NZK FY19 Full Year Results Announcement

Market Announcement
29 August 2019

NEW ZEALAND KING SALMON ANNOUNCES SOLID FY19 RESULTS

New Zealand King Salmon Investments Ltd (NZX & ASX: NZK) reported its financial results for the 12
months ended 30 June 2019 (FY19) today. The business experienced revenue growth of 8% year on
year, with biomass, sales and EBITDA impacted by fish quality and survival due to challenging growing
conditions, as previously reported.

Key highlights include:
• Revenue of $172.6 million, up 8% on FY18
• Statutory net profit after tax of $11.4 million, down 30% on FY18 (partly down due to fair value
biomass adjustment)
• Pro forma operating EBITDA of $25.2 million, down 4% on FY18
• Harvest volume of 7,931 metric tonnes, down 1% on FY18
• Strong sales growth in key export markets, up 9% in North America, up 6% in Other Asian
markets (Asia ex Japan and China), and up strongly in China off a small base
• Implementation of operational improvements to mitigate sustained high-water temperatures
during future summers.

The Board also affirmed its previously announced full year FY20 pro forma operating EBITDA guidance
of between $25.0 million and $28.5 million.

Chairman John Ryder said, “A challenging year has tested our resilience, and yet we have still achieved
a robust result and revenue growth. We achieved our second-most profitable year, despite sustained
high-water temperatures during summer impacting fish survival.

“We continue to focus on operational improvement to advance fish performance and survival and are
forecasting FY20 capex expenditure of $20m to fund these enhancements and other infrastructure
developments.”

Managing Director and CEO Grant Rosewarne said strong brand equity and solid pricing strategies
were key drivers of revenue.

“For all our products we continue to target branded premium markets and have experienced strong
increase in value as a result. New Zealand still accounts for nearly half of our FY19 revenue and is an
important market to us, but we also saw strong growth in North America and Asia throughout the
year. North America accounted for 33% of revenue and 74% of all Ōra King sales and we continue to
gain traction with the Regal retail brand.”

Mr Rosewarne continued, “We are responding decisively to elevated mortality with three key
strategies; firstly, we are introducing a new Single Year Class production model, as well as upwelling
systems to bring cooler water to the surface, to counter expected warm sea temperatures.

“Secondly, we are awaiting Ministerial approval to relocate low flow farms to inshore high flow sites
and, finally, we have applied to establish NZ’s first Open Ocean finfish farm. Our application to farm
7km north of Cape Lambert in the Cook Strait is with Marlborough District Council and we are
expecting a decision by early next year.”

The Board is pleased to declare a final dividend of 3.0 cents per share to be paid on 20 September
2019, bringing the total dividend paid in respect of the FY19 year 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
Mobile: 027 246 0980

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 2,800 shareholders from top of the South. More information can be found at
www.kingsalmon.co.nz

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FACTS AND FIGURES

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A member firm of Ernst & Young Global Limited


Independent auditor’s report to the Shareholders of New Zealand King Salmon
Investments Limited
Report on the audit of the financial statements
Opinion
We have audited the financial statements of New Zealand King Salmon Investments Limited (“the
company”) and its subsidiaries (together “the group”) on pages 2 to 24, which comprise the
consolidated statement of financial position of the group as at 30 June 2019, and the consolidated
statement of comprehensive income, consolidated statement of changes in equity and consolidated
statement of cash flows for the year then ended of the group, and the notes to the consolidated
financial statements including a summary of significant accounting policies.
In our opinion, the consolidated financial statements on pages 2 to 24 present fairly, in all material
respects, the consolidated financial position of the group as at 30 June 2019 and its consolidated
financial performance and cash flows for the year then ended in accordance with New Zealand
equivalents to International Financial Reporting Standards and International Financial Reporting
Standards.
This report is made solely to the company's shareholders, as a body. Our audit has been undertaken so
that we might state to the company's shareholders those matters we are required to state to them in an
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 company and the company's shareholders, as a body,
for our audit work, for this report, or for the opinions we have formed.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report.
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 we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Ernst & Young provides taxation services to the group, has performed a review of the interim financial
statements and performs agreed upon procedures in relation to sustainability information of the group.
Partners and employees of our firm may deal with the group on normal terms within the ordinary
course of trading activities of the business of the group. We have no other relationship with, or interest
in, the group.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current year. These matters were addressed in the
context of our audit of the consolidated financial statements as a whole, and in forming our opinion

