Annual Meeting Chairman’s Address

14 December 2018

Sanford Limited 2018 Annual Meeting
Mr Paul Norling
Chairman’s Address


(Slides 1 - 2)
I and my fellow directors wish to present to shareholders our report for the year ending 30th
September, 2018 which, in the main, will summarise and in some instances supplement our
reasonably extensive 2018 Annual Report.

(Slide 3 Steffan Stewart)
I need, however, to commence my address today on a very sombre and most regrettable
note. For those shareholders who have read our Annual Report and in particular the
footnote to the Chairman and CEO’s Review section, you will be aware that at the time this
year’s Annual Report was going to print, a fatal accident occurred on one of our vessels at
sea - one of our valued crew members, Steffan Stewart, aboard the San Granit suffered a
fatal injury on November 14 while working on the factory deck of the vessel. Such an
occurrence is a company and a family’s worst nightmare and I trust you will understand that
at the present time we are not able to discuss and certainly neither would we wish to
elaborate further in respect to any details surrounding this extremely unfortunate and tragic
incident. The matter is, of course, subject to official investigation with a report to be issued
in due course as to the exact circumstances - in the meantime the company management is
continuing to focus their attention on supporting the family as well as work colleagues.

I will return to the topic of Health and Safety later in my remarks but wished to accord
priority to this most regrettable matter and to comment on it specifically at the beginning of
my address.

(Slide 4 Integrated Report)
Now to our report on the company’s result and progress over the past 12 months to
September 30, 2018.

2018 Results
Firstly, our financial results for the 2018 year. Following our solid result for the 2017 year,
this past year’s financial outcome fell short of both management and the Board’s
expectations.

(Slide 5 Results)
On the one hand our reported GAAP compliant NPAT of $42.3 million was $4.8 million or
12.9% ahead of our 2017 result - this increase, however, was largely attributable to the
settlement of an insurance claim relating to our Havelock mussel processing facility, a

consequence of the damage sustained during the Kaikoura earthquake. The Non GAAP
compliant methodology of measuring Adjusted or Normalised Earnings before Interest and
Tax (i.e. the Underlying operating result) saw this measurement improve by only 1.6% to
$64.7 million over the 2017 year result.

As we noted in the Annual Report review, our financial performance was adversely
influenced by challenging climatic conditions in our operations around the country – I will
comment further on this shortly. The counterfactual, however, could have been more
challenging had the company not previously embraced and implemented a strategy of
prioritising brand and channel development, innovation and product cascade improvements
which enabled us to mitigate in value terms some of the ‘climate change’ affects
encountered.

This past year also saw us advance our continuing progress with EBIT per kilogram of green-
weight resource (both caught and harvested) from 52c. to 54c per kilogram. If we were to
exclude our lesser value commodity species caught by our charter fishing partners, this
improvement would have been from 57c per kilo to 63c year on year.

On a further positive note, cash flow from operations improved by $22.3 m. to $72.6 m.

(Slides 6-7 Climate Change)
CLIMATE CHANGE
I would now like to briefly revert to the topic of Climate Change which is potentially amongst
our most substantial emerging business risks we face at the present time. The impact of
rising atmospheric temperatures earlier this year in the January/May period saw substantial
increases in ‘normal’ water temperatures – particularly so in the Tasman Sea where the
affect flowed through to some of our fishing grounds as well as certain of our aquaculture
farming waters.

Management and the Board are very mindful of the potential risks that this phenomenon
could pose. Without being at all complacent we are, however, reasonably placed to mitigate
(to some extent), the possible downsides resulting from Climate Change influences – our
relative strengths being the extent, quality and high value characteristics of our wild-catch
quota assets, the location of our salmon farming operations in the cooler southern waters of
Stewart Island and with some diversity in location of our mussel growing areas. Also,
management is investigating and implementing appropriate operational enhancements
wherever practicable. The Climate Change factor is also being taken into full consideration
with all major decisions being made.

I am sure our Chief Executive Officer will have more to say on this important topic during his
address.

(Slide 8 Sanford Strategy)
STRATEGIC REVIEW
I would now like to spend a few moments talking about the company’s strategy.

Earlier this year, senior management together with the Board undertook an extensive review
of the company’s strategy against the background of the company’s vision which, as you are
aware, is to become the Best Seafood Company in the World! The management team put
considerable effort into this review and the Board along with the senior executive looked at
all the material parts and aspects of the company’s business and activities. It was an in-
depth review.

As a consequence of this review we re-affirmed our added value strategy regarding the
company’s marine resources (both fished and farmed) but with greater emphasis to be
placed on product development and innovation as well as getting closer to our end
consumers. There is a considerable amount of activity and some exciting prospects in all
these areas of focus – particularly in non-food opportunities such as nutraceuticals - and
there are also other areas of endeavour where improved commercial outcomes will be
possible.

