NZK FY19 Annual Report

“Future expansion of
seafood should come
from aquaculture, which
is one of the fastest
growing food production
sectors in the world.”

EAT-Lancet Commision report, February 2019

100
%
344
326219
0
6300
28
17
1000
NEW JOBS
IN FY19
19
$
153,600
545
OF TEAM MEMBERS AT
OR ABOVE THE LIVING WAGE
LOCAL SHAREHOLDERS
MALE TEAM
MEMBERS
FEMALE TEAM
MEMBERS
46
%
54
%
TOTAL SALES
NEW ZEALAND
EXPORT
PeopleNatureCompany
$
11. 3
$
172.6
$
25.2
million
million
million
NET PROFIT
AFTER TAX
SERIOUS HARM
(NOTIFIABLE)
INJURIES
LITRES DAILY
REDUCTION IN
FACTORY WATER USE
NATIVE TRESS
PLANTED UP TO
BEACH CLEAN UPS
SURFACE HECTARES OF
SALMON FARM SPACE
SPONSORSHIPS AND DONATIONS
PRO FORMA
OPERATING EBITDA
REVENUE OF
We work to fulfil salmon
aquaculture’s potential as a
positive force for the health of
people, nature and our company.
COMMITMENT
TO ENSURING
REUSABLE /
RECYCLABLE OR
COMPOSTABLE
PACKAGING BY 2025
100
%
TONNES HARVESTED
7,931
KING SHAG
NUMBERS UP
25
%
4STAR BAP CERTIFIED
EMPLOYEES
4.1
kg
AVERAGE
HARVEST
SIZE

BLUE FRONTIERS
Aquaculture is one of the most
efficient ways of producing protein,
and salmon farming is leading the
way in aquaculture innovation,
according to the Global Salmon
Initiative. It offers one possible
solution to the global mission to
meet growing protein needs, while
continuing to support healthy and
vibrant oceans.
At New Zealand King Salmon, we farm a sustainable product that is
high in protein and Omega 3, with minimal environmental impact.
We have a positive impact in our workplace of over 500 team
members, and in our local communities where we support and
sponsor a number of organisations.
We are a
trustworthy
and transparent
neighbour and
community
partner.
We attract
and develop
talented people
across our diverse
roles and teams.
We are
committed to
using resources
responsibly
and reducing
our impacts
wherever
possible.
We work to
fulfil salmon
aquaculture’s
potential as a
positive force
for the health of
people, nature
and our company.
We are
committed to
caring for water
in our region.
OUR COMMITMENT TO
SUSTAINABILITY
As part of our sustainability journey, the company has
committed to five United Nations’ Sustainable Development
Goals as a guiding framework for our sustainability activities.
As a result, we have developed our own sustainability goals
which are specific to our business.
IN THIS REPORT
Caring for our people and communities
Farming in balance
Delivering healthy, tasty, branded products
Financial Statements
44
64
28
16
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
76
BLUE FRONTIERSBLUE FRONTIERS

CHAIR & CEO REPORT
John Ryder
CHAIRMAN
Grant Rosewarne
MANAGING
DIRECTOR & CEO
Our second-most profitable year – and third as
a public company – has been achieved despite
challenging growing and climatic conditions.
The business benefited from improved pricing
and revenue growth of eight per cent year-
on-year. However, sustained warm water
temperatures during summer impacted the
overall survival rate of our salmon.
Our records show that three of the last five summers have seen
record high water temperatures. While last summer wasn’t quite
as hot as the all-time record of the year before, the effects of
the summer carried on well into April, impacting the survival
of our salmon.
We are responding decisively to elevated mortality with three
strategies; firstly, we are introducing a new single year class
production model during the next two years to improve resilience
during the summer period, as well as introducing better
biosecurity management.
Secondly, we are awaiting Ministerial approval to relocate low
flow farms to inshore high flow sites.
Finally, we are progressing open ocean farming, with a pending
application for a site we have called “Blue Endeavour”, 7km
north of Cape Lambert in the Cook Strait. If the application
is approved, we intend to commission an initial farm with the
potential to grow 4,000 tonnes of King salmon per cycle, with
harvest anticipated in FY2023.
Sustainability remains key to our business model. The need
for low-carbon, high-nutrition food is a global issue, and we
are investing in what we see as the future of sustainable
food production.
Aquaculture already enjoys widespread support among the
global scientific community, including key organisations such
as The Nature Conservancy and the EAT-Lancet Commission
on Food, Planet, Health.
The Nature Conservancy believes farming seafood is one of the
most environmentally efficient ways of producing animal protein,
and that new technologies and certain production systems now
offer the opportunity to grow seafood with even less impact.
The EAT-Lancet Commission on Food, Planet, Health was the
result of a three-year project bringing together 37 experts from
16 countries. The report said future expansion of seafood “should
come from aquaculture” given the pressure on wild fish stocks
and the need to steer the global population towards animal
proteins with reduced environmental effects and enhanced
health benefits, such as those offered by salmon.
With the growing support for well-managed ocean food
production models, we are confident our strategy for the
future is well-placed.
SUSTAINABILITY UPDATE
We have a 4-star rating with the Global Aquaculture Alliance’s
Best Aquaculture Practices (BAP) programme, which is the
highest designation.
In addition to being committed to the five United Nations’
Sustainable Development Goals specific to our business, we have
committed to the 10 principles of the UN’s Global Compact on
human rights, labour, environment and anti-corruption.
We are aligned with the Global Salmon Initiative (GSI) worldwide
goal to maintain and grow the industry’s licence to operate
"Food from the ocean and
inland waters can supply
the world with nutritious
food with a relatively low
carbon footprint compared
with other animal-source
food production sectors."
Global Goals, Ocean Opportunities,
UN Global Compact
FUTURE FARMING
We believe farming in the open ocean is the future of our
industry, globally and in New Zealand.
Aquaculture has the potential to contribute significantly to
New Zealand’s sustainable food future, and even become this
country’s most valuable industry and greenest primary sector.
Farming in deeper water far from land brings positive
environmental and social benefits for our community. It also
provides the best conditions to produce quality protein at a
greater scale.
We now have the technology to do this with our unique King
salmon species and the future possibilities from harnessing the
ocean’s potential is a truly exciting prospect.
Achieving open ocean farming will also support the fulfilment of
our mission to:
• Enrich the lives of our customers (taste and health), team
members (wellness, personal development and wealth) and
shareholders (wealth, environmental and social conscience).
• Contribute positively to the communities in which we operate,
providing regional prosperity and operating in balance with
the natural environment.
• Reward our partners (value added relationships) and suppliers
(transactional relationships) fairly.
The realisation of this project will support a significant increase
in production, create more jobs and boost the economies of
Marlborough and Nelson – all without disturbing residents and
recreational water users.
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
98
CHAIR & CEO REPORTCHAIR & CEO REPORT

AMCHAM DHL
Express Success &
Innovation Awards
WINNER
Exporter of the Year – $10m +
NZKS won the Exporter of the Year $10m+
award. The AmCham awards celebrate
success and innovation in the export,
import and investment sectors between
New Zealand and its third-largest trading
partner, the USA.
TVNZ Marketing
Awards
WINNER
Sector Award - Fast Moving
Consumer Goods
The team won the FMCG category at
the NZ Marketing Awards 2018 for the
launch campaign for Regal Manuka
Salmon, featuring Al Brown and Reg
the Seal. Regal was in fine company
with the other finalists being iconic
brands Vogel's and Speight's.
by educating about the benefits of salmon farming. As a GSI
member, we have signed up to gain Aquaculture Stewardship
Council (ASC) certification by 2020, with the required audit
scheduled for the second half of 2019.
We are also a partner in the New Zealand Plastic Packaging
Declaration, which commits us to the 2025 goal of using
100% reusable, recyclable or compostable packaging across
our business.
BUSINESS UPDATE
For all our products we continue to target branded premium
markets and have experienced a strong increase in value as a
result. New Zealand still accounts for nearly half of our FY19
revenue and is an important market for us, but we also saw
strong revenue growth in North America, China and South East
Asian markets.
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. Ōra King now features on approximately 1,200 restaurant
menus worldwide, which is completely in line with our strategy of
being known to our final consumer.
Our pet food brand, Omega Plus, has successfully launched
into the China market via pet products e-store Boqii.com, with
early results proving encouraging. With China set to become
the world’s largest pet food and treats market, eclipsing the
United States’ US$33 billion market, the potential of the
China market is huge.
NEW FARMING MODEL
After a tough couple of summers, we are now planning for
higher water temperatures each year. Prior to this coming
summer, we began implementing measures to counter these
higher temperatures, including summer diets, adapting
our breeding programme for temperature resistance, and
immunisations to improve fish health.
The company is also introducing a single year class model on all
farms, which means only one year class of salmon will be grown
in each farm with a period of fallowing. This will further protect
fish health, improve survival rates and biosecurity.
We are also introducing upwelling, a technique commonly used
on salmon farms around the world. Cooler water will be pumped
up to the surface of farm pens, counteracting the effects of
warmer surface temperatures, including stress and mortality.
FINANCIAL UPDATE:
For the 12-month period ending 30 June 2019, your Board
is pleased to announce our second most successful result,
recording a profit after tax of $11.3 million, down 33% on FY18.
The company recorded record revenue of $172.6 million, up
8% on FY18. The Pro Forma operating EBITDA, a metric used
extensively by your Board as an indication of the underlying
profitability for the group, is $25.2 million, down 4% on FY18 but
within the FY19 earnings range of $25 million to $28.5 million.
Record price of $22.95 per kg was achieved which was a healthy
11% up on last financial year.
The results were affected by a second year of warm sea
temperatures, which also impacted sales volume, which dropped
3% on FY18 to 7,520 metric tonnes.
We are pleased to advise that a final dividend of 3.0 cents per
share was declared for payment on 20 September, bringing the
total dividend paid for FY19 to 5.0 cents per share.
SUMMARY
Your Board would like to take this opportunity to acknowledge
the contribution of the entire New Zealand King Salmon team
during what has been a challenging period. They have remained
positive and shown passion for our product and for the future of
the company.
We would also like to thank our broader New Zealand
team – our shareholders, our customers, our community and our
partners, for supporting us throughout the year. The prestigious
awards listed opposite are testament to the contributions from
all of you.
We look forward to an exciting year ahead, in the anticipation
of taking salmon farming to the next level and achieving our
mission to enrich the lives of all of our stakeholders.
John Ryder
CHAIRMAN
Grant Rosewarne
MANAGING DIRECTOR & CEO
Marine Farmers
Association (MFA)
WINNER
Research & Development Award
Omega Innovations – Simon Thomas
Simon Thomas won the R&D award for
the innovative work Omega Innovations
does adding value to what was once
considered a waste product. They
have created premium, value-added
products such as Omega Plus pet food,
Big Catch Salmon Burley and compost.
Seafood NZ
Seafood Star Awards
WINNER
Our People Award
Justin Hough from our sea water aquaculture
team won the ‘Our People’ award at the
Seafood NZ industry awards. Presented for
his leadership of the new pen construction in
the Pelorus Sound.
NZIBA – New Zealand
International Business
Awards
WINNER
Inspiring Preference for NZ
NZKS won the Inspiring Preference for New
Zealand award and was also a finalist in
the categories for Innovation and Inspiring
Female Leader. These well-known awards pit
us against companies from all industries, not
just food. To win an award for excellence in
telling the NZ story was incredibly rewarding
for a proud New Zealand business.
Massey University
NZ Food Awards
FINALIST
Finalist –Primary Sector Products
Ōra King TYEE was a finalist for the Primary
Sector Products award. These long-standing
awards are the ultimate celebration of
innovation and excellence in New Zealand
food and beverage.
Marlborough Chamber
of Commerce Business
Excellence Awards
WINNER
Clever Business Award
We won the Clever Business award for our
innovative Ōra King TYEE. These annual
awards celebrate the local business
community, highlighting organisations
that contribute to the success of the
Marlborough economy.
AWARDS
NEW ZEALAND KING SALMON ( ANNUAL REPORT FY19
10
CHAIR & CEO REPORT

