NZK FY18 Full Year Results Announcement

Media Release
29 August 2018

NEW ZEALAND KING SALMON ANNOUNCES RECORD RESULT AND FINAL DIVIDEND OF
3.0 CENTS PER SHARE

Strong branding and focused sales activity supported volume and value growth for New Zealand King
Salmon Investments Ltd (NZX and ASX: NZK) (the Company), which today reported its full year result
for the twelve months to 30 June 2018 (FY18).

Key highlights include:
• Net profit after tax of $16.1 million, up 14% on PFI
1
.
• Pro forma operating EBITDA of $26.2 million, up 21% on the comparable twelve month period
to 30 June 2017 (FY17) and 17% ahead of PFI.
• 7,779 metric tonnes of gilled and gutted salmon sold, up 8% on FY17 and 4% on PFI.
• Sustained higher summer water temperatures resulted in a significant increase in mortality.
• Strong sales growth in export markets, including increased sales of Ōra King, delivered
improved value.
• Launch of ultra-premium Ōra King TYEE salmon.
• First in Australasia to achieve the highest ‘Best Aquaculture Practices’ third-party certification
(four star) by Global Aquaculture Alliance.

The Board reaffirms its previously announced full year FY19 pro-forma operating EBITDA guidance of
between $25.0 million and $28.5 million.

John Ryder, Chairman, said “Net profit after tax was 14% above PFI forecast issued prior to listing in
October 2016. We achieved a pro-forma operating EBITDA
2
of $26.2m, which is not only a record for
the company, but also well above PFI. This result was made possible by the strong demand for our

1
Prospective Financial Information
2
Pro-Forma Operating EBITDA is a non-GAAP profit measure used by New Zealand King Salmon. In addition to the
adjustments outlined above, Pro-Forma Operating EBITDA reverses out fair value gains associated with the revaluation of
livestock pursuant to NZ IAS 41-Agriculture and NZ IAS 2-Inventory. The application of NZ IAS 41–Agriculture, and NZ IAS 2–
Inventory effectively results in the New Zealand King Salmon Group recognising expected profits from the sale of livestock
prior to sale. Other international listed salmon companies will typically present ‘Operating’ results which remove the impact
of these gains or losses. New Zealand King Salmon therefore believes that Operating results enable a better comparison of
financial performance between its peers and between periods. A full reconciliation between GAAP and Pro Forma results is
included in the Annual Results FY 17 Investor Presentation.

world-leading salmon and creates a platform for future earnings. The Board is pleased to re-affirm
previous EBITDA guidance for FY19.”
Managing Director and CEO Grant Rosewarne commented “Whilst the year was impacted by an
extended summer period of higher water temperatures, our strong H1 performance coupled with
product and pricing mix strategies helped us maintain the highest possible value. Our focus remains
on our branded salmon products, with sales of Ōra King, our best-of-breed salmon brand for premium
foodservice, up 26% on FY17 and 17% on PFI. This growth was possible due to an increase in
average fish size, and supported with brand campaigns and increased sales resource. We also saw
the launch of Ōra King TYEE – rare salmon weighing in excess of 30 lbs (13.6 kilograms) each and
positioned as an ultra-premium sustainable sushi option.
We saw continued sales momentum in our lead international market, North America. Total sales to this
market were up 27% on FY17, with corresponding volumes of 2,175 MT, or 28% of all sales. We also
recorded excellent sales growth to markets in China and South East Asia, up 43% on FY17, as well as
solid performance in export generally. Domestic sales remained relatively flat during FY18, as
premium branded opportunities were prioritised.”
“From an aquaculture perspective, results were a little more mixed. Our Feed Conversion Ratio
continues to improve (1.81 vs 1.84 in FY17), but remains higher than PFI (1.76). The higher summer
water temperatures gave rise to a significant increase in mortality (20% vs 8% in FY17 and 11% in our
PFI). Our aquaculture team is focused on adapting to evolving climatic conditions through longer term
measures such as building warm weather resistance into our breeding program, and continuing to
drive improved fish health outcomes through diet and husbandry. The proposed farm relocation under
consideration by our Minister will also help mitigate warmer temperatures if it were to go ahead.”

“Notwithstanding an increased investment in capital expenditure, we continue to maintain a strong
financial position with a positive net cash position at the end of the year, and the capacity to finance
further growth.” Mr Rosewarne said.

Mr Ryder noted, “We continue to take an uncompromising position in our commitment to the health,
safety and welfare of all our team members. Our results would not be possible without the hard work
and dedication of our entire team.”