To lend more support and to accelerate this value-added focus and equally to increase our
efficiency and productivity, the Board also approved in principal, capital investment of $120
million over the next two-year period. In respect to the efficiency and productivity
component this, in the main, will be focussed on optimising our land-based processing
footprint and also selectively improving the efficiency of our fishing fleet where capital
investment is also required.

(Slide 9 Strategy in Action)
OTHER STRATEGIC INITIATIVES
You may have noticed recently that we made a decision to sell our 50% shareholding in
Weihai Dong Won Foods Ltd - a seafood processing and product manufacturing company
which produces crumbed seafood products and is located in China. This business was co-
owned with our long-standing charter fishing partner Dong Won Fisheries Ltd of South
Korea. From a business operations perspective we will continue to supply similar fish species
to the business which will have expanded turnover prospects as the new co-owner is Plenus
Company Limited of Japan which has in excess of 3000 ‘family’ type seafood restaurants.

We have also announced just last week the unconditional sale of our Tauranga based
‘pelagic’ business for $24.3m to Pelco Ltd, another Tauranga based fishing company which
specializes in the pelagic fishery. From Sanford’s viewpoint this fishery had very limited
potential for us to add further value without substantial capital investment and the offer we
received was attractive given the limited prospects and scale that existed under our
ownership.

Both of these transactions are in harmony with our increased and accelerated focus on
maximising the value from what we catch and process.

We are also about to undertake a re-organisation and expansion of our Australian activities
which will focus entirely on the market side of the business. Product will continue to be
resourced in the main from our high quality New Zealand seafood capability. We will,
however, have a much improved ‘on the ground’ sales presence, both directly and indirectly,
and will be getting much closer to end consumers in much greater numbers.

(Slide 10 Auckland Fish Market)
We have a similar objective in New Zealand which is moving ahead in an encouraging way.
This will be assisted by the opening very shortly of our re-vamped Auckland Fishmarket
(downstairs from our Head Office) together with a complex of some 10 new
restaurant/eateries in the same downstairs and courtyard area. I hasten to stress that we
will be the landlord and not the restaurant operator and we are also being assisted with the
establishment and on-going oversight of this facility by one of Auckland’s leading restaurant
development groups. As I understand it there has been strong demand with very good
selected tenant quality.

(Slide 11 Health and Safety)
Health and Safety
During the year to September 30, 2018 we made favourable strides by reducing the number
of Serious Harm Injuries from 10 in the 2017 year to 5 this past year. You might recall that I
drew particular attention to this issue at last year’s Annual Meeting and that we were
looking forward to a measurable improvement in the 2018 year which we achieved. We
were quietly pleased with this improvement although our goal is to get the sustainable
number of Serious Harm Injuries down to zero. Total Reported Injuries also came down by
some 6% - we were looking for an even better result than this but the progress was in the
right direction.

Unfortunately, this progress that the company achieved, ‘pales into insignificance’ with the
tragic death that I spoke of at the outset of this meeting. In this respect shareholders can be
assured that the Board and the senior management team accord the safety of all our
employees and contractors as a paramount priority and this will continue to have our
constant focus.

(Slide 12 Other Matters)
GOVERNMENT AND INDUSTRY MATTERS
Last year we observed that the new (at that time) Government had shown some favourable
beginning signs with a new Minister of Fisheries established and the sensible delay to the
implementation of some regulatory provisions, to enable a more considered and effective
approach to be taken.

The fishing industry is, as we have mentioned, facing challenges particularly on the supply
side of the business. As change is also happening faster and new potential obstacles such as
climate change are emerging, we need a Ministry that reacts to matters that have
operational and/or financial implications for industry participants, with more urgency, agility
and decisiveness. Sanford has clearly illustrated its willingness to work closely with the
regulator to formulate long term and sensible solutions to issues as they arise but materially
improved timeframes would be greatly welcomed.

(Slide 13 Dividend)
Dividend
I acknowledged this issue at last year’s Annual Meeting and it has been the Board’s wish to
endeavour to increase the company’s dividend. Unfortunately, matters have conspired
against our objectives for the following reasons:
- Our profit result did not meet our expectations with climate change intrusions being a
material factor on the supply side of our business.

- The company is in need of continuing investment both in respect to the substantial
transformational change on the market side of our business (e.g. innovation, new product
development and implementation, branding etc) as well as our fishing fleet and processing
plants which are in need of rejuvenation as we seek greater efficiency and productivity.

- Sanford is a capital-intensive undertaking which can also have unpredictable &/or difficult
operational challenges to endeavour to manage e.g. climatic. We are also undergoing a
period of substantial change and for this reason also need to be relatively conservative with
our financial structure including NPAT dividend cover and Debt/EBITDA cover ratios

– for the 2018 year we will pay out just over half of our Profit after Tax which also included
an insurance claim payment.

It is for these reasons that the dividend has remained unchanged again this year and the
Board must consider annually whether a dividend increase is appropriate given the other
competing demands and what is considered to be in the best interests of the company.
Shareholders can be assured, however, that your Board will keep this matter under
continual review but you will understand that I can’t make any promises in this respect at
this point.