PERFORMANCE HIGHLIGHTS
BIOLOGICAL PERFORMANCE – KEY INDICATORS
The FY19 harvest volume of 7,931 tonnes (t) was in line with FY18 of 8,018t however high summer water temperatures gave rise to a
significant increase in mortality, which increased to 23.2%, slightly up on the prior year (20.4%). This increase in summer mortality
also negatively impacted closing livestock biomass, which at 5,125t is below the prior year. High water temperatures led us to
implement a new production model based on single year class for the FY20 year. Single year class will mean farm managers and team
members can focus on improving biosecurity, feeding and fish health. It also allows the establishment of fallow periods on all farms,
which is better for the environment. The new production model also includes the following to be implemented:
• Reduced handling of stock – all stock entered in their eventual harvest pen.
• Upwelling systems to be installed on all farms, providing cooler water from depth and improving waterflow.
• Passive grading systems to reduce biomass before summer periods.
• All nets removed post harvest (predator and grower), returned to land, cleaned of all biofouling, disinfected and repaired before
being reinstalled prior to smolt entry.
We continue efforts to further improve FCR and are working with Seafood Innovations Ltd, the Cawthron Institute, and existing and
prospective international feed partners to undertake research into improving feed for the King salmon species. FY19 saw an increase
in average feed cost versus the previous year due to the increased use of specialty diets, which showed limited apparent benefit.
The table below shows key biological measures against the actual performance and the 2018 forecast detailed in the PDS:
Income Statement ($000)FY2019FY2018
Sales volume [t]7, 5 2 07, 7 7 9
Revenue 172.6 160.3
EBITDA 23.1 28.5
Pro Forma EBITDA 25.2 26.2
Net Profit After Tax (NPAT) 11.3 16.1
Pro Forma Operating NPAT 12.9 14.5
Total assets 222.1 216.0
Cash and cash equivalents 6.2 14.4
Total liabilities 53.3 49.7
Net cash / (debt) (9.2) 4.0
Net cash flows from operating activities
10.8 24.8
Biological MetricsFY2019FY2018
Harvest Volume [t]7, 9318,018
Feed Conversion Ratio (FCR)1.801.81
Mortality as a % of Biomass23.2%20.4%
Closing Livestock Biomass [t]5,1255,391
Feed Volume [t]19,59317,952
Your Board is announcing net profit after tax of
$11.3m for the full year. This result is lower than
FY18 (33%) due to challenges with fish survival
which saw mortality cost increase and our GAAP
result negatively impacted by movements in fair
value. Despite record revenue of $172.6m our Pro
Forma operating EBITDA of $25.2m is slightly down
on FY18 (4%). Whilst demand remains favourable
and we have seen strong revenue growth,
the challenges posed by warm summer water
temperatures affecting fish survival has negatively
impacted the FY19 result, and seen us implement
a new aquaculture production model.
Directors and management use non-GAAP profit measures when discussing financial performance in this document. The Directors and management believe
that these measures provide information that is useful to stakeholders along with GAAP measures. International financial reporting standards require us to value
our biological assets (salmon) and foreign exchange contracts at the end of each year. Changes in the values of these assets are recognised as a gain or loss in
our accounts. However, because only a small percentage of these fish are ready for harvest, and because we intend to hold our foreign exchange contracts to
completion (taking any associated gain or loss on those contracts at the point at which they are closed out), our approach is to focus on profit or loss prior to these
adjustments. Furthermore, the non-GAAP profit measures discussed above are also used internally to evaluate company performance. Non-GAAP profit measures
are not prepared in accordance with NZ IFRS and are not uniformly defined, therefore the non-GAAP profit measures reported in this document may not be
comparable with those that other companies report and should not be viewed in isolation or considered as a substitute for measures reported by New Zealand King
Salmon Investments Limited in accordance with NZ IFRS.
Marlborough salmon relocation costs of $204k were capitalised in the period as NZKS entered the next phase of work with Iwi and MPI.
In calculating Pro Forma Operating NPAT the financing cost and income tax expense differ from statutory due to the adjusting of income tax to reflect tax expense
on Pro Forma Operating EBITDA.
FY2019FY2018
Reconciliation of Non-GAAP to GAAP Financials ($000)ActualActual
Net Profit/ (Loss) After Tax 11,350 16,125
Add Back:
Depreciation, amortisation and impairment6,2345,105
Net financing cost1,092690
Income tax expense/ (income)4,3876,562
Statutory EBITDA 23,063 28,482
Deduct:
Fair value (gains) / losses2,103(2,549)
Operating EBITDA25,16625,933
Pro Forma adjustments:
Non-recurring or infrequent items
Consent swap expense write off − 232
Offer costs − −
Supplier settlement gain − −
Pro Forma Operating EBITDA25,16626,165
Deduct:
Depreciation and amortisation(6,234)(5,105)
Net financing cost(1,092)(690)
Income tax (expense) / income(4,976)(5,913)
Pro Forma Operating NPAT12,86414,457
FINANCIAL PERFORMANCE – KEY INDICATORS
TONNES HARVESTED
7,931
4.1
kg
AVERAGE
HARVEST
SIZE
$
25.2million
PRO FORMA
OPERATING
EBITDA
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
1312
PERFORMANCE HIGHLIGHTSPERFORMANCE HIGHLIGHTS

BEST PRACTICE
FARMING MODEL
A best practice farming model contains multiple
separate regions with each region containing one or
more farms to adequate commercial scale. Farms and
regions work in balance to ensure we are able to fallow
while maintaining continuous supply.
million
$
3 4. 3
NZ'S MARINE
ENVIRONMENT
IS OVER
OF THE
WORLD'S
SURFACE
OF THE
WORLD'S
PROTEIN
LARGER
THAN OUR
LAND MASS21x
71
%
17
%
Our vision is to pursue best practice
salmon farming to deliver a sustainable
food solution for the future.
Future Farming
WHAT ARE WE DOING?
To fulfil our future farming vision, we must
seek out the most suitable waterspace
to grow our King salmon sustainably.
Our two key strategic initiatives to
achieve this goal are
1. Farm relocation
2. Open ocean farming
COVERS
$
623
million
REVENUE GENERATED BY
AQUACULTURE IN NEW ZEALAND
REVENUE EXISTING HIGH FLOW SITES
Monitoring continues
for future open ocean
locations
Single year class model under
implementation – see page 37
Expecting Blue
Endeavour consent
application by 2020
VOLUME
2016201720182019202020212022
8,018t
~8,000t~8,000t
7,931t
~9,200t
7, 2 32 t
6,315t
FUTURE INCREMENTAL GROWTH
Based on existing water space
FINANCIAL YEAR
PER HECTARE
PRODUCES
Proposed low flow
sites for relocation
Proposed new
high flow sites
Active sites
Proposed open
ocean sites
(farms not to scale)
BEST PRACTICE FOR BIOSECURITY
Key considerations for regional management include:
ADEQUATE
SEPARATION
HIGH FLOW,
COOL & DEEP
SINGLE YEAR CLASS
& FALLOWING
MULTIPLE
REGIONS
THE FUTURE INCLUDES
OCEAN FARMING
Our first proposed open ocean farm, dubbed Blue
Endeavour, is located 7kms north of Cape Lambert,
Marlborough. The application for consent is under
consideration by the Marlborough District Council. Each
farm will produce up to 4000t per 18 month cycle.
Applications to monitor open ocean conditions in
locations off the east coast of the South Island are also
in progress, as part of early stage investigations into
future sites for open ocean salmon farming over the
next 10 years.
Blue Endeavour: First
open ocean salmon
farming region in NZ
THE OCEAN OPPORTUNITY
THE BENEFITS
MINIMAL
SEABED IMPACT
DISTANCE FROM
COMMUNITIES
REGIONAL
ECONOMY
FISH QUALITYBIOSECURITY
GROWTH
OPPORTUNITIES
2019: BLUE FRONTIERS
15
NEW ZEALAND KING SALMON | ANNUAL REPORT FY19
14
OUR VISIONOUR VISION

We attract and develop talented people
across our diverse roles and teams.
The success of our business in today’s
world is highly dependent on the
communities and the environment in
which we live and operate, as well as
the people who care for our salmon.
Caring for our
people and
communities
We work to fulfil salmon aquaculture’s
potential as a positive force for the health
of people, nature and our company.
We are a trustworthy and transparent
neighbour and community partner.

One of the key ingredients to the future
sustainability of any business is its people.
Talented team members are crucial to the success of any
business, and at New Zealand King Salmon that is no exception.
With over 500 team members predominantly based in
Marlborough and Nelson, we are a significant employer for the
region, requiring a diverse range of skills and experience.
Engagement
Our annual engagement survey in August 2018 had the following
results, indicating a stable result for engagement compared with
the previous year:
OUR COMMITMENT
TO PEOPLE
ENGAGED
TEAM MEMBERS
AMBIVALENT
TEAM MEMBERS
DISENGAGED
TEAM MEMBERS
100
%
OF TEAM MEMBERS AT OR
ABOVE THE LIVING WAGE
UP 0.8
%
UP 0.4
%
DOWN 1.2
%
TALENT RECRUITMENT AND
RETENTION
We recognise the need to attract and retain great talent,
continually supporting them in their professional development.
We put more resource and focus on supporting our managers
with recruitment to ensure “we are getting the right people
with the right skills to fill the right roles and who are motivated
to execute our company strategy” – a key part of this is around
additional personality profiling and testing.
We have continued to provide leadership workshops through the
Dale Carnegie Leadership Programme. Many team members
have gone through the two-day Courageous Conversations
workshops, encouraging strong, sensitive and assertive
communication. We have developed more cross-functional visits
and secondment programmes, where we move team members
around the company to encourage learning opportunities.
Aquaculture Excellence Awards
We launched our first Aquaculture Excellence Awards this year,
established to identify and reward the best of the best within
our aquaculture division. In future years we plan to roll out the
awards to other divisions.
The awards recognise the hard work of our aquaculture
division forging a path forward in the unique world of the
King salmon species.
More than 250 nominations were received across 12 award
categories, and over 170 people attended the gala dinner and
awards ceremony, with the theme ‘Life Under Water’.
Over 250 nominations were received across 12 award categories.
The ultimate award of ‘Aquaculture Star 2018’ was presented
to two young team members: Dayle Snowden from Tentburn
Freshwater facility, and Sam Pearson from the Harvest team.
Both received a financial contribution towards their personal
development. Sam opted to travel to the Boston Seafood Show
in early 2019, to meet wholesale customers and end-users, and
better understand what drives them to purchase our products
and what their needs are. Dayle is planning a trip to Chile in
early 2020 to work at a hatchery and gain experience in first
feeding systems.
Dayle Snowden and Sam Pearson
are our 2018 'Aquaculture Stars'
Results from the 2018 survey show that 32% of staff were
engaged, 55.6% ambivalent and 12.4% disengaged. We carry
out the survey to find out what our team members think and the
level of communication within the company.
Our commitment to the Ten Principles of the
UN Global Compact
This year, New Zealand King Salmon became a Participant in the United Nations
Global Compact, established to drive business awareness and action in support
of achieving the UN's Sustainable Development Goals by 2030.
The Global Compact encourages participants to adopt a principles-based approach
to doing business more sustainably. This means operating in ways that, at a
minimum, meet fundamental responsibilities in the areas of human rights, labour,
environment and anti-corruption.
Our aim is to continuously incorporate the Ten Principles of the UN Global Compact
into strategies, policies and procedures, fulfilling our basic responsibilities to people
and planet, but also setting the stage for more detailed sustainability work in
our own industry.
Our first annual Communication of Progress (COP) will be submitted to the Global
Compact in August, reporting our achievements to date within these principles.
Commitment to fair pay and the Living Wage
Our goal of ensuring all our team members are paid to the New Zealand Living Wage
standard – nearly $3 an hour more than the minimum wage – was achieved this year.
We're proud to report that 100% of our team members were at or above the current
Living Wage of $20.55 by the end of FY19.
SUSTAINABILITY ACTIONS
2019: BLUE FRONTIERS
19
CARING FOR OUR PEOPLE AND COMMUNITIES