“We also continue to be mindful of our environment, with our aim being to pass on the land and water
resources we are privileged to use in the same or better condition than we inherited them. We are
delighted to have been awarded a fourth star in the Best Aquaculture Practices certification program by
the Global Aquaculture Alliance” Mr Ryder added. “Finally, we are also cognisant of the ongoing
Ministry for Primary Industries (MPI) consultation process. Earlier this year the Marlborough Sounds
Salmon Farm Relocation Advisory Panel (the Panel), recommended the relocation of three of our farms
to higher-flow waters. The decision now rests with the Minister of Fisheries. We are looking carefully

at issues raised by the Panel to consider how we can address points of concern that were raised. This
is a rare opportunity to realise even better environmental, social and economic outcomes for our
community without increasing the space we occupy.”

The Board is also pleased to declare a final dividend of 3.0 cents per share to be paid on 21
September 2018, bringing the total dividend paid for FY18 to 5.0 cents per share.

<ENDS>

Contacts:
Grant Rosewarne, Managing Director and CEO, New Zealand King Salmon Investments Ltd
email: grant.rosewarne@kingsalmon.co.nz

About New Zealand King Salmon
New Zealand King Salmon is the world’s largest aquaculture producer of the premium King salmon
species. We operate under our four key brands: Ōra King, Regal, Southern Ocean, and Omega Plus, as
well as the New Zealand King Salmon label. We have been growing and selling salmon to consumers
for more than 30 years. Today we employ around 500 people. New Zealand investors make up a
significant percentage of the ownership of NZ King Salmon and the communities of Marlborough,
Nelson Bays and Tasman are well represented with nearly 400 of the 2,700 shareholders from top of
the South. More information can be found at www.kingsalmon.co.nz

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New Zealand King Salmon Investments Limited, 93 Beatty St, Nelson 7011, New Zealand
NEW ZEALAND KING SALMON INVESTMENTS LIMITED
Results for announcement to the market
Reporting Period 12 months to 30 June 2018
Previous Reporting Period 12 months to 30 June 2017

Amount ($000s) Percentage change
Revenue from ordinary activities $NZ160,271 17.5%
Profit (loss) from ordinary activities
after tax attributable to security
holder
$NZ16,125 (29.2%)
Net profit (loss) attributable to
security holders
$NZ16,125 (29.2%)

Dividends Amount per security Imputed amount per security
Final dividend $NZ0.03 $NZ0.011667
Special dividend N/A N/A

Record Date 12 September 2018
Dividend Payment Date 21 September 2018

Net tangible assets 30 June 2018 30 June 2017
Net tangible assets per security $1.22 $1.15

Earnings per share (EPS) 30 June 2018 30 June 2017
EPS $0.12 $0.16

New Zealand King Salmon Investments Limited, 93 Beatty St, Nelson 7011, New Zealand
Basis of report
This announcement is accompanied by the audited Financial Statements for the period ending 30
June 2018 which is the basis for the information presented in this announcement. These financial
statements have been prepared in accordance with New Zealand Generally Accepted Accounting
Practice and with the New Zealand equivalents to International Financial Reporting Standards.
Pursuant to ASX Listing Rule 1.15.3, New Zealand King Salmon Investments Limited confirms that it
continues to comply with the rules of its home exchange (the NZX Main Board).
Key comments relating to the understanding of this announcement are described below:

The impact of IAS 41 – Agriculture
The accounting standard IAS 41 – Agriculture requires biological assets to be measured at fair value
less costs to sell. This results in fair value gains or losses being recongised through profit or loss before
the stock is actually sold. The impact of the fair value gains and the key assumptions used in
calculating fair value are detailed in Note 15 of the 30 June 2018 financial statements. The pro-forma
information presented in the investor presentation may also aid users understand the impact of IAS
41 – Agriculture on the 30 June 2018 Financial Statements.

Non-Recurring and Infrequent Items
Details of non-recurring and infrequent items during the reporting period can be found in the Annual
Results FY18 presentation.

Net tangible assets per share
Net tangible assets per share can be found in the 30 June Financial Statements. The impact of the
accounting standard IAS 41 – Agriculture has also significantly increased the asset base due to fair
value gains from biological transformation, as per Note 15 of the 30 June 2018 Financial Statements.

Earnings per share
The impact of the accounting standard IAS 41 – Agriculture has become embedded within earnings
due to the fair value gains from biological transformation, as per Note 15 of the 30 June 2018
Financial Statements.

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EMAIL: announce@nzx.com
Notice of event affecting securities
1
New Zealand King Salmon Investments Limited
Andrew ClarkDirectors' Resolution
03 548 571403 538 087429082018
Ordinary SharesNZNZKE0003S0
In dollars and cents
Retained Earnings
$0.030
Enter N/A if not
applicable
$$0.002083$0.011667
$
NZ Dollars$0.005294
$0.030
Date Payable
21 September, 2018
12 September, 201821 September, 2018