(Slide 14)
ACKNOWLEDGEMENTS
In case there may be some of our shareholders who are not aware, I am pleased to be able
to tell you that just last month, Sanford was the recipient of the Excellence in Governance
Award at the Deloitte Top 200 Awards for 2018. This is a prestigious award amongst a very
prestigious group of the top New Zealand companies and in this regard, I wish to particularly

acknowledge my hard-working Board colleagues as well as our dedicated Head Office senior
management team. Very well done to all concerned.

I would also like to publicly and personally acknowledge Mr. Bruce Goodfellow who is
retiring from the Board at the conclusion of this meeting. As stated in our Annual Report,
Bruce has been an integral and longstanding member of the Board since 2006 and has
served the company in this important capacity in a considered, consistent and diligent
manner throughout his tenure.

We thank you for the thoughtful contribution you have made Bruce to the many important
matters that have come before the Board for consideration during your time as a Director,
and as a representative of the substantial Goodfellow shareholding interests in the
Company.
We wish you and Mary Ann a well-deserved and enjoyable retirement. I would be grateful
ladies and gentlemen if you would join with me in expressing our thanks and best wishes to
Bruce.

(Slide 15)
As a consequence of Bruce’s retirement today, I am also very pleased to be able to inform
you that we have just selected a new director as Bruce’s replacement. His name is Peter
Cullinane and he will bring a different but extremely valuable skillset to the Company.

His career experience in Innovation, Brand development and Channel strategy, Marketing
will provide a great addition to Sanford as the company progresses its transition to a higher
end value added seafood company, and also beyond seafood into marine resource-based
nutraceutical products and more.

Peter’s career background includes the leadership of Saatchi and Saatchi’s New Zealand
operations from where he progressed to become the global Chief Operating Officer of this
leading and influential international entity. Subsequent to this, he has formed and grown
other successful businesses, most notably Lewis Road Creamery which has become a stand-
out innovator in the chilled food sector.

He is an ideal fit with Sanford and our strategic pathway forward. He is excited to be joining
us which he will do from February 1, 2019. He also has good public company director
experience in both New Zealand and Australia which includes his current chairmanship of
NZME Group.

To our Chief Executive Officer and his management team along with the entire staff
throughout the company, the year (and since) has been a challenging one. We thank you all
for your efforts and the continued passion you bring to the company as we pursue both our
vision as well as our many short and medium term objectives.

(Slide 16)
Conclusion
The Board and the management team again looks forward to the coming year and
continuing to implement the strategic and operational changes as the company pursues its
vision of becoming the Best Seafood Company in the World. We trust also that the influence
of climate will be less intrusive this year and that we are able to present you with a pleasing
report on our progress, 12 months hence.

(Slide 17 Thank You)
Thank you, ladies and gentlemen - I now have pleasure in placing you in the very
knowledgeable hands of our CEO Mr Volker Kuntzsch who will present his report to you.

---

Fiona is happy to do this slide

The Sanford Board: Peter Kean, Rob McLeod, Paul Norling (Chair) Abby
Foote, Peter Goodfellow and Bruce Goodfellow

SteffanStewart
1992-2018

SANFORD’S 2018
INTEGRATED REPORT
2018 integrated report available at
https://www.sanford.co.nz/investo
rs/reports-1/company-reports/
The report outlines Sanford's
business excellence framework –
this enables each part of the
business to map out their role in
helping to deliver on our goals
4

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%
5

CLIMATE CHANGE THREATS

CLIMATE CHANGE: MITIGATING THE RISK
Mussels
Sanford’s number
one species
Salmon
Creating value with
the fish we have
Wild Catch
Diversity of species
7

SANFORD STRATEGY
Business Excellence Framework
AMBITION
$1 EBIT/KG
2023
VISON
To be the Best
Seafood Company
in the world
PURPOSE
We share the natural
goodness of our oceans
with uncompromising care
8
INVESTMENT PLAN

STRATEGY IN ACTION IN 2018
•SALE OF SANFORD SHARE
OF WEIHAI PLANT
•SALE OF TAURANGA-BASED
PELAGIC ASSETS
9

AUCKLAND FISH MARKET
OPENING 17
TH
DECEMBER

HEALTH, SAFETY AND WELLBEING IN FOCUS

GOVERNMENT AND INDUSTRY RELATIONS

DIVIDEND STABLE IN 2018 AT 23CPS
13

RECOGNITION FOR GOVERNANCE AT SANFORD
SANFORD WINS THE
EXCELLENCE IN
GOVERNANCE AWARD 2018
AT THE
DELOITTE TOP 200 AWARDS

PETER CULLINANE APPOINTED TO SANFORD BOARD
•CHAIR OF NZME BOARD
•FOUNDER/CEO LEWIS ROAD
CREAMERY LTD
•FORMER CEO SAATCHI & SAATCHI
NEW ZEALAND
•FORMER GLOBAL COO SAATCHI &
SAATCHI

THANK YOU TO SANFORD MANAGEMENT AND STAFF

THANK YOU