WORK PLACEMENTS AND
INTERNSHIPS
We understand the need to identify and encourage the next
generation of our workforce. Our participation in the Summer
of Tech national internship programme is one example of how
we do this. Two interns were placed in our business over the
summer months – one as an electrical engineering apprentice in
our processing plant, and the other an ICT graduate who worked
with the corporate marketing team on our digital projects.
We also partner with Nelson Marlborough Institute of Technology
(NMIT) to provide scholarships and work experience for local
students across our business. The scholarships originally focused
on aquaculture, but now encompass business and hospitality
students. The scholarships usually incorporate tailored work
experience opportunities within the business to suit their
career aspirations.
SCHOLARSHIP RECIPIENTS 2019
David Stephens
NZ King Salmon Aquaculture Scholarship recipient, Year 3
"I believe future and present aquaculture needs to be balanced
with the possible environmental impacts of producing this
valuable food source, and am keen to continue my learning
in this field."
Chris Chamberlain
NZ King Salmon Aquaculture Scholarship recipient, Year 3
“The scholarship will help me financially as I try to save for
the feed trial part of my final year, which involves a trip
to New Caledonia.”
Dane Laugesen
NZ King Salmon Aquaculture Scholarship recipient, Year 3
“Seeing the possibilities that aquaculture has presently and
in the future, excites me to want to stay within the industry
and work hard.”
Samiuela Pouanga
NZ King Salmon Business Scholarship recipient
Sam is currently part of the team on the Primary Line Night
Shift. He made the decision to go ‘back to school’ to get a
qualification with the hope of moving into other areas within
the business.
Danielle Thomas
NZ King Salmon Hospitality Scholarship recipient
“I plan to travel to gain experience from different cultures
and learn first-hand some of the techniques and dishes
that they use.”
Samiuela Pouanga
HEALTH, SAFETY
AND WELLNESS
Health, Safety and Wellness (HSW) is
an essential part of everything we do
at New Zealand King Salmon.
OUR ACHIEVEMENTS
THIS YEAR
July 2018 – June 2019
OUR ACHIEVEMENTS
THIS YEAR
July 2018 – June 2019
OUR FOUR KEY HSW PRINCIPLES:
ENGAGEMENT
We will involve all our team
members in our plans to
improve our health, safety
and wellness performance.
PERFORMANCE
We will actively look to
recognise positive health,
safety and wellness behaviours
and will challenge any
team member who fails to
set the highest personal
standards of health and safety
performance, while continuing
to improve equipment
and infrastructure.
• Near miss reporting
remains high
• Farm coordinates set up as
recognised locations with
police and St John.
• Hazard registers moved to
single hazard review based
on level of risk.
• Rapid Global now in use for
contractor pre-qualification
and induction.
• Reviews completed for
diver vessel interactions,
pedestrian forklift
interactions and pen towing.
• New winch design for
Tory Channel.
• Board gets detailed
monthly reports and a
director attends executive
steering meetings. Board
now also has a Health &
Safety Committee.
ACCOUNTABILITY
All our team members will
have a clear understanding
of their health, safety and
wellness accountabilities
through clarity of expectations
and ongoing training.
• Annual conferences for
leadership and health and
safety representatives.
• Three cross functional
visits for team members
visiting other sites.
• Completed Worksafe
inspection of Waiau
hatchery with very
positive feedback.
• Ran a wellness seminar
with the Mental Health
Foundation and contributed
to their national
communications campaign.
• Lone worker
devices purchased.
• New forklifts purchased for
Bullen Street Dispatch team.
• New improved pallet jacks
in the Tory Channel.
• Began offering paid GP
visits to team members with
work-related injuries.
• Continuation of monthly
nominations highlighting
positive HSW behaviours
• Investigations into lost time
injuries are reviewed by
Senior Leadership Team.
SYSTEMS & PROCESSES
We will have systems and
processes that manage risk in
the workplace. We commit to
design and engineer high-risk
activities out of our business
wherever possible.
01020304
OUR ACHIEVEMENTS
THIS YEAR
July 2018 – June 2019
OUR ACHIEVEMENTS
THIS YEAR
July 2018 – June 2019
• Since the first quarter of
2018 we have seen a 35%
increase in completion of
H&S meetings and a 177%
increase in audit completion
across the business.
• Our aquaculture team
ran a full diver evacuation
involving NZKS, Coast
Guard, St John, the
Nelson Marlborough
Rescue Helicopter and the
decompression chamber
team in Christchurch.
• Engaged provider to bring
HSR training onsite and take
reps to national certificate
level 3 in OH&S.
• Restructured Board visits
to help them better meet
their duties and engage with
the team.
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
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CARING FOR OUR PEOPLE AND COMMUNITIESCARING FOR OUR PEOPLE AND COMMUNITIES

STAYING SAFE AT WORK
Our main HSW metrics are Lost-time Injury Frequency
Rate, (LTIFR) and Total Recordable Incident Frequency
Rate (TRIFR), and a severity measure based on the
average number of days lost per Lost time injuries. Our
LTIFR for the year was 28.1, up from 18.1 in FY18. Our TRIFR
was 248.4, down from 254.5 to FY18. Our severity measure
was 14, up from five in 2018. While LTIs have risen, we have
had no serious injuries that required notification during
the financial year. Lost time injuries we have recorded
are largely low risk strains and sprains that merely require
time to rehabilitate.
Leading indicators such as audit completion, positive
behaviour nominations and health and safety
meetings have all improved when compared to FY18.
Comprehensive near miss reporting makes a positive
impact on safety as it allows us to identify incidents and
make improvements before more serious incident occurs.
In FY19, 832 near misses were reported, compared to 998
last financial year.
Mental health and wellness continues to be an area of
focus for the Government and Worksafe. To reflect this,
we have started working on a wellness plan, holding a
number of mental wellbeing workshops as well as working
with the Mental Health Foundation.
Maritime Operations
• Continued ongoing skipper training
• Diver evacuation and man overboard scenario planning
and practical drills
• Use of crotch strap made mandatory
• Lone worker devices rolled out to farms and hatcheries
Fire, Electricity & Natural Events
• Adoption of sophisticated lone working devices with
remote monitoring of lone working
• Ongoing fire evacuation and site preparedness activities
• Fire audits completed for Bullen St sites
• Warden training conducted for 50+ team members
Heights & Lifting
• Training conducted for dispatch team working
with man cage
• Harvest lifting methods reviewed and updated
• New winch design rolled out in Tory Channel
Confined Spaces
• Developed new confined space procedures for newly
identified confined spaces
• Gas detection installed on B10 and other barges
Mobile Plant & Equipment
• Updated forklift trucks with new technologies including
individual pin code access
• Speed limits that are set to each operator’s skill level
• Driver assessments
• Advanced driver training continues
Construction Activity
• Introduction of computer-based contractor
management and pre-approval and
assessment software
• Asbestos surveys completed, awaiting final reports
We have had no serious injuries
that required notification
during the financial year.
ADDRESSING CRITICAL RISK
We have identified six critical risks in our business.
This year we took the following improvement actions:
832
NEAR MISSES REPORTED
2019: BLUE FRONTIERS
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NEW ZEALAND KING SALMON – ANNUAL REPORT FY19
CARING FOR OUR PEOPLE AND COMMUNITIES

New Zealand King Salmon is proud to call the
Top of the South our home, and we’re committed
to our communities wherever we have a
presence. Although we’re a global business, it’s
important to us that we remain local.
LOOKING AFTER LOCALS
We are proud of the role we play in the regional economy of the
Top of the South. Salmon farming has an ‘economic multiplier’
effect – it creates work and income for employees, as well as a
raft of local suppliers.
It also creates opportunities for the next generation, and helps
secure a thriving future for aquaculture in the region.
Through our relationships with Te Tau Ihu (Top of the South) iwi,
we collaborate on a variety of local partnerships and projects.
OUR COMMUNITY
Contribute to
the economic
development of our
regional community
Improve life in the
community; focus on
youth development,
environmental
and educational
organisations
Build constructive
partnerships with iwi
Be a good
neighbour
Participate in
flagship local food
and wine events
Produce the world’s
finest salmon
and make our
community proud
Our commitments:
Queen Charlotte Yacht Club
Boaties are an important part of our community, and the entry
to the Sounds represents the heartland of our business.
We are a platinum sponsor of Queen Charlotte Yacht Club’s
rebuild, and its new main function room will be called the King
Salmon Ward Room.
Head of the club's redevelopment committee, Ian Gardiner,
says their partnership with NZKS is “critical” and goes beyond
just financial support.
“Because NZ King Salmon is such a well-known and respected
brand in the Picton and Marlborough community, and a big
employer, it’s provided a catalyst for other supporters to
get on board.”
Nelson Tasman Hospice
The new $11.5 million Nelson Tasman Hospice building was opened
by the Prime Minister in April. The hospice provides a variety of
free specialist care services for people who have a life-limiting
illness – supporting them, their families /whānau and carers
through illness, death and bereavement. We chose to sponsor the
reception area and café as it aligns with our beliefs of giving back
to our community and our association with food.
From environmental initiatives to
youth development programmes,
we’re involved with a variety of
organisations and charities.
Available for feedback
We consult with a wide variety of individuals and groups,
one-on-one, in larger briefings or at public meetings,
depending on the level of communication required.
For example, as part of our commitment to the Aquaculture
Stewardship Council (ASC), we held a public meeting
in Picton in June, where we provided attendees with a
company update and details of our participation in the ASC
certification programme. We aim to communicate more
extensively than is legally required, which means we actively
work with various interest groups, including central and
local government, iwi, NGOs and community organisations.
Support through sponsorships
From environmental initiatives to youth development
programmes, we’re involved with a variety of organisations
and charities throughout Marlborough, Nelson/ Tasman,
Golden Bay and Canterbury.
We also support a variety of programmes in local schools
and nurture the next generation through our scholarships
and internship programme with Nelson Marlborough
Institute of Technology (NMIT) and the Summer of Tech.
In the past year, we have backed two large projects which
we believe provide huge benefit to their communities.
We sponsored the café and reception in the new Nelson
Tasman Hospice facility, and also contributed towards the
redevelopment of the Queen Charlotte Yacht Club in Picton.
SUSTAINABILITY ACTIONS
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
2524
CARING FOR OUR PEOPLE AND COMMUNITIESCARING FOR OUR PEOPLE AND COMMUNITIES

Graeme Dingle Foundation
We are gold sponsors of the Graeme Dingle Foundation’s Kiwi
Can programme in Marlborough. Kiwi Can is currently run in
nine primary schools in Marlborough. The programme teaches
the children values such as integrity and respect, which are
important skills for life. We have also raised funds for Kiwi Can
via our stands at the Picton Maritime Festival and Havelock
Seafood & Mussel Festival. We are actively involved in the careers
day and Career Navigator through the foundation.
Mistletoe Charitable Foundation
We are premier sponsors of the foundation, which provides
financial assistance for any New Zealand school-aged youth
to attend school camp at Mistletoe Bay in the Marlborough
Sounds. We also held an auction which raised over $6,000 for
the Mistletoe Charitable foundation at our annual shareholder
dinner. Chef Mark McAllister, winner of the Best New Zealand
Dish award at the 2018 Ōra King awards, was there to personally
serve up his winning ‘Salmon Solstice’ dish.
Kaipupu Wildlife Sanctuary
We support the sanctuary in its goal to restore a 40-hectare
‘mainland island’ in Picton Harbour. The sanctuary offers
amazing wildlife viewing, school or group visits and
volunteering opportunities.
Koru Native Wildlife Centre
We have a long-term sponsorship partnership with the newly-
opened Koru Native Wildlife Centre, set up by the Tui Nature
Reserve Wildlife Trust. Koru focuses on a breeding programme
for giant wētā and yellow-crowned kakariki, with a goal
of education and engagement around conservation and
restoration in the Marlborough Sounds. NZKS’s support, along
with grants from Rata Foundation and the Lottery Grants
Board, has made the establishment and ongoing operation
of the centre possible.
Nelson Marlborough Rescue Helicopter Trust
As a silver sponsor of the Nelson Marlborough Rescue helicopter,
we are supporting a service which provides treatment and
the recovery of people needing urgent medical care and
transportation to hospital in the Nelson Marlborough region.
Fifeshire Foundation
We have made a commitment to support disadvantaged
and underprivileged groups in Nelson-Tasman through the
Fifeshire Foundation.
Big Brothers Big Sisters
We are a cornerstone sponsor of Big Brothers & Big Sisters
(BBBS) in Nelson-Tasman, a mentoring organisation that
creates lasting bonds and provides access to opportunities
that every child should have. For 20 years, BBBS has helped
children and youth realise their potential, build their futures,
and strengthen communities.
Marlborough Girls' College
Equal opportunities for learning are important to us at
NZKS. So, once we learned about the school’s need for extra
funding around technology, we decided to provide devices
for those girls whose families couldn’t afford them. We
sponsored 60 Chromebooks in 2017 and 2018 as part of the
BYO Device program. Each device is loaned to a student for
the school year.
Our programme also covers support for the netball team,
the annual prizegivings, and donations of salmon for
cooking classes.
Marlborough Boys' College
We have supported the schools' First XV rugby team for a
number of years, helping with everything from uniforms and
sports gear to contributions towards travel costs.
Queen Charlotte College
As leaders in the aquaculture industry in the region, we
support the Aquaculture Studies programme at Queen
Charlotte College and we have done so for many years.
LOCAL EVENTS
Each year we participate in a number of key events in the
Marlborough region, including the Marlborough Wine & Food
Festival, the Picton Maritime Festival, the Havelock Mussel
Festival and Feast Marlborough. We often provide a celebrity
chef to demonstrate salmon recipes. At the 2018 Marlborough
Wine & Food Festival, we had Annabelle White cook up a
storm, and Al Brown joined us for Feast Marlborough’s Friday
Night Feast. We also use these events as a great opportunity
to showcase our processing team’s filleting and pin-boning
skills, often encouraging the crowd to get involved as well.
We support local schools with
educational visits and nurture
the next generation.
60
CHROMEBOOKS IN
2017 AND 2018 AT
MARLBOROUGH
GIRLS' COLLEGE
WE SPONSORED
2019: BLUE FRONTIERS
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NEW ZEALAND KING SALMON | ANNUAL REPORT FY19
CARING FOR OUR PEOPLE AND COMMUNITIES

