
other organisations to initiate climate
change and carbon emission discussions.
We have actively engaged in collaborative,
multi-stakeholder initiatives to support
climate change action. In November 2016,
we signed an open letter to the New Zealand
Government, calling for ambitious targets
to reduce emissions, a long term plan to
achieve them, the implementation of strong
policies, and the necessary information to
be provided to empower New Zealanders
to make low carbon choices.
In 2017, our carbon emission intensity
reduced by 4.5% from 0.81 T CO
2
-e/GWT
to 0.77 T CO
2
-e/GWT, exceeding our
2.5% target and putting us on track to
meet our 2030 ambition to reduce our
greenhouse gas emissions to 30% below
2005 levels by 2030. Sanford recognises
the role of voluntary action by business
and industry as an important contribution
to international commitments such as
the Paris Agreement.
PHOTO: OPEN LETTER TO THE NZ GOVERNMENT
SOURCE: WWF WEBSITE
CARBON EMISSION INTENSITY
REDUCED BY 4.5%, EXCEEDING
OUR 2.5% TARGET
–4.5%
101
• CASE STUDY •
ENERGY EFFICIENCY AND
CONSERVATION AUTHORITY (EECA)
AND SANFORD
Sanford is continuing to partner with EECA,
which follows our energy management
collaboration agreement. Energy
management has played a significant role
in our continuous improvement work and
around 25 energy projects with short term
paybacks and low investment thresholds
were identified. Of these projects, 18 have
the potential to deliver energy savings such
as replacing light-emitting diode lighting,
installing variable speed drives on motors,
optimising freezing systems, and replacing
the mussel vessel fleet’s diesel engines.
Over the past year, Sanford has
continued to build a clear link
between energy savings and
improved productivity. This is a
win for Sanford’s ongoing
competitiveness and more
broadly NZ Inc. I also applaud the
continued priority given to
carbon reduction through energy
management – a cost effective
way of responding to our climate
change challenge.
—
Andrew Caseley
CHIEF EXECUTIVE – EECA
To better understand our operational
energy efficiency opportunities, we are
producing monthly energy monitoring
reports for our land-based processing sites
and a select number of vessels. These
reports have highlighted a number of
energy saving opportunities across our
operations. For example, we have had an
efficiency benchmark improvement of
10.4% (kWh/kg) at our Havelock processing
plant when compared to 2015. The
improvement is due to implementing a
number of initiatives such as optimising the
boiler, reviewing our spiral freezer and
boiler operating procedures, and focusing
on the start-up and shutdown processes to
avoid wastage. There was a $279,100 saving
from tariff improvements during the year
across all of Sanford’s land-based
processing sites, including a $124,600
saving in Havelock.
—
Cawthron environmental
award in Marlborough
—
Our Havelock mussel farming team
were the winners of the Cawthron
Marlborough Environmental Award’s
Marine Category in March 2017. The
judges concluded that the staff
initiatives were an excellent example
of a team’s effort towards continuous
improvement. Some of the initiatives
that enabled the win include:
9
Smart tech: From innovative, new
compostable eco-lashings to
sand-weighted ropes.
9
Beach clean-ups: The Sanford
team are working proactively with
the community to keep marine
debris off Marlborough’s beaches
and bays.
9
Cleaner engines: Introducing
biodegradable hydraulic oil, more
effective bilge water filters and
more efficient engines across the
farming fleet.
9
Mussel float recycling: Sanford
acts as the recycling hub for all
floats throughout Marlborough,
recycling around 4,500 floats
every year.
The team plan to invest the prize
money into an environmental
improvement project.
PHOTO: GRANT BOYD, DARREN BROWN AND
LYNDON DAYMOND ACCEPTING THE CAWTHRON
MARLBOROUGH ENVIRONMENTAL AWARD
PHOTO CREDIT: JACQUI LESLIE PHOTOGRAPHY
• CASE STUDY •
—
Timaru biomass project
—
A key development in 2017 has been
our focus on renewable energy,
including the potential transition
of our Timaru fishmeal plant boiler
fuel source from coal to wood chip.
We completed extensive trials and
once commissioned, anticipate a
range of benefits including improved
processing controls, safety and fuel
efficiency, a 50% projected reduction
in emission levels, and a considerable
reduction in carbon emissions.
Fully replacing coal with wood chip
biomass as proposed, will realise a
saving of 1,721.34 T CO
2
-e per year,
significantly reducing our greenhouse
gas emissions towards our goal of 30%
below 2005 levels by 2030.
With the support of EECA, we will
continue to progress this opportunity
in 2018.
The people of New Zealand
own the Marlborough
Sounds, so we must behave
in such a way that we are
always welcome to be here.
—
Grant Boyd
FLOATING & FARM DEVELOPMENT MANAGER
SANFORD
PHOTO: TERRY DENLEY, PROJECTS AND
PROCESS IMPROVEMENT MANAGER, HAS
BEEN INSTRUMENTAL IN PROGRESSING THE
TIMARU BOILER PROJECT AND OUR OTHER
WORK WITH EECA
102Sanford Annual Report 2017
PROTECTING AND ENHANCING THE ENVIRONMENT
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
5
MATERIAL ISSUESSTRATEGIC GOALS FUTURE TARGETS 2018 AND BEYONDOUR 2025 VISION
Environmental
effects
Minimise our impact on
the environment when
carrying out our business
operations, avoid pollution
or contamination of land,
air and water and enhance
the environment in which
we operate through sound
management and mitigation.
Achieve and maintain certification to
the updated ISO 14001:2015 EMS
standard across all of our operations,
while progressing integration with
health, safety and quality systems.
Sanford responsibly manages, protects
and demonstrates positive impacts on
the environment across all our operations,
including sourcing, processing, and delivery
of our products across our value chain.
Build a leadership driven environmental
culture to deliver consistently high
engagement and performance.
Develop and deliver targeted
programmes to identify and mitigate
critical environmental risk areas
including legal compliance, reputation,
and pollution prevention and control.
Resource
utilisation and
efficiency
Do more with less by
maximising efficient use
of resources, including
optimising the utilisation
of all fish and mussels
harvested, and ensuring
waste minimisation, re-use
and recycling.
Continue to set annual targets to
progressively achieve energy use,
water use, and carbon emission
reductions, supported by targeted
improvement programmes.
Sanford is ‘virgin resource neutral’, where
practicable, and all materials are fully utilised,
reused, recycled or where necessary, disposed
of in a sustainable manner.
Drive ongoing improvements in
waste diversion rates across all of our
operations, targeting plastic waste
streams as a key priority to reduce.
Implement innovative approaches to
optimise the utilisation of all materials
as a proactive step towards supporting
a circular economy.
Carbon
reduction and
offsetting
Demonstrate our
commitment to climate
change response by
actively reducing our
energy consumption and
emission of greenhouse
gases and seeking to
introduce low carbon
solutions into our value
chain, where practicable.
Implement targeted programmes,
aligned with our low carbon roadmap,
to drive our overall goal of reducing
greenhouse gas emissions to 30%
below 2005 levels by 2030 through
a combination of reducing and
offsetting emissions.
Sanford is recognised as a ‘zero emissions’
business. All Sanford products and services are
carbon neutral. We provide solutions to our
value chain in carbon reduction and offsetting.
Research opportunities to optimise the
potential of carbon sequestration
across all of our farming operations
through innovation and targeted
research and development.
These targets for 2018 and beyond have been informed by Sanford’s strategy, and a thorough review of international guidance
1
on business
commitments to support achievement of the UN Sustainable Development Goals.
1. GRI and UN Global Compact 2017: Business Reporting on the SDGs – An Analysis of the Goals and Targets.
AND our future focus
103
Audit &
Finance
Committee
SHAREHOLDERS
STAKEHOLDERS
BOARD OF DIRECTORS
BOARD COMMITTEES
CHIEF EXECUTIVE OFFICER
JOINT SUBSIDIARIES/BUSINESSES, ARRANGEMENTS,
OPERATIONS AND FUNCTIONS
Board
Nomination
Committee
EXECUTIVE TEAM (collectively and individually)
People
Committee
Health &
Safety and
Regulatory
Compliance
Committee
Combined
Assurance &
Disclosure
Operational
Integration
Business &
Functional
Integration
Sustainability
and
Environment
Food
Safety and
Quality
Tax
Practices
Accounting
Practices
Regulatory
Compliance
Health
& Safety
Human
Resources
GO
VERNANCE OF RISK
CO
MPLIANCE
INFORMAT
ION
TE
CHNOL
OG
Y
INTERNAL C
ONTROL AND CO
MBINED ASSURANCE
INTERNAL
AU
DIT
INTE
GRAT
ED REPORTING AND DISCL
OSURE
CORPORATE GOVERNANCE
CREATING VALUE THROUGH SOUND CORPORATE GOVERNANCE
ETHICAL FOUNDATIONS
CARE PASSION INTEGRITY
CREATING VALUE THROUGH SOUND
CORPORATE GOVERNANCE
The Board of Directors of Sanford Limited
(the Board) and management are committed
to building long-term value for shareholders
and employees. As a values-based business,
with a strong foundation in sustainability,
Sanford is committed to maintaining the
highest standards of governance, supported
by best practice structures, people,
practices and policies. This includes
maintaining high standards of business
integrity and ethics in all our activities.
Consistent with its commitment to best
practice corporate governance, Sanford
has chosen to adopt and report against
the recommendations of the NZX
Corporate Governance Code (NZX Code)
2017 in advance of the effective date
required by the NZX Main Board Listing
Rules (Listing Rules).
This section provides an overview of Sanford’s
Corporate Governance Framework,
introducing our Board and Executive
Team, and detailing key information on
remuneration, shareholdings, indemnity
and insurance. For further details on
governance structure, policies and
practices, please refer to the Sanford
Corporate Governance Statement 2017,
available at: www.sanford.co.nz/investors/
governance/corporate-statement.
OUR GOVERNANCE FRAMEWORK
The Board, supported by the Audit and
Finance, Health & Safety and Regulatory
Compliance, People and Board Nomination
Committees, regularly review and
benchmark the organisation’s structure
and processes to ensure they support
effective and ethical leadership, good
corporate citizenship and sustainability,
and ensure that these principles are
applied in the best interests of Sanford
and its diverse range of stakeholders.
As a listed company on the NZX,
our governance practices and policies
reflect, and are consistent with, the Listing
Rules. The Company considers that the
governance practices it has adopted follow
these principles and policies for the year
ended 30 September 2017.
The Board provides effective leadership
in the best interest of Sanford and is
responsible for the strategic direction
and control of the company. The Board
exercises this control by way of a
governance framework, which includes
detailed reporting to the Board and
its Committees, effective delegation,
risk management and a system of
assurances regarding financial reporting
and internal controls.
Sanford’s constitution, and each of the
charters, codes and policies are referred
to in our Corporate Governance
Statement 2017.
The Board’s charter recognises the
respective roles of the Board and
management, and reflects the sound
base the Board has developed for
providing strategic guidance and
oversight of management.
Corporate Governance
104Sanford Annual Report 2017
Corporate governanCe
LEFT TO RIGHT: PETER GOODFELLOW, PETER KEAN, PAUL NORLING, ELIZABETH (LIZ) COUTTS, ROBERT MCLEOD AND BRUCE GOODFELLOW.
Strong Governance and
Effective Leadership
OUR DIRECTORS AND COMPOSITION OF THE BOARD
Sanford’s Directors bring a diverse wealth of experience and passion, acting on behalf of our shareholders and other stakeholders. Directors
are chosen for their corporate leadership skills, professional backgrounds, experience and expertise. The right blend of skills and experience,
combined with the diversity of Directors’ perspectives, is crucial to ensuring the attainment of long-term value for Sanford’s shareholders.
For more information about each Director, please visit:
http://www.sanford.co.nz/investors/governance/board-of-directors/
Under the Constitution of Sanford, and the Listing Rules one third of the independent non-executive Directors (two, being the nearest
third), shall retire from office at the Company’s Annual Meeting. This requires the retirement, by rotation, of Mr P G Norling and
Mr P J Goodfellow, both of whom will seek re-election at the Annual Meeting in December 2017.
105
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OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
GENDER DIVERSITY
In accordance with the NZX Diversity Rule, we continue to report the gender composition of our Directors and our Senior Leadership Team.
As noted above, the Board is comprised of six members (2016: 6), of which five are male (2016: 5), and one is female (2016: 1). The gender
diversity of the Board comprises 83% male and 17% female representation. The Senior Leadership Team (inclusive of the Executive Team) is
comprised of 26 members, (2016:22) of which 19 are male (2016: 16) and seven are female (2016: 6).
Our vision is ambitious, and our strategy supports this. We have continued to embed a cross-functional approach to realise it, led by an
Executive team who are all experts in their respective fields. Our strong Executive team, enhanced in 2017 by the appointment of our
Chief People Officer, positions us well on our journey to become the Best Seafood Company in the World.
EXECUTIVE AND CEO DIRECT REPORT ORGANISATION CHART
The Board and Chief Executive Officer (CEO) are effectively assisted by the Executive Team who are direct reports to the CEO. All direct
reports to the CEO are shown in the following diagram, with members of the Executive Team shown in dark blue:
LEFT TO RIGHT: GREG JOHANSSON (CHIEF OPERATING OFFICER), KAREN DUFFY (CHIEF PEOPLE OFFICER), VOLKER KUNTZSCH (CHIEF EXECUTIVE OFFICER),
CLEMENT CHIA (CHIEF FINANCIAL OFFICER) AND ANDRE GARGIULO (CHIEF CUSTOMER OFFICER).
Our Executive team
– leading the way
* For more information about our Executive Team, please visit: http://www.sanford.co.nz/investors/governance/executiveteam
Board Of Directors
Chief Executive
Officer
Chief Financial
Officer
Executive Assistant
Group Quality
Manager
Chief Operating
Officer
General Manager
Communications
Chief People
Officer
General Manager
Sustainability
Chief Customer
Officer
106Sanford Annual Report 2017
Corporate governanCe
Remuneration
The following tables provide a breakdown of remuneration for Board fees and committee roles. No other payments were made to Directors.
DIRECTORS’ REMUNERATION 2017
NAME OF DIRECTOR BOARD FEES
AUDIT &
FINANCE
COMMITTEE
HEALTH &
SAFETY AND
REGULATORY
COMPLIANCE
COMMITTEE
PEOPLE
COMMITTEE
TOTAL
REMUNERATION
Paul Norling (Chair)150,0007,5006,2505,000168,750
Elizabeth (Liz) Coutts85,00020,000
(Chair)
105,000
Peter Goodfellow85,0005,00090,000
W Bruce Goodfellow85,0006,25091,250
Peter Kean85,0006,25010,000
(Chair)
101,250
Robert McLeod85,0007,50012,500
(Chair)
105,000
Total575,00035,00031,25020,000661,250
DIRECTORS’ REMUNERATION 2016
NAME OF DIRECTOR BOARD FEES
AUDIT &
FINANCE
COMMITTEE
EMPLOYMENT AND
REGULATORY
COMPLIANCE
COMMITTEE
(OLD)
(3)
HEALTH &
SAFETY AND
REGULATORY
COMPLIANCE
COMMITTEE
PEOPLE
COMMITTEE
TOTAL
REMUNERATION
Paul Norling (Chair)150,0006,8751,2504,6883,750166,563
Elizabeth (Liz) Coutts85,00018,750
(Chair)
103,750
Mark Cowsill
(1)
14,1662,50016,666
Peter Goodfellow85,0001,2503,75090,000
W Bruce Goodfellow85,0001,2504,68890,938
Peter Kean85,0001,2502,0824,6887,500
(Chair)
100,520
Robert McLeod
(2)
63,7505,6259,375
(Chair)
78,750
Total567,91633,7507,08223,43815,000647,187
(1) Retired 30 November 2015
(2) Appointed 1 January 2016; fees do not represent a full year
(3) Committee structure changed from 1 January 2016; Employment and Regulatory Compliance Committee split into Health & Safety and Regulatory Compliance Committee and
People Committee
The total Directors’ fees pool is capped at $700,000, effective 1 October 2015; this was approved by shareholders at the 2015 Annual Meeting.
Indemnity and Insurance
In accordance with section 162 of the Companies Act 1993 and the constitution of the Company, the Company has given indemnities to,
and has effected insurance for, the directors and executives of the Company and its related companies which, except for some specific
matters that are expressly excluded, indemnify and insure directors and executives against monetary losses as a result of actions undertaken
by them in the course of their duties. Specifically excluded are certain matters, such as the incurring of penalties and fines, which may be
imposed for breaches of law.
107
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OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
CHIEF EXECUTIVE OFFICER (CEO)
REMUNERATION
The CEO’s remuneration consists of fixed
remuneration, a short term incentive (STI)
and a long term incentive (LTI). This is
reviewed annually by the People
Committee and the Board after reviewing
the Company’s performance, the CEO’s
individual performance and advice from
external remuneration specialists.
The aim of the STI is to reward the CEO
for achieving strategic objectives, which
will result in strong financial returns for
our shareholders. Participation in the plan
is by annual invitation at the discretion of
the Company at which time financial
targets and key performance indicators
are established. If minimum financial
thresholds are not met, no incentive will
be paid. The STI value is set at 30% of
the CEO’s base salary. The STI has two
components, individual performance
and financial performance. Individual
performance accounts for 30% and is based
on achieving certain personal performance
goals. Financial performance accounts for
70% and is based on EBIT against budget.
For FY17 the financial threshold is set at
achieving 90% of budget with the maximum
target set at 110%. Achievement of the
maximum financial target results in a
payment of 150% of the financial
performance component. The STI payments
are shown in the financial year that they are
paid, which may not be the same year that
they are earnt.
2014 LTI
In July 2014, the Company announced
an LTI plan for the CEO. The LTI plan
is designed to improve the long-term
sustainable performance of the company
by incentivising and motivating the CEO
and to encourage share ownership. The
Board retain absolute discretion as to
whether any future offers will be made and
to review the terms. The benefits provided
under the plan are capped at 30% of the
CEO’s annual base salary, which at the time
was the equivalent of up to $240,000
under the 2014 offer. This is then translated
to the equivalent number of shares based
on the weighted average share price over
the 10 trading days immediately following
the market announcement of the annual
financial results for the year. The CEO
has been granted three tranches of
Performance Share Rights as follows:
• Tranche one – 53,097 issued 28 July 2014
• Tranche two – 46,466 issued
17 December 2014
• Tranche three – 42,770 issued
11 December 2015
Each tranche vests over a consecutive
three year period. A Performance Share
Right represents a conditional right to,
upon vesting, acquire a Sanford Limited
ordinary share at a nil exercise price. If the
CEO departs the Company’s employ for
any reason prior to vesting, all Performance
Share Rights will lapse. Vesting is conditional
on achieving certain threshold levels in
YEAR
BASE SALARY
$
VEHICLE
ALLOWANCE
$
FIXED
REMUNERATION
$
PAY FOR PERFORMANCE
$
TOTAL
REMUNERATION
$
STILTI
FY17*846,00050,000896,000250,000159,0001,305,000
FY16*825,00050,000875,000120,000–995,000
*Based on year the amount was paid
relation to the objective to progressively
improve underlying operating profit to
a level which approximates 130% of its
Weighted Average Cost of Capital over
a five year period. The threshold for tranche
one was achieved for the vesting period
ended 30 September 2016 resulting in
21,735 (41%) Performance Share Rights
becoming Eligible Share Rights that the
CEO subsequently exercised in April 2017.
The balance of 31,362 Performance
Share Rights are forgone. Vesting of
the remaining tranche two and three
Performance Shares Rights are recorded
in the financial year of Board approval.
