Annual Meeting CEO’s Address

Fiona is happy to do this slide

SteffanStewart
1992-2018

Solid business performance
despite adverse climatic conditions
* Excluding third party partner catches, EBIT is $.57/kg to $0.63/kg up 6 cents
** Including Havelock insurance settlement of $6.8m net of repair cost
5.6%
EBIT GWT kg
+0.02c/kg
54c*
CATCH/HARVEST VOLUME
118k GWT
REVENUE
$515M
7.7%
ADJUSTED EBIT
$64.7M
1.5%
Up from 6.6%
RETURN ON AVERAGE
TOTAL EQUITY
7.3 %
NPAT
$42.3M**
12.9%
ANNUAL DIVIDEND
23CPS
Stable
EPS
45c
+5c
2%
Aquaculture GWT
Salmon
Mussels
Wild Catch GWT
Deepwater
Inshore
Fishing partners
Revenue per PW kg
9.2% fresh sales (from 8.3%)
Hoki product cascade
Salmon price achievement
Ling swim bladders
2%
9%
5%
14
%
4%
8%
15
%
‹3›

down from 32.3%
Operating Cash Flow
$72.6m
16%
NET DEBT
$152.4M
TOTAL EQUITY
$582M
EBITDA*
$84.4M
DEBT / EBITDA
1.81x
GEARING
26.6%
Strong cash flow and balance sheet
44%
2%
1%
$-
$50,000
$100,000
FY16FY17FY18
NZD $’000
OPERATING CASH FLOW
FY17 2.25x
*EBITDA: Earnings before interest, taxation, non trading currency exchange gain/(loss), depreciation, amortisation, restructuring, adjusting items,
impairment and gain (loss) on sale of investments, intangible and long term assets
‹4›

FY18 Headwinds
Marine heatwave impacted salmon growth and mortality
rates –led to suspended sales for 10 weeks
Algal bloom impacted mussel harvests and yields in
Marlborough
Extended shutdown of Havelock plant for earthquake repairs
Lower hoki catch volumes
leading to voluntary shelving of West Coast hoki catch
entitlement in 2018/19 season
Inshore fleet impacted by poor weather conditions and
reduced fleet size, mitigated by engaging private fishing
partners
‹5›

6
Albert Sanford bought his first boat in 1864
Established the company in 1881
Listed on the NZX in 1924
‹6›

We satisfy customers globally
‹7›
22
deep water
& inshore
vessels
61
independent
sharefishers
8
processing,
incl. joint
operations

Diversified revenue, operations and customer base
‹8›

SANFORD’S <IR> JOURNEY
Building Trust through Transparency

Investment in brand development
-Big Glory Bay, Sanford Blue and Sanford Black
Focus on end customer, replacing third party distributors
“Focus on Fresh“ -9.2% of Sales are now fresh, up from 8.3%
Acquired Auckland based home-delivery E-platform Fresh Catch
Auckland Fish Market Development in Wynyard Quarter
2018 STRATEGY IN ACTION –PROGRESS AND DELIVERY ON KEY FOCUS AREAS
BRANDING
‹10›

Developed Sea to Me nutraceuticals range
Marine collagen nano-fibre for skin care products
Selective spat breeding at SPAT
NZ
Further rollout of PSH across our deep water fleet
2018 STRATEGY IN ACTION –PROGRESS AND DELIVERY ON KEY FOCUS AREAS
INNOVATION
‹13›

14
REDUCING THE
DEPENDENCE ON VOLUME
Adding value

Salmon –infrastructure investment, volume growth
Havelock facility upgraded for earthquake strengthening
Hoki product cascade improvements moving from fillet frozen in
blocks to individually frozen fillet
San Granit reaching expected levels of operational capability
Vessel improvement programme underway
2018 STRATEGY IN ACTION –PROGRESS AND DELIVERY ON KEY FOCUS AREAS
OPERATIONAL
EXCELLENCE
‹15›

$120m investment over 2 years
Channel
Development
$3M
Brand
Development
$10M
Product & Technology
Innovation
$10M
Operational
Excellence
$55M
Organisational
Capability
$4M
SanCore
$15M
Social License
Development
$4M
FOUNDATIONAL
TRANSFORMATIONAL
ASPIRATIONAL
F19F21

