Sanford Limited – Analyst Interim Result Briefing

23 MAY 2018
ANALYST RESULT BRIEFING
FINANCIAL PERIOD 6 MONTHS
ENDING 31 MARCH 2018

DISCLAIMER
This presentation contains not only a review of operations, but also some forward looking statements
about Sanford Limited and the environment in which the company operates. Because these statements
are forward looking, Sanford Limited’s actual results could differ materially. Media releases, management
commentary and analysts presentations, including those relating to the previous results announcement,
are all available on the company’s website and contain additional information about matters which could
cause Sanford Limited’s performance to differ from any forward looking statements in this presentation.
Please read this presentation in the wider context of material previously published by Sanford Limited.
Non-GAAP Terms
The presentation makes reference to adjusted EBIT, which is a Non-GAAP measure, a description of this term is found in the Interim
Report on page 8.
2

SANFORD AT A GLANCE
Mussels
Pelagics
FAS
Charter
Vessels
FAS
Fillet
Vessels
Inshore
Landing
Salmon
Longline
Scampi
FAS H&G Vessel
Sanford
Wildcatch
Aquaculture
Offshore
Inshore
Frozen at Sea
Vessels
Commodity volume
High Value volume
Revenue
Size of bubbles
indicates relative size

HIGHLIGHTS
>Net Profit After Tax improvement of 43.3% to $27.3m, positively impacted by 2016 Kaikouraearthquake insurance
claim settlement for Havelock plant ($9.9m pre-tax)
>Adjusted EBIT improvement of 14.2% to $35.4m
>Revenue growth of 18.4% from $230m to $273m y-o-y on volume increase of 6.8%
>EBIT/kg (harvested weight) improved from $0.52 to $0.54
>Value growth attributable to
>Strong pricing across species like squid, orange roughy, salmon and improving mussel pricing
>Product diversification and cascade optimisation (mussel powder, hokifillets vs fillet blocks)
>Channel strategy (high end foodservice)
>Branding (Big Glory Bay)
>Strong operating cash flow of $22.8m, 114% up on prior year.
>San Granit bedding down saw a 27% improvement of catch costs relative to first half of last year
4

CHALLENGES
>Unusual weather patterns
•Cyclones impacting fishing leading to less days at sea
•Warmer waters leading to reduced growth and higher mortality of our King salmon –
lower volume of salmon available for H2
>Lower than expected volume and pricing for pelagic business (mackerels and tuna)
>Wildcatchfleet incurred unplanned maintenance issues
>Reduced catches of skipjack and pelagicsleading to lower inventory levels going into H2
>2.5m one-off write down of an inshore vessel
5

ADJUSTED EBITOF $35M
6
•A 14.2% improvement in Adjusted EBIT
•Adjusted EBITDA increase of 14.6%
20182017
($m)($m)
Reported EBIT
42.530.7
Adjust for one off Items
Impairment of assets2.50.1
Restructuring costs0.30.2
Havelock earthquake insurance settlement(9.9)-
Total one off items(7.1)0.3
Adjusted EBIT
35.431.0
D&A10.18.7
Adjusted EBITDA
45.539.7

16% IMPROVEMENT IN ADJUSTED EBIT IN LAST 2 YEARS
2018 v 2017
•EBIT improvement due to:
increased catch and sales pricing of squid and orange roughy
Hoki cascade changes led to increased margin
Salmon price growth
San Granit now fully operational
7

2018 H1 PLEASING GROWTH ON 2017
•Wildcatchimprovement driven by higher margins on orange roughy and squid
partially offset by poor pelagic catch volumes and pricing. Improved fresh fish
sales margin due to better mix of species sold.
•Salmon sales volume slightly down countered by mussel volume growth –
both businesses evidenced improving pricing

H1 FRESH VOLUME STEADILY INCREASING WITH RENEWED FOCUS
•Increased contract catch volumes through the business.
•Increased focus on moving all fresh landed volume, as fresh sales.

INNOVATION –MUSSELS UPDATE
•Existing Production -raw material supply has seen strong yields resulting in good
productivity from our current single dryer
•Expansion -a second dryer is currently being installed and will be operational in early June
•Sales -customer demand for our powder remains strong, with indications that there is a
general shortage of good quality powders
•Overall–high demand product providing excellent value-add opportunity to the green lipped
mussel business

INNOVATION-SPATNZ
>Harvested the first
batch of seeded
mussels in May
2017
>Enables selective
breeding and
predictive supply of
spat
http://www.spatnz.co.nz
The first hatchery for
Greenshell mussels opened in
Nelson in April 2015

COLLAGEN FROM HOKISKINS
12
•Sanford’s focus on innovation includes working alongside
Plant & Food Research and Revolution Fibres to produce
marine collagen nanofibrefor skincare products
•Collagen from hoki skins is converted to fibres through
electrospinning and formed into a platform that enables
delivery of specially-formulated extracts into the human
skin
•Hoki skins, that would ordinarily be turned into fishmeal,
are now used for a significantly higher value proposition
•At the development stage but holds considerable potential
for high value addition

PRODUCT CASCADE OPTIMISATION -HOKI
Reducing hokifillet block production towards a focus on individual fillets
on our factory vessels, delivering a higher value product to the end users.
Commodity blocks are traditionally used for further processing into fish fingers
and compete against other whitefish species.

© COLMAR BRUNTON BETTER FUTURES REPORT 2017 EDITION
SUSTAINABILITY AS A
KEY ENABLER FOR
BUILDING
ENGAGEMENT AND A
POSITIVE VALUES-
BASED CULTURE

MARINE PLASTIC
OUR KEY FOCUS AREAS
Identify, quantify, set reduction targets
Internal engagement -personal pledge
Targeted initiatives to reduce plastic packaging
Eliminating plastics across target operational
areas, through innovation
Engaging in strategic partnership initiatives to
mobilise action: local, national, international

QUESTIONS