2017 LTI
A second LTI plan was established in
February 2017 on similar terms and
conditions to the 2014 plan but with
the benefits provided under the 2017
plan capped at 30% of the CEO’s current
annual base salary at the time, which is
the equivalent of up to $253,000.
Vesting is conditional on achieving certain
threshold levels in relation to achieving
a Return on Funds Employed Compound
Annual Growth Rate of 18% over a three
year period.
The CEO was granted the following
Performance Share Rights:
• Tranche one – 38,525 issued
22 February 2017
The CEO is not a member of the Board.
108Sanford Annual Report 2017
Corporate governanCe
EMPLOYEES’ REMUNERATION
The table below shows the number of employees and former employees who received remuneration and other benefits in excess of
$100,000 during the year ended 30 September 2017. The table does not include amounts paid after 30 September 2017 that relate
to the year ended 30 September 2017.
REMUNERATION RANGE $000 NUMBER OF EMPLOYEES REMUNERATION RANGE $000NUMBER OF EMPLOYEES
100 – 11017230 – 2405
110 – 12023240 – 2501
120 – 130 12250 – 260 1
130 – 1409260 – 2701
140 – 1506280 – 2902
150 – 1606310 – 3201
160 – 1706350 – 3602
170 – 1805410 – 4201
180 – 1903540 – 5501
190 – 2001550 – 5601
200 – 2104620 – 6301
210 – 22031,300 – 1,3101
Shareholdings
DISCLOSURE OF DIRECTORS’ INTERESTS
Interests Register
Sanford maintains an Interests Register in which relevant transactions and matters involving the Directors are recorded. Details of
Directors’ interests are set out in the Directors’ Shareholding table below.
DIRECTORS’ INTERESTS IN SHARES
The Directors disclosed the following relevant interests in shares as at 30 September 2017:
BENEFICIAL INTERESTNON BENEFICIAL INTERESTASSOCIATED PERSONS
201720162017201620172016
E M Coutts24,00024,000––––
P J Goodfellow 127,200127,200––––
W B Goodfellow 146,049146,049––500500
P N Kean 5,0005,000––––
R A McLeod500500––––
P G Norling43,50043,500––––
SHARE TRADING
Sanford’s Constitution directs that each Director holds a minimum of 500 shares in the Company. Directors and Executives are required to
seek approval in advance of share trading, and certify to the Board that they are not in possession of inside information, in accordance with
the Share Trading Policy and Guidelines. The Board has determined that share trading may only occur during two trading window periods in
each year. The periods commence at the time the interim and annual reports are announced and end on 31 August, after the end of the
half-year and on 28 February, after the end of the financial year.
There was no share trading by Directors in this reporting period.
External Auditor
KPMG were commissioned as Sanford’s external auditors for the year ending 30 September 2017. The Board, after considering the
recommendation of the Audit and Finance committee, consider and review the appointment of external auditors. It is proposed that the
current Auditor should continue in office, in accordance with Section 207T of the Companies Act 1993.
109
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REPORTING OUTCOMES
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& FINANCIALS
SHAREHOLDING ANALYSIS
AS AT 20 OCTOBER 2017
SIZE OF HOLDING
NUMBER OF
SHAREHOLDRS%
NUMBER OF
SHARES%
1 – 99949723.27220,7690.24
1,000 – 4,9991,00246.912,086,1882.23
5,000 – 9,99929113.621,904,3552.03
10,000 – 49,99925812.084,775,0225.10
50,000 – 99,999331.542,176,4492.32
Over 100,000552.5882,463,95288.08
2,136100.093,626,735100.0
TWENTY LARGEST SHAREHOLDERS
AS AT 20 OCTOBER 2017
SHAREHOLDER
NUMBER OF
SHARES %
Amalgamated Dairies Limited22,771,56724.32
New Zealand Central Securities Depository Limited
1
21,012,03822.44
Avalon Investment Trust Limited 8,606,0549.19
Maruha Nichiro Corporation4,534,2314.84
Masfen Securities Limited 4,079,6054.36
Forsyth Barr Custodians Limited <1-Custody>3,820,5404.08
JB Were (NZ) Nominees Limited <NZ Resident A/C>2,659,8992.84
Sterling Nominees Limited2,159,0372.31
Kevin Glen Douglas & Michelle McKenney Douglas – K & M Douglas A/C)1,395,1801.49
Tasman Equity Holdings Limited 1,062,8861.14
Arden Capital Limited 708,5900.78
James Douglas & Jean Ann Douglas <Douglas Family A/C>623,7220.67
Kevin Douglas & Michelle Douglas <Douglas Irrevocable A/C>623,5040.67
Seaford Holdings Limited 534,7500.57
The Goodfellow Foundation Incorporated 523,6870.56
Brian Grove Spackman & Murray Gordon Wells <Brian Spackman Family A/C No 2>500,0000.53
Auckland Medical Research Foundation 494,9200.53
Investment Custodial Services Limited <A/C C> 431,3350.46
Marie Roberta Taylor & Richard Heywood Taylor <Taylor Family A/C>431,3140.46
Geoffrey Francis Lindberg & Craig Francis Lindberg <G F Lindberg Family A/C>400,3000.43
1 New Zealand Central Securities Depository Limited provides a custodial depository service to institutional shareholders and does not have a
beneficial interest in these shares. Its major holders are:
Citibank Nominees (New Zealand) Limited4,939,1735.28
HSBC Nominees (New Zealand) Limited 2,946,1613.15
BNP Paribas Nominees (NZ) Limited 2,650,0552.83
National Nominees New Zealand Limited2,554,1482.73
TEA Custodians Limited Client Property Trust Account 1,845,3391.97
Accident Compensation Corporation 1,670,0001.78
JP Morgan chase Bank NA NZ Branch – Segregated Clients Acct1,528,9771.63
New Zealand Permanent Trustees Limited 1,052,0001.12
BNP Paribas Nominees (NZ) Limited 794,4470.85
110Sanford Annual Report 2017
Statutory information
SUBSTANTIAL PRODUCT HOLDERS
According to the Company’s records and substantial product holder notices given to the Company under the Financial Markets Conduct
Act 2013, as at 30 September 2017, the following were substantial product holders in the Company through having a relevant interest in the
Company’s ordinary shares:
NUMBER OF VOTING SECURITIES
Avalon Investment Trust Limited8,606,054
Amalgamated Dairies Limited 22,771,567*
Paul Gerard Keeling and Edgar William Preston26,404,517*
The total number of quoted voting products of Sanford Limited on issue as at 30 September 2017 was 93,506,137.
Because of the provisions of the Financial Markets Conduct Act 2013 more than one relevant interest can exist in the same Voting Security.
*The shares held by Amalgamated Dairies Limited are included in the shares in which Messrs Keeling and Preston have a relevant interest.
NZX WAIVER AND OVERSEAS OWNERSHIP
In November 2016, NZX granted the Company a waiver from NZX Main Board Listing Rule 11.1.6 which allows the Company to suspend the
voting rights of any of the Company’s shares which are “Affected Shares”.
“Affected Shares” are those shares which the Board determines have caused the Company to be in Breach of the “Overseas Ownership
Threshold” (currently, a level of overseas ownership of 22.5% of the Company) and in respect of which the Board can exercise its powers
to require (or effect) a sale to transfer the “Affected Shares” to a “Non-Overseas Person”.
The NZX also granted approval for the Company to include provisions in its Constitution which allow the Board to restrict the transfer of
the Company’s shares to “Overseas Persons” and which allow the Board to require certain documentation and/or information in relation to
a proposed transfer or transferee of the Company’s Shares.
A more detailed outline and explanation of the effects of the powers that the Board has to restrict the transfer and in certain circumstances
suspend voting rights of securities can be found on our website www.sanford.co.nz/investors/governance/company-constitution/Overseas
Ownership, and the provisions which enable the Board to exercise those powers are set out in the Company’s Constitution. The full text of
the NZX’s waiver can also be found here www.nzx.com/files/documents/companies/SAN/249139.pdf.
The Company estimates Overseas Person ownership to be 16.09% based on NASDAQ reporting, as at 30 September 2017 (16.21% at
30 September 2016). Sanford’s level of overseas ownership may have changed since this estimate was prepared. Overseas persons
intending to trade in Sanford shares should seek legal advice regarding their obligations under the Overseas Investment Act 2005.
111
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
Sanford’s standard profit measure prepared under New Zealand GAAP is net profit. Sanford have used non-GAAP measures when discussing financial
performance in this document. The Directors and management believe that these measures provide useful information as they are used internally
to evaluate divisional and total Group performance and to establish operating and capital budgets. Non-GAAP profit measures are not prepared in
accordance with NZ IFRS (New Zealand International Reporting Standards) and are not uniformly defined, therefore the non-GAAP profit measures
included in this report are not comparable with those used by other companies. They should not be viewed in isolation or as a substitute for GAAP
profit measures as reported by Sanford in accordance with NZ IFRS.
DEFINITIONS
EBITDA: Earnings before interest, taxation, depreciation, amortisation, restructuring, adjusting items, impairment and gain (loss) on sale
of investments, intangible and long term assets.
Reported EBIT: Earnings before interest, taxation and gain (loss) on sale of investments, intangible and long term assets.
GAAP TO NON-GAAP RECONCILIATION
Audited
30 September
2017
$000
Audited
30 September
2016
$000
Reported net profit for the period (GAAP)
37,478 34,731
Add back:
Income tax expense
14,172 14,681
Net interest expense
8,492 8,193
Net loss on sale of investments and property, plant and equipment
580 136
Reported EBIT
60,722 57,741
Adjustments:
Impairment of assets
2,130 5,389
Provision for one-off vessel disposal costs
474 –
Restructuring costs
418 228
Adjusted EBIT
63,744 63,358
Add back:
Depreciation and amortisation
18,803 15,515
EBITDA
82,547 78,873
112
Sanford Annual Report 2017
non-gaap profit meaSureS
ContentS
The Directors are pleased to present the Financial Statements of the Group for
the year ended 30 September 2017.
For and on behalf of the Board of Directors:
P G Norling E M Coutts
CHAIRMAN DIRECTOR
15 November 2017 15 November 2017
FIVE YEAR
FINANCIAL REVIEW
STATEMENT OF
FINANCIAL POSITION
NOTES TO THE
FINANCIAL STATEMENTS
INCOME
STATEMENT
STATEMENT OF
CASH FLOWS
INDEPENDENT
AUDITOR'S REPORT
STATEMENT OF
COMPREHENSIVE INCOME
STATEMENT OF
CHANGES IN EQUITY
114
117
121
115
118
151
116
120
113
finanCial StatementS 2017
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
2017
$000
2016
$000
2015
$000
2014
$000
2013
$000
Revenue477,940463,472450,332460,521462,644
EBITDA*82,54778,87364,36260,04049,285
Depreciation and amortisation(18,803)(15,515)(16,901)(17,975)(17,428)
Restructuring costs(418)(228)(3,048) – –
Impairment of assets(2,130)(5,389)(13,287)(2,260)(4,226)
Other one-off items(474)––4,332–
EBIT60,72257,74131,12644,13727,631
Net interest expense(8,492)(8,193)(9,460)(9,607)(8,692)
Net currency exchange (losses) gains – – – (4,558)10,349
Net (loss) gain on sale of investments, property,
plant and equipment and intangible assets(580)(136)1361,755152
Profit before income tax51,65049,41221,80231,72729,440
Income tax expense(14,172)(14,681)(8,024)(9,363)(9,040)
Profit for the year37,47834,73113,77822,36420,400
Non controlling interest8132166(39)
Profit attributable to equity holders of the Company37,48634,74413,79922,43020,361
Equity
Paid in capital 94,69094,95895,02795,15295,355
Reserves 480,619462,779417,592450,206458,978
Non controlling interest527398451483575
Total equity 575,836558,135513,070545,841554,908
Represented by:
Current assets150,363141,149127,708121,543132,416
Less current liabilities 123,68290,366114,08253,97248,366
Working capital 26,68150,78313,62667,57184,050
Property, plant and equipment132,000119,84193,658128,769131,077
Investments 10,94011,31310,96410,43810,651
Biological assets16,44814,97812,65410,5106,693
Intangible assets504,398500,327500,356506,078499,177
Derivative financial instruments5,816 10,228 – – –
696,283707,470631,258723,366731,648
Less non-current liabilities120,447149,335118,188177,525176,740
Total net assets575,836558,135513,070545,841554,908
Dividend per share (cents)23
†
23
†
23
†
23
†
23
†
Dividend cover (times)1.7
†
1.6
†
0.6
†
1.0
†
1.0
†
Return on average total equity6.6%6.5%2.6%4.1%3.7%
Earnings per share (cents)40.137.114.824.021.7
Net asset backing per share $6.16 $5.97 $5.48 $5.83 $5.93
* Earnings before interest, taxation, depreciation, amortisation, restructuring, adjusting items, impairment, gain (loss) on sale of investments,
intangible and long term assets and up to 2014, non-trading net currency exchange gains (losses).
†
Includes the dividends proposed after balance date.
The five year financial review includes both the continuing and discontinued businesses.
114Sanford Annual Report 2017
five year finanCial review
Note
2017
$000
2016
$000
Continuing Operations
Revenue4477,940463,469
Cost of sales(365,661)(350,753)
Gross profit112,279112,716
Other income6,4645,530
Distribution expenses(24,457)(24,452)
Administrative expenses5(23,329)(23,962)
Other expenses5(11,676)(9,214)
Operating profit59,28160,618
Finance income6389474
Finance expense6(8,853)(8,649)
Net finance expense(8,464)(8,175)
Share of profit of equity accounted investees138331,249
Profit before income tax51,65053,692
Income tax expense7(14,172)(15,879)
Profit for the year from continuing operations37,47837,813
Discontinued Operation
Loss for the year from discontinued operation (attributable to equity holders of the Company)18–(3,082)
Profit for the year37,47834,731
Profit attributable to:
Equity holders of the Company37,48634,744
Non controlling interest(8)(13)
37,47834,731
Earnings per share from continuing and discontinued operations, net of tax attributable to equity
holders of the Company during the year (expressed in cents per share)
Basic and diluted earnings per share (cents)
From continuing operations 40.140.4
From discontinued operation–(3.3)
From profit for the year1640.137.1
115
inCome Statement
FOR THE YEAR ENDED 30 SEPTEMBER 2017
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
2017
$000
2016
$000
Profit for the year (after tax)37,47834,731
Other comprehensive income
Items that may be reclassified to the income statement
Foreign currency translation differences189(257)
Change in fair value of cash flow hedges recognised in other comprehensive income2,25441,083
Deferred tax on cash flow hedges(631)(11,503)
Cost of hedging (losses) gains recognised in other comprehensive income(385)3,631
Deferred tax on cost of hedging108(1,017)
Items that may not be reclassified to the income statement
Amount of treasury share cost expensed in relation to share-based payment62171
Other comprehensive income for the year1,59732,108
Total comprehensive income for the year39,07566,839
Total comprehensive income for the year is attributable to:
Equity holders of the Company39,07566,865
Non controlling interest – (26)
Total comprehensive income for the year39,07566,839
Total comprehensive income attributable to shareholders arises from:
– continuing operations39,07569,921
– discontinued operation – (3,082)
39,07566,839
116
Sanford Annual Report 2017
Statement of ComprehenSive inCome
FOR THE YEAR ENDED 30 SEPTEMBER 2017
Note
2017
$000
2016
$000
Current assets
Cash on hand and at bank85,1503,589
Trade receivables955,36264,340
Derivative financial instruments1912,450 10,512
Other receivables and prepayments7,2774,896
Biological assets1018,04814,876
Inventories1143,57634,140
Assets held for sale188,5008,796
Total current assets150,363141,149
Non-current assets
Property, plant and equipment12132,000119,841
Investments1310,94011,313
Derivative financial instruments195,816 10,228
Biological assets1016,44814,978
Intangible assets14504,398500,327
Total non-current assets669,602656,687
Total assets 819,965797,836
Current liabilities
Bank overdraft and borrowings (secured)855,12155,234
Current portion of bank loans (secured)19 36,000 –
Derivative financial instruments192,6312,169
Trade and other payables1529,35429,923
Taxation payable5763,040
Total current liabilities123,68290,366
Non-current liabilities
Bank loans (secured)1995,000121,400
Contributions received in advance 3,756 3,814
Employee entitlements151,9641,791
Derivative financial instruments193,4969,294
Deferred taxation715,78112,128
Lease obligation450908
Total non-current liabilities120,447149,335
Total liabilities244,129239,701
Equity
Paid in capital94,69094,690
Retained earnings472,147456,164
Other reserves8,4726,883
Shareholder funds575,309557,737
Non controlling interest527398
Total equity16575,836558,135
Total equity and liabilities819,965797,836
117
Statement of finanCial poSition
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
AS AT 30 SEPTEMBER 2017
Note
2017
$000
2016
$000
Cash flows from operating activities
Receipts from customers490,102449,684
Interest received361456
Dividends received2818
Payments to suppliers and employees(418,078)(394,738)
Income tax paid(13,505)(12,501)
Interest paid(8,628)(8,547)
Net cash flows from operating activities50,28034,372
Cash flows from investing activities
Sale of property, plant and equipment4194,301
Contributions received in advance(58)205
Dividends received from associates131,206854
Purchase of property, plant and equipment and intangible assets(36,803)(42,148)
Purchase of business (1,478) –
Net cash flows from investing activities(36,714)(36,788)
Cash flows from financing activities
Proceeds from borrowings23,60041,240
Repayment of term loans(14,000)(18,402)
Dividends paid to Company shareholders17(21,503)(21,507)
Dividends paid to non controlling shareholders in subsidiaries(27) (27)
Purchase of own shares16 – (240)
Net cash flows from financing activities(11,930)1,064
Net increase (decrease) in cash and cash equivalents1,636(1,352)
Effect of exchange rate fluctuations on cash held38(35)
Cash and cash equivalents at beginning of year(51,645)(50,258)
Cash and cash equivalents at 30 September(49,971)(51,645)
Represented by:
Bank overdraft and borrowings (secured)(55,121)(55,234)
Cash on hand and at bank5,1503,589
8(49,971)(51,645)
118
Sanford Annual Report 2017
Statement of CaSh flowS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
reConCiliation of profit for the perioD with the
net CaSh flow from operating a CtivitieS
Note
2017
$000
2016
$000
Profit for the year (after tax)37,47834,731
Adjustments for non-cash items:
Depreciation and amortisation18,80315,515
Impairment of property, plant and equipment121,865343
Impairment of assets held for sale182655,000
Impairment of other investments – 46
Share-based payment expense62171
Change in fair value of biological assets(4,642)(4,851)
Change in fair value of fuel swaps – (118)
Change in fair value of foreign currency options(479)(1,782)
Change in fair value of forward exchange contracts(515)(4,402)
Share of profit of equity accounted investees13(833)(1,249)
Increase in deferred tax3,130388
Unrealised foreign exchange losses (gains)2,658(75)
20,3148,986
Movement in working capital
Decrease (increase) in trade and other receivables and prepayments4,034(13,541)
(Increase) decrease in inventories(8,913)2,271
(Decrease) increase in trade and other payables and other liabilities(749)178
(Decrease) increase in taxation payable(2,464)1,611
(8,092)(9,481)
Items classified as investing activities
Loss on sale of property, plant and equipment580136
580136
Net cash inflows from operating activities50,28034,372
119
Statement of CaSh flowS
for the year enDeD - September
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
GroupNote
Share
Capital
$000
Share
Based
Payment
Reserve
$000
Translation
Reserve
$000
Cashflow
Hedge
Reserve
$000
Cost of
Hedging
Reserve
$000
Retained
Earnings
$000
Total
$000
Non
Controlling
Interest
$000
Total
Equity
$000
Balance at 1 October 201694,6902682765,1161,223456,164557,737398558,135
Profit for the year (after tax)–––––37,48637,486(8)37,478
Other comprehensive income
Foreign currency translation
differences––181–––1818189
Hedging gains (losses) recognised in
other comprehensive income–––2,254(385)–1,869–1,869
Deferred tax on change in reserves–––(631)108–(523)–(523)
Amount of treasury share cost
expensed in relation to share-based
payment–62––––62–62
Total comprehensive income–621811,623(277)37,48639,075–39,075
Shares issued to non-controlling
shareholders in subsidiaries–––––––156156
Distributions to shareholders17–––––(21,503)(21,503)(27)(21,530)
Balance at 30 September 201794,6903304576,739946472,147575,309527575,836
Balance at 1 October 201594,93097520(24,464)(1,391)442,927512,619451513,070
Profit for the year (after tax)–––––34,74434,744(13)34,731
Other comprehensive income
Foreign currency translation
differences––(244)–––(244)(13)(257)
Hedging gains recognised in other
comprehensive income–––41,0833,631–44,714–44,714
Deferred tax on change in reserves–––(11,503)(1,017)–(12,520)–(12,520)
Amount of treasury share cost
expensed in relation to share-based
payment–171––––171–171
Total comprehensive income–171(244)29,5802,61434,74466,865(26)66,839
Acquisition of treasury shares16(240)–––––(240)–(240)
Distributions to shareholders17–––––(21,507)(21,507)(27)(21,534)
Balance at 30 September 201694,6902682765,1161,223456,164557,737398558,135
120
Sanford Annual Report 2017
Statement of ChangeS in equity
FOR THE YEAR ENDED 30 SEPTEMBER 2017
NOTE 1 – GENERAL INFORMATION
(a) Reporting entity
Sanford Limited (‘the parent’ or ‘the
Company’) is a profit-orientated company
that is domiciled and incorporated in
New Zealand. The Company is registered
under the Companies Act 1993 and listed
on the New Zealand Stock Exchange (NZX).