Huge success with “Keeping it Fresh”, “San Ignite”, and “San Activate”
development programmes. ‘Highly commended employer’ by Tertiary Education
Commission Skills Highway for our “Keeping it Fresh” programme
Structure supporting strategy –cross functional teams to drive strategy
execution
Engagement score static
2018 STRATEGY IN ACTION –PROGRESS AND DELIVERY ON KEY FOCUS AREAS
ORGANISATION
CAPABIILTY
‹17›

Health & Safety
‹18›
Continuous
reduction in
injury
numbers
from 2016-
2018
Our 2019 safety strategy will
Drive a formal safety management system
Adopt a risk based approach
Provide confidence, clarity and certainty to our
people and stakeholders
Deliver strategic initiatives to reduce the risk of
harm
Our goal is to be the safest seafood company in the world

THINK SAFE, BE SAFE, HOME SAFE

C L I M A T E C H A N G E
© COLMAR BRUNTON BETTER FUTURES REPORT 2017 EDITION

Strategy in Action +6m
Value +6m
Climate -11m
Key Drivers of YOY ADJUSTED EBIT change
$ m
Value strategy driving adjusted EBIT improvement
‹21›

P L A S T I C W A S T E
18
˃Studies estimate that the world’s oceans
will contain more plastics than fish by
2050
˃Estimates are that at least 2/3 of the
world’s fish stocks suffer from plastic
ingestion, and 90% of seabirds ingest
plastic daily

Sanford mobilising positive action
‹23›
Identify, quantify, set impact reduction targets
Internal and external engagement -personal pledge
Reducing plastic packaging
Developing operational alternatives to plastic
Engaging in strategic partnership

WHAT’S COMING FOR SANFORD IN 2019
‹24›

---

14 December 2018

Sanford Limited 2018 Annual Meeting
Mr Volker Kuntzsch
Chief Executive Officer’s Address



(Slide 1)
Ladies and Gentleman,
Thank you for the opportunity to address you, both in person and per webcast, to report
back on the financial year, ended 30 September 2018, my fifth year as CEO overlooking an
incredibly diverse, but interesting and rewarding, journey towards a very ambitious vision. I
will delve into a little more detail on some of the points raised by our Chairman, but also
reflect on the road ahead.

(Slide 2 Steffan Stewart)
The year has been somewhat of an emotional rollercoaster. The very tragic death of 26-year
old Steffan Stewart, following an accident onboard the San Granit on 14 November, shocked
all of us. Such a tragedy is difficult to fathom and words don’t do the sorrow that Steffan’s
family experiences from this loss any justice. Our thoughts are with them. I have to thank the
Deepwater Team, our Human Resources Team and my Executive Team for stepping up in an
unprecedented manner during this sad time to support Steffan’s family and his crew mates
on the vessel, who have all lost a friendly, happy and helpful member of their family.

This tragic accident, which is currently under investigation by relevant authorities, followed a
year that was marked by a reduction in serious harm injuries and highlights that the strong
focus on Health & Safety needs to continue at all levels. We will share the learnings from this
incident across the company and within our industry.

(Slide 3 Solid business performance)
We announced our result in November, describing it as solid considering the headwinds we
experienced. While not in line with our ambitious expectations for the year, we managed to
deliver a slight improvement in profitability compared to prior year. Although volumes were
down 5.6% compared to the previous year, revenue increased by almost 8%, bringing our
revenue across the $500m milestone. This is due to improved pricing and our strategy
gaining traction. This is great news as it highlights our growing independence from catch
volume and the potential of value creation from our strategic focus areas.
(Slide 4 – Strong cash flow and balance sheet)

As the chairman has already highlighted in his speech, the year was marked by strong
improvement in cash flow and we were able to reduce our debt to achieve a much improved
gearing and an improved debt/EBITDA ratio.

(Slide 5 FY18 Headwinds)
Both our wildcatch and our aquaculture volumes were subject to climatic impacts, primarily
warmer ocean temperatures and algal blooms. Our salmon turned lethargic during summer
and stopped feeding, necessitating delivery interruptions to our customers for over two
months. Our mussels in the Marlborough Sounds couldn’t be harvested for almost two
months as they were hit by an algal bloom. However, mortalities across salmon and mussels
were low and we expect improved performance across these species in the current year.

We underwent repairs in the Havelock plant following the Kaikoura earthquake in November
2016, which effectively extended the mussel closure by another three weeks.

We believe that the high water temperatures also had consequences on the availability of
hoki during this last spawning season. The large hoki quota owners subsequently decided to
act precautionary to shelve 20,000 tonnes of New Zealand’s annual catch entitlement for the
2019 fishing year. We will revisit this measure at the end of the fishing year in order to
determine further action in this regard. We at Sanford believe we can compensate for this
reduction by addressing our product portfolio appropriately and I will discuss that in more
detail later in the presentation.