Care for the environment is a key pillar in
our business strategy – we want to minimise
our footprint as much as we can. From our
freshwater facilities to our farms in the
Marlborough Sounds, we ensure our aquaculture
operation grows high quality King salmon for
year round supply, but also takes into account
caring for the natural resources we are privileged
to have access to, and the natural environment
that surrounds us.
Farming in
balance
We are committed to caring
for water in our region.
We are committed to using resources
responsibly and reducing our impacts
wherever possible.
We work to fulfil salmon aquaculture’s
potential as a positive force for the health
of people, nature and our company.

Delivering high quality products requires
quality farming practices with a focus on
the responsible management of resources
for the long term.
RECOGNISING SUSTAINABILITY
To independently verify our sustainable practices in
aquaculture and our supply chain, we are regularly audited
or assessed by expert third-party organisations.
Best Aquaculture Practices
We now hold a four-star rating with the Global Aquaculture
Alliance’s (GAA) Best Aquaculture Practices (BAP)
programme. The four-star rating is the highest designation in
the programme, indicating that a product originates from a
BAP-certified processing plant, farm, hatchery, and feed mill.
New Zealand King Salmon was the first King salmon company
to earn the distinction worldwide,
Aquaculture Stewardship Council (ASC)
The Aquaculture Stewardship Council (ASC) is an independent
non-profit organisation and labelling organisation that
establishes protocol on farmed seafood while ensuring
sustainable aquaculture.
As a member of the Global Salmon Initiative (GSI), we are
committed to the collective goal of achieving ASC certification
by 2020. This goal aims to maintain and grow the industry’s
license to operate, through improving the reputation of both
farmed salmon and salmon farming.
In April we completed a pre-audit with ASC auditors as a
gap-identification exercise, prior to a full audit scheduled for
September 2019.
Monterey Bay Aquarium Seafood Watch
New Zealand King Salmon is the first salmon industry to have
achieved the Green/'Best Choice' rating from the globally
respected Seafood Watch programme. The MBA Seafood
Watch Programme helps consumers and businesses choose
seafood that supports a healthy ocean.
ENVIRONMENTAL
SUSTAINABILITY
Salmon farming has a substantially
lower environmental impact
than other proteins
Global production
*
3.2
million
1 07.1
million
118.2
million
66.0
million
*Production: Global production of farmed salmon and livestock primary products, measured in tonnes. Carbon: CO2e is calculated by multiplying the emissions
of each of the six greenhouse gases (CO2, CH4, N2O, HFCs, PFCs and SF6) by its 100-year global warming potential (GWP). Protein: Protein retention describes
the gain in edible protein as a percentage of the protein intake from food. It is calculated as a percentage (grams protein in edible portion / grams protein in feed).
Yield: Edible yield is calculated by dividing edible meat by total body weight. – Global Salmon Initiative
All farmed
salmon
Protein retention
*
28
%
37
%
21
%
14
%
Yield
*
68
%
46
%
52
%
No data
Carbon footprint
*
0.600.881.305.92
"Our planet is 71% ocean.
The interlinkages between the
climate crisis and ocean health
cannot be ignored. A healthy
ocean can be a productive one."
Global Goals, Ocean Opportunities,
UN Global Compact, June 2019
CARBON ASSESSMENT
Climate change is a significant challenge for our world, and
every organisation or individual has some level of carbon
footprint to acknowledge.
As a starting point in understanding our own impact, we have
commissioned a Life Cycle Analysis report on our own carbon
footprint for our egg to plate operations. Once completed,
the report will help us better understand our impact on the
environment and lead to initiatives to manage and reduce
these over time.
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
3130
FARMING IN BALANCEFARMING IN BALANCE

FRESHWATER
This year's warmer summer weather had
an effect on our freshwater operations,
particularly at our Takaka broodstock facility.
Our source of quality fresh water at Takaka, Te Waikoropupū
Springs, suffered during the region’s extended drought
conditions, which resulted in a low water flow in our raceways.
The limited water flow impacted fish performance, with lower
quality results in egg production. During this period, we
implemented 24-hour water monitoring as a precautionary
exercise, checking parameters such as available oxygen,
temperature, pH and carbon dioxide.
We also have a project underway at Takaka to increase the
incubation chiller capacity, allowing greater control over
year round egg production, and increased water exchange to
maintain quality.
Meanwhile, at our smolt facility in Tentburn we installed a small
bore pump to increase water flow to the hatchery.
As part of our fish welfare management plan, the team at
Tentburn also completed our yearly vaccination programme in
May, immunising approximately 2.7 million fish before transfer to
sea. The immunisation programme is to enhance resilience in the
fish for high temperatures and any possible diseases. There are
no side effects or detection at harvest and it is absolutely safe
for human consumption.
Our Takaka freshwater facility also plays an important role
in growing Ōra King TYEE for our foodservice customers. This
year, 100 TYEE were harvested and supplied to international
customers, all weighing over 13.6kg (30 pounds liveweight), a
significant increase over the previous year. The team continues
to work on solutions to grow more of these remarkable salmon.
FISH IMMUNISED BEFORE TRANSFER TO SEA
2.7million
MANAGED
WATER USE
ANIMAL
HUSBANDRY
INLET
OUTLET
CONSISTENT
WATER
TEMPERATURE
& QUALITY
MAXIMISE WATER
CLARITY
GOOD MANAGEMENT PRACTICES
AT OUR TAKAKA FACILITY
STREAM HEALTH
Tested below the farm for:
BOD*
OXYGEN &
p H LEVEL
BIODIVERSITY
OF ORGANISMS
IN STREAM
Management of
water intake
Significant native
tree planting.
Wasabi grows in high
quality water
Water is tested
at the outlet
after it leaves
our site.
The health of the
stream is checked
at the outlet
CLARITY
WATER QUALITY MANAGEMENT
In growing fish, particularly salmon, the quality of the water must be
of a high standard. At our Takaka hatchery, we are privileged to have
access to extremely high quality water from Te Waikoropupū Springs,
designated as some of the clearest water in the world. The water is
also a consistent year round temperature of approximately 12deg, an
ideal temperature for rearing salmon.
The flow in the Springs River is continually monitored to ensure there
is always a residual flow. The amount of water able to be used by the
farm is based on a formula to ensure this minimum does not drop
below 4.2cumecs. All records are provided to Tasman District Council.
In terms of biomonitoring, Stark Environmental Ltd found that the
mean Macroinvertebrate Community Index (MCI) from the last five
sampling occasions downstream of the hatchery was within the
consented requirement.
* Biological oxygen demand
2019: BLUE FRONTIERS
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NEW ZEALAND KING SALMON – ANNUAL REPORT FY19
32
FARMING IN BALANCEFARMING IN BALANCE

It was also a challenging year in terms of fish
performance in sea water due to another
hot summer. Our farming teams worked
extremely hard to alleviate the impact of the
sustained warmer sea temperatures, especially
in the Pelorus Sound, but they did experience
increased fish health and mortality issues,
particularly from February to April.
In addition to the continual monitoring of seawater
temperatures and conditions at our salmon farms, several
key operational initiatives have been completed or are well
underway to combat these challenges.
SEAWATER
CREATING A LOW STRESS
ENVIRONMENT IN SEAWATER
FISH
WELFARE
FEEDCLEANING &
MAINTENANCE
C O O L
WATER
NO GRADING
OR HANDLING
PREDATOR
MANAGEMENT
5
10
15
20
25
Oct
Nov
Dec
Jan
Feb
Mar
Apr
Tory Channel
Pelorus Sound
Average daily 5m water temperature (1 October 2018 - 28 April 2019)
Optimal
temperature
INFRASTRUCTURE IMPROVEMENTS
The capacity upgrade at our Ngamahau and Waitata farms
was completed this year, based on the successful completion of
three years of positive environmental results at our new farms.
The Ngamahau farm’s pen capacity has doubled from three
pens (40x 40m) to six pens, whilst the Waitata farm expanded to
eight pens (40x 40m). As our single year class production model
is introduced, this capacity expansion will be needed to maintain
the same productivity, whilst providing improved rearing
conditions for the fish.
The continued improvement of our farming infrastructure took
a positive step forward this year with the build commencing
on our second modern feed barge. Named after former
director Thomas Song, who passed away in April this year, the
320-tonne $5 million barge will arrive in late 2019 from its build
base in Margate, Tasmania. Carrying enough feed for at least
two weeks, it will be stationed at the Waitata farm with the
current 240-tonne feed barge relocating to Kopaua to deliver an
enhanced feed service there.
Significant investment has also been made in the net cleaning
operation with a new dedicated net cleaning vessel (Manuka)
coming into operation, as well as two new net cleaners dedicated
to predator nets and grower nets. The grower net solution
“AutoBoss I” is manufactured locally in Picton by Boss Aqua,
whose founder Andy Fairhall spent many years working for our
company before launching this innovative equipment for the
aquaculture industry worldwide.
COPING WITH CHANGING
WATER TEMPERATURES
Our Pelorus farms were noticeably warmer this year, compared
with our Tory Channel farms. We are seeking optimal water space
to address warming sea temperatures and our key projects are:
• Site specific measures in current farms
• Farm relocation
• Open ocean farming
We monitor seawater temperatures and conditions at our salmon farms on an ongoing basis.
King salmon thrive in cooler waters and best growth is achieved at a temperature of 12-17°C.
35
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
34
FARMING IN BALANCE