The Company is an FMC entity for the
purposes of Part 7 of the Financial Markets
Conduct Act 2013.
The financial statements presented are for
Sanford Limited (‘Sanford’ or ‘the Group’) as
at, and for the year ended 30 September 2017.
The Group comprises the Company, its
subsidiaries, and its investments in joint
arrangements and associates.
In accordance with the Financial Markets
Conduct Act 2013, where a reporting entity
prepares consolidated financial statements,
parent disclosures are not required.
The Group is a large and long-established
fishing and aquaculture farming business
devoted entirely to the farming, harvesting,
processing, storage and marketing of
quality seafood products and investments
in related activities.
NOTE 2 – BASIS OF PREPARATION
(a) Statement of compliance
The financial statements comply with
New Zealand equivalents to International
Financial Reporting Standards (NZ IFRS),
and other applicable Financial Reporting
Standards as appropriate for Tier 1 for-profit
entities. They also comply with International
Financial Reporting Standards.
(b) Basis of measurement
The financial statements have been prepared
on the historical cost basis except for the
following which are measured at fair value:
• Derivative financial instruments: interest
rate and fuel swaps, forward exchange
contracts and foreign currency options
• Biological assets: immature salmon and
mussels are measured at fair value less
costs to sell
(c) Foreign currency
Functional and presentation currency
These financial statements are presented in
New Zealand dollars (NZD), the Company’s
functional currency. All financial information
presented in NZD has been rounded to the
nearest thousand dollars (unless described
as milllions within the notes to these
financial statements).
Foreign currency transactions
Foreign currency transactions are translated
to NZD at the exchange rates ruling at the
dates of the transactions. At balance date
foreign currency monetary assets
and liabilities are translated at the closing
rate. The exchange variations arising from
these translations are recognised in the
income statement.
Foreign operations
Foreign operations are entities within the
Group, the activities of which are based in
a country other than New Zealand, or are
conducted in a currency other than NZD.
The assets and liabilities of foreign operations
are translated into NZD at the balance date
closing rate, while revenues and expenses
are translated at rates approximating the
exchange rate ruling at the date of the
transaction. Exchange variations are
taken directly to the foreign currency
translation reserve.
(d) Use of estimates and judgements
The preparation of financial statements
requires the Board of Directors to make
judgements, estimates and assumptions that
affect the application of accounting policies
and the reported amounts in the financial
statements. Actual results may differ from
these estimates.
Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the
period in which the estimate is revised and
in any future periods affected.
Accounting policies, and information about
judgements, estimates and assumptions that
have had a significant impact on the amounts
recognised in the financial statements are
disclosed in the relevant notes as follows:
• Valuation of deferred tax assets and
liabilities (refer note 7)
• Impairment testing of property, plant and
equipment (refer notes 12 and 18)
• Impairment testing of intangible assets
(refer note 14)
• Valuation of biological assets (refer note 10)
• Valuation of financial instruments (refer
note 19)
Estimates are designated by a
symbol
in the notes to the financial statements.
(e) Significant accounting policies
Accounting policies are disclosed within
each of the applicable notes to the
financial statements and are designated
with a symbol.
The Group’s accounting policies have been
applied consistently to all periods presented
in these financial statements, and have been
applied consistently by Group entities.
There have been no changes in accounting
policies or methods of computation.
To ensure consistency with the current
period, comparative figures have been
restated where appropriate.
121
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
NOTE 2 – BASIS OF PREPARATION
(continued)
(f) New accounting standards and
interpretations not yet adopted
The following standards and interpretations
which are considered relevant to the Group
but not yet effective for the year ended
30 September 2017 have not been applied
in preparing the financial statements:
NZ IFRS15: Revenue from Contracts
with Customers
The standard was issued in May 2014 and
will replace all existing guidance for revenue
recognition, including NZ IAS11: Construction
Contracts and NZ IAS18: Revenue. It is required
to be adopted by the Group in the year ending
30 September 2019. The Group is continuing
to evaluate the impact of this standard but
does not anticipate it will have a significant
impact on the financial statements.
NZ IFRS16: Leases
This standard was issued in January 2016 and
will replace all existing guidance on leases,
including NZ IAS17: Leases. The standard
introduces a single, on-balance sheet
accounting model for leases that is similar to
current finance lease accounting. It is required
to be adopted by the Group in the year ending
30 September 2020. The Group has not yet
fully evaluated the impact this standard will
have on the financial statements.
Disclosure Initiative (Amendments to
NZ IAS7)
The amendments to NZ IAS7: Cash Flow
Statements were issued in January 2016.
The amendments introduce a reconciliation
between cash flows arising from financing
activities as reported in the statement of
cash flows to the corresponding liabilities
in the opening and closing statement of
financial position. It is effective for the Group’s
financial year ending 30 September 2018.
NOTE 3 – SEGMENT REPORTING
Executive management of the Group monitors
the operating results of the wildcatch and
aquaculture (mussels and salmon) divisions.
Divisional performance is evaluated based on
operating profit or loss. Capital expenditure
consists of additions of property, plant and
equipment and intangible assets.
The Group’s key operating divisions are:
• wildcatch – responsible for catching
and processing inshore and deepwater
fish species; and
• aquaculture – responsible for farming,
harvesting and processing mussels
and salmon.
The Group has determined that the divisions
above should be aggregated to form one
reportable segment to reflect the farming,
harvesting, processing and selling of seafood
products, due to the aggregated manner in
which performance is monitored.
The criteria as set out in paragraph 12 of NZ
IFRS8: Operating Segments was considered in
determining the aggregation of the operating
divisions. In aggregating these operating
divisions into one reportable segment, the
Group identified similarities in the following:
Similar economic characteristics
The Group considered and identified
similarities in economic characteristics in the
wildcatch and aquaculture divisions. The Group
concluded, having considered several factors,
that the operating divisions exhibited similar
long term economic characteristics because
the impact of these factors is expected to be
similar across all operating divisions. This is
supported by the following observations:
Foreign exchange
A large proportion of the Group’s sales are
derived from exporting seafood products.
Movements in foreign exchange rates have
a significant influence on the degree of
profitability of the Group.
Competitive and operating risks
The operating risks are similar for all of the
seafood products in which the Group trades,
due to the vagaries of nature and its impact
in respect of weather patterns, nutrients in
the oceans, parasites and disease.
The global growth in seafood product demand
and rising commodity prices has led to a
heightened competitive environment in which
the Group trades, this applies in a similar
manner across all of the operating divisions.
Economic and political risk
Economic/political prosperity and stability
for countries in which Sanford’s customers
are based, have a direct impact across the
Group in its ability to derive increasing
positive returns to shareholders.
Other variables impacting profit
There are many other variables that directly
or indirectly impact the profitability of the
operating divisions such as international trade
rules and tariffs and climate change. The Group
has assessed that the operating divisions are
similarly impacted by these variables.
Nature of the products
All of the seafood products have similar
nutritional factors, principally they are a good
source of protein and relatively low in fat.
Similar nature of production processes
The Group has determined that all of the
seafood products produced for its customers
are harvested from the sea. Additionally,
certain fish species and mussels have hand
opening or machine opening processes
involved in the final completion of the
production chain.
The type or class of customer for
the product
The Group sells products derived from all
of its operating divisions to eight (2016: nine)
of its top ten customers. The Group’s customers
are largely of a wholesale nature.
The methods used to distribute
the product
The Group’s sales and marketing team is
structured geographically and not by product
type or by operating division.
The nature of the regulatory environment
Both aquaculture and fish products are
governed by the quality control regulations
set by the Ministry for Primary Industries in
New Zealand and those countries to which
the Group exports. In respect of vessels
these must meet Maritime New Zealand
regulations; this requirement is similar for
all operating divisions.
122
Sanford Annual Report 2017
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
NOTE 3 – SEGMENT REPORTING (continued)
(a) Income and expenditure (continuing operations)
Segmental information is presented in respect of the Group’s industry and geographical segments.
NEW ZEALANDAUSTRALIAELIMINATIONSTOTAL
2017
$000
2016
$000
2017
$000
2016
$000
2017
$000
2016
$000
2017
$000
2016
$000
Total external revenue451,786434,14626,15429,323 – – 477,940463,469
Inter-segment revenue2,8242,512 – – (2,824)(2,512) – –
Segment revenue454,610436,65826,15429,323(2,824)(2,512)477,940463,469
Segment profit (loss) for the year36,65736,760(12)(196) – – 36,64536,564
Share of profit of equity accounted investees8331,249
Reported profit for the year (continuing operations)37,47837,813
Inter-segment transactions
Inter-segment revenue is eliminated upon consolidation and is reflected in the eliminations column.
(b) Revenue by geographical location of customers (continuing operations)
2017
$000
2016
$000
New Zealand169,247155,977
North America85,08369,779
Australia65,54269,601
Europe45,55452,842
China40,48840,022
Japan18,26116,029
Africa13,58910,782
Other Asia12,74918,260
Korea12,35111,079
Middle East5,6236,503
Hong Kong4,3268,506
Pacific3,3072,857
Other1,8201,232
Revenue477,940463,469
The revenue information above is based on the delivery destination of sales.
Sales to one customer for the year accounted for $49.8m or 10% of total sales (2016: $53.0m and 11%).
(c) Assets and liabilities
NEW ZEALANDAUSTRALIATOTAL
Note
2017
$000
2016
$000
2017
$000
2016
$000
2017
$000
2016
$000
Segment assets802,747780,7116,3675,901809,114786,612
Investment in equity accounted investees1310,85111,224––10,85111,224
Total assets813,598791,9356,3675,901819,965797,836
Segment liabilities223,046219,62621,08320,075224,129239,701
Total liabilities223,046219,62621,08320,075244,129239,701
Capital expenditure36,22842,2311314736,35942,278
Depreciation and amortisation18,66915,38813412718,80315,515
There are no assets or liabilities that are classified as discontinued in 2017 and 2016, all discontinued assets and liabilities having been sold and
cleared by 30 September 2016.
123
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
NOTE 4 – REVENUE
Revenue from the sale of goods is measured at the fair value of the consideration received and is recognised in the income statement when
the significant risks and rewards of ownership have been transferred to the buyer.
NOTE 5 – EXPENSES
Note
2017
$000
2016
$000
Continuing Operations
(a) Administrative and other expenses includes
Directors’ fees24661647
Donations179152
Audit fees – KPMG204196
Audit fees – other auditors (for audit of Group companies)5860
KPMG fees for other services
†
4982
Leasing charges5,2425,302
Bad debts written off12054
Increase in allowance for doubtful debts19 1458
Impairment of property, plant and equipment12 1,865 343
Impairment of assets held for sale18 265 –
Impairment of other investments– 46
Loss on sale of property, plant and equipment580136
Restructuring costs418 228
Research and development3,3143,715
(b) Personnel expenses included in cost of sales, administrative and distribution expenses
Wages and salaries (including short-term employee benefits)113,613105,006
†
KPMG fees for other services are in respect of a limited assurance engagement in relation to selected sustainability information included in the
Sanford annual report ($41,500) and scrutineering the results of the annual meeting ($7,000). 2016 fees for other services related to a limited
assurance engagement in relation to selected sustainability information included in the Sanford annual report ($36,500), accounting advice on
transition to NZ IFRS9 ($40,000) and scrutineering results of the annual meeting ($5,000).
NOTE 6 – FINANCE INCOME AND EXPENSE
Finance income comprises interest income on funds invested and dividend income. Interest income is recognised as it accrues, using the
effective interest method. Dividend income is recognised on the date that the Group’s right to receive payment is established, which in the
case of quoted securities is the ex-dividend date.
Finance expenses comprise interest expense on borrowings and impairment losses recognised on financial assets (except for trade receivables).
2017
$000
2016
$000
Finance income
Interest income361456
Dividends received2818
389474
Finance expense
Interest expense on bank loans and bank overdraft8,8538,649
8,8538,649
Net finance expense8,4648,175
124
Sanford Annual Report 2017
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
NOTE 7 – TAXATION
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement except to the extent
that it relates to items recognised in other comprehensive income (OCI) in which case it is recognised in OCI.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the
reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is:
• Recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes.
• Not recognised for the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly
controlled entities to the extent that they probably will not reverse in the foreseeable future.
• Measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have
been enacted or substantively enacted at balance date.
7.1 Income tax expense (continuing operations)
2017
$000
2016
$000
Current period11,05413,450
Adjustments for prior periods(12)786
11,04214,236
Deferred tax expense
Origination and reversal of temporary differences3,0931,896
Adjustments for prior periods37(253)
3,1301,643
Income tax expense14,17215,879
Reconciliation of effective tax rate
Profit for the year 37,47837,813
Income tax expense14,17215,879
Profit before income tax51,65053,692
Tax at current rate of 28%14,46215,034
Non-deductible expenses152585
Capitalised asset timing differences(5)(2)
Non-taxable income (7)–
Adjustments for prior periods25533
Different foreign tax rate42
Other(459)(273)
(290)845
Income tax expense14,17215,879
Imputation credit account
Imputation credits available for use in subsequent reporting periods71,38466,597
The Group imputation credits are available to be attached to dividends paid by Sanford Limited.
125
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
NOTE 7 – TAXATION (continued)
7.2 Deferred tax
2017
Balance
30 September
2016
$000
Recognised
in Income
Statement –
Continuing
Operations
$000
Recognised
in Other
Compre-
hensive
Income
$000
Balance
30 September
2017
$000
Movement in temporary differences during the year
Property, plant and equipment(2,633)(654) – (3,287)
Intangible assets(10,974)(1,563) – (12,537)
Trade receivables60 – – 60
Derivative financial instruments(2,466) – (523)(2,989)
Biological assets1,454(1,147) – 307
Other liabilities2,431234 – 2,665
Net deferred tax liability(12,128)(3,130)(523)(15,781)
2016
Balance
30 September
2015
$000
Recognised
in Income
Statement –
Continuing
Operations
$000
Recognised
in Other
Compre-
hensive
Income
$000
Balance
30 September
2016
$000
Movement in temporary differences during the year
Property, plant and equipment(3,071)438 – (2,633)
Intangible assets(9,431)(1,543) – (10,974)
Trade receivables60 – – 60
Derivative financial instruments10,054 – (12,520)(2,466)
Biological assets1,899(445) – 1,454
Other liabilities2,524(93) – 2,431
Net deferred tax asset (liability)2,035(1,643)(12,520)(12,128)
Deferred tax recognised in OCI relates to tax on the effective portion of the change in fair value of cash flow hedges, and on cost of hedging gains
or losses.
A deferred tax asset has not been recognised in respect of the following item because it is not probable that future taxable profit will be
available against which the Group can utilise the benefits. There is no expiry time for the use of these tax losses.
2017
$000
2016
$000
Unrecognised deferred tax asset
Net tax losses – Australia2,8522,736
126
Sanford Annual Report 2017
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
NOTE 8 – CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes deposits that are subject to insignificant risk of changes in their fair value. Cash and cash equivalents are
classified and measured at amortised cost in the statement of financial position. These financial instruments are short term in nature and
the carrying amount is considered to be a reasonable approximation of fair value.
Bank overdraft and borrowings are classified and measured at amortised cost. These financial instruments are short term in nature and the
carrying amount is considered to be a reasonable approximation of fair value.
2017
$000
2016
$000
Cash on hand and at bank5,1503,589
Bank overdraft and borrowings (secured)(55,121)(55,234)
(49,971)(51,645)
Borrowings expire in April 2018 (2016: April 2017).
Interest rates
Interest rates applicable on call deposits range from 0.60% – 3.30% (2016: 0.50% – 3.58%).
Interest rates applicable on the bank overdraft and borrowings range from 2.62% – 13.75% (2016: 2.72% – 14.40%).
Security
Bank loans are secured by a general security interest over property and a mortgage over quota shares.
NOTE 9 – TRADE RECEIVABLES
Trade and other receivables are financial assets classified and measured at amortised cost less allowance for doubtful debts. Short term
trade receivables are not discounted. These financial instruments are short term in nature and the carrying amounts are considered to be
a reasonable approximation of fair values.
2017
$000
2016
$000
Gross trade receivables55,64064,473
Less: Allowance for doubtful debts (refer to note 19(a))(278)(133)
55,36264,340
127
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
NOTE 10 – BIOLOGICAL ASSETS
Biological assets include pre-harvest salmon and mussel stocks, and are measured at fair value less costs to sell, with any change therein
recognised in the income statement. Costs to sell include all costs that would be necessary to sell the assets. Biological assets are
transferred to inventories at the date of harvest.
2017
Mussels
$000
Salmon
$000
Total
$000
Balance at beginning of year23,0016,85329,854
Change in fair value less estimated costs to sell23,8456,67130,516
Harvested produce transferred to inventories(21,690)(4,184)(25,874)
Balance at 30 September 201725,1569,34034,496
Current11,1486,90018,048
Non-current14,0082,44016,448
25,1569,34034,496
2016
Mussels
$000
Salmon
$000
Total
$000
Balance at beginning of year19,2875,71625,003
Change in fair value less estimated costs to sell24,1455,53429,679
Harvested produce transferred to inventories(20,431)(4,397)(24,828)
Balance at 30 September 201623,0016,85329,854
Current10,0104,86614,876
Non-current12,9911,98714,978
23,0016,85329,854
Risk factors
The Group is exposed to a number of risks relating to its growing of salmon and mussel stocks. These include storms, marine predators,
biosecurity incursions and other contamination of the water space. The Group has extensive processes in place to monitor and mitigate
these risks including insurance of salmon and mussels, regular inspection of the growing areas and contingency plans in the event of an
adverse climatic event.