In addition to the warmer water temperatures, we were also impacted by adverse weather
conditions that limited our inshore fishing days when we had to keep them sheltered in port.
The suboptimal efficiency of some of our inshore fishing vessels was to a large extent
overcome by attracting private fishermen to deliver catch exclusively to Sanford.

(Slide 6 – Albert Sanford photo)
In order to provide more detail on why we are where we are and where to from here, I
would like to take you back in time to the beginnings of Sanford almost one and a half
centuries ago. Albert Sanford fished the Hauraki Gulf and sold his product through Sanford-
owned fish markets in the Auckland region. Over the decades we have invested more into
our fishing operations, added aquaculture operations to our company, while limiting our
interaction with customers to a few factory-based fish shops around the country and a small
sales department interacting predominantly with wholesalers overseas. That resulted in a
very supply driven business model and focus on commodity production.

(Slide 7 – We satisfy customers globally)
Over the last five years we have increasingly realigned our supplies to customer driven
preferences. This slide highlights the emerging importance of the domestic market, which
previously purchased only approximately 5% of our volume. The current share of over 40%
does include volume that is subsequently exported by our customers, but the general supply
trend is certainly towards more local consumption. A major driving force behind this is our
focus on fresh fish and customer channel strategy, which I will come back to.

(Slide 8 – Diversified revenue)
Nevertheless, the diversity of our business remains impressive across our species and
customer portfolios. Greenshell mussels are today the biggest single species in our
operations. Our dependency on the US has shrunk considerably. Sanford’s diversity does
provide its challenges, but also many opportunities that help mitigate both business and
environmental variability, particularly the effects of climate change over the long term.

(Slide 9 – Sanford’s IR journey)
Detailed information regarding our results and progress against the six outcomes that form
part of our business excellence framework are transparently shared in our integrated report,
of which you may have already received a copy. We are very proud of this report, having
been the first company in the seafood industry globally to publish such a report. We have
won several international awards and are often used as an exemplar by business leaders and
educators both here in New Zealand and around the world.

The report highlights how far we have come from being a true commodity trader to focusing
on adding value to our precious marine resources.

(Slide 10 – 2018 Strategy in action - Branding)
Since Sanford had great expertise in fishing and fish farming and was generally effective at
harvesting and processing, our immediate attention was primarily on the customer end of
the supply chain over the last few years. The introduction of stronger brand development
and a channel strategy taking us closer to the high-end foodservice sector and closer to
consumers created the opportunity to improve gross margins significantly. The ‘focus on
fresh’ enabled the execution of this approach to a large extent and helped lift average sales
prices for our product.

We have recently acquired the home delivery service ‘Fresh Catch’ and are now bringing our
seafood directly to consumers in the Auckland region. The Auckland Fish Market has also
undergone major renovations with the aim of introducing New Zealand’s impressive
diversity in seafood to Kiwis and tourists alike. The Fish Market opens on Monday, 17
December 2018, and boasts 10 eateries and the Sanford & Sons Fishmonger, which reflects
the passion our people have developed over the last 138 years in the business.

(Slide 11 – BGB brand)
The Big Glory Bay brand, which we introduced last year, emphasising our premium quality
salmon product and its pristine provenance, achieves a significantly higher margin than our
regular king salmon. It is targeted at high-end restaurants, domestically and in a small
number of countries overseas, but quantities are currently small, making up less than 5% of
total supply volume. Efforts in ensuring consistency in quality and supply will increase this
share markedly over years to come.

(Slide 12 – Branding wildcatch)
Branding in wildcatch is aimed at introducing a premium segment into our otherwise still
largely commoditised deepwater operations. Species like high-end orange roughy, scampi
and toothfish are the first off the rank under the Sanford Black brand.

(Slide 13 – Strategy in action - Innovation)
Innovation supported our drive to create more value with every kilogram of fish we catch or
harvest from our farms. The acquisition of Enzaq, the mussel powder manufacturer in
Blenheim, a year ago was very successful and delivered profit as per our expectations. We
doubled the number of dryers from one to two during the course of the year and are
planning to add another two dryers over the next 10 months. Demand for our Greenshell
mussel powder is strong and with the recent launch of our nutraceutical brand ‘Sea to Me’
we introduced further product diversification into our mussel portfolio. The products are
available online, directly to consumers.