SECURITY OF TENURE
In addition to the capacity upgrades completed at Waitata and
Ngamahau, based on consented increases in feed discharge,
a plan change and resource consent application lodged with
Marlborough District Council (MDC) is still underway for our Te
Pangu farm to be moved closer to the main channel, to access a
more optimum, high flow position.
Meanwhile, work continues on longer term waterspace
capacity under two key projects:
1. Farm Relocation
The farm relocation process is ongoing with a new proposal
presented to the Ministry of Primary Industries (MPI) and
the Minister of Fisheries, Stuart Nash, in a joint iwi/company
proposal. If accepted this proposal will further improve the
environmental, social and economic benefits for the company
for the Top of the South and for New Zealand.
2. Open Ocean
Research into offshore locations that might be suitable for
open ocean farming was carried out by NZKS and independent
scientists throughout the previous year.
After assessing key environmental factors including temperature,
wave height and currents, a 1,792 hectare space was chosen,
roughly 7km north of Cape Lambert.
An application for a 35-year consent for farming at this site
(dubbed “Blue Endeavour”) was then lodged with Marlborough
District Council, as we completed FY19.
Pending approval, we intend to commission an initial farm with
the potential to grow 4,000 tonnes of King salmon - about
twice the output of our largest existing farms. It's hoped the first
salmon stocks could then be introduced at the start of 2021,
with harvest following 12-18 months later.
Resource consent application sent to
Marlborough District Council
Submission period of 20 days (community input)
October / November 2019
Hearing
Early 2020
Possible consent granted
Early to mid 2020
Farm commissioned
2021
First harvest
2022
KEY STEPS TO FIRST COMMERCIAL
OPEN OCEAN FARMING:
Eventually, the resource consent will allow for the
implementation of a second farm nearby, taking the overall
production capacity for this region to around 8,000 tonnes of
salmon per 18-month cycle.
Prior to the application, we consulted a wide range of
groups, including iwi, fishing companies, the Department of
Conservation (DoC), Forest and Bird, the Environmental Defence
Society and local community groups.
Farming the open ocean will be a challenge because of more
extreme conditions than in the Sounds, but we’ve chosen the
best site possible.
Timeline indicative only
24
month
cycle
FALLOW
FALLOW
SMOLT Y1
SMOLT Y1
20
month
cycle
GROWOUT Y1
GROWOUT Y1
2 months
6 months
18 months
18 months
HARVEST
HARVEST
A CHANGE OF MODEL
Single year class in seawater is the best practice model in
international aquaculture production planning, with the
intention of improving fish health, improving survival rates
and delivering the best possible biosecurity.
A year class denotes one production group of salmon as
they move through the fresh water and sea water grow out
cycles. Avoiding overlapping year classes at sea farms and
implementing fallowing periods after harvest are the two
most important elements of this model. This avoids the
transfer of disease between year classes – better for biosecurity
and fish health – and a better environmental outcome as a
result of fallowing.
Commencing the conversion to the single year class model is
the largest change we have made to production plans in many
years. Reducing stress on the salmon during the summer and
HIGH FLOW SITES
Cooler, deeper waters with stronger flows.
Ngamahau, Clay Point, Te Pangu, Waitata, Kopāua
Longer fallow is
required for seabed
remediation and to
minimise exposure
to summer water
temperature
LOW FLOW SITES
Often shallower with less current resulting in poorer performance.
Ruakaka, Otanerau, Waihinau Bay, Forsyth Bay
We are adopting a single year
class model to protect fish health,
improve survival rates and deliver
the best possible biosecurity.
ending the need to tow pens is also addressed within the new
seawater operational plan, leaving the team with more time to
focus on clean farms, fish health and feeding.
With the implementation of this best practice model, initially our
volumes of salmon harvested will remain static, however we are
confident that this responsible, long-term approach will deliver
sustainable growth for the long term.
OPERATIONAL CHANGES
PRODUCTION PLANNING – SINGLE YEAR CLASS
NO HANDLINGUPWELLING
SYSTEMS
PASSIVE
GRADING SYSTEMS
ALL NETS
REMOVED
SITE FALLOWED
all stock entered in final
numbers to the pen
to provide cooler
water from depth and
improve water flow
to separate larger
fish for harvest and
reduce biomass before
summer
post harvest for repair
and disinfection
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
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FARMING IN BALANCEFARMING IN BALANCE

Fish welfare is a priority for our business,
as a healthy, low-stress environment for
our salmon results in higher survival rates,
superior fish quality and less impact on
our broader environment.
We employ an expert team to support our production team in
implementing our Fish Health Management Plan, which aims
to minimise disease and physical damage within our stock.
This is achieved through:
FISH WELFARE
Bringing veterinary expertise as well as specific knowledge
of the unique biology of our King salmon species, the team
regularly monitors our hatcheries and farms to ensure that
important or unusual conditions (both infectious and non-
infectious) are identified as early as possible. Early detection
of a potential health issue increases the likelihood that actions
can be undertaken to prevent the spread and/or reduce the
impact of an outbreak of disease. Early detection also allows for
timely research into the condition (if required) to determine its
significance and possible control methods.
NZKS sends fish tissues to pathology laboratories on a monthly
basis for diagnostic testing, and we take routine water samples
for testing at the Cawthron Institute.
The team also maintains the good health and welfare of farmed
fish stocks through low stress /low impact handling, good
nutrition and an optimal growing environment.
In addition to the immunisation programme recently introduced
in our freshwater facilities, the welfare of our fish will also be
helped by the introduction of single year class and the fallowing
of farms.
G O O D
HUSBANDRY
ROUTINE HEALTH
MONITORING
EARLY
INVESTIGATION
RAPID
RESPONSE
ONGOING PHILOSOPHY
OF CONTINUAL IMPROVEMENT
2019: BLUE FRONTIERS
39
FARMING IN BALANCE

Best Management Practices (BMP)
New Zealand King Salmon, the Marlborough District Council,
the Ministry for Primary Industries and other key stakeholders
and experts have worked together to develop the Best
Management Practice (BMP) guidelines for salmon farming
in the Marlborough Sounds. These Best Management Practice
guidelines, which cover water quality and benthic (seabed)
impact, will help protect the environment while including the
local community and industry, and are standards we can
proudly promote to the world.
We work within the environmental constraints at each farm
site by managing production levels to ensure compliance
with agreed consented conditions. Older consent conditions
will eventually be reviewed and BMP benthic guidelines will be
adopted prior to or during 2024.
Beach Clean-ups
As part of our social responsibility commitment, 86 of
our team members took part in 28 beach clean-ups and
collected almost 100kg of waste throughout the year. We held
one clean-up at the Picton foreshore as a way of highlighting
World Oceans Day. Children from Tua Marina School and 40
locals turned up to help pick up rubbish.
RUAKAKAFORSYTH BAYOTANERAUWAIHINAU BAYTE PANGUCLAY POINTCRAIL BAY 1CRAIL BAY 2NGAMAHAUWAITATAKOPAUA
NZKS farming
commenced
19861989199020062009-1020152016
low flowlow flowhigh flowhigh flowlow flowhigh flowhigh flow
Consent
compliance FY19
BMP Benthic
guidelines apply
SUSTAINABILITY ACTIONS
Marine Wildlife
We have management controls and plans in place to guide
appropriate interaction with marine wildlife, with our main
focus being seals, bird life, and other marine mammals such
as dolphins and sharks.
We are a member of Marlborough's King Shag working group,
and each year undertake a census to establish the population
of this nationally endangered species, which is only found
in small numbers in the outer Marlborough Sounds. We are
pleased to report a 25 percent increase in bird numbers
compared to the 2018 results.
The common fur seal is a persistent visitor to our farms,
attracted to the source of food. Predator nets are in place,
and our farm teams take daily action to ensure the safety of
the seals and our salmon. A permit is required to handle them,
with all seal interactions managed by the Department of
Conservation under the Marine Mammals Protection Act 1978.
Shark interactions are minimal due to the predator nets
we have in place around all our farms, Some sharks are
protected, and all sharks are covered by our Marine Mammal
and Shark Management Plan.
We take all interactions with mammals and seabirds seriously
and report any incidents on our website.
Under consideration for relocation.
Individual consent conditions on low flow sites, currently under consideration in farm relocation proposal.
Voluntary implementation of BMP in 2016 at our two largest high-flow farms.
Consent conditions apply across all sites, but precede BMP publication. Voluntary implementation of BMP planned by 2024.
Streamlining Consent Conditions
for Best Practice
We are aiming to gradually streamline numerous site-specific
consent conditions in accordance with the BMP Guidelines
for Benthic and Water Quality, which were developed
to designate best practice, over and above regulatory
compliance. All our farms currently comply with consent
conditions, but our low flow farms are located in less suitable
environments for best practice salmon farming, limiting the
commercial viability of these farms if BMP were implemented.
The low flow farms are under consideration for relocation.
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
4140
FARMING IN BALANCEFARMING IN BALANCE

WHAT DO WE FEED OUR SALMON?
The formulation of our feed changes to meet the dietary
requirements of our King salmon throughout their lifecycle.
The breakdown below is based on our highest use feed in FY19.
Feeding salmon is one of the most important activities on our farms, to achieve best
quality (growth/nutrition) salmon while minimising feed wastage.
OUR FEED
Fish Oil
Sourced from
well managed
fisheries, fish oil is
an essential source
of Omega 3
fatty acids
Vegetable / Poultry Oil
By-products of human food
production, these fats are a
crucial source of energy
Fish Protein
Sourced from well
managed fisheries and
by-products of human
food production, fish
meal is a great source of
Omega 3 and essential
for growth
Land-animal Protein
By-products of human
food production, this
land-based protein is
essential for growth
Vegetable Protein
Protein is essential for
growth, using both land
animal and vegetable-
based proteins allows us
to reduce our reliance on
fish protein
Cereal / Grain
A good source of energy
that also acts as a binder
in the feed recipe.
Vitamins &
Minerals
Astaxanthin (see over
page), phosphorus
& calcium for strong
bones, vitamins C,
E, zinc and folic acid
to maintain overall
health and wellbeing
Reducing Feed Waste
Monitoring net pens with cameras to ensure
feeding is stopped before feed is wasted.
Feeding is kept away from the outside edges
of the net pen to avoid feed being dispersed
outside each farm.
MINIMISING
OUR IMPACT ON
THE SEABED
We aim to minimise the level
of discharge to the seabed,
with practices that include:
Monitoring the seabed
We work within the environmental constraints
at each site by managing production levels
to ensure compliance with agreed consented
conditions. We contract scientific partners to
monitor the health of the seabed.
What we leave out
Equally as important as what is in our feed, is what
we leave out. Our feed does not contain ingredients of
genetically modified (transgenic) origin, antibiotics,
growth hormones or growth promoters.
FISH HEALTH &
WELFARE
King salmon require
a unique diet
ENVIRONMENTAL
IMPACT
Sustainable sources, minimal
waste and seabed impact
COST & AVAILABILITY OF
RAW MATERIALS
Our most significant cost is feed,
accounting for up to ~50% of our fish cost.
FEED RESEARCH
We are now in the final year of the four-year, $5.2 million
research programme to ascertain the optimal diet for our
King salmon, in partnership with the Cawthron Institute,
Seafood Innovations Ltd (SIL) and salmon feed companies.
The most recent trial focussed on increasing the energy
content of the feed and results of these trials show that
salmon grew faster whilst using less feed.
This year, we are focusing on determining digestible protein
and energy levels for diets at various life stages. We will
conduct trials on different feeding regimes to determine
which regime results in the most efficient use of nutrients.
FEED DECISION FACTORS
Novel sources of nutrients and proteins for fish feed are
under development, including new sources of Omega-3
and Omega-6 fatty acids from algae, and alternative
protein options from insect meal, yeast fed with wood
by-products, and bacteria.
1

2004
Now
Future
?
33
%
Fish protein & fish oil
51
%
Fish protein & fish oil
1 Source: United Nations Global Compact, Ocean Opportunities report, June 2019
AN IMPROVING STORY
We are committed to feeding our salmon in a responsible and
sustainable way. Our aim is to produce more fish per kilogram
than we use in our feed.
The fish oil and fish protein components of our feed is sourced
from a combination of foraged wild fish and by-products from
human food production. The foraged wild catch is harvested
from responsibly managed sources and typically comprised
of small bony pelagic fish that generally aren’t used for
human consumption. The fish by-products from human food
production are off-cuts and trimmings that would otherwise be
disposed of as waste.
The below illustrates how feed composition has improved in the
past 15 years and what possible innovations the future holds.
WHAT'S THE DEAL WITH
ASTAXANTHIN?
Astaxanthin is a powerful antioxidant and micro-nutrient
that is a vital part of our King salmon’s diet, required for egg
and fry development and overall fish health.
Astaxanthin is a carotenoid that is stored in the salmon’s
muscle tissue, resulting in the appealing and vibrant orange
colour of our King salmon. Amazingly, a white fish like cod
would not change colour if it ate astaxanthin in its diet. We
do not add any dye to our salmon feed or salmon products.
Astaxanthin is so crucial for
development that salmon
pass it onto their eggs, this
is what gives them their
vibrant orange colour.
Results of the most recent
trials showed salmon grew
faster while using less feed.
NEW ZEALAND KING SALMON | ANNUAL REPORT FY19
42
FARMING IN BALANCE
2019: BLUE FRONTIERS
43
FARMING IN BALANCE

We are proud of our delicious, versatile and
sustainable salmon products developed to
suit discerning chefs, consumers, and even
pets, in New Zealand and overseas. Our
premium brands include Regal, Omega Plus,
and premium foodservice brand, Ōra King.
Delivering
healthy, tasty,
branded
products
We work to fulfil salmon aquaculture’s
potential as a positive force for the health
of people, nature and our company.
We are committed to using resources
responsibly and reducing our impacts
wherever possible.
Food from the ocean can supply the world with
nutritious food with a relatively low carbon
footprint compared with other animal-source
food production sectors – Global Goals, Ocean
Opportunities Report, UN Global Compact