The key assumption which would lead to future uncertainty which may cause an adjustment to the carrying amounts of biological
assets is the fair value per kg at the point of harvest. The value of these assets may fluctuate with both the market prices and foreign
exchange movements.
Supply and demand risks
The Group is exposed to risks arising from fluctuations in the price and sales volumes of salmon and mussels. Management performs
regular analysis to ensure that the Group’s pricing structure is in line with the market and to ensure harvest volumes are appropriate.
Determining fair value
Salmon
The pre-harvest salmon stock has been valued with reference to their stage of development, the length of the growth cycle, number in the
water, assumptions in respect of biomass and feed conversion rates, and the fair value per kg at the point of harvest. The fair value per kg at
the point of harvest is determined with reference to the market selling prices as at 30 September 2017.
Mussels
The pre-harvest mussel stock has been valued with reference to their stage of development, the length of the growth cycle for the mussels
in the regions being farmed, the fair value per kg at point of harvest, and the physical quantity in the water at balance date. The fair value
per kg at the point of harvest is determined with reference to market selling prices as at 30 September 2017.
128
Sanford Annual Report 2017
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
NOTE 11 – INVENTORIES
Inventories are measured at the lower of cost and net realisable value. The estimated costs of marketing, selling and distribution are
deducted in calculating net realisable value.
Cost is based on the weighted average cost principle and includes expenditure incurred in acquiring the inventory and bringing it to its
existing condition and location. In the case of processed inventories and work in progress, cost includes an appropriate share of overheads.
Fixed overheads are allocated on the basis of normal operating capacity. The cost of items transferred from biological assets is their fair
value less costs to sell at the date of transfer.
2017
$000
2016
$000
Seafood34,35426,361
Packaging, fishing gear, fuel and stores9,2227,779
43,57634,140
NOTE 12 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is measured at cost less accumulated depreciation and impairment losses.
Cost may include:
• the consideration paid on acquisition of the asset;
• the cost of materials and direct labour and any other costs directly attributable to bringing the asset to a working condition for its
intended use;
• the costs of dismantling and removing the items and restoring the site on which they are located; and
• borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset.
The capitalisation of expenditure ceases when the asset is ready for use.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major
components) of property, plant and equipment.
Subsequent expenditure that increases the economic benefits derived from an asset is capitalised.
Depreciation of property, plant and equipment, other than land, is calculated using straight-line basis and is expensed over the useful life
of the asset. Depreciation methods, useful lives and residual values are reassessed at balance date. Leased assets are depreciated over the
shorter of the lease term and their estimated useful lives. Estimated useful lives (years) are as follows:
20172016
Buildings (freehold and leasehold)20–2520–25
Fishing vessels:
Hulls20–3020–30
Engines12–1512–15
Electronic equipment3–43–4
Machinery and plant7–107–10
Motor vehicles55
Office fixtures and fittings3–73–7
Marine farm assets5–155–15
129
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
NOTE 12 – PROPERTY, PLANT AND EQUIPMENT (continued)
2017
Land
$000
Freehold
Buildings
$000
Leasehold
Buildings
$000
Fishing
Vessels
$000
Plant and
Equipment
$000
Total
$000
Cost
Balance at beginning of year 2,57220,99043,359165,392127,515359,828
Additions – business combination––9–141150
Additions – other–3334,15423,4865,67633,649
Disposals ––(798)(5,351)(3,215)(9,364)
Effect of movements in exchange rates––45–1661
Balance at end of year2,57221,32346,769183,527130,133384,324
Accumulated depreciation and impairment
Balance at beginning of year–(7,913)(26,505)(111,820)(93,749)(239,987)
Depreciation–(541)(1,675)(9,764)(6,823)(18,803)
Impairment––(51)(1,814)–(1,865)
Disposals ––5005,1442,6878,331
Balance at end of year–(8,454)(27,731)(118,254)(97,885)(252,324)
Net book value at 30 September 20172,57212,86919,03865,27332,248132,000
2016
Land
$000
Freehold
Buildings
$000
Leasehold
Buildings
$000
Fishing
Vessels
$000
Plant and
Equipment
$000
Total
$000
Cost
Balance at beginning of year 2,57220,77643,070132,437124,370323,225
Additions – other – 196 361 35,620 6,080 42,257
Disposals – – – (2,665)(3,483)(6,148)
Net transfer of assets held for sale – 18 – – 555 573
Effect of movements in exchange rates – – (72) – (7)(79)
Balance at end of year2,57220,99043,359165,392127,515359,828
Accumulated depreciation and impairment
Balance at beginning of year – (7,376)(24,838)(107,208)(90,145)(229,567)
Depreciation – (525)(1,667)(6,671)(6,617)(15,480)
Impairment – – – (343) – (343)
Disposals – – – 2,402 3,297 5,699
Net transfer of assets held for sale – (12) – – (284)(296)
Balance at end of year–(7,913)(26,505)(111,820)(93,749)(239,987)
Net book value at 30 September 20162,57213,07716,85453,57233,766119,841
Impairment
The fishing vessels impairment charge ($1.8m) relates to an inshore vessel acquired during the year, which subsequently was found to have
structural weakness that requires significant remediation work in order for the vessel to meet compliance standards for fishing. The Company
is investigating legal remedy, however no recoveries have been recorded at balance date due to the early stage of this process. A provision
of $0.5m has been raised in respect of the anticipated disposal costs of this vessel.
The Havelock mussel processing plant was impacted by an earthquake which struck the top of the South Island on 14 November 2016 and has
subsequently been subject to both engineering and insurance assessments. Operations at the facility have been largely unaffected by the
earthquake, however the extent of remediation to restore the facility to its pre-earthquake state is still to be finalised. It is expected that the
Group has sufficient insurance to cover any remediation expenditure but the quantum has not been finalised. Therefore no financial impact
of the earthquake is recognised in these financial statements.
130
Sanford Annual Report 2017
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
NOTE 12 – PROPERTY, PLANT AND EQUIPMENT (continued)
Commitments
The estimated capital expenditure for property, plant and equipment contracted for at reporting date but not provided is $1.0m for the
Group (2016: $4.4m).
NOTE 13 – INVESTMENTS
The Group’s interest in equity accounted investees comprises interests in those associates and joint ventures disclosed in note 22.
Associates are those entities in which the Group has significant influence, but not control or joint control over the financial and operating
policies. A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the
arrangement rather than the rights to its assets and obligations for its liabilities.
Interests in associates and joint ventures are accounted for using the equity method. They are initially recognised at cost, which includes
transaction costs. Subsequent to initial recognition, the financial statements include the Group’s share of the profit or loss and OCI of
equity accounted investees, until the date on which significant influence or joint control ceases.
Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the
Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent there is no
evidence of impairment.
The Group’s other investments comprise shareholdings in other companies which do not constitute controlling interests, nor does the
Group have significant influence over the investees. As these are not held for trading, the Group has elected these equity instruments to
be classified and measured at fair value through OCI.
2017
$000
2016
$000
Equity Accounted Investees
(a) Summary financial information for equity accounted investees, not adjusted for the percentage
ownership held by the Group:
Current assets18,97121,550
Non-current assets11,35411,606
Total assets30,32533,156
Current liabilities3,4604,632
Non-current liabilities 633 1,752
Total liabilities4,0936,384
Revenue40,47937,411
Expenses(38,833)(34,909)
Profit1,6462,502
(b) Movements in carrying value of equity accounted investees:
Balance at beginning of year11,22410,829
Share of profit 8331,249
Dividends received from associates(1,206)(854)
Balance at 30 September10,85111,224
Other Investments
Shares in other companies8989
10,94011,313
131
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
NOTE 14 – INTANGIBLE ASSETS
Purchased fish quota is carried at cost less impairment losses. Quota and licences which are initially recognised on the basis of previous
permits, catch history or when purchased through business combinations are initially valued at fair value on allocation. Fair value is
determined by reference to Crown tender prices and market prices available close to the time of the acquisition. This became the deemed
cost upon the adoption of NZ IFRS.
Marine farm licences are recorded at cost, or when purchased through business combinations are initially measured at fair value.
Marine farm licences and quota have indefinite useful lives are not amortised but are tested annually for impairment at balance date.
Quota has no expiry date and is therefore deemed to have an indefinite useful life. Marine farm licences are deemed by the Directors
to have indefinite useful lives as it is highly probable that they are renewed and the costs of renewal are expected to be minimal.
2017
Intellectual
Property
$000
Fishing
Quota
$000
Marine Farm
Licences
$000
Goodwill
$000
Total
$000
Carrying amount
Balance at beginning of year –412,70999,537974513,220
Additions – business combination–––1,3501,350
Additions – other414–2,296–2,710
Effect of movements in exchange rates–11––11
Balance at end of year414412,720101,8332,324517,291
Impairment
Balance at beginning and end of year–(11,649)(1,244)–(12,893)
Carrying amount at 30 September 2017414401,071100,5892,324504,398
2016
Intellectual
Property
$000
Fishing
Quota
$000
Marine Farm
Licences
$000
Goodwill
$000
Total
$000
Carrying amount
Balance at beginning of year 35412,70399,537974513,249
Additions – other–21––21
Amortisation(35)–––(35)
Effect of movements in exchange rates–(15)––(15)
Balance at end of year–412,70999,537974513,220
Impairment
Balance at beginning and end of year–(11,649)(1,244)–(12,893)
Carrying amount at 30 September 2016–401,06098,293974500,327
The Group purchased water space at Wilson’s Bay in the Coromandel during 2017 for $2.3m (2016: Nil).
Impairment testing
The carrying amounts of the Group’s non-financial assets other than inventories, biological assets and deferred tax assets are reviewed at
each reporting date to determine whether there is any indication of impairment. An impairment loss is recognised whenever the carrying
amount of an asset exceeds its recoverable amount which is the greater of its value in use and its fair value less costs to sell. If it is not
possible to estimate the recoverable amount of the individual asset, the Group determines the recoverable amount of the cash generating
unit (CGU) to which the asset belongs.
Impairment losses directly reduce the carrying amount of assets and are recognised in the income statement. For goodwill and intangible
assets that have indefinite lives, recoverable amount is estimated at each reporting date.
132
Sanford Annual Report 2017
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
NOTE 14 – INTANGIBLE ASSETS (continued)
Cash Generating Units
The table below outlines the allocations of intangible assets with indefinite useful lives to CGUs:
2017
Intellectual
Property
$000
Fishing
Quota
$000
Marine Farm
Licences
$000
Goodwill
$000
Total
$000
New Zealand Seafood414400,750100,5892,324504,077
Australia Seafood –321 – –321
414401,071100,5892,324504,398
2016
Fishing
Quota
$000
Marine Farm
Licences
$000
Goodwill
$000
Total
$000
New Zealand Seafood400,75098,293974500,017
Australia Seafood310 – –310
401,06098,293974500,327
14.1 Fishing Quota and Marine Farm Licences
Impairment testing and assumptions
Based on impairment testing undertaken in September 2017, no impairment is required for New Zealand quota or marine farm licences and
none for the remaining Australian fish quota or licences, given the recoverable amount of all CGUs exceed the carrying value of the net assets
at 30 September 2017.
Impairment testing was performed on the applicable New Zealand CGU to determine whether fishing quota and marine farm licences were
impaired using a discounted cash flow model based on value-in-use. Post-tax discount rates of between 7.3% and 7.9% (2016: 7.3% and 8.0%)
were applied. Future cash flows were projected for 5 years and a terminal growth rate of 3% (2016: 3%) was applied. Key assumptions on EBITDA
and capital expenditure were based on actual results and Board approved business plans. The forecasts for purposes of valuation are sensitive to
changes in foreign exchange rates, projected operating earnings and cash flows in the terminal year.
14.2 Goodwill
Goodwill represents the excess of the consideration transferred over the fair value of the net identifiable assets of the acquired business.
Goodwill is carried at cost less accumulated impairment losses.
The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill
that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs
are expensed as incurred, except if related to the issue of debt or equity securities. The consideration transferred does not include amounts
related to the settlement of pre-existing relationships. Such amounts are generally recognised in the income statement.
During the 2017 year, the Group acquired the business and assets of Enzaq Aquaculture Limited. The acquisition gave rise to goodwill
($1.35m). No impairment was identified in respect of the goodwill in this or any other CGU (2016: Nil).
133
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
NOTE 15 – TRADE AND OTHER PAYABLES
Trade and other payables
Trade and other payables are financial liabilities, classified and measured at amortised cost. As these are short term in nature and the
carrying amount is considered to be a reasonable approximation of fair value.
Employee entitlements
(i) Long service leave
The Group’s net obligation in respect of long service leave is the amount of future benefit that employees have earned in return for their
service in the current and prior periods. The obligation is calculated using an actuarial technique. Changes in long service leave provision
are recognised in the income statement.
(ii) Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
2017
$000
2016
$000
Trade payables7,8415,755
Other payables and accruals12,81716,152
Employee entitlements10,6609,807
31,31831,714
Less: employee entitlements classified as non-current(1,964)(1,791)
29,35429,923
134
Sanford Annual Report 2017
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
NOTE 16 – CAPITAL/RESERVES AND EARNINGS PER SHARE
(a) Translation reserve
This reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations as well as from
the translation of liabilities that hedge the Group’s net investments in foreign subsidiaries.
(b) Cash flow hedge reserve
This reserve comprises the effective portion of changes in the fair value of derivative contracts for highly probable forecast transactions.
(c) Cost of hedging reserve
This reserve contains the cumulative net change in fair value of the time value component of foreign currency options which are excluded from the
hedge designations of foreign currency risk.
(d) Share capital and earnings per share
ORDINARY SHARES
2017
No. of Shares
2016
No. of Shares
On issue at beginning and end of year93,626,73593,626,735
All issued shares are fully paid. The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one
vote per share at meetings of the Company. All shares rank equally with regard to Sanford’s residual assets. In respect of the Company’s shares that
are held by the Group, all rights are suspended until those shares are reissued.
The calculation of basic earnings per share at 30 September 2017 was based on the profit attributable to ordinary shareholders of $37.5m (2016: $34.7m)
and a weighted average number of ordinary shares outstanding of 93,495,121 (2016: 93,493,922).
(e) Treasury shares
In 2014, Sanford established a long-term incentive plan (the LTI plan) for the CEO. The LTI plan is designed to improve the performance of the Group
by incentivising and motivating the CEO. This involves the Group purchasing treasury shares pursuant to the terms of the LTI plan. The Group has not
acquired any Sanford Limited shares in 2017 for the purposes of the LTI plan (2016: 42,770 shares acquired at a price of $5.60 per share). Total treasury
shares held at 30 September 2017 was 120,598 shares (2016: 142,333 shares) following the vesting of 21,735 shares which were issued to the CEO
and are treated as fully-paid up.
NOTE 17 – DIVIDENDS
2017
$000
2016
$000
The following dividends were declared and paid by the Company for the year ended 30 September:
$0.23 per ordinary share (2016: $0.23)21,50321,507
On 15 November 2017 the Directors proposed a final dividend of 14 cents per share (2016: 14 cents per share) to be paid on 8 December 2017.
This dividend has not been provided for in the financial statements at 30 September 2017.
135
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FOR THE YEAR ENDED 30 SEPTEMBER 2017
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
NOTE 18 – ASSETS CLASSIFIED AS HELD FOR SALE AND DISCONTINUED OPERATION
(a) Assets Classified as Held for Sale
The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through
a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured
at the lower of their carrying amount and fair value less costs to sell. The criteria for held for sale classification is regarded as met only
when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management
must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date
of classification.
Property, plant and equipment is not depreciated once classified as held for sale.
2017
$000
2016
$000
Property, plant and equipment at fair value (continuing operations) 8,500 8,796
Total assets held for sale 8,500 8,796
Property, plant and equipment classified as held for sale reflects the Christchurch mussel processing facility, which was closed during
the 2015 financial year and continues to be marketed for sale. During the year, an impairment loss of $0.3m was recognised against
the carrying value of these assets (2016: Nil).
(b) Discontinued Operation
Policies
Where a disposal group that is either sold or is held for sale meets the following parameters, it is reported as a discontinued operation:
• The operations and cash flows can be clearly distinguished from the rest of the Group; and
• It represents a separate major line of business or geographical area of operations.
With the decision to exit the IPS business in 2015, the results of this operation are disclosed as a discontinued operation.
2017
$000
2016
$000
(i) Income Statement
Revenue – 3
Operating expenses – 717
Impairment – (5,000)
Loss before income tax – (4,280)
Income tax expense – 1,198
Loss for the year – (3,082)
(ii) Cash Flows
Operating cash flows – (520)
Investing cash flows – 3,917
Total – 3,397
There are no operations which are classified as discontinued during 2017. During 2016 the carrying value of San Nikunau was reviewed and
a further impairment of $5.0m was recognised in the results of the discontinued operation in the income statement in that year. The vessel
was sold for $3.9m in May 2016.
136
Sanford Annual Report 2017
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
NOTE 19 – FINANCIAL INSTRUMENTS
Classification and measurement
Classification and measurement of financial assets
Financial assets are classified into three categories depending on their contractual cash flow characteristics and the Group’s business model
for managing the financial assets. These categories are:
• Amortised cost;
• Fair value through profit or loss; and
• Fair value through OCI.
A financial asset which is a debt instrument is measured at amortised cost only if both the following conditions are met:
• it is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest.
However, the Group may choose at initial recognition to designate a debt instrument that meets the amortised cost criteria as at fair value
through profit or loss if doing so eliminates or significantly reduces an accounting mismatch.
For investments in equity instruments that are not held for trading nor managed on a fair value basis, the Group has elected to measure
these at fair value through OCI.
Derivative financial instruments which are not designated in an effective hedge relationship are classified as fair value through profit or loss.
Classification and measurement of financial liabilities
Financial liabilities are classified as either amortised cost or fair value through profit or loss. The Group may choose at initial recognition
to designate a financial liability as at fair value through profit or loss if doing so eliminates or significantly reduces an accounting mismatch.
All financial liabilities of the Group are measured at amortised cost except for derivative financial instruments which are measured at fair
value. Changes in the fair value of derivative financial liabilities are recognised in profit or loss except when the derivative instrument is
designated in an effective hedge relationship.
Specific accounting policies for the Group’s financial assets and liabilities are described below.
Exposure to credit, interest rate, foreign currency, fuel price and liquidity risks arises in the normal course of the Group’s business. Derivatives
may be used as a means of reducing exposure to fluctuations in foreign exchange rates, interest rates and fuel prices. While these instruments are
subject to the risk of subsequent changes to market rates, such changes would generally be offset by opposite effects on the items being hedged.
The Group is not exposed to substantial other market price risk arising from financial instruments.
Fair value measurement
The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows using market interest rates.
The fair value of forward foreign exchange rate contracts is estimated by discounting the difference between the contractual forward
price and the current forward price for the residual maturity of the contract using market interest rates. The fair value of foreign currency
options is estimated using option valuation methods with reference to current spot rates and market volatility. The fair value of fuel
contracts is estimated using forward fuel prices at reporting date.
Fair value hierarchy
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are categorised
into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value
measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the
entire measurement.
137
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
NOTE 19 – FINANCIAL INSTRUMENTS (continued)
(a) Credit risk
Credit risk, the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, arises principally from the Group’s receivables from customers.
The Group does not generally require collateral in respect of trade and other receivables. Management has a credit policy in place and the
exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain
amount. Reputable financial institutions (defined as having a minimum credit rating of A-) are used for investing and cash handling
purposes.
Maximum exposure to credit risk
The carrying amount of financial assets represents the Group’s maximum credit exposure.