A member firm of Ernst & Young Global Limited


thereon, but we do not provide a separate opinion on these matters. For each matter below, our
description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
financial statements section of the audit report, including in relation to these matters. Accordingly, our
audit included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial statements. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying consolidated financial statements.
Valuation and existence of biological assets
Why significant How our audit addressed the key audit matter
At 30 June 2019, the consolidated statement
of financial position includes biological assets
(live salmon) of $78.2 million with an
estimated biomass of 5,173 metric tonnes
measured at fair value less costs to sell. This
includes a fair value increase above cost of
$33.9 million in the carrying amount.
This is a key audit matter because the group’s
estimation of the fair value of biological assets
involves estimation of year end biomass, and a
valuation model that relies on significant
estimation including:
► future biomass growth to harvest;
► future fish mortalities;
► forecast sales prices;
► costs to harvest date and sale;
► sales product mix; and
► use of a weight-based methodology, in
calculating the present value of estimated
gross margin on future fish sales.
Disclosures in relation to biological assets are
included in Note 15 to the group financial
statements.
In
considering the valuation of live salmon we:
► evaluated the appropriateness of key
estimations and assumptions and their impact
on discounted future cash flows;
► tested the mathematical accuracy of
discounted cash flow forecasts;
► agreed key estimation inputs used by the
group in their model to source data and to
board approved budgets;
► involved our valuation specialists in the
evaluation and testing of the mathematical
logic and accuracy of the calculations in the
valuation model and of the discount rate
used; and
► challenged the accuracy of model inputs
compared to historical actual values and
considered the accuracy of previous input
forecasts.
In considering live salmon existence we:
► tested controls over fish count recording of
transfers from a fresh water farm to sea
farms;
► considered the key inputs used by the group
in estimating growth and biomass;
► tested controls over fish quantity and biomass
adjustments to the livestock recording
system;
► agreed significant quantity and biomass
adjustments made by the group in the
livestock recording system to source data;
► performed analytical procedures over feed
conversion to biomass;

A member firm of Ernst & Young Global Limited


► considered the accuracy of previous internal
forecasts of average fish weight and quantity
of fish harvested compared to the livestock
recording system; and
► considered the appropriateness and
sufficiency of biological assets disclosures
included in the group financial statements.
Goodwill impairment assessment
Why significant How our audit addressed the key audit matter
At 30 June 2019, the consolidated statement
of financial position includes goodwill arising in
business combinations of $39.3 million,
assigned to three cash generating units
(CGUs).
This is a key audit matter because the annual
impairment assessment of goodwill involves
significant judgements related to future cash
flow forecasts, discount rate and terminal
growth rate assumptions.
Disclosures in relation to goodwill are included
in Note 17 to the group financial statements.
In obtaining sufficient, appropriate audit evidence

we:
► evaluated the basis of the group’s CGU
determination;
► assessed the allocation of assets and goodwill
to CGUs;
► evaluated the appropriateness of key
assumptions;
► tested the mathematical accuracy of future
cash flow forecasts;
► involved our valuation specialists in assessing
the discount rate and terminal growth rate
applied;
► agreed relevant valuation inputs to board
approved budgets and compared these with
historical actual results. We also considered
the accuracy of previous internal forecasts;
► performed sensitivity analyses on key future
cash flow forecast assumptions, including
earnings before interest, tax, depreciation
and amortisation (EBITDA), renewal periods
of sea farm licence consents, weighted
average cost of capital (WACC) and capital
expenditure levels, to understand the impact
of reasonably possible changes in key
assumptions;
► compared the calculated recoverable values
to the associated carrying amounts, and
assessed whether any impairment charges
were required; and
► considered the appropriateness and
sufficiency of goodwill disclosures included in
the group financial statements.