PROCESSING AND FOOD SAFETY
Our processing plant focuses on producing the
highest quality products while prioritising food
safety and responsible resource consumption,
including limiting our energy and water use and
using all of our by-products.
It has been a busy year in processing as increased demand for
value-added products has required investment in improved
slicing technology and packing equipment.
This year we installed a new Marel cold smoked salmon slicer,
which weighs and scans a fillet and then slices it into a specified
target weight and slice count. These slices are then placed
automatically onto a board. We also invested in a portion
grading unit which lets us use software to produce the optimum
mix of portions from every fillet. Within the next year, we will also
be trialling an automated filleting unit for operational efficiency.
A Reich Kiln will be installed into our hot smoke area in October.
This will further improve our food safety operation and minimise
any Listeria cross contamination risk. It also gives significantly
increased smoking capacity moving forward.
We will be installing a new bin wash for sterilisation to avoid the
transfer of bacteria, particularly Listeria. The machine will also
speed up the process of cleaning, making it more consistent and
reducing manual handling.
We have a continuous improvement programme built on
cleaning, testing and tracking to manage Listeria. We have been
building a family tree of any Listeria monocytogenes strains.
Water use
Reducing fresh water use in the plant is an important
goal. Hygiene is the main reason for use of water in our
processing plant. Maintaining a high level of sanitation
is paramount to our production process and providing a
high quality, safe product for the consumer.
We have invested in water monitoring equipment to build
an understanding of our water footprint throughout our
processing site (total volume of water used to produce
a product). The aim is to measure our water use and
develop an understanding of how to best manage
it within our processing. We view water stewardship
as an important step to meeting SDG 12 responsible
consumption and production. The Nelson region
experienced water shortages in the summer of 2018-2019
and given changing climate a proactive approach is
required to address any future challenges.
SUSTAINABILITY ACTIONS
From these identified strains we can conduct challenge and
resistance testing to see what makes the environment difficult
for them to grow or survive.
To strive for best practice we are also conducting a food safety
survey with our team members in the plant to understand and
benchmark our “food safety culture”. This will help to identify
knowledge gaps and provide more tailored training
and processes.
47
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DELIVERING HEALTHY, TASTY, BRANDED PRODUCTS

Every link in our supply chain is crucial in
delivering our quality products to the market,
in New Zealand and overseas.
The chain includes production planning, procurement,
customer services, logistics, coldstore and pick ‘n’ pack
teams. It’s all about getting a great final product safely to
our consumers and chefs by ensuring quality is maintained
throughout the supply chain.
The past 18 months has seen a massive effort from our IT team
and Super Users to prepare our move from our 15-year-old
existing Enterprise Resource Planning (ERP) system to the new
Microsoft NAV platform. For more information see below.
Over the course of 2019, we upgraded our fleet of forklifts
to Crown machines that employ the latest battery and user
technology. Each machine is controlled by a “black box” which
assists with the management of drivers and ensures safety
checks are undertaken before use. Speed restrictions and
collision reporting is all managed by linking through our site wifi.
In the December quarter of 2018, we conducted a review of our
export air cargo carriers. We send our salmon to many parts of
the world and were using many airlines to do so. In conjunction
with our export partner Hellmanns Perishables Ltd (HPL), we
conducted a tender process which resulted in consolidation of
our carriers and some good freight savings and/or better routes
to market. Cost is important but time is often more important
when shipping fresh salmon to overseas markets.
ICT TEAM UPDATE
The last twelve months have continued to see the ICT team
focus on a variety of projects to improve services, security, and
process efficiencies. Key projects include:
Enterprise Resource Planning (Stage 2 – NAV)
On 1st July 2019 we went live with our new Core Financial System
– “Microsoft Dynamic NAV”. The Microsoft system integrates
directly with some of our larger customers and suppliers and our
factory operating system. The benefits of the new system include
greater traceability, simplification of tasks, greater visibility of
our financial operations and an intuitive platform that is easy
for users to learn.
This has been a massive undertaking, but we are confident
we will deliver a robust transactional platform upon which we
will operate from.
SUPPLY CHAIN
It’s all about getting a great
final product safely to our
consumers and chefs.
Cyber Security Review
Our reputation is paramount to the success of our business
and must be maintained. This audit and those to come will
be critical to ensuring the data we hold in relation to our
customers and our core business is kept safe and secure. These
external audits ensure that the systems and environment we
operate in are configured and secured to meet all our business
requirements and established global security standards.
Takaka Hatchery Infrastructure Upgrade
This year we upgraded the network infrastructure at our
Takaka-based hatchery to meet our current and future
needs. To maximise the return on this investment we used
this specific upgrade to set the template (hardware and
network configuration) for rolling out similar environments
across all our remote sites, planned for the next financial
year. Introducing this standard platform reduces our support
overheads and ensures that we can maintain a secure and
reliable infrastructure.
Data Warehouse Upgrade
This new Cloud-Based data warehouse is fully integrated with
our new core financial system and provides the company with
a new level of reporting and data-based analytics. It is the
platform for storing new data sets that will provide greater
insights and to aid future business decisions.
FRESH WHOLE FISH ARE GENERALLY HARVESTED
AND DISPATCHED TO CUSTOMERS WITHIN
24
hours
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DELIVERING HEALTHY, TASTY, BRANDED PRODUCTSDELIVERING HEALTHY, TASTY, BRANDED PRODUCTS

Waste Minimisation Project
Our increased focus on sustainability has been included in
the tendering of supplier contracts. The tendering of our
consumable supply business in 2019 provided an opportunity
to address the amount of waste generated by our processing
plant. We have now embarked on a project to minimise
waste to landfill. The first step was to conduct a waste
audit with the help of our partners Office Max and Waste
Management.
Our records demonstrate that we send around 625,838kg to
landfill from our factory each year. Recycled material totals
approximately 138,316kg per year, or 22.1% of our waste.
Our findings over a two-day waste audit in our factory
determined that over 50% of our current waste to landfill
is likely to be production waste, comprising mainly plastic
liner bags and empty packaging for ingredients. Organic/
compostable waste comprised nearly a quarter of the landfill
waste, made up of salmon scraps and food waste/paper
towels. The third largest category was personal protection
equipment – mainly smocks and gloves. These three
categories will be a key focus in the coming year, with a plan
to either eradicate or reduce usage, or seek alternatives to
the current option.
SUSTAINABILITY ACTIONS
The subsequent stages in our “Responsible Consumable and
Packing Consumption Project” will be:
1. An Environmental Accreditations Product Alternatives
Review providing a matrix of sustainable alternatives for
every SKU purchased.
2. From data collected and observations made during the
audit, a series of smaller projects targeting specific areas
of waste reduction.
3. The implementation of a formal reporting process.
Reporting criteria such as;
-Landfill / recycling % comparison movement.
-Organic waste sent to composting.
-Drop in total weight of plastic purchased.
Boiler replacement
We have successfully reduced our carbon emissions by
129,000 kg CO
2
per year by replacing our coal-fired boiler with
electric water heating. With funding from Energy Efficiency
and Conservation Authority (EECA), the company completed
an energy audit in 2018, which included boiler replacement
as one energy saving option. We are now using 316,000 kWh
less energy per year by using three electric hot water cylinders
instead of the coal boiler.
Our EV story
New Zealand King Salmon is introducing electric vehicles in
its ongoing efforts to reduce environmental impact and lead
the way in sustainable business practices. Reducing transport
emissions is a well-documented part of New Zealand’s
carbon emissions, and although it's in its early days, the
initiative is symbolic of the change required by business to
help to address this problem.
To date we have replaced two of our company fleet cars with
the fully electric Hyundai Kona 5 door SUV, with the aim of
eventually phasing out most petrol cars.
100
%
ELECTRIC VEHICLES
ADDED TO OUR
COMPANY FLEET
TWO NEW
Sweet Chilli Salmon from the
Regal Oven Ready range.
With limitations in incremental volume,
this year our innovation pipeline has
been focused on upgrading the existing
portfolio into higher value opportunities.
Work is progressing, for example, on improved
utilisation of our hot smoked pieces. With consumer
demand for convenience and ease of cooking, we’re
also working on portion controlled projects with
easy cook solutions. A machine was purchased and
commissioned this year to produce the new Regal
Oven Ready range, which launched in July with three
different flavours: Manuka Honey and Soy, Sweet Chilli
and Smoked Chilli, and Honey and Lime.
We have also worked closely with our overseas markets,
including a new fillet offering for China, and a hot-
smoke and new portion business in the US.
Packaging changes were another hot topic this year,
and we successfully trialled a compostable film and
introduced a recyclable PET plastic in place of a
polystyrene plastic. In addition, we have replaced the
bottom web of the tray that the hotsmoke portions sit
on with ‘Plantic’, an APET-Plantic-PE plastic, decreasing
the reliance on petrochemicals as Plantic is made from
corn starch. The recycled APET content is 30% and the
Plantic plant structure is 27% of the tray.
In total we have worked on 97 projects with 11 SKUs
launched. Total gross margin for FY19 from new
products launched in FY18 and FY19 was $2,507,929.
NEW PRODUCT
DEVELOPMENT
11
NEW SKU'S
LAUNCHED
$
2,507,929
TOTAL GROSS MARGIN FROM NEW PRODUCTS
LAUNCHED IN FY18 AND FY19
SUSTAINABILITY ACTIONS
The New Zealand Plastics Declaration
As a partner in the New Zealand Plastics Packaging
Declaration, this year we declared our commitment
to reaching the ultimate goal of using 100% reusable,
recyclable or compostable packaging across our
business by 2025. We also joined 10 leading New
Zealand retail businesses to support a local study by
the Sustainable Business Network’s Circular Economy
Accelerator (CEA) to develop long-term viable
solutions and alternatives to plastic packaging.
Our first annual report on progress is scheduled for the
end of August 2019.
2019: BLUE FRONTIERS
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DELIVERING HEALTHY, TASTY, BRANDED PRODUCTS

THE ŌRA KING AWARDS 2018 –
INSPIRED BY ART
Ōra King’s annual chef competition is the flagship campaign for
our premium foodservice brand. It drives loyalty with end-user
chefs in our four key markets and has proven to be a successful
vehicle to communicate our premium market position, align
ourselves as a key partner of high-end chefs, and activate our
‘global gourmet village’.
The 2018 theme ‘Inspired by Art’ set the challenge to chefs to
take inspiration from a piece of artwork and re-interpret this
on the plate with an Ōra King dish. The calibre of the entrants
and the level of creativity and craftsmanship has reinforced
that the Ōra King Awards is a truly unique platform among chef
competitions. The theme captured the imagination of chefs
while weaving through one of Ōra King’s core brand messages;
that Ōra King delivers the most premium dining experience for
the world’s best restaurants.
The awards celebration with all the finalists and ambassador
chefs included visits to our facilities in Golden Bay, Nelson
and the Marlborough Sounds, a prestigious awards ceremony
catered by visiting chefs from New Zealand, Australia and North
America, and a traditional Māori hangi prepared by guest chef
Monique Fiso (featured onNetflix’s The Final Table).
The 2019 theme, ‘Sustain’, will ask chefs from New Zealand,
North America, Australia and Japan to reflect on their own
sustainability story and communicate this with an Ōra King dish.
We want to celebrate the big and small steps that chefs and
restaurants are taking on this journey that we are all on to live
more sustainably.
Ōra King
Awards 2018
celebrations
The level of creativity and
craftsmanship put forward
cemented the Ōra King Awards
as a truly unique platform
among chef competitions.
Our premium brands tell the story
behind our products to our core groups of
customers - discerning chefs, consumers,
retailers and wholesalers - both in
New Zealand and worldwide.
OUR BRANDS
Ōra King Awards 2018
Best Dish New Zealand
by Mark McAllistar
NEW ZEALAND KING SALMON | ANNUAL REPORT FY19
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DELIVERING HEALTHY, TASTY, BRANDED PRODUCTS