The Group has not renegotiated the terms of any financial assets which would result in the carrying amount no longer being past due or avoid
a possible past due status.
The Group’s maximum exposure to credit risk for trade and other receivables by geographic region is as follows:
2017
$000
2016
$000
New Zealand25,61426,631
North America16,13814,689
Europe11,35910,501
Australia6,4207,140
Japan1,5441,911
Other1,5648,364
Trade and other receivables62,63969,236
Concentration of credit risk
The Group has credit insurance in respect of two (2016: one) of its largest customers for USD 15.0m (2016: USD 8.4m). At balance date the Group’s
exposure in respect of these debts is USD 11.7m (2016: USD 8.4m) which comprised 29% (2016: 18%) of trade receivables. Since balance date and in
accordance with agreed credit terms these customers have subsequently paid 40% (2016: 47%) of the outstanding balance. There are no concerns
with the collectability of these debts.
The status of trade receivables at the reporting date is as follows:
Gross
Receivables
2017
$000
Allowance for
Doubtful Debts
2017
$000
Gross
Receivables
2016
$000
Allowance for
Doubtful Debts
2016
$000
Not past due48,301 – 58,763 –
Past due 0 – 30 days5,779 – 4,382 –
Past due 31 – 120 days714 – 858(3)
Past due 121+ days846 (278)470(130)
55,640(278)64,473(133)
Impairment assessment – expected credit losses
The Group applies the simplified approach to providing for expected credit losses prescribed by NZ IFRS9, which permits the use of
the lifetime expected loss provision for all trade receivables. The allowance for doubtful debts on trade receivables that are individually
significant are determined by an evaluation of the exposures on a line by line basis. For trade receivables which are not significant on
an individual basis, collective impairment is assessed on a portfolio basis based on number of days overdue, and taking into account the
historical loss experience in portfolios with a similar number of days overdue. The expected credit losses incorporate forward looking
information and relevant macroeconomic factors.
138
Sanford Annual Report 2017
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
NOTE 19 – FINANCIAL INSTRUMENTS (continued)
(b) Liquidity risk
Liquidity risk represents the Group’s ability to meet its contractual obligations. The Group evaluates its liquidity requirements on a daily
basis. The Group has secured bank loans which contain debt covenants. A breach of covenant may require accelerated repayment of the
loans earlier than indicated in the loan contract.
The following table sets out the contractual and expected cash flows for all financial liabilities and derivatives:
2017
Statement
of Financial
Position
$000
Contractual
Cash Out (In)
Flows
$000
6 Months
or Less
$000
6–12
Months
$000
1–2
Years
$000
2–5
Years
$000
More than
5 Years
$000
Bank loans131,000136,8961,75837,37452,03045,734 –
Trade payables7,8417,8417,841 – – – –
Other payables12,81712,81712,817 – – – –
Bank overdraft and borrowings55,12155,87675955,117 – – –
Total non-derivative liabilities206,779213,43023,17592,49152,03045,734 –
Foreign currency options(7,521)(8,738)(2,410)(2,863)(2,819)(646) –
Forward exchange contracts(8,960)(9,223)(4,565)(2,165)(2,493) – –
Interest rate swaps 5,4585,8831,1691,1131,7911,713 97
Fuel swaps(1,116)(1,128)(538)(410)(180) – –
Total derivative liabilities (assets) (12,139)(13,206)(6,344)(4,325)(3,701)1,06797
2016
Statement
of Financial
Position
$000
Contractual
Cash Out (In)
Flows
$000
6 Months
or Less
$000
6–12
Months
$000
1–2
Years
$000
2–5
Years
$000
Bank loans121,400131,4861,7981,80840,16487,716
Trade payables5,7555,7555,755 – – –
Other payables16,15216,15216,152 – – –
Bank overdraft and borrowings55,23456,11298855,124––
Total non-derivative liabilities198,541209,50524,69356,93240,16487,716
Foreign currency options(9,684)(13,466)(2,094)(3,896)(4,389)(3,087)
Forward exchange contracts(9,516)(9,764)(3,538)(2,747)(3,479) –
Interest rate swaps 9,26610,2881,0619932,1886,046
Fuel swaps657661357398(88)(6)
Total derivative liabilities (assets)(9,277)(12,281)(4,214)(5,252)(5,768)2,953
Facilities
The Group generates sufficient cash flows from its operating activities to meet its obligations arising from its financial liabilities and has credit lines
in place to cover potential shortfalls. At balance date the Group had available approximately $44m of headroom funding to meet any unforeseen
liability obligations (2016: $54m). The Group will refinance $36m of current debt in April 2018, in line with its contractual maturity and taking full
advantage of favourable rates.
139
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
NOTE 19 – FINANCIAL INSTRUMENTS (continued)
(b) Liquidity risk (continued)
Term loans
Bank loans are recognised initially at fair value, net of attributable transaction costs. Subsequent to initial recognition bank loans are
measued at amortised cost, applying the effective interest method.
Facilities, interest rate ranges, expiry dates and balances of bank loans for the Group are as follows:
2017
Facility
$000
Expiry DateBalance
$000
Current liabilities40,000April 201836,000
Non-current liabilities
Term loans (secured)
4 year70,000April 201950,000
5 year65,000April 202045,000
175,000131,000
2016
Facility
$000
Expiry DateBalance
$000
Non-current liabilities
Term loans (secured)
3 year40,000April 201837,000
4 year70,000April 201944,400
5 year65,000April 202040,000
175,000121,400
Interest rates
Interest rates on the above loans ranged from 2.50% – 2.87% (2016: 2.72% – 3.12%).
Security and covenants
Bank loans are secured by a general security interest over property and a mortgage over quota shares. All borrowings are subject to borrowing
covenant arrangements. The Group has complied with all covenants during the year.
140
Sanford Annual Report 2017
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
NOTE 19 – FINANCIAL INSTRUMENTS (continued)
(c) Market risk
Financial risk management and hedge accounting
Market risk is the risk that arises from changes in foreign exchange rates, interest rates and commodity (specifically fuel) prices. Such
changes will affect the Group’s earnings and/or the value of its holdings of financial instruments. These risks arise due to the Group having
financial instruments that would be impacted by changes in these market factors.
The Group enters into derivative contracts, being forward exchange contracts, foreign currency options and interest rate swaps to manage
exposure to foreign currency and interest rate risks. The Group also enters into commodity swaps to manage fuel price risk. Senior
management are involved in the operation and oversight of risk management and derivative activities. Regular reporting of activities is
provided to the Board of Directors which provides the policy for the use of derivative instruments. In accordance with its Treasury Policy,
the Group does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge
accounting are accounted for as held for trading and classified at fair value through profit or loss.
The Group initially recognises derivatives at fair value when the Group becomes a party to the contractual provisions of the instrument,
and subsequently re-measures these at fair value at each balance date. All derivatives are classified as level 2 on the fair value hierarchy.
The resulting fair value gain or loss on re-measurement is recognised in profit or loss immediately, unless the derivative is designated
and effective as a hedging instrument, in which case the timing of recognition in profit or loss depends on the nature of the designated
hedge relationship.
Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in OCI to the
extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognised in the income statement.
For cash flow hedges of financial items (for example forecast sales), the changes in fair value deferred in OCI are transferred to the income
statement when the hedged item affects the profit or loss.
The Group designates only the intrinsic value of options into hedging relationships. The time value of the options is treated as a cost
of hedging. Changes in fair value of the time value component of the option contract are deferred in OCI over the term of the hedge.
For transaction related hedged items the cumulative change in fair value deferred in OCI is recognised in profit or loss at the same time
as the hedged item.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge
accounting is discontinued prospectively. The cumulative gain or loss previously recognised in OCI remains there until the forecast
transaction occurs, or immediately recognised in profit or loss if the transaction is no longer expected to occur.
Interest rate risk
The Group is exposed to interest rate risk through its cash balances, short term and long term borrowings. The Group adopts a risk
management strategy of managing the exposure to interest rate risk through a proportion of fixed and floating rate borrowings. In order
to meet this strategy the Group has a policy of using interest rate swaps to fix between 25% and 75% of the floating rate exposure on long
term borrowings in line with its Board approved Treasury Policy. In the current period, the Group designated the highly probable forecast
transactions and the interest rate swap contracts into cash flow hedge relationships.
Interest rate swap contracts are recognised within Derivative Financial Instruments on the statement of financial position as at balance
date. The fair value gains and losses on these derivatives were recognised in OCI and transferred to profit or loss when the underlying
transactions affected the profit or loss within finance expenses in the income statement. The amounts designated as the hedged item in
qualifying cash flow hedges mirror the amounts designated as hedging instruments, therefore the Group has established a 1:1 hedge ratio.
Hedge ineffectiveness is only recognised for accounting purposes if it results in movements in the value of the hedge instrument in excess
of those on the hedged item. The source of any ineffectiveness would be largely due to credit valuation adjustments and timing of cash
flows. No ineffectiveness arose on cash flow hedges of interest rate risk during the year (2016: None).
141
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
NOTE 19 – FINANCIAL INSTRUMENTS (continued)
(c) Market risk (continued)
Interest rate risk (continued)
Interest-bearing variable rate instruments and related derivatives reprice as follows:
2017
Total
$000
6 Months
or Less
$000
6–12
Months
$000
1–3
Years
$000
3–5
Years
$000
More than
5 Years
$000
Cash and cash equivalents5,1505,150 – – – –
Bank overdraft and borrowings(55,121)(55,121) – – – –
Bank loans(131,000)(131,000) – – – –
Interest rate swaps
Notional cash inflows167,000167,000 – – – –
Notional cash outflows(167,000) – (27,000)(43,000)(41,000)(56,000)
Total variable rate(180,971)(13,971)(27,000)(43,000)(41,000)(56,000)
2016
Total
$000
6 Months
or Less
$000
6–12
Months
$000
1–3
Years
$000
3–4
Years
$000
4–5
Years
$000
Cash and cash equivalents3,5893,589 – – – –
Bank overdraft and borrowings(55,234)(55,234) – – – –
Bank loans(121,400)(121,400) – – – –
Interest rate swaps
Notional cash inflows168,000168,000 – – – –
Notional cash outflows(168,000) – (25,000)(55,000)(15,000)(73,000)
Total variable rate(173,045)(5,045)(25,000)(55,000)(15,000)(73,000)
142
Sanford Annual Report 2017
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
NOTE 19 – FINANCIAL INSTRUMENTS (continued)
(c) Market risk (continued)
Interest rate risk (continued)
Effects of hedge accounting on financial position and performance
The tables below demonstrate the impact of hedged items and the hedging instruments designated in hedging relationships.
2017
Cash flow hedges
Nominal
$000
Weighted
Average
Rate
Carrying
Amounts
Assets
$000
Carrying
Amounts
Liabilities
$000
Change in Fair
Value Used
to Measure
Ineffectiveness
$000
Cash Flow
Hedge
Reserve
$000
Interest rate risk
Hedged item: NZD floating rate exposure on
borrowings(186,000)2.66%n/an/a5,488n/a
Hedging instrument: Interest rate swaps(167,000)3.62%72(5,530)(5,458)5,458
2016
Cash flow hedges
Nominal
$000
Weighted
Average
Rate
Carrying
Amounts
Assets
$000
Carrying
Amounts
Liabilities
$000
Change in Fair
Value Used
to Measure
Ineffectiveness
$000
Cash Flow
Hedge
Reserve
$000
Interest rate risk
Hedged item: NZD floating rate exposure on
borrowings(176,400)2.82%n/an/a9,561n/a
Hedging instrument: Interest rate swaps(168,000)3.66%–(9,266)(9,266)9,266
The interest rate swaps include $34.0m of forward starting swaps (2016: $36.0m).
143
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
NOTE 19 – FINANCIAL INSTRUMENTS (continued)
(c) Market risk (continued)
Foreign currency risk
The Group is exposed to foreign currency risk as a result of sales and investments denominated in foreign currencies, as well as the foreign
currency exposure arising from USD denominated fuel and freight purchases. The Group has entered into forward exchange contracts and
foreign currency options (hedging instruments) to hedge the variability in cash flows arising from foreign exchange rate movements in
relation to foreign currency sales (hedged item) up to two years forward. Minimum and maximum hedging levels for the next two years
expected sales volumes are stipulated by its Board approved Treasury Policy. In the current period, the Group designated the highly
probable forecast transactions and the forward exchange contracts and options into cash flow hedge relationships.
Forward exchange contracts and foreign currency options are recognised within Derivative Financial Instruments on the statement of
financial position as at balance date. The fair value gains and losses on these derivatives were recognised in OCI and transferred to profit
or loss when the underlying transactions affected profit or loss within revenue and cost of sales in the income statement. The amounts
designated as the hedged item in qualifying cash flow hedges mirror the amounts designated as hedging instruments as set out below,
therefore the Group has established a 1:1 hedge ratio.
Hedge ineffectiveness is only recognised for accounting purposes if it results in movements in the value of the hedge instrument in excess
of those on the hedged item. The source of any ineffectiveness would be largely due to credit risk adjustments on the derivatives and
timing of cash flows. No ineffectiveness arose on cash flow hedges of foreign currency transactions during the year (2016: None).
As at 30 September 2017, the Group’s exposure to foreign currency risk for the next 12 months can be summarised as follows:
(figures are NZD)
2017
USD
$000
AUD
$000
JPY
$000
EUR
$000
GBP
$000
Cash 707 35342 369 15
Trade receivables29,8803,5311,544385451
Trade payables(2,411)(388) – (461) –
Net statement of financial position exposure before hedging activity28,1763,4961,586293466
Forecast net receipts164,93215,09615,6965,2931,389
Net cash flow exposure before hedging activity193,10818,59217,2825,5861,855
Forward exchange contracts and options(134,846)(16,874)(11,933) – –
Net un-hedged exposure58,2621,7185,3495,5861,855
(figures are NZD)
2016
USD
$000
AUD
$000
JPY
$000
EUR
$000
GBP
$000
Cash 38 21346– 7
Trade receivables 36,190 3,6671,9113991
Trade payables(1,441)(355) – – –
Net statement of financial position exposure before hedging activity34,7873,5251,9573998
Forecast net receipts189,56413,12511,0283,7301,935
Net cash flow exposure before hedging activity224,35116,65012,9853,7692,033
Forward exchange contracts and options(123,882)(15,758)(12,283) – –
Net un-hedged exposure100,4698927023,7692,033
144
Sanford Annual Report 2017
noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
NOTE 19 – FINANCIAL INSTRUMENTS (continued)
(c) Market risk (continued)
Foreign currency risk (continued)
Effects of hedge accounting on the financial position and performance
The tables below demonstrate the impact of hedged items and the hedging instruments designated in hedging relationships.
2017
Cash flow hedges*
Nominal
$000
Carrying
Amounts
Assets
$000
Carrying
Amounts
Liabilities
$000
Change in Fair
Value Used
to Measure
Ineffectiveness
$000
Cash Flow
Hedge
Reserve
$000
Foreign currency risk
Hedged item: Forecast transactions denominated in
foreign currencies204,803n/an/a(12,738)n/a
Hedging instruments: Forward exchange contracts(131,993)7,087(108)6,979(6,979)
Hedging instruments: Foreign currency options (72,810)5,743–5,743(5,743)
2016
Cash flow hedges*
Nominal
$000
Carrying
Amounts
Assets
$000
Carrying
Amounts
Liabilities
$000
Change in Fair
Value Used
to Measure
Ineffectiveness
$000
Cash Flow
Hedge
Reserve
$000
Foreign currency risk
Hedged item: Forecast transactions denominated in
foreign currencies210,998n/an/a(16,234)n/a
Hedging instruments: Forward exchange contracts(103,218)8,785(736)8,049(8,049)
Hedging instruments: Foreign currency options(107,780)8,042(43)7,999(7,999)
* Includes all hedges of forecast future transactions
Fuel price risk
The Group is exposed to fuel price risk through its purchases of fuel for its fishing fleet.
Fuel price risk is the risk of loss to the Group due to adverse fluctuations in fuel prices in USD terms. The currency exposure arising from
USD fuel costs is managed separately (see foreign currency risk management). The Group’s fuel price risk has the following contractually
specified components: gas oil and light fuel oil prices, and shipping costs.
The Group enters into gas oil and light fuel oil commodity swaps to reduce the variability in those components of fuel costs, which historically
have comprised approximately 85% (2016: 85%) of total fuel cost. Minimum and maximum hedging levels for the next two years expected
purchase volumes are stipulated by its Board approved Treasury Policy. A 1:1 hedge ratio is used, reflecting the match of the hedging
instruments and the component exposures in the fuel costs.
Fuel swaps are recognised within Derivative Financial Instruments on the statement of financial position as at balance date and were
designated as the hedging instruments in qualifying cash flow hedges. The fair value gains and losses on these derivatives were recognised
in OCI and transferred from OCI and included in the initial carrying amount of inventory. When the fuel is consumed it is expensed to
profit or loss within cost of sales in the income statement.
Hedge ineffectiveness is only expected to result from credit valuation adjustments and any shortfalls in the amounts of the expected
exposures. Hedge ineffectiveness is only recognised for accounting purposes if it results in movements in the value of the hedge
instrument in excess of those on the hedged item. Any ineffectiveness is recognised within cost of sales in the income statement.
All fuel derivative contracts mature within 22 months of balance date (2016: 24 months).
145
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FOR THE YEAR ENDED 30 SEPTEMBER 2017
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OF AND
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3
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& MATERIAL ISSUES
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& FINANCIALS
NOTE 19 – FINANCIAL INSTRUMENTS (continued)
(c) Market risk (continued)
Reconciliation of changes in hedge reserves
The movement in the fair value of hedging instruments which are deferred to the cash flow hedge reserve during the year are set out below,
together with changes in the cost of hedging reserve, and the tax thereon:
2017
Hedging Instruments used to Hedge
Recognised in Statement of Changes in Equity Hedge Reserves
Interest Rate
Risk
$000
Currency
Risk
$000
Fuel Price
Risk
$000
Total
$000
Balance at the beginning of the year(6,671)13,483(473)6,339
Changes in cash flow hedge reserve3,808(3,326)1,7722,254
Changes in cost of hedging reserve–(385)–(385)
Deferred tax on change in reserves(1,066)1,039(496)(523)
Balance at the end of the year(3,929)10,8118037,685
2016
Hedging Instruments used to Hedge
Recognised in Statement of Changes in Equity Hedge Reserves
Interest Rate
Risk
$000
Currency
Risk
$000
Fuel Price
Risk
$000
Total
$000
Balance at the beginning of the year(3,548)(20,464)(1,843)(25,855)
Changes in cash flow hedge reserve(4,338)43,5181,90341,083
Changes in cost of hedging reserve–3,631–3,631
Deferred tax on change in reserves1,215(13,202)(533)(12,520)
Balance at the end of the year(6,671)13,483(473)6,339
146
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FOR THE YEAR ENDED 30 SEPTEMBER 2017
NOTE 19 – FINANCIAL INSTRUMENTS (continued)
(c) Market risk (continued)
Sensitivity to changes in market prices or rates
All derivatives are measured at fair value and changes in market inputs used to determine these fair values would have an impact on the
Group’s financial statements. For each type of market risk to which the Group is exposed at the end of the reporting period, the below
sensitivity analysis shows the impacts of reasonably plausible changes in the relevant market variables on the profit or loss and OCI for
the period. The effects of a variation in a particular assumption is calculated independently of any changes in another assumption. As this
sensitivity analysis is only on financial instruments (derivative and non-derivative), these ignore the offsetting impacts of future forecast
transactions designated as hedged items to the derivatives held.