Our relationship with Plant & Food Research and Revolution Fibres, which culminated in the
utilisation of hoki skin collagen for the manufacture of face masks that completely dissolve
into the human skin, has enabled us to find advanced opportunity for value addition to our
wild caught marine resources.

The two primary growth partnership projects we are involved with, Spatnz and Precision
Seafood Harvesting, continue to deliver innovative advantage to our business. The ability to
selectively breed mussels for improved performance in terms of quality and processing
ability turns out to also be an effective ocean acidification risk mitigation. Ocean acidification
limits the potential of shellfish to develop and harden their shell, leading to their inability to
survive. Having the mussels’ first stage in life happen on land, ensures proper shell
development – and thus future survival – before they enter the ocean.

With respect to Precision Seafood Harvesting, PSH, the development of an innovative fishing
method, we are well into the last year of this project between the Ministry of Primary
Industries and 3 fishing companies, incl. Sanford, and the net is increasingly being used on
our vessels. We are very satisfied with the quality of fish captured through this fishing
method and are hoping that outstanding issues around the deployment of PSH in the
inshore fishery will be sorted out between the involved parties within the next few months.

(Slide 14 – Strategy in action - Branding)
The focus on branding and the development of our sales channel strategy towards
consumers and the high end foodservice sector have the objective of commanding a higher
sales price by highlighting the goodness of our seafood and its origin and reducing the supply
chain as much as feasible. Our innovation strategy takes us beyond food to enable further
value extraction. These strategic thrusts complement each other, especially where
innovation works with traditional waste products. Both branding and innovation also tend to

reduce our dependency on volume, thereby acting as mitigating factors in this relatively
unpredictable environment we work in.

(Slide 15 – Operational Excellence)
Operationally, our focus throughout the year ranged from rejuvenating and repairing assets,
especially on our salmon farm and in our Havelock mussel processing plant, to improving
product cascades, which create more value, and increasing operational efficiencies on
vessels and in plants.

The very recent announcement of the sale of our three purse seine vessels, with pelagic
quota and processing equipment in Tauranga, aligns with our strategic direction to prioritise
opportunities that lead to increased value. In Tauranga’s case, this means providing more
room for fresh fish production while concentrating pelagic operations with an experienced
processor, Pelco, who specialise on these species, to create much needed economies of
scale. The decision to sell some of our pelagic fishing quota was made on the basis of most
of these species, like jack mackerel, being ubiquitous, making the development of a unique
selling point for our mackerel very difficult, especially in the low value markets that these
fish are generally consumed in. Innovation may provide greater opportunity for pelagic
species over time, in which case the remaining 15,000 t in our portfolio and purchases of raw
material would be good options for further utilisation.

(Slide 16 – $120 investment over 2 years)
Product branding, the further development of our sales channel strategy and innovation will
remain areas of strategic focus. We will continue to grow our fresh fish business and shorten
the supply chain to consumers. We are investigating the opportunity for other marine
extracts and are planning a further doubling of our dryer capacity for Greenshell mussel
powder production. Approximately half of our investments over the next two years will be
dedicated to ensuring operational efficiency through asset rejuvenation. This includes
replacements of vessels in the scampi and inshore fleet, spending $20m on vessel surveys,
improving the assets in our salmon and mussel farming divisions and updating processing
plants. SanCore is a business transformation project that encompasses investments into a
new core information system and business intelligence upgrade to improve visibility across
all operations and enhance the way we operate.

The board has, in principle, approved up to $120m for an investment plan that covers these
actions over the next two years.

(Slide 17 – Strategy in action – organisational capability)
We continued building our organisational capability throughout 2018. On the one hand we
invested further into skills needed to develop, for example, our sales, marketing and
innovation activity, on the other we supported personal training and development across
the company through a variety of programmes including communication and leadership.
These were received really well and turned many from a reserved bystander into a proud

contributor and presenter of novel ideas and improvements for our company and their own
lives.

While the investment we are making into people is helping in developing skills, it has not yet
translated into improved engagement scores, which have remained relatively static over the
last two years. We believe this to be a function of the amount of change our company is
undergoing, a generally tough environment from a labour supply market perspective and
strong expectations raised through discussions around minimum wage levels in New
Zealand.