Examples of our recent ambassador
activations include:
-Engaging Jason Roberts and Ian Curley as judges for the
Ōra King Awards in Australia
-Inviting New Zealand chefs Mark McAllister and Antony
Page to attend the Noosa Food and Wine Festival
-Showcasing Jason Roberts, Aaron Bludorn and Shaun
Clouston in a social media video series talking about
what sustainability means to them
-Showcasing Mike Ellis, Michael Demagistris and Mark
McAllister in a social media video series reflecting on
their experience visiting Nelson and Marlborough as part
of the Ōra King Awards Celebrations
-Offering the first ever harvested Ocean Run TYEE to Tim
Hollingsworth at Otium Restaurant in Los Angeles
ŌRA KING AMBASSADORS
In each market we work to nurture relationships with high-profile
chefs who are loyal to Ōra King. Our Ōra King ambassadors
are recognised at the Ōra King Awards ceremony, and we
then actively help these chefs develop their careers and build
their profile by contributing to special events and causes they
are involved with. The ambassador programme is especially
valuable to us, as genuine endorsements speak volumes to the
international credibility of Ōra King.
SOCIAL MEDIA AND DIGITAL
Our social media and digital presence for the Ōra King brand
has grown substantially over the last year, particularly impressive
at a time when brands are combating follower fatigue from
content saturation. Over the last year, for example, we have
doubled our followers on Instagram to over 10,000 globally.
Our social media followers, generally chefs, continue to spread
the word - using our hashtags, mentioning us in their stories and
sending us messages. They also like to showcase their unique
dishes and culinary art using Ōra King salmon.
Facebook is an important secondary social communications
tool for us, with just under 5,000 followers and strong
overall engagement.
In late 2018 the first salmon from our trial to grow Tyee in
seawater were ready to be market tested.
We launched with a bespoke brand and logo, packaging,
marketing collateral and harvest photos under a Tyee sign, as we
do at Takaka. During December and January we offered weekly
harvests to customers, most of them from North America.
Ōra King Tyee (the original and Ocean Run) has provided an
amazing opportunity to grow and build the Ōra King brand.
Many restaurants create Tyee specific events and most of the
chefs that receive a Tyee like to post to social media about it.
To launch the campaign, we put together a video of high profile
US chef and Netflix star Tim Hollingsworth preparing the Tyee
specially for us. The uptake of this video was significant with
over 42,000 views.
Our social media and digital
presence for the Ōra King
brand has grown substantially
over the last year.
With over 30 years of leadership in the salmon category in New
Zealand, Regal is our premium retail brand. Although it was a
tough year in New Zealand for our retail brands, with limited
supply and an influx of imported salmon, we are confident
of retaining our category leadership, supported by our own
emerging portfolio of quality Atlantic salmon.
Domestically, we finished the year with a market share of
40.5% and a brand awareness of 88% amongst smoked salmon
shoppers in New Zealand. In the USA the brand continues to
grow, with over 300 new stores selling Regal this year.
This year we expanded distribution of the successful Manuka
range into Countdown where sales are going well. We were
proud to win the TVNZ Marketing Awards for the best FMCG
marketing campaign for our work with Al Brown and Reg the
seal promoting the Manuka range.
While there was no TV activity this year, we leveraged the
success of the previous campaign and Regal’s relationship
with Al Brown in a consumer promotion. Shoppers needed
to purchase a pack of Regal smoked salmon to be in to win a
culinary trip for two to San Francisco with Al Brown. This on-pack
promotion is part of our activity to maintain Regal’s premium,
local positioning with our target shopper, and protect against
market share erosion caused by the influx of cheaper Atlantic
salmon products.
In other markets, particularly in the USA, Regal continues to
grow. Regal is now in available in two divisions of Albertsons /
Safeway, one of the States' largest grocery chains, as well as over
150 independent high-end retailers in the New York area.
Total Regal branded sales for the last fiscal year are $30.8m,
with $3.8m coming from overseas markets.
Southern Ocean is our value brand, predominantly sold as
smoked salmon products in New Zealand domestic channels.
Southern Ocean is the second most recognised salmon brand
(after Regal)with 61% awareness in a recent Nielsen survey.
Southern Ocean plays an important role in the category offering
a value King salmon option versus Atlantic salmon brands.
We finished the year with a
market share of 40.5% and a
brand awareness of 88% amongst
smoked salmon shoppers in New
Zealand. In the USA the brand
continues to grow, with over 300
new stores selling Regal this year.
*Nielsen Brand Health Tracker April 2019
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Our premium pet brand has developed well this year, at home
and in export markets.
Domestic sales and distribution increased across both retail
banners and on our online platforms. Supermarket distribution is
now at approximately 40%, the equivalent of 200 stores. Omega
Plus dog food saw an increase in value by 43% and unit sales
increase by 54%, while Omega Plus cat food increased in value
by 171% and unit sales grew by 219% off a low base.
We launched our wet cat food offering into 108 Countdown
stores and dry cat food into 65 stores, with a campaign for cats
featuring a taste and health message; two factors that strongly
influence purchasing behaviour in the premium cat food space.
To date, we have seen good uptake of the product.
We have plans to extend brand offerings with larger bags of dry
cat and dog food, line extensions with new flavour variants, and
a new treats product.
Internationally, we successfully launched Omega Plus in May
on the online pet platform Boqii.com, with early results proving
encouraging. The China pet food market has huge potential and
is set to become the single largest pet food market in the world,
eclipsing the US$33 Billion US market. We recently employed a
new team member in Shanghai through Primary Collaboration
NZ, to support the pet food growth plans in China. Our next
focus for market development is South Korea, a pet food market
also demonstrating strong growth.
The Omega Innovations team of five is directly responsible for
two brands, with another on the way. With a focus on waste
minimisation and utilising by-products, the team is making good
progress in the company’s journey to zero fish waste, which
aligns with our commitment to sustainability.
Remaining Raw Materials
We have seen strong demand and growth for remaining
raw materials (RRMs) from new and existing customers. We
collect and freeze heads and frames and on-sell to pet food
manufacturers. Additionally, we built and commissioned a
plant to block freeze salmon RRMs. This has enabled access to
raw materials that would have otherwise not been available
for processing. We have been working on developing domestic
customers to take large volumes of high quality salmon RRMs for
pet food. We can produce RRMs as fit for human consumption
grade in consistent volumes, which is a highly attractive protein
source for pet food manufacturers.
DOMESTIC OMEGA
PLUS DOG FOOD
UNIT SALES
INCREASED BY
DOMESTIC OMEGA
PLUS CAT FOOD
UNIT SALES
INCREASED BY
54
%
219
%
It’s been a challenging year for this product as the shift to a
heat treated salmon burley and improved biosecurity practices
has dented sales. Increases in production costs also made supply
more challenging.
A new product formulation and toll manufacturer has been
established and this will drive cost and complexity out of the
product. With the reduction in price and improved product
characteristics, we should see an improved performance this
coming burley season.
Having explored the China
market over the past two years,
we successfully launched Omega
Plus in May on Boqii.com, with
early results proving encouraging.
30
%
OMEGA PLUS
SUPERMARKET
PRESENCE
APPROXIMATELY
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5756
NEW ZEALAND KING SALMON | ANNUAL REPORT FY19
DELIVERING HEALTHY, TASTY, BRANDED PRODUCTS

33
%
NORTH
AMERICA
NEW
ZEALAND
46
%
7
%
AUSTRALIA
7
%
ASIA
EX JAPAN
& CHINA
3
%
JAPAN
2
%
EUROPE
2
%
CHINA
SALES BY MARKET
($ FY19)
Demand throughout the past financial year
continued to exceed the available supply.
With limited volume for expansion in sales
volume, we have sought to maximise our
branded and value-added products. In
North America we have more than doubled
our retail sales of Regal Smoked products,
confirming the potential within the retail
sector. The precut portion business has also
expanded with additional restaurant chains
joining the programme. Our premium fresh
brand continued to expand in North America
over the previous year as we added more
restaurants into the Ōra King portfolio.
MARKET
GROWTH AND
DEMAND
China has doubled its sales volume over the past year. Our
dedicated Shanghai-based Market Manager, together with our
shareholder China Resources Ng Fung, have ensured that we
were able to transact our business seamlessly throughout the
year. This has proven valuable as restaurants and customers are
very reliant on consistency of supply. Retail in China remains
strong but we remain focused on growing the foodservice sector.
The Southern Asian region has seen some realignment as
we focus our brands of Ōra King into Foodservice, and Regal
branded smoked products into the retail sector. This has
resulted in volume and value growth in both of these sectors
and positions us well for the future. The addition of specialist
epicurean foodservice distributors in Hong Kong and Singapore
over the past year has accelerated our progress into fine dining
and premium hotels in this region.
Pricing and margin returns ensure ongoing growth in North
American, China and Southern Asia markets. However, due to
the constrained supply some other key markets have seen a
decrease in volume.
We remain committed to our goal of doubling salmon
consumption within New Zealand, however the New Zealand
market has seen the greatest impact with increased competition
from imported Atlantic product. Over the past year we have
focused on incremental growth in value for our smoked
products. Despite this increased competition our Regal brand
has performed well domestically during this time with a 6%
(dollar) growth over the previous year. This insatiable demand
for salmon meant we turned to a supplementary imported
fresh Atlantic salmon option. Additionally, our branded smoked
Atlantic project progressed well throughout this past year and is
ready to deploy in the coming months.
Australia has been in a similar situation with a competitive
market and rising competition from imported Atlantic supply.
Whilst we have worked hard to position our King salmon
strongly into the foodservice sector, pricing continued to firm
which slightly suppressed the demand for NZ product into the
Australian market. That has resulted in growth in revenue but a
resulting decrease in volume.
Regal
18
%
New Zealand
King Salmon
(eectively unbranded)
36
%
38
%
Ōra King
Southern
Ocean
8
%
8
%
Wood
Roasted
Cold
Smoked
Other
3
%
18
%
Whole
Salmon
49
%
22
%
Fillets and
Portions
SALES BY
BRAND
($ FY19)
SALES BY
PRODUCT
($ FY19)
Domestic
retail
24
%
International
foodservice/retail
54
%
Domestic
Foodservice
22
%
SALES BY
CHANNEL
($ FY19)
Japan has reduced to 3% (5% in FY18) of our total supply as a
direct result of the continued drive into foodservice. The two new
foodservice distributors have made progress in expanding this
sector resulting in declining volumes to the retail sector. By far
the largest sector for salmon purchases within Japan is retail.
Consistency of supply and service is highly valued within these
markets so the potential for expansion cannot be unlocked until
production volumes lift.
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
5958
DELIVERING HEALTHY, TASTY, BRANDED PRODUCTSDELIVERING HEALTHY, TASTY, BRANDED PRODUCTS