20172016
$000
Increase
$000
Decrease
$000
Increase
$000
Decrease
Impact on other comprehensive income (net of tax):
Sensitivity to changes in interest rates
100 bp change in interest ratesIncrease (decrease) in OCI3,850(4,057)3,895(4,170)
Sensitivity to changes in foreign exchange rates
10% change in foreign exchange ratesIncrease (decrease) in OCI13,003(14,851)13,116(14,736)
Sensitivity to changes in fuel prices
10% change in gas oil / light fuel oil prices Increase (decrease) in OCI623(1,225)887(888)
Impact on profit after taxation:
Sensitivity to changes in interest rates
100 bp change in interest rates(Decrease) increase in profit
after tax(71)71(103)103
Sensitivity to changes in foreign exchange rates
10% change in foreign exchange rates(Decrease) increase in profit
after tax(282)459(736)980
(d) Capital management
The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development
of the business. The impact of capital structure on shareholders’ return is also recognised and the Group acknowledges the need to maintain a
balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by a sound capital position.
The allocation of capital between its specific business operations and activities is, to a large extent, driven by optimisation of the return achieved on
the capital allocated. The process of allocating capital to specific business segment operations and activities is undertaken independently of those
responsible for the operation.
The Group’s policies in respect of capital management and allocation are reviewed regularly by the Board of Directors.
There have been no material changes in the Group’s management of capital during the period.
(e) Master netting arrangements
Sanford enters into derivative transactions under the International Swaps and Derivatives Association (ISDA) master agreements. The ISDA
agreements do not meet the criteria for offsetting in the statement of financial position. This is because the Group does not currently have any
legally enforceable right to offset recognised amounts. Under the ISDA agreements the right to offset is enforceable only on the occurrence of
future events such as a default on the bank loans or other credit events. The potential net impact of this offsetting is shown below. Sanford does
not hold and is not required to post collateral against its derivative positions.
Net derivatives after applying rights of offset under ISDA agreements
2017
$000
2016
$000
Deriviative assets 18,266 20,740
Deriviative liabilities(6,127)(11,463)
Net amount12,1399,277
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REPORTING OUTCOMES
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& FINANCIALS
NOTE 20 – OPERATING LEASES
Payments made under operating leases, where the lessors effectively retain the risks and benefits of ownership, are recognised in the
income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the
total lease expense, over the term of the lease.
Non-cancellable operating lease rentals are payable as follows:
2017
$000
2016
$000
Less than one year5,3515,053
Between one and five years14,84315,521
More than five years24,81827,036
45,01247,610
Lease of premises
The Group leases land and buildings under operating leases. The leases typically run for a period of 25 years with an option to renew the lease after
that date. Lease payments are increased periodically to reflect market rentals.
Lease of annual catch entitlement (ACE)
The Group acts as a lessor and lessee in respect of leasing certain ACE to and from other ACE holders in the industry.
2017
$000
2016
$000
Lessor of ACE10,3869,328
Lessee of ACE9,8648,261
The leasing arrangements are never for more than one year and vary each year in respect of species and amount.
NOTE 21 – CONTINGENT LIABILITIES
2017
$000
2016
$000
Guarantees 779 566
The Group considers guarantees to be insurance arrangements and accounts for them as such. In this respect the Group treats the guarantee
contracts as contingent liabilities until such times as it becomes probable that the Group will be required to make payments under the guarantees.
NOTE 22 – GROUP ENTITIES
Basis of consolidation
Business combinations
The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration
transferred in the acquisition is generally measured at fair value (excluding transaction costs), as are the identifiable net assets acquired.
Any goodwill that arises is tested annually for impairment.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of
subsidiaries are included in the financial statements from the date on which control commences until the date on which control ceases.
Intra-group balances and transactions, and any unrealised income and expense arising from intra-group transactions, are eliminated on
consolidation.
Joint arrangements
A joint arrangement is an arrangement where two or more parties have joint control. The Group classifies its joint arrangements as either
joint operations or joint ventures depending on the legal, contractual or other rights and obligations. Where the interest in the joint
arrangement is in the net residual of the business, the arrangement is a joint venture. Joint ventures are accounted for using the equity
method; which is detailed in note 13. Where the Group has rights to the assets, and obligations for liabilities of the joint arrangement, this is
a joint operation. The Group recognises its share of assets, liabilities, revenues and expenses of each joint operation.
148
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noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
NOTE 22 – GROUP ENTITIES (continued)
Basis of consolidation (continued)
The Group comprises the Company and the following principal entities:
Name
2017
Interest Held
(%)
2016
Interest Held
(%)Balance DatePrincipal Activity
Subsidiaries:
New Zealand
Auckland Fish Market Limited10010030 SeptemberAuction
Sanford Fish Market Limited10010030 SeptemberRetail
Sanford Investments Limited10010030 SeptemberInvestment company
Sanford LTI Limited10010030 September Holding company
Shellfish Production & Technology NZ Limited10010030 SeptemberResearch company
BreedCo Limited808030 SeptemberResearch company
Auckland Fishing Port Limited676731 MarchWharf company
Australia
Sanford Australia Pty Limited10010030 SeptemberAuction
Sanford Seafoods (Australia) Pty Limted10010030 SeptemberHolding company
Primestone Nominees Pty Limited757530 SeptemberSeafood wholesaler
Joint Operation:
New Zealand
North Island Mussels Limited505030 SeptemberMussel farming and seafood processing
Joint Ventures and Associates:
New Zealand
Perna Contracting Limited505031 MarchMussel harvesting
San Won Limited505030 September Cold storage
New Zealand Japan Tuna Company Limited46.7446.7430 September Fish catching and processing
Live Lobster Southland (1995) Limited502531 MarchSeafood processing
Trident Systems General Partner Limited42.3542.3530 September Research company
Precision Seafood Harvesting General Partner Limited33.3333.3330 September Research company
China
Weihai Dong Won Food Company Limited505031 DecemberSeafood processing
149
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FOR THE YEAR ENDED 30 SEPTEMBER 2017
1
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OF AND
2
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3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
NOTE 23 – RELATED PARTY TRANSACTIONS
(a) Basis of transactions
Related parties of the Group include the joint ventures, associates and joint operation disclosed in note 22.
Transactions with related parties have been entered into in the ordinary course of business and undertaken on normal commercial terms.
(b) Material transactions and balances with related parties
Transaction Value
Joint Ventures and Associates
Transaction Value
Joint Operation
2017
$000
2016
$000
2017
$000
2016
$000
Income (Expenses)
Management fees211175 – –
Sales – – 2,5823,479
Interest received – – 595 608
Dividends received1,206854 – –
Processing and harvesting services(3,003)(3,293) – –
Freight(62)(77) – –
Purchases – – (25,452)(27,498)
(1,648)(2,341)(22,275)(23,410)
Amounts Owing from
Related Parties
2017
$000
2016
$000
Associates363424
Joint Operation14,04414,274
14,40714,698
In respect of the joint operations the transaction values and amounts owing are eliminated on consolidation and are therefore for information purposes.
Except for North Island Mussels Limited (NIML) no interest is charged on balances between New Zealand related parties. Interest is charged at
market rates on other balances. All related party balances are repayable on demand. The parties have agreed not to call upon the loans within 12
months from balance date.
NOTE 24 – KEY MANAGEMENT PERSONNEL COMPENSATION
Key management personnel compensation comprised:
2017
$000
2016
$000
Salary and short-term employee benefits 7,166 6,324
Directors’ fees 661 647
7,827 6,971
Key management personnel is defined as the executive and their direct reports.
NOTE 25 – SUBSEQUENT EVENTS
No subsequent events have been identified.
150
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noteS to the finanCial StatementS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
© 2017 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
Combined Independent Auditor’s and
Assurance Report
General
Our assurance procedures consisted of the audit of the Consolidated Financial Statements of Sanford Limited
and limited assurance procedures on selected non-financial information in Sanford Limited’s Annual Report.
Our scope can be summarised as follows:
Independent Auditor’s Report
To the shareholders of Sanford Limited.
Report on the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated
financial statements of Sanford Limited (‘the
company’) and its subsidiaries (‘the group’) on
pages 115 to 150:
i. present fairly in all material respects the Group’s
financial position as at 30 September 2017 and
its financial performance and cash flows for the
year ended on that date; and
ii. comply with New Zealand Equivalents to
International Financial Reporting Standards and
International Financial Reporting Standards.
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of financial position
as at 30 September 2017;
— the consolidated statements of comprehensive
income, changes in equity and cash flows for
the year then ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Other Information in Sanford Limited's annual reporting
Consider consistency with Financial Report
No assurance
Sanford Limited's Financial Report
Audit Scope
Reasonable assurance
Selected Non-Financial Information
Assurance Scope
Limited assurance
- "Our material issues" (pages 16-18)
- "The six performance outcomes" (pages 22-
103)
- "Key performance indicators table" (pages
158-160)
© 2017 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
Combined Independent Auditor’s and
Assurance Report
General
Our assurance procedures consisted of the audit of the Consolidated Financial Statements of Sanford Limited
and limited assurance procedures on selected non-financial information in Sanford Limited’s Annual Report.
Our scope can be summarised as follows:
Independent Auditor’s Report
To the shareholders of Sanford Limited.
Report on the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated
financial statements of Sanford Limited (‘the
company’) and its subsidiaries (‘the group’) on
pages 115 to 150:
i. present fairly in all material respects the Group’s
financial position as at 30 September 2017 and
its financial performance and cash flows for the
year ended on that date; and
ii. comply with New Zealand Equivalents to
International Financial Reporting Standards and
International Financial Reporting Standards.
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of financial position
as at 30 September 2017;
— the consolidated statements of comprehensive
income, changes in equity and cash flows for
the year then ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Other Information in Sanford Limited's annual reporting
Consider consistency with Financial Report
No assurance
Sanford Limited's Financial Report
Audit Scope
Reasonable assurance
Selected Non-Financial Information
Assurance Scope
Limited assurance
- "Our material issues" (pages 16-18)
- "The six performance outcomes" (pages 22-
103)
- "Key performance indicators table" (pages
158-160)
© 2017 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
Combined Independent Auditor’s and
Assurance Report
General
Our assurance procedures consisted of the audit of the Consolidated Financial Statements of Sanford Limited
and limited assurance procedures on selected non-financial information in Sanford Limited’s Annual Report.
Our scope can be summarised as follows:
Independent Auditor’s Report
To the shareholders of Sanford Limited.
Report on the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated
financial statements of Sanford Limited (‘the
company’) and its subsidiaries (‘the group’) on
pages 115 to 150:
i. present fairly in all material respects the Group’s
financial position as at 30 September 2017 and
its financial performance and cash flows for the
year ended on that date; and
ii. comply with New Zealand Equivalents to
International Financial Reporting Standards and
International Financial Reporting Standards.
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of financial position
as at 30 September 2017;
— the consolidated statements of comprehensive
income, changes in equity and cash flows for
the year then ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Other Information in Sanford Limited's annual reporting
Consider consistency with Financial Report
No assurance
Sanford Limited's Financial Report
Audit Scope
Reasonable assurance
Selected Non-Financial Information
Assurance Scope
Limited assurance
- "Our material issues" (pages 16-18)
- "The six performance outcomes" (pages 22-
103)
- "Key performance indicators table" (pages
158-160)
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2
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the group in accordance with Professional and Ethical Standard 1 (Revised) Code of
Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board and the
International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (‘IESBA
Code’), and we have fulfilled our other ethical responsibilities in accordance with these requirements and the
IESBA Code and NZX Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the
consolidated financial statements section of our report.
Our firm has also provided other services to the group in relation to sustainability assurance and accounting
advisory services. Subject to certain restrictions, partners and employees of our firm may also deal with the
group on normal terms within the ordinary course of trading activities of the business of the group. These
matters have not impaired our independence as auditor of the group. The firm has no other relationship with, or
interest in, the group.
Materiality
The scope of our audit was influenced by our application of materiality. Materiality helped us to determine the
nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually
and on the consolidated financial statements as a whole. The materiality for the consolidated financial
statements as a whole was set at $2.6 million determined with reference to a benchmark of group profit before
tax from continuing operations. We chose the benchmark because, in our view, this is the key measure of the
group’s performance.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the consolidated financial statements in the current period. We summarise below those matters and our key
audit procedures to address those matters in order that the shareholders as a body may better understand the
process by which we arrived at our audit opinion. Our procedures were undertaken in the context of and solely
for the purpose of our statutory audit opinion on the consolidated financial statements as a whole and we do not
express discrete opinions on separate elements of the consolidated financial statements.
The key audit matter How the matter was addressed in our audit
Valuation of quota and marine farm licenses (carrying value $501.66m)
Refer to Note 14 to the Financial
Report.
The Group holds quota and marine
farm licenses in New Zealand and
Australia, recognised as indefinite
life intangible assets, across three
cash generating units. The
accounting standards require those
assets with an indefinite useful life
to be tested for impairment annually.
Our audit procedures to assess the carrying value of the intangible
assets included understanding and challenging the key assumptions
and estimates used to determine the carrying value, specifically those
relating to discount rates, growth assumptions, and terminal growth
rates, wherever possible referring to external data.
We compared the cash flow forecasts to Board approved business
plans, assessed management’s accuracy in budgeting, and compared
previous forecasts to actual results achieved.
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The key audit matter How the matter was addressed in our audit
Impairment of these assets is
considered to be a key audit matter
due to the uncertainty inherent in the
growth and discount rates used in
the cash flow forecasts that support
the carrying value.
In relation to the Marine Farm
Licenses we also note the
uncertainty surrounding whether
these licenses will be renewed upon
expiry in 2024. This required us to
assess the continual recognition of
the licenses as indefinite life assets.
Additionally, we also applied stress-testing to the Group’s assumptions
used in the cash flow forecasts, by analysing the impact on results from
using reduced growth rates, discount rates and cash flow forecasts.
In relation to the 2024 expiration of the marine farm licenses, we
performed our own independent research into the status of the marine
farm license renewal process, including the costs expected to be
incurred upon renewal.
Finally, we noted the Group’s market capitalisation exceeds the Group’s
net assets as at 30 September 2017.
Use of this independent auditor’s report
This report is made solely to the shareholders as a body. Our audit work has been undertaken so that we might
state to the shareholders those matters we are required to state to them in the independent auditor’s report and
for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the shareholders as a body for our audit work, this report, or any of the opinions we have
formed.
Responsibilities of the Directors for the consolidated financial
statements
The Directors, on behalf of the group, are responsible for:
— the preparation and fair presentation of the consolidated financial statements in accordance with generally
accepted accounting practice in New Zealand (being New Zealand Equivalents to International Financial
Reporting Standards) and International Financial Reporting Standards;
— implementing necessary internal control to enable the preparation of a consolidated set of financial
statements that is fairly presented and free from material misstatement, whether due to fraud or error; and
— assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless they either intend to liquidate or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial
statements
Our objective is:
— to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error; and
— to issue an independent auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs (NZ) will always detect a material misstatement when it exists.
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4
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
A further description of our responsibilities for the audit of these consolidated financial statements is located at
the External Reporting Board (XRB) website at:
https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page1.aspx
This description forms part of our independent auditor’s report.
Limited assurance report on Selected Non-financial Information included in
the annual report
To the Directors of Sanford Limited
Conclusion
Based on the procedures performed, as described,
nothing has come to our attention that causes us to
believe that the “Selected Non-Financial
Information” has not been prepared, in all material
respects, in accordance with the GRI Standards.
The Selected Non-Financial Information on which
we have concluded comprises:
- Our material issues (pages 16-18)
- The six performance outcomes (pages 22-103):
- Building a sustainable seafood business
- Enabling zero harm and great prospects for
our people
- Leading the way to healthy food
- Ensuring healthy oceans
- Supporting enduring communities and
partnerships
- Protecting and enhancing the environment
- Key performance indicators table (pages 158-160)
Basis for conclusion
We have performed an engagement to provide limited assurance in relation to whether anything has come to
our attention to indicate the Selected Non-Financial Information has not been prepared in all material respects in
accordance with the GRI Standards.
We conducted our limited assurance engagement in accordance with International Standard on Assurance
Engagements (New Zealand) (NZ) 3000 (Revised) Assurance Engagements other than audits or reviews of
historical financial information (‘ISAE (NZ) 3000 (Revised)’) and Standard on Assurance Engagements 3100
(Revised) Assurance Engagements on Compliance (‘SAE 3100 (Revised)’). We believe that the evidence we
have obtained is sufficient and appropriate to provide a basis for our conclusion.
Our procedures included:
— Enquiries of Sanford personnel to understand the process for deriving the “Selected Non-Financial
Information”;
— Analytical review and other testing to assess the reasonableness of the information presented;
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— Checking whether the appropriate indicators have been reported in accordance with the GRI Standards in
accordance with core level; and
— Overall sense check of the Report against our findings and understanding of Sanford.
A limited assurance engagement is substantially less in scope than a reasonable assurance engagement or an
audit conducted in accordance with New Zealand Auditing and Assurance Standards and consequently does not
enable us to obtain assurance that we would become aware of all significant matters that might be identified in
an audit or a reasonable assurance engagement. Accordingly, we do not express a reasonable assurance or
audit opinion.
Because of the inherent limitations of an assurance engagement, it is possible that fraud, error or non-
compliance may occur and not be detected. As the procedures performed for this engagement are not
performed continuously throughout the year and the procedures are undertaken on a test and specific
procedures basis, our assurance engagement cannot be relied on to detect all instances where Sanford may not
have complied with the GRI Standards. The conclusion expressed in this report has been formed on the above
basis.
The extent of evidence gathering procedures performed in a limited assurance engagement is less than that for
a reasonable assurance engagement, and therefore a lower level of assurance is provided.
We have complied with the independence and other ethical requirements of Professional and Ethical Standard 1
(Revised) issued by the New Zealand Auditing and Assurance Standards Board, which is founded on
fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and
professional behaviour.
Use of this limited assurance report
The firm applies Professional and Ethical Standard 3 (Amended) and accordingly maintains a comprehensive
system of quality control including documented policies and procedures regarding compliance with ethical
requirements, professional standards and applicable legal and regulatory requirements.
Our limited assurance report is made solely to the Directors of Sanford in accordance with the terms of our
engagement. Our work has been undertaken so that we might state to Sanford those matters we have been
engaged to state in this assurance report and for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the Directors of Sanford for our work, for this
assurance report, or for the conclusions we have reached.
Responsibilities of management for the selected non-financial
information
Management, on behalf of the company, are responsible for:
— for the preparation and presentation of the “Selected Non-Financial Information” in accordance with the
criteria set out in the GRI Standards, for each of the principles of materiality, stakeholder inclusiveness,
sustainability context and completeness; and
— for determining Sanford’s objectives in respect of sustainability reporting and for establishing and
maintaining appropriate performance management and internal control systems from which the information
is derived.
155
CombineD inDepenDent auDitor’S anD aSSuranCe report
1
THE POWER
OF AND
2
SANFORD & OUR OPERATIONS
3
REPORTING OUTCOMES
& MATERIAL ISSUES
4
GOVERNANCE
& FINANCIALS
6
Auditor’s responsibilities for the assurance of the selected non-
financial information
Our responsibility is to carry out a limited assurance engagement and to express a conclusion in relation to
whether anything has come to our attention to indicate the Selected Non-Financial Information has not been
prepared in all material respects in accordance with the GRI Standards.