(Slide 18 – Health & Safety)
The awareness of health and safety amongst our employees rated highest across all criteria
in our engagement survey. We have seen a continuous reduction in total injuries over the
last few years and a halving in the number of serious harm incidents from 10 to 5 between
2017 and 2018, but incidents over the last couple of months indicate that our efforts need to
continue in full rigour across all our operations. With the recent appointment of Susan
D’Ath-Weston as our General Manager overseeing Health, Safety and Wellbeing, we are
increasing the level of expertise in this area further - with the goal of developing into the
safest seafood company in the world.

Our initiatives around this important topic of health and safety have also included one of our
strategic partners, whom we have been engaged with for the last three years. The
collaboration with Paralympics NZ culminated in a remarkable video, which I am excited to
share with you, as it puts a very special angle on the subject.

(Video, Slide 19)
To close off, I would like to spend a few minutes on subjects that are of increasing
importance to our business.

(Slide 20 – Climate Change)
Climate change has been referred to on numerous occasions during the chairman’s and my
presentation as having had an impact on this year’s result. As we are dependent on natural
marine resources any changes in the oceans will naturally impact on their abundance and
wellbeing.

(Slide 21 – Value strategy drive adjusted EBIT improvement)
The headwinds we experienced in 2018 proved the point that our strategy serves as
effective risk mitigation. As a purely commodity driven business the year would have been
difficult for us, as we would not have been able to compensate for the $11m negative
impact we have experienced as a result of climate related challenges. Although a large share
– approximately 80% - of our volume can still be categorised as commodity, the other 20%
make it possible already now to generate greater value, even under tough conditions. We
expect greater volatility in nature in years to come, but we feel that our strategy gives us the

necessary resilience to combat those headwinds. The increasing independence from large
catch volumes will make it possible to deliver great results, especially as our product
portfolio evolves further beyond food, with our nutraceuticals and other products that are
currently under development.

We will incur further limited increases in overhead cost as we continue building expertise in
innovation, operational excellence and the customer facing end of our supply chain, but
these will be aimed at generating greater value that will outweigh these investments.

(Slide 22 – Plastic waste)
Another subject of increasing importance to our business is plastic pollution and its impact
on the oceans. A rather sombre study forecasts that the oceans will contain more plastic
than fish by 2050 and it is a well-known fact that most seabirds accidentally prey on pieces
of plastic, often leading to their death.

(Slide 23 – Sanford mobilising positive action)
While we await the outcome of studies concerning the effect of plastic on fish and human
health, we have initiated a number of activities that are targeted at significantly reducing the
use of plastics at Sanford. Our teams around the country are often seen cleaning beaches,
usually in partnership with organisations like Sustainable Coastlines. This topic will require
greater attention on a political level to address the fact that 90% of all plastic in the oceans
stems from 10 rivers around the globe and action should naturally be targeted at those areas
with priority.

(Slide 24 – What’s coming for Sanford in 2019)
This past year has been another busy one for all of us. It took a lot of hard work to take us
where we are now, but we now have a lot to look forward to. The amount of change we’ve
gone through is considerable. However, the journey from a predominantly extraction
focused business to one that appreciates our marine resources for the value that they can
deliver as New Zealand’s beautiful seafood and now a further evolution towards capturing
the health benefits these resources hold, is incredibly exciting. We continue to be surprised
by the sheer volume of opportunity our business has to offer as we delve deeper into the
detail.

Progress is a never-ending journey and we know the nature of today’s challenges,
environmentally, ethically and politically, cannot be solved by yester-year’s approach. We
have been working to build relationships and collaborations across our industry, across
sectors and across Government to ensure the necessary focus, agility and collaboration are
in place to embrace these ever-changing demands on our business.

We are hopeful that 2019 will bring to life the actions necessary to support New Zealand in
taking a leadership role in managing our huge marine environment in a way that provides
appropriate financial and economic returns, while at the same time paying the correct

amount of attention to social and environmental prerogatives. We will do our bit, and lead
where necessary, to demonstrate industry accountability through the likes of the Hauraki
Gulf spatial plan and cameras on board fishing vessels.

The holidays ahead will hopefully offer many of us the chance to take a well-deserved break
and prepare for another good challenge ahead. There is a lot to do, but for now I would like
to thank my Sanford team for all their untiring input over the last 12 months. I appreciate
your passion, care and integrity when it comes to turning our business into one that can be
the best seafood company in the world. Thank you all!

I also thank the Board for their support and their contribution to this powerful strategy we
have developed together. A special Thank You to Bruce Goodfellow, who has been a
thoughtful contributor to many discussions around the board table.

(Slide 25 – Sanford video)
Finally, I would like to share our people’s passion for Sanford through a short video.

(Slide 26 – end slide)