A member firm of Ernst & Young Global Limited


Valuation of sea farm related assets
Why significant How our audit addressed the key audit matter
At 30 June 2019, the consolidated statement
of financial position includes sea farm assets
recorded within property, plant and equipment
of $16.9 million, and related marine licences
and resource consents recorded within
intangible assets of $3.4 million.
This is a key audit matter because the annual
assessment of remaining useful lives,
amortisation periods and identification of
indicators of impairment involves significant
judgements related to future sea farm use,
marine licence and resource consent renewal
and environmental compliance.
Disclosures in relation to intangibles and
property, plant and equipment are included in
Note 17 and 16 respectively to the group
financial statements.
In obtaining sufficient,
appropriate audit evidence
we:
► considered the group’s assessment of
compliance with resource consents relating to
sea farms;
► evaluated the appropriateness of key
assumptions used by the group in their
assessment of indicators of impairment of
intangibles and property, plant and
equipment;
► evaluated the appropriateness of key
assumptions used by the group in their
determination of remaining useful lives of
significant sea farm assets; and
► considered the appropriateness and
sufficiency of property, plant and equipment
and marine licence intangible assets
disclosures included in the group financial
statements.
Information other than the financial statements and auditor’s report
The directors of the company are responsible for the Annual Report, which includes information other
than the consolidated financial statements and auditor’s report which is expected to be made available
to us after the date of this auditor’s report.
Our opinion on the consolidated financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, 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 during the audit, or otherwise
appears to be materially misstated.
When we read the Annual Report, if we conclude that there is a material misstatement therein, we are
required to communicate the matter to those charged with governance and, if uncorrected, to take
appropriate action to bring the matter to the attention of users for whom our auditor’s report was
prepared.
Directors’ responsibilities for the financial statements
The directors are responsible, on behalf of the entity, for the preparation and fair presentation of the
consolidated financial statements in accordance with New Zealand equivalents to International Financial
Reporting Standards and International Financial Reporting Standards, and for such internal control as

A member firm of Ernst & Young Global Limited


the directors determine is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors are responsible for assessing on behalf
of the entity the group’s ability to continue as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless the directors either intend to
liquidate the group or cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are 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 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 International Standards on Auditing (New
Zealand) will always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and 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 the auditor’s responsibilities for the audit of the financial statements is located
at the External Reporting Board’s website: https://www.xrb.govt.nz/standards-for-assurance-
practitioners/auditors-responsibilities/audit-report-1/. This description forms part of our auditor’s
report.
The engagement partner on the audit resulting in this independent auditor’s report is Bruce Loader.



Chartered Accountants
Christchurch
28 August 2019

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Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)



93 Beatty Street, Tahunanui, Nelson 7011, New Zealand
+64 3 548 5714

contact@kingsalmon.co.nz

www.kingsalmon.co.nz

Results for announcement to the market
Name of issuer New Zealand King Salmon Investments Limited
Reporting Period 12 months to 30 June 2019
Previous Reporting Period 12 months to 30 June 2018
Currency NZD
NZ$ Amount (000s) Percentage change
Revenue from continuing
operations
$172,609 7.7%
Total Revenue $172,609 7.7%
Net profit/(loss) from
continuing operations
$11,350 (29.4) %
Total net profit/(loss) $11,350 (29.4) %
Interim/Final Dividend
Amount per Quoted Equity
Security
$ 0.03000000
Imputed amount per Quoted
Equity Security
$0.01166667
Record Date 06 September 2019
Dividend Payment Date 20 September 2019
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$0.86 $0.87
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
The final dividend was declared on 28 August 2019
Authority for this announcement
Name of person

authorised
to make this announcement
Andrew Clark
Contact person for this
announcement
Andrew Clark
Contact phone number
+64 21 471 953

Contact email address
Andrew.clark@kingsalmon.co.nz

Date of release through MAP

28/08/2019

Audited financial statements accompany this announcement.

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Distribution Notice


93 Beatty Street, Tahunanui, Nelson 7011, New Zealand
+64 3 548 5714

contact@kingsalmon.co.nz

www.kingsalmon.co.nz

Section 1: Issuer information
Name of issuer New Zealand King Salmon Investments Limited
Financial product name/description Ordinary Shares
NZX ticker code NZK
ISIN (If unknown, check on NZX
website)
NZNZKE0003S0
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year X Quarterly
Half Year Special
DRP applies
Record date 06/09/2019
Ex-Date (one business day before
the Record Date)
05/09/2019
Payment date (and allotment date for
DRP)
20/09/2019
Total monies associated with the
distribution
$4,157,134.41
Source of distribution (for example,
retained earnings)
Retained earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution $0.04166667
Total cash distribution $0.03000000
Excluded amount (applicable to listed
PIEs)
N/A
Supplementary distribution amount $0.00529412
Section 3: Imputation credits and Resident Withholding Tax
Is the distribution imputed Fully imputed
If fully or partially imputed, please
state imputation rate as % applied
28%
Imputation tax credits per financial
product
$0.01166667
Resident Withholding Tax per
financial product
$0.00208333
Section 5: Authority for this announcement
Name of person

authorised to make
this announcement
Andrew Clark

Distribution Notice


93 Beatty Street, Tahunanui, Nelson 7011, New Zealand
+64 3 548 5714

contact@kingsalmon.co.nz

www.kingsalmon.co.nz

Contact person for this
announcement
Andrew Clark
Contact phone number +64 21 471 953
Contact email address Andrew.clark@kingsalmon.co.nz
Date of release through MAP

28/08/2019