Other Information
The Directors, on behalf of the group, are responsible for the Other Information included in the entity’s Annual
Report (specifically the areas of Now and beyond (page 1), About this report (pages 2-3), Introduction (pages 4-
5), Our global operations (pages 6-7), How we create value (pages 8-9), Chairman and CEO review (pages 10-13),
Our year in numbers (page 14-15), Reporting what matters (page 19-21), Corporate governance (pages 104-109),
Statutory information (pages 110-111), Non-GAAP profit measures (page 112), Five year financial review (page
114) and Appendices (pages 161-167)). We do not express any form of assurance conclusion thereon within the
Independent Auditors (in respect of the consolidated financial statements) and Assurance Report (in respect of
the Selected Non-financial Information) in respect of the Other Information.
In connection with our audit of the consolidated financial statements and our limited assurance engagement in
respect of the Selected Non-Financial Information, our responsibility is to read the Other Information and, in doing
so, consider whether the Other Information is materially inconsistent with the consolidated financial statements
or our knowledge obtained in the audit or otherwise appears materially misstated. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
The partners on the engagement resulting in this Combined Independent Auditor’s and Assurance Report are
Malcolm Downes – Audit Partner
David Sutton – Assurance Partner
For and on behalf of
KPMG
Auckland
15 November 2017
156Sanford annual report 2017
CombineD inDepenDent auDitor’S anD aSSuranCe report
CONTENTS
KPI
TABLE
APPENDIX AAPPENDIX BAPPENDIX C
ALIGNING MATERIAL
ISSUES WITH BUSINESS RISK
INDUSTRY MEMBERSHIPS
AND STAKEHOLDERS
158161162
KEY INITIATIVES
CONTRIBUTING
TO THE UN SUSTAINABLE
DEVELOPMENT GOALS: 2017
163
GRI CONTENT
INDEX
165
APPENDIX DAPPENDIX E
157
appENdiCES
5
APPENDICES
GRI Standard RefKPI MetricUnits2017201620152014
OUTCOME 1 – BUILDING A SUSTAINABLE SEAFOOD BUSINESS
ECONOMIC PERFORMANCE
201-1Revenue$m477.9463.5450.3460.5
201-1Profit Attributable to Shareholders$m37.534.713.822.4
102-7Total Assets$m820.0797.8745.3777.3
102-7Total Equity$m575.8558.1513.1545.8
201-1Return on Average Equity %6.66.52.64.1
201-1Dividend per Sharecents23.023.023.023.0
201-1Earnings per Sharecents40.137.114.824.0
201-1Wages and Salaries
[i]
$m114105102101
201-1Payments to New Zealand Income Tax$m13.412.59.23.0
204-1Payments to Domestic Suppliers$m283246230238
OPERATIONAL CAPABILITY AND CAPACITY
102-7Number of Vessels
[ii]
#49504948
102-7Number of Aquaculture Farms#211210210211
103-2Number of Continuous Improvement Projects
[iii]
#9077119160
N/ANumber of External Compliance Audits
[iv]
#91 76 8783
GLOBAL PRESENCE
102-7Total Sales Domestic
[v]
%35.433.7 27.427.7
102-7Product Sales Domestic
[v]
%32.028.9 19.717.3
N/AUSD Exchange Rate ComparisonNZD/USD0.710.690.730.84
102-6Product Exported to Global Customers% revenue62646984
102-7Total Sales Export
[v]
%64.666.3 72.672.3
102-7Product Sales Export
[v]
%68.071.7 80.382.7
102-7Number of Containers Shipped
[vi]
TEU3,498 3,3244,5704,697
OUTCOME 2 – ENABLING ZERO HARM AND GREAT PROSPECTS FOR OUR PEOPLE
102-7Total Workforce (as at 30 Sept 2017)#1,717 1,548 1,4741,639
102-8Independent Sharefishers (as at 30 Sept 2017)#583 474 503427
102-13Union Membership%1920 22 20
404-1Training Credits Achieved by Females
[vii]
#2,246 2,410 2,694940
404-1Training Credits Achieved by Males
[vii]
#5,238 3,944 3,6392,843
401-1Average Length of Serviceyears8.107.908.556.98
401-1Involuntary Turnover%7.0 6.6 4.02.0
401-1Voluntary Turnover%16.0 18.0 12.014.0
AGE OF WORKFORCE
405-1<20 (annual quarterly average)#6468 68 70
405-120 to 29 (annual quarterly average)#361340 283 312
405-130 to 39 (annual quarterly average)#274278 269 322
405-140 to 49 (annual quarterly average)#353345 356 408
405-150 to 59 (annual quarterly average)#328318 285 316
405-160+ (annual quarterly average)#147146 139 147
N/ADOB Not Stated (annual quarterly average)#5163 74 56
405-1Average Age of Employees on Landyears4342 43 42
405-1Average Age of Employees at Seayears3433 32 33
AGE OF NEW HIRES (LAND ONLY)
401-1<20 (annual quarterly average)%137911
401-120 to 29 (annual quarterly average)%36342832
401-130 to 39 (annual quarterly average)%12193421
401-140 to 49 (annual quarterly average)%22212022
158Sanford Annual Report 2017
appENdix a – SaNfOrd kEy pErfOrmaNCE iNdiCaTOrS
YEAR ENDING 30 SEPTEMBER 2017
GRI Standard RefKPI MetricUnits2017201620152014
401-150 to 59 (annual quarterly average)%1317911
401-160+ (annual quarterly average)%4203
WOMEN IN THE WORKFORCE
405-1Directors%17171714
405-1Executive (annual quarterly average)%13162525
405-1Senior Leadership Team (annual quarterly average)
[viii]
%26 2722Not reported
ETHNICITY %
405-1New Zealand European (annual quarterly average)%4752 52 47
405-1Pacific Island Peoples (annual quarterly average)%1919 18 17
405-1Ma
-
ori (annual quarterly average)%1414 14 14
405-1Asian (annual quarterly average)%33 3 11
405-1European (annual quarterly average)%22 2 2
405-1Other (annual quarterly average)%57 9 7
405-1Not stated (annual quarterly average)%103 2 2
EMPLOYEE BENEFITS
401-2Health Insurance Planmembers178 172 182176
401-2– Health Insurance Plan Membership%16 Not reportedNot reportedNot reported
201-3Employees in Super Scheme Onlymembers115125150150
201-3– Super Scheme Membership (excludes Sharefishers)%10.425.3 27.320.2
201-3Employees in Kiwi Saver Onlymembers586456368475
201-3– Kiwi Saver Membership (excludes Sharefishers)%52.942.5 50.048.4
201-3Employees in Both Schemesmembers14414711183
HEALTH AND SAFETY
403-2Absenteeism Rate%54 4 5
NZ/ACCNumber of Near Misses Reported#324289242122
403-2Number of Reported Injuries#1,0321,300944853
NZ/ACCNumber of Notifiable Events
[ix]
#106126
403-2Number of Lost Time Injuries
[x]
#55 534256
403-2Lost Time Injury Frequency Rate (LTIFR)
[x]
#/mhrs14.6714.6910.3318.09
NZ/ACCNumber of Accepted ACC Claims
[xi]
#134141188154
NZ/ACC– Number of Accepted ACC Claims per Employee#0.12 0.14 0.200.10
NZ/ACC– Average Cost per Claim (including outstanding
estimates)
$1,525 3,439 2,761 1,418
403-2Total Number of Days Off Work
[xii]
#386846402418
419-1Safety-related Prosecutions#0 1 0 0
OUTCOME 3 – LEADING THE WAY TO HEALTHY FOOD
416-1Number of Food Safety Recalls#0000
416-1Working Days to Action and Close Complaints
(12 month average)
days9.059.7717.00Not reported
OUTCOME 4 – ENSURING HEALTHY OCEANS
304-2NZ Quota Owned Based on ACE Equivalent%23.0022.9322.9422.82
304-3Wildcatch sourced from MSC designated fisheries %463741Not reported
102-7Total Wildcatch (GWT)
[xiii][xiv]
tonnes91,93683,495
[xv]
95,975 94,857
102-7– Greenweight wild caught harvested - Deepwater Fleet
[xiv]
tonnes63,501 53,92856,34652,953
102-7– Greenweight wild caught harvested - Inshore Fleet
[xiv]
tonnes28,435 29,56732,96036,446
102-7– Greenweight wild caught harvested - International Fleet
[xiv]
tonnes0 06,5705,385
102-7Greenweight King Salmon Harvested
[xiv]
tonnes3,657 3,8433,8593,624
102-7Greenweight Mussels Harvested
[xiv]
tonnes31,631 30,95729,62137,504
304-3Marine Stewardship Council Deepwater Species Certified
in New Zealand
[xvi]
# 6555
304-2Seabird Mortality Rate
[xvii]
%75775246
159
appENdix a – SaNfOrd kEy pErfOrmaNCE iNdiCaTOrS
5
APPENDICES
YEAR ENDING 30 SEPTEMBER 2017
GRI Standard RefKPI MetricUnits2017201620152014
304-2– Total Number of Seabirds Caught Dead#286372242Not reported
304-2Marine Mammal Mortality Rate
[xvii]
%89968387
304-2– Total Number of Marine Mammals Caught Dead#477360Not reported
OUTCOME 5 – SUPPORTING ENDURING COMMUNITIES AND PARTNERSHIPS
201-1Community and Charitable Investments - Sponsorships
and Donations
$000s182 307 383172
OUTCOME 6 – PROTECTING AND ENHANCING THE ENVIRONMENT
306-3Number of Notifiable Spills
[xviii]
#2Not reportedNot reportedNot reported
306-3– Total Volume of Notifiable Spillslitres152Not reportedNot reportedNot reported
302-1Total Liquid Fossil Fuel Consumed litres22,590,71719,057,55320,786,89724,062,218
302-1– Total Vessel Liquid Fossil Fuel Consumed
[xix]
litres21,657,270Not reportedNot reportedNot reported
302-3– Wildcatch Vessel Fuel Efficiency
[xx]
L/GWkg0.3440.3540.1660.175
302-3– Aquaculture Vessel Fuel Efficiency
[xxi]
L/GWkg0.054Not reportedNot reportedNot reported
302-1Electricity ConsumedkWh25,408,46025,164,39427,755,91030,601,113
302-3– Electricity Efficiency
[xxii]
kWh/GWkg0.3060.3010.5680.595
302-1Coal Consumedkg381,100484,060649,220608,820
302-1Lube Oil Consumedlitres158,760145,10992,554128,517
302-1– Biodegradable Lube Oil Consumed litres12,508Not reportedNot reportedNot reported
302-1Natural Gas ConsumedkWh2,868,3302,861,1341,806,3461,905,188
N/ATotal Greenhouse Gas Emissions (CO2-e)
[xxiii]
tonnes74,95171,81271,56388,410
305-1– Direct Emissions (CO2-e) – Scope 1tonnes66,12561,41365,92782,079
305-2– Purchased Electricity (CO2-e) – Scope 2tonnes3,0243,4733,8404,233
305-3– Indirect Emissions (CO2-e) – Scope 3
[xxiv]
tonnes5,8026,9271,7962,097
[i] Wages and Salaries (including Super) data includes
all subsidiaries at 100% (companies we own more
than 50% shareholding in), 50% of NIML, excludes
Perna, San Won, WDWF, which are associates and
not consolidated into our Group accounts.
[ii] Excludes barges, includes MTOP certified vessels
and negotiable non-operational registered vessels.
[iii] 2017 captures key continuous improvement (2020)
projects defined in business plans and in progress;
2014-2016 included all projects completed,
irrespective of size and scale.
[iv] Compliance audits include external food safety,
quality, health and safety, environmental and
maritime; this does not include internal audits
carried out by third parties on behalf of Sanford.
[v] Sales have been restated based on known
destination of customers (previously reported
under predicted destination of product).
[vi] Twenty-foot equivalent units (TEU) - export
containers.
[vii] Report training credits as a proxy for hours
– one credit equates to approximately 10 hours
of learning.
[viii] Senior Leadership Team formed in 2015 (annual
quarterly average). Includes Executive Team and
their direct reports.
[ix] Number of notifiable events (formally serious
harm injuries) includes injuries, illnesses, and
incidents (defined under Health and Safety at
Work Act 2015).
[x] Lost time injuries and frequency rate relates to
all workforce injuries resulting in lost time per
1,000,000 hours worked. Includes employees,
independent sharefishers, and contractors.
[xi] ACC claims relates to Sanford employees only
(excludes sharefishers, contractors, and Auckland
Fish Market). ACC claims are continuously updated
throughout the year.
[xii] Figures relate to ACC cases, refers to days
off work >7 days (excludes contractors and
independent sharefishers).
[xiii] Total Wildcatch has been adjusted to reflect total
catch landed including Sanford and third party
fleets landing to Sanford facilities. Includes
Deepwater, Inshore, and Charter vessel wildcatch.
[xiv] GWT - weight of seafood before processing.
[xv] 2016 figure restated due to the decision to exclude
spat from the final figures.
[xvi] MSC certified fishery - globally recognised
standard for a sustainable fishery.
[xvii] Mortality Rate is the ratio between total species
caught and species caught dead, data is supplied
by MPI. 2016 figures restated to reflect 12 month
dataset (9 months available at time of 2016 report
production). 2017 figures based on 9 month dataset,
as available from MPI at the time of reporting.
[xviii] Notifiable spills (significant as defined by GRI)
are discharges into the environment that, if
uncontained, are notifiable to a regulatory
authority. Includes any discharge of fuel or oil
regardless of the amount, that has entered the
land or a body of water or is greater than 100 litres.
[xix] Fuels used on all vessels.
[xx] Fuel used/GWkg landed. Calculation relates to
wildcatch vessel fuel consumption specifically
(rather than total fuel consumption).
[xxi] Fuel used on mussel and salmon farming vessels
per greenweight kg harvested.
[xxii] Land based processing sites only per greenweight
kg processed.
[xxiii] All six Kyoto gases are included in the
calculation as appropriate. Emission factors
are based on the most recent Ministry for the
Environment guidelines.
[xxiv] Indirect Emissions reporting scope increased
from 2016 to capture emissions calculations
from sea freight.
160Sanford Annual Report 2017
appENdix a – SaNfOrd kEy pErfOrmaNCE iNdiCaTOrS
YEAR ENDING 30 SEPTEMBER 2017
External experts assist us to identify key risks each year as part of ongoing strategy development and implementation. Risk reporting and
response plans are reported to the appropriate Board committee for the top ten risks.
The top ten risks informed the materiality process to ensure that Sanford’s material issues reflect not only external stakeholder concerns,
but also business risk. These risks are addressed throughout the performance chapters in this Report, structured to reflect the six outcomes
of the Business Excellence Framework, as identified in the table below.
Risk mapping was based on a risk criteria model which resulted in the following ranking of inherent risks:
PRIORITYINHERENT RISKPOTENTIAL IMPACT
IMPACT ON
OUTCOMESKEY MITIGATION STRATEGIES
1.Climate changes causing
short or long term
impacts
Changes in water temperature
negatively impacting on fish
or mussel stocks
• Ongoing monitoring of environmental conditions
• Diversity of geography and species mix
• Development of SPAT
nz
(Shellfish Production and Technology)
2.Biosecurity issuesCausing negative impacts
on harvest/take out volume,
food safety e.g. algae
• Ongoing monitoring of water conditions
• Diversity of geographic locations for farming
• Relationship with Ministry for Primary Industries (MPI),
scientific research organisations
3.Accident causing injury
and/or fatality
Fatality and resulting negative
impacts on families, staff
and business
• Health and safety policy and systems
• Medium term strategy and plan
• Health and safety governance from Board level
• Significant investment in staff education and training
4.Competing operational
and commercial drivers
compromise food safety
Can lead to contaminated
product being exported or
product specifications not
being met
• Group Quality Manager reporting directly to the CEO
• Regular review to ensure compliance, ISO 22000 certification
• Rigorous testing, monitoring regime
• Finished product sampling on a regular basis
5.Possible traceability
limitations and impacts
Could limit Sanford’s growth
as consumers demand full
traceability. May also lead
to food safety issues
• Recall procedure
• Trace to vessel process
• Day coding for fresh fish
6.IT systems and
information do not
support efficient
decision making
Limits growth strategies
for the future
• Technology roadmap in place
• New analysis and reporting tools
• Longer term strategy, solutions
7.Breach of quota/marine
farm licence
requirements
Potential loss of vessels, quota
or marine farm licence
• External onboard observers, independent audits
• Electronic and compliance monitoring
• Ongoing training for marine farm management, compliance
8.Loss of licence to
operate through
government
intervention
Loss of revenue streams
• Active and strong relationships with local and central
government
• Involvement in multi-stakeholder forums to inform,
support and influence public policy outcomes
9.Localised
physical/natural
disaster
Loss of head office, processing
plant or vessels
• Comprehensive insurance
• Business continuity plan (IT)
• Multiple operating locations and vessels
• On vessel monitoring
10.Reputational risk,
brand tarnished
Financial losses sustained as a
result of reputational damage
• Values based culture, messaging
• Ongoing stakeholder engagement
• Communication and public policy strategies and plans
• Business focus on quality, brand, value and innovation
• GM Sustainability, GM Corporate Communications direct
reports to CEO
161
appENdix B – aligNiNg maTErial iSSuES wiTh BuSiNESS riSk
5
APPENDICES
We actively monitor legislative and regulatory change directly and via key industry and sustainability bodies of which we are a member. Our principal
memberships and the key roles that Sanford representatives contribute are set out below:
ORGANISATIONFUNCTIONOUR ROLE
Aquaculture New Zealand
www.aquaculture.org.nz
Industry body for aquaculture sector, focused on representing the current
industry, while enhancing profitability and providing leadership to facilitate
transformational growth
• Board member
• Active industry member
• Industry stakeholder group
Deepwater Group
www.deepwatergroup.org
Industry body focused on the management of deepwater fisheries
resources, within a long-term sustainable framework
• Directors
• Active industry member
• Industry stakeholder group
Fisheries Inshore
www.inshore.co.nz
Commercial fisheries stakeholder organisation that represents collective
interests as an inshore quota owner, Annual Catch Entitlement (ACE)
holder and commercial fisher
• Directors
• Active industry member
• Industry stakeholder group
Groundfish Forum
www.groundfishforum.com
Meeting place for leading members of the global groundfish industry to
increase understanding about global supply and consumption trends and
developments for groundfish products
• Executive committee member
• Forum members
Seafood New Zealand
www.seafoodnewzealand.org.nz
Industry peak body for the New Zealand seafood sector, with a strategy to
support the Government’s growth objective to double seafood export
revenue by 2025
• Directors
• Active industry member
Southern Seabird Solutions Trust
www.southernseabirds.org
Group focused on the protection of seabirds, with initiatives across 24
target species (from black petrel to yellow eyed penguins)
• Trustee
• Management board member
Sustainable Business Council (SBC)
www.sbc.org.nz
Executive-led advocacy body for sustainable business in New Zealand• Advisory board member
• Active member
Sustainable Seas
www.sustainableseaschallenge.co.nz
Ecosystem-based management group set up to enhance and protect our
marine resources
• Board member
Trident Systems
www.tridentsystems.co.nz
Organisation undertaking fisheries science, monitoring and catch sampling• Directors
• Shareholder
World Ocean Council
www.oceancouncil.org
Industry leadership alliance on ‘Corporate Ocean Responsibility’• Member
OUR STAKEHOLDERSROLE
Our People
Our 1,717 employees, including 583 sharefishers,
are the foundation of our business and our most
valuable asset. Through their commitment to
living our values of care, passion and integrity,
our people ensure that we continue to produce,
deliver and succeed.
Shareholders
and Investor
Around 2,000 shareholders provide the financial
capital and stability required to sustain, grow
and diversify our business.
Government
and Regulators
These stakeholders provide our formal licence
to operate, including policy and regulatory
frameworks which define what, how, where
and when we can perform our activities.
Industry and
business associations
As a company committed to its own vision as
well as a vision for a sustainable future for
New Zealand and the world, we are members of
a number of organisations (as shown above).
They help us leverage our impact and, in
partnership, collectively find ways of achieving
a more sustainable future.
Suppliers
Share valued expertise, support and deliver
products and services that strengthen our
business and facilitate development and growth.
Further information on our engagement with
suppliers is provided in Outcome 3 – Healthy food.
OUR STAKEHOLDERSROLE
Customers
Sustain our business, provide the basis for
continued growth, product development
and innovation.
Communities,
Scientific partners,
NGOs
External partners help us to gain a deeper
understanding of social and environmental
issues. They also can unlock new opportunities,
understand industry best practice, scientific
research and development and alert us
to potential challenges which may need to
be addressed.
Civil Society including
recreational fishers
The views and needs of civil society and
recreational fishers assist us to stay in-step with
society, and hence ensure our social license to
operate. We share some fishing space with
recreational fishers and it is important to us that
we collaborate with other users of the ocean.
Iwi
Partnership with Iwi represent a critical
relationship for us. As guardians of the land and
ocean that we operate on/in, we are pleased to
work together to ensure good outcomes for all.
STAKEHOLDER GROUPS AND THEIR ROLES
162Sanford Annual Report 2017
appENdix C – iNduSTry mEmBErShipS aNd STakEhOldErS
KEY INITIATIVES CONTRIBUTING TO THE UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS: 2017
This table illustrates the initiatives undertaken by Sanford in the achievement of the key Sustainable Development Goals that we can shift
the dial on. As a company committed to value creation for all stakeholders, it is critical that we use this international framework to guide us
in strategy, goal development and initiatives to ensure we are contributing toward the global achievement of the goals. We are not there
yet, but each year we make progress.
UN SUSTAINABLE
DEVELOPMENT GOAL
SANFORD CONTRIBUTION THROUGH
PERFORMANCE OUTCOMES
KEY INITIATIVES DURING 2017
SDG 3
Good health
and wellbeing
Our people
• Implemented wellness programme across all Sanford sites
• Delivered health and safety focused training across all levels of the
business
SDG4
Quality education
Our people
• Invested in new training programmes internally to enable
development opportunities to many people across the business,
including 7,484 credits attained by staff through the formal NZ
Qualifications Authority (NZQA) channel, and Keeping it Fresh
programme
• Leadership development programmes implemented across senior
management team and frontline staff
SDG 8
Decent work and
economic growth
Our people
Sustainable
seafood business
Communities
and partnerships
• Identified and implementing 90 key continuous improvement
programmes, covering the six outcomes that contribute to achieving
our Sustainability Policy and Business Excellence Framework
• Key procurement project efficiencies resulting in $2.5 million savings
in procurement
• Targeted strategies and plans implemented to support local business
and optimise employment
SDG 9
Industry, innovation
and economic growth
Sustainable
seafood business
• Primary Growth Partnerships in place with the Government, turning
research into commercial reality (for example,
SPATnz and Precision
Seafood Harvesting)
• Targeted initiatives to drive improvement to $/kg return, to help
achieve our long term goal of an average return of $1/kg greenweight
• Invested in targeted business partnerships delivering 100% product
utilisation e.g. marine by-products into pet food, nutraceuticals
• Identified innovative research partners and acquired Enzaq, providing
a platform to launch nutraceuticals and deliver enhanced utilisation
and value
SDG 12
Responsible consumption
and production
Healthy food
Protecting
the environment
• Implemented Oritain full product traceability of Big Glory Bay King
Salmon and Greenshell™ Mussels
• 80% of sites implemented and achieved compliance with the Food
safety standard FSSC 22000
• Trialled polystyrene box replacement with a target to replace with
recyclable cardboard boxes during 2018
• Developed a project team to identify the actions required to move all
packaging materials to 100% renewable resources
• Piloted “Eco-farm” in Pelorus Sound which aims to develop NZ’s
lowest impact and technically smart mussel farm
• Developed a comprehensive environmental impact assessment
process accounting for the full life cycle of all of Sanford’s operations
• Maintained ISO 14001:2004 environmental management system
certification across our operations
• Achieved 24% waste diversion rate across our operations
SDG 13
Climate action
Protecting
the environment
• Reduced our carbon emission intensity by 4.5% across our
operations, setting ambitious targets to 2030
• Started to adapt to climate change and build resilience in operations
(e.g.
SPATnz innovation)
• Reduced refrigeration gas loss across sites and vessels
• Completed the trial and working to replace our coal fired boiler
operation into wood chip changeover to take place in 2018)
• Signatory to open letter to NZ Government on climate action
• Leadership role with Sustainable Business Council on climate action
• Developed and delivered pre-election briefings, informing political
discussions with peer businesses on climate action
163
appENdix d – kEy iNiTiaTiVES CONTriBuTiNg TO ThE uNiTEd NaTiONS SuSTaiNaBlE dEVElOpmENT gOalS: 2017
5
APPENDICES
164Sanford annual report 2017
appENdix d – kEy iNiTiaTiVES CONTriBuTiNg TO ThE uNiTEd NaTiONS SuSTaiNaBlE dEVElOpmENT gOalS: 2017
UN SUSTAINABLE
DEVELOPMENT GOAL
SANFORD CONTRIBUTION THROUGH
PERFORMANCE OUTCOMES
KEY INITIATIVES DURING 2017
SDG 14
Life below water
Healthy oceans
Healthy food
• World Ocean Council representation and leadership
• APEC and East Asia Summit on Marine Plastic Debris, Indonesia,
informing policy development across 19 countries
• Implemented Māui Dolphin Protection Plan in conjunction with
Moana and WWF to ensure Maui-safe fishing
• Achieved multiple aquaculture certifications (BAP, A+ (trials), organic)
• 46% of Sanford’s total wildcatch in FY17 was Marine Stewardship
Council (MSC) certified
• 7 year government funded precision seafood harvesting (PSH) and
Modular Harvest System (MHS) to deliver more sustainable fishing
methods and spat selective breeding;
SPATnz
SDG 17
Partnerships
for the goals
Communities and
partnerships
• Two year collaboration agreement with EECA, setting 5 GWh energy
reduction targets, audit programme and range of targeted initiatives
• Active participant to a range of national and international multi-
stakeholder forums to help us to deliver on our vision, and contribute
to achievement of SDGs across a range of areas, from sustainable
wealth creation to oceans management and plastics reduction
• Provided leadership and operational input into a wide range of
industry forums from the Southern Seabird Solutions Trust, to
Fisheries Inshore New Zealand, Deepwater Group and the Convention
for the Conservation of Antarctic marine Living Resources
• Graeme Dingle Foundation partner, including Kiwi Can and Career
Navigator programmes
• Paralympics New Zealand partner
• Signatory to the Seafood NZ Promise Campaign code of conduct
This Report has been developed in accordance with the International Integrated Reporting Council (IIRC) Integrated Report <IR>
Framework. The Report has been prepared in accordance with the GRI Sustainability Reporting Standards (GRI) 2016, and were applied to a
core level of compliance. Further references to GRI indicators are provided in Appendix A (Key Performance Indicators).
DISCLOSURESDESCRIPTIONSECTION DESCRIPTION AND PAGE NUMBER
GRI 102: GENERAL DISCLOSURES 2016
STRATEGY AND ANALYSIS
102-14Chairman, CEO statementDelivering on our Vision, pages 10-13
ORGANISATIONAL PROFILE
102-1NameSanford Limited
102-2OperationsAquaculture, fishing, fish processing, retail; refer Our Global Operations, pages 6-7
102-3Head Office22 Jellicoe Street, Auckland, New Zealand
102-4LocationsOur Global Operations, pages 6-7
102-5Legal formNZX listed New Zealand limited liability company
102-6Markets and customersOur Global Operations, pages 6-7; Sustainable Seafood Business, page 34
102-7Scale of operationOur Global Operations, pages 6-7; Our Business Model, pages 8-9
102-8WorkforceGreat Prospects for Our People, pages 44-55
102-41Collective agreementsKey Performance Indicators, Page 158
102-9Supply chainOperations Overview, page 33; Healthy Food, pages 59, 65-67
102-10Business changesFinancial and Operations Overviews, pages 30-33; Financial Statements, pages 113-150
102-11Precautionary principleCorporate Governance, page 104; Healthy Oceans, pages 72-83
102-12ChartersHealthy Oceans, pages 72-83; Strategic Partnerships and Collaboration, page 94
102-13MembershipsAppendix C – Industry Memberships, page 162
IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES
102-45OrganisationAbout this Report, page 5; Financial Statements – Group Entities, page 149
102-46Report contentAbout this Report, pages 4-5; Reporting What Matters, page 16
102-47Material issuesReporting What Matters, pages 17-18
103-1Scope – Boundary insideMaterial issues cover all Sanford entities unless otherwise stated, page 5
103-1Scope – Boundary outsideAbout this Report, pages 4-5; How We Create Value, pages 8-9
102-48RestatementsKey Performance Indicators, pages 158-160; Financial Statements, pages 113-150
102-49ChangesReporting What Matters, pages 16-21; Financial and Operations Overviews, pages 30-34
STAKEHOLDER ENGAGEMENT
102-40Stakeholders - GroupsReporting What Matters – Engaging with our Stakeholders, page 19; Appendix C, page 162
102-42Stakeholders – BasisReporting What Matters – Engaging with our Stakeholders, page 16; Appendix C, page 162
102-43Stakeholders – ApproachReporting What Matters – Engaging with our Stakeholders, page 16
102-44Stakeholders – Key TopicsReporting What Matters – Engaging with our Stakeholders, pages 16-19
REPORT PROFILE
102-50Report period1 October 2016 to 30 September 2017
102-51Last reportSanford Annual Report 2016
102-52Reporting cycleAnnual
102-53ContactContact sustainability@sanford.co.nz for queries, or to provide feedback
102-54GRI complianceGRI Standard 2016; Core
102-55GRI content indexHeading in this Index
102-56AssuranceCombined (financial and non-financial), pages 151-156
GOVERNANCE
102-18GovernanceSustainable Seafood Business page 35-36; Corporate Governance, pages 104-109; Corporate
Governance Statement 2017: www.sanford.co.nz/investors/governance
ETHICS AND INTEGRITY
102-17Ethics and valuesOur Business Model, pages 8-9; Corporate Governance, pages 104-109; Corporate Governance
Statement 2017 www.sanford.co.nz/investors/governance
165
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5
APPENDICES
MATERIAL TOPICS AND RELATED INDICATORS
Including GRI 100, GRI 200 2016, GRI 300; 2016
DMA AND
INDICATORSDESCRIPTIONREPORT SECTION TITLESECTION DESCRIPTION AND PAGE NUMBER
CATEGORY: ECONOMIC
ASPECT: ECONOMIC PERFORMANCE (M: SHAREHOLDER VALUE AND RISK)
103-1ApproachSustainable seafood
business
Healthy oceans
Communities and
partnerships
Year in numbers, page 14-15; Financial, operations and customer overviews, pages 30-34;
Governance and communication, Innovation, pages 35-41
201-1Economic valueShareholder value and risk, pages 28-34; Continuous improvement projects, page 31; EECA, page
102; Communities and partnerships pages 87-95; KPIs, pages 158-160; Financial statements, pages
113-150
201-4Government
assistance
SPAT
nz pages 37-38; HVN page 38; Greenshell™ page 38-39; PSH, page 40; EECA page 102
CATEGORY: ENVIRONMENTAL
ASPECT: ENERGY (M: RESOURCE UTILISATION AND EFFICIENCY)
103-1ApproachProtecting the
environment
Resource utilisation and efficiency, page 100; Carbon reduction, pages 101-102
302-1Energy Resource efficiency, page 100; Carbon reduction, page 101-102; KPIs, page 160
302-3,4Reduction
of energy
Resource efficiency, page 100; Carbon reduction and offsetting, page 101; EECA, page 102; KPIs
Appendix A, page 160
ASPECT: BIODIVERSITY (M: SUSTAINABLE FISH STOCKS AND MARINE FARMS)
103-1ApproachHealthy oceansSustainable fish stocks and marine farms, pages 74-76
304-2ImpactSustainable fish stocks and marine farms, pages 74-76; Marine conservation, pages 77-78;
Endangered, threatened and protected species, pages 79-82; KPIs Appendix A, pages 158-160
ASPECT: EMISSIONS (M: CARBON REDUCTION AND OFFSETTING)
103-1ApproachProtecting the
environment
Carbon reduction and offsetting, page 101-102; KPIs, Appendix A, Page 160
305-1GHG (Scope 1)Carbon reduction and offsetting, page 101-102; KPIs, Appendix A, page 160
305-2GHG (Scope 2)Carbon reduction and offsetting, page 101-102, KPIs, Appendix A, page 160
305-3GHG (Scope 3)Carbon reduction and offsetting, page 101-102, KPIs, Appendix A, page 160
ASPECT: EFFLUENTS AND WASTE (M: SUSTAINABLE FISH STOCKS AND MARINE FARMS)
103-1ApproachHealthy oceansSustainable fish stocks, page 74-76; Environmental effects, page 98-99
306-3SpillsProtecting the
environment
Environmental effects, page 99; KPIs Appendix A, page 160
CATEGORY: SOCIAL
SUB-CATEGORY: LABOUR PRACTICES AND DECENT WORK
ASPECT: EMPLOYMENT (M: DEVELOPING OUR PEOPLE)
103-1ApproachOur people
Communities and
partnerships
Developing our people, pages 49-52; Engagement and employment, pages 87-89; Strategic
partnerships and collaboration, pages 90-94
401-1Hires and
turnover
Developing our people, pages 49-52; KPIs Appendix A, pages 158-159
ASPECT: OCCUPATIONAL HEALTH AND SAFETY (M: HEALTH, SAFETY AND WELLBEING)
103-1ApproachOur peopleHealth, safety and wellbeing, pages 44, 46-48
403-2Injury StatisticsHealth, safety and wellbeing, pages 44, 46-48; KPIs, Appendix A, page 159
ASPECT: TRAINING AND EDUCATION (M: DEVELOPING OUR PEOPLE)
103-1ApproachOur peopleDeveloping our people, pages 49-52; Strengthening our workplace culture, pages 53-54
404-1Training Developing our people, pages 59-52; Strengthening our workplace culture, pages 53-54; KPIs,
Appendix A, pages 158-159
SUB-CATEGORY: SOCIETY
ASPECT: LOCAL COMMUNITIES (M: ENGAGEMENT AND EMPLOYMENT)
103-1ApproachCommunities and
partnerships
Engagement and employment, pages 86-89; Strategic partnerships and collaboration, pages 91-94
413-1ProgrammesEngagement and employment, pages 86-89; Strategic partnerships and collaboration, pages 91-94
SUB-CATEGORY: PRODUCT RESPONSIBILITY
ASPECT: CUSTOMER HEALTH AND SAFETY (M: FOOD SAFETY AND QUALITY)
103-1ApproachHealthy food
Healthy oceans
Sustainable seafood
business
Food safety and quality, pages 58-61
416-2Non-complianceFood safety and quality (compliance), pages 60-61; KPIs Appendix A, page 159
G4-FP5
1
Third party
certification
Certifications, pages 61-62, 76; Compliance audits, page 36; Traceability, page 63; KPIs, Appendix A,
page 158-160
G4-FP13
1
Non-complianceCompliance, pages 58-61; Product quality and testing, page 61; complaints response, page 61;
product recall, page 61, KPIs Appendix A, page 159
ASPECT: PRODUCT AND SERVICE LABELLING (M: CUSTOMER RELATIONSHIPS AND TRACEABILITY)
103-1ApproachHealthy foodDrive value through brand creation, pages 62-64; Sustainable fish stocks and marine farms, page 76
417-1,
304-3
Information
required
Healthy oceansSustainable fish stocks, pages 74-96; Certifications, pages 61-62, 76; Drive value through brand
creation, pages 62-64; Traceability, page 63; MSC Certification, KPI Appendix A, page 159
G4-PR5 Customer
satisfaction
Customer survey, pages 58, 60-61; Customer relationships, pages 60-64
1. Aspects and indicators sourced from GRI Disclosure for Food Processing, 2014
166Sanford Annual Report 2017
appENdix E – gri CONTENT iNdEx
167
COrpOraTE dirECTOry
BOARD OF DIRECTORS
Paul Norling, Chairman
Elizabeth (Liz) Coutts
Bruce Goodfellow
Peter Goodfellow
Peter Kean
Robert McLeod
EXECUTIVE TEAM
Volker Kuntzsch, Chief Executive Officer
Clement Chia, Chief Financial Officer
Karen Duffy, Chief People Officer
Andre Gargiulo, Chief Customer Officer
Greg Johansson, Chief Operating Officer
REGISTERED OFFICE
22 Jellicoe Street
Freemans Bay
Auckland 1010
New Zealand
PO Box 443
Shortland Street
Auckland 1140
New Zealand
Telephone +64 9 379 4720
Email info@sanford.co.nz
Website www.sanford.co.nz
PRINCIPAL BANKERS
ANZ Bank New Zealand Limited
Bank of New Zealand
Rabobank New Zealand Limited
SOLICITORS
Chapman Tripp
Russell McVeagh
GROUP AUDITORS
KPMG, Auckland
STOCK EXCHANGE
The Company’s shares trade on the
New Zealand Stock Exchange (NZX).
NZX Trading Code: SAN
The minimum marketable parcel on the
Exchange is 100 shares (price $2 to $5 per
share) or 50 shares ($5 to $10 per share)
SHARE REGISTRAR
Computershare Investor Services Limited
Private Bag 92 119
Auckland 1142
New Zealand
159 Hurstmere Road
Takapuna
Auckland 0622
New Zealand
MANAGING YOUR
SHAREHOLDING ONLINE
To change your address, update your payment
instructions and to view your investment
portfolio including transactions please visit:
www.investorcentre.com/nz
GENERAL ENQUIRIES
General enquiries can be directed to:
enquiry@computershare.co.nz
Private Bag 92 119
Auckland 1142
New Zealand
Telephone +64 9 488 8777
Please assist our registrar by quoting your
CSN or shareholder number.
Other queries should be directed to the
General Manager Risk and Corporate Affairs
at the Registered Office.
This document is printed on an environmentally
responsible paper, produced using Elemental
Chlorine Free (ECF), FSC® certified Mixed Source
pulp from Responsible Sources, and manufactured
under the strict ISO14001 Environmental
Management System. The ink used is 100%
vegetable based, mineral oil free and manufactured
from 100% renewable resources.
insight
creative.co.nz
SAN056
ANNUAL MEETING
Wednesday
13
December 2017
2:00pm
The Maritime Room,
Princes Wharf
Corner Quay
and Hobson Streets
Auckland 1010
Disabled parking is available on the
Eastern Viaduct at 210 Quay Street,
just after the Canterbury NZ shop.
Pay and Display parking is also
available at the Eastern Viaduct,
210 Quay Street. Alternative parking
is in the Downtown car park at
31 Customs Street West, from
where attendees can walk across
Customs Street to Princes Wharf.
The Directors encourage full
participation of shareholders
at the Annual Meeting.
WE VALUE YOUR FEEDBACK
We welcome any questions, comments
or suggestions you might have on this
Report and our performance.
Please send your feedback
on this Report to:
sustainability@sanford.co.nz
For all other communications or
enquiries, please contact us at:
info@sanford.co.nz
or call us on +64 (9) 379 4720
ENGAGE WITH US
www.facebook.com/SanfordLimited/
twitter.com/sanford_ltd
ONLINE
www.sanford.co.nz
www.sanford.co.nz/investors/
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.