JOHN RYDER
Independent Chairman
MCom (Hons), FCA, CMA
BOARD OF DIRECTORS
JACK PORUS
Non-Executive Director
BCom, LLB
MARK HUTTON
Independent
Non-Executive Director
BCom
John became a Director of
New Zealand King Salmon
in 2009 and Chair in 2016.
John is an active investor
and company director, and
his current roles include
Executive Chairman of Alpine
Retirement Group Limited
and Independent Chairman of
Direct Capital IV Management
Limited. John was the
cofounder of NZX listed Ryman
Healthcare Limited (where he
was co-Managing Director)
and was a director of NZX
listed Michael Hill International
Limited. He was involved in the
initial public offering of both
of these companies. John is a
Chartered Accountant.
Jack has been a Director of
New Zealand King Salmon
since 2008. Jack is Joint
Managing Partner of law firm
Glaister Ennor, which he joined
in 1972. Jack has practiced
in all areas of property law,
commercial law, trusts and
estate planning and is an
experienced mediator. Jack
is currently the chairman of
Pinnacle Life Limited and a
Director of Neil Corporation
Limited, Norfolk Financial
Management Limited, as well
as other substantial private
businesses, and is a trustee
of numerous personal and
charitable trusts. Jack is a
nominated appointee for
major New Zealand King
Salmon shareholder, Oregon
Group Limited.
Mark became a Board
member of New Zealand
King Salmon in 2008. He
is a founding partner of
Direct Capital. Mark has a
background in private equity,
specialising in portfolio
management with a focus on
strategy, growth and capital
funding. Mark is currently
a director of a number of
Direct Capital entities. Mark
is also director of NZX listed
Scales Corporation and
a director of investment
company Evergreen Partners
Limited. Mark is also Chair
of our Nominations and
Remunerations Committee.
Our Board brings many years
of experience in salmon
farming, processing and
marketing alongside broader
business experience in New
Zealand and internationally.
CHIONG YONG TIONG
Non-Executive Director
MCom, BCom
PAUL STEERE
Independent
Non-Executive Director
LAI PO SING, TOMAKIN
Non-Executive Director
MBA, BBA, FCPA, FCA, FCCA,
FCIS, FCS, CIA, CRMA, CISA
GRANT ROSEWARNE
Managing Director and CEO
MBA (Executive), BAppSc
Yong Tiong became a Director
of New Zealand King Salmon
in 2019. He has extensive
experience in timber industries
and property development
companies. He is Managing
Director of Timbergrow
Limited and Maraetai Land
Development Limited. Yong
is also a director of property
development company Neil
Corporation Limited and is on
the board of Saint Kentigern
School in Auckland. He also
holds a Masters in Finance
and Economics from Monash
University (Melbourne).
Paul was the founding CEO
of New Zealand King Salmon
from its formation in 1996 until
2009 and has been a Director
of New Zealand King Salmon
since 2009. He is Chair of the
Audit and Risk Committee.
Paul has a background in
manufacturing, international
trade and fast-moving
consumer goods, having
previously held senior chief
executive positions with a
British multinational including
in Hong Kong and Singapore.
He joined the NZ Dairy
Board as a General Manager
for eight years, including
responsibility for major
product lines and aligned
regional global markets.
Paul is currently chairman
of Nelson Airport Limited,
Deputy Chair and Councillor
of Nelson Marlborough
Institute of Technology, and a
chairman of other substantial
private businesses in wine
and architectural facades. He
chairs an advisory committee
for advancing aquaculture in
the South Pacific community,
which undertakes initiatives
funded by NZ MFAT. He served
on the national board of New
Zealand Red Cross and its
Foundation from 2003 to 2013.
Mr Lai has extensive
experience in internal and
external auditing, finance
and accounting. Mr Lai, who
joined as a non-executive
director in 2019, is a Director
of China Resources Ng Fung
Limited, which holds a 9.96%
shareholding in the company,
and is also the Vice President,
Chief Financial Officer and
Company Secretary of China
Resources Enterprise Limited.
He is the Executive Director,
the Chief Financial Officer
and the Company Secretary
of China Resources Beer
(Holdings) Company Limited,
which is listed on the Hong
Kong stock exchange. He is
a non-executive director of
Scales Corporation Limited,
which is listed on the NZX.
In addition to being a Fellow
Certified Public Accountant
of the Hong Kong Institute of
Certified Public Accountants,
he is a fellow member of
the Institute of Chartered
Secretaries and Administrators
in the UK and of the
Hong Kong Institute of
Chartered Secretaries.
Grant started his career
in technical roles having
completed a degree in
Chemistry and Microbiology.
He went on to gain
considerable international
consumer goods sales,
marketing and general
management experience. He
has worked across a number
of consumer goods categories
including dairy, wine, fresh
produce, and dry grocery as
well as foodservice segments
from cafes to fine dining.
Grant’s international business
expertise spans Britain, Europe
and Australasia, with blue chip
companies such as Unilever,
Cerebos and Douwe Egberts /
Sara Lee.
Grant was appointed CEO of
New Zealand King Salmon in
2009. During his time as CEO,
Grant has focused on lifting
New Zealand King Salmon’s
unique products from a
premium commodity to
a worldwide branded
food delicacy.
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
6160
DIRECTORS AND MANAGEMENTDIRECTORS AND MANAGEMENT

T
homas Song was a pioneering businessman who has been
credited with saving the salmon industry in New Zealand
and building a forestry company’s worth to over $1 billion.
The businessman died in April at the age of 66 after a
short illness while overseas in his home town of Sibu in
Sarawak, Malaysia.
Thomas moved to Gore with his family in 1990, following the
purchase of forests by the Malaysian-based Tiong family.
Through a succession of purchases and development of new
forests, he built up Ernslaw One to become one of the largest
forestry companies in New Zealand. Ernslaw One also purchased
a number of sawmills and Winstone Pulp International. During
the last 10 years he became a great advocate of carbon credits,
to the point the company is the largest trader of credits in
New Zealand.
Through the Oregon Group, another New Zealand company
owned by the Tiong family, Thomas led the acquisition of the
Neil Group, an Auckland-based land development company
that developed the Albany Centre in Auckland. The Neil Group
was purchased for $17.1 million in 1990 and is worth $350 million
today. At this time, he and his family moved to live in Auckland.
In 1994, the Regal Salmon company approached Thomas,
seeking his investment. He believed in renewable protein sources
which is why he agreed to invest. Paul Steere, who managed
Salmond Smith Biolab’s seafood business Southern Ocean
Seafoods, said the company was struggling and saw Thomas as
a potential ‘white knight’ because of his work in building up the
forestry business. The plan was simple: buy the assets, merge the
two companies, and drive efficiencies. So in 1996, New Zealand
King Salmon was formed and the Oregon Group today owns
40% of the company.
Former New Zealand King Salmon managing director and
current director Paul Steere worked with Thomas for nearly 24
years and said he was “a businessman of great accomplishment
yet of equal humility, shunning the spotlight and accolades he
undoubtedly deserved”.
“New Zealand has lost a great and unique entrepreneur.”
Ernslaw South Island manager Phil Delamere said Thomas
had a reputation for being a strategic thinker and pragmatic
in business.
“He was commercially astute and built high quality enduring
business relationships. He invested confidence in his
management teams and was held in high regard by the many
employees of the businesses that he had oversight of. Thomas
became regarded as a leader in the forestry industry.”
Lawyer and NZKS board member Jack Porus, who worked
alongside Thomas through all the investment deals, said he
enjoyed extraordinary delegated authority from the Tiong family,
which he passed on to senior managers of the companies. “He
understood the market and the importance of building high
quality relationships, and was a clear, strategic thinker.
“He will be greatly missed and his value to New Zealand should
not be underestimated. He built up a network of relationships
in Asia, including mainland China, which enabled him to export
more timber to the region.”
Thomas is survived by his wife Leh Sieng, son Steven, daughter
Swee Sing and two grandchildren.
In Memory of
Thomas Song
1953 - 2019
SENIOR LEADERSHIP TEAM
GRANT ROSEWARNE
Managing Director and CEO
See previous page.
ALAN COOK
Chief Operating Officer
Alan joined New Zealand King Salmon
in 2019 to lead the aquaculture and
processing operations teams. Alan has
more than 20 years’ senior management
experience in the aquaculture industry,
working in salmon farming on both
coasts of Canada, Chile and in
Washington state on the US west coast.
Before joining the company he was
Vice President – Fish for Marel, a
leading provider of commercial food
processing equipment.
ANDREW CLARK
Chief Financial Officer
Andrew joined New Zealand King Salmon
in 2011. His previous roles include 17 years
in the dairy industry where he occupied
a number of senior finance roles in
New Zealand, the United States,
Venezuela and Uruguay.
JEMMA MCCOWAN
General Manager, Marketing
Jemma joined New Zealand King Salmon
in 2012 to launch the Ōra King brand in
New Zealand and abroad. Her previous
roles include 15 years in international
business development and marketing for
food and consumer products based in
New Zealand and the United Kingdom.
GRAEME TREGIDGA
General Manager, Sales
Graeme joined New Zealand King
Salmon in 2004. His previous roles
included 16 years in the horticulture
industry with various roles in processing,
sales (internationally and domestic)
and management.
SHAUN YOUNG
General Manager, Supply Chain
Shaun has been with New Zealand King
Salmon since 2008. He was based in
Auckland as General Manager Retail Sales
& Marketing before moving to Nelson in
early 2015 to take up the role of General
Manager Supply Chain. Previously he
worked with Goodman Fielder.
NEW ZEALAND KING SALMON | ANNUAL REPORT FY19
62
DIRECTORS AND MANAGEMENT
2019: BLUE FRONTIERS
63
DIRECTORS AND MANAGEMENT
Left to right: Graeme Tregidga,
Jemma McCowan, Alan Cook,
Shaun Young, Grant Rosewarne,
Andrew Clark.

Consolidated Statement of comprehensive income 66
Consolidated Statement of financial position 67
Consolidated Statement of changes in equity 68
Consolidated Statement of cash flows 69
Notes to the financial statements 70
1. Corporate information 70
2. Basis of preparation 70
3. Summary of significant accounting policies 71
4. New standards and interpretations not yet adopted 75
5. Segment information 77
6. Other income 78
7. Expenses 78
8. Financing income and costs 78
9. Income tax 79
10. Components of other comprehensive income 80
11. Earnings per share 80
12. Cash and cash equivalents 80
13. Trade and other receivables 81
14. Inventories 81
15. Biological assets 82
16. Property, plant and equipment 83
1 7. Intangibles 84
18. Interest bearing loans and borrowings 85
19. Trade and other payables 85
20. Employee benefits 85
21. Commitments and contingencies 86
22. Financial risk management 86
23. Fair values of financial instruments 89
24. Capital management 90
25. Capital and reserves 90
26. Events after balance date 91
27. Related party disclosures 91
28. Auditor’s remuneration 92
29. Reconciliation of net operating cash flow to profit /(loss) 93
30. Revenue from contracts with customers 93
Independent Auditor’s Report 96
Corporate Governance 100
Director Disclosures 117
Corporate Directory 121
Glossary 122
CONTENTS
Financial
Statements
1 July 2018 - 30 June 2019

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
DIRECTOR
28 August 2019
DIRECTOR
28 August 2019
The above consolidated statements of financial position should be read in conjunction with the accompanying notes.
For and on behalf of the Board, who authorised the issue of these financial statements on 28 August 2019.
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
20192018
Note$000$000
Revenue from contracts with customers5172,609 -
Revenue 5- 160,271
Cost of goods sold including fair value uplift at point of harvest14(172,147) (145,320)
Fair value gain on biological transformation1560,002 50,309
Freight costs to market(15,642) (15,212)
Gross profit44,822 50,048
Other income6857 1,822
Sales, marketing and advertising expenses(9,619) (10,381)
Distribution overheads(3,600) (3,348)
Corporate expenses7(7,006) (6,728)
Other expenses7(2,391) (2,931)
Earnings before interest, tax, depreciation and amortisation23,063 28,482
Depreciation and amortisation expense16, 17(6,234) (5,105)
Finance income896 198
Finance expenses8(1,188) (888)
Profit before tax15,737 22,687
Income tax expense9(4,387) (6,562)
Net profit after tax11,350 16,125
Other comprehensive income
Other comprehensive income to be reclassified to profit or loss in subsequent periods:
Exchange differences on translation of foreign operations10(244) 120
Movement on cash flow hedges10(2,374) (2,571)
Income tax effect of movement on cash flow hedges10665 721
Other comprehensive income that will not be reclassified to profit or loss in subsequent periods:
Net other comprehensive income(1,953) (1,730)
Total comprehensive income9,397 14,395
Earnings per share
Basic earnings per share11 $0.08 $0.12
Diluted earnings per share11 $0.08 $0.12
20192018
ASSETSNote$000$000
Current assets
Cash and cash equivalents126,231 14,428
Trade and other receivables1313,502 12,426
Inventories1420,830 16,582
Biological assets1568,052 71,566
Non-current assets held for sale- -
Derivative financial assets23494 1,057
Total current assets109,109 116,059
Non-current assets
Property, plant and equipment1651,843 43,722
Biological assets1510,180 7,888
Derivative financial assets231,709 1,884
Deferred tax asset92,443 2,052
Intangible assets177,521 5,114
Goodwill1739,255 39,255
Total non-current assets112,951 99,915
TOTAL ASSETS222,060 215,974
LIABILITIES
Current liabilities
Trade and other payables1916,499 13,924
Contract liabilities- -
Employee benefits202,429 3,384
Borrowings18416 461
Other financial liabilities27149 46
Derivative financial liabilities232,091 1,189
Taxation payable605 4,902
Total current liabilities22,189 23,906
Non-current liabilities
Employee benefits20566 473
Borrowings1815,000 10,000
Deferred tax liabilities913,507 13,995
Derivative financial liabilities232,046 1,299
Total non-current liabilities31,119 25,767
TOTAL LIABILITIES53,308 49,673
NET ASSETS168,752 166,301
EQUITY
Share capital25122,595 122,579
Reserves(1,455) 328
Retained earnings47,612 43,394
TOTAL EQUITY168,752 166,301
Net tangible assets per share
Net tangible assets per share $0.86 $0.87
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
6766
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMECONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
Share
Capital
Foreign
Currency
Translation
Reserve
Hedge
Reserve
Share
Based
Payment
Reserve
Retained
Earnings
Total
Equity
Note$000$000$000$000$000$000
Balance as at 1 July 2018122,579 (395) 318 405 43,394 166,301
Profit for the period- - - - 11,350 11,350
Other comprehensive income/(loss)10- (244) (1,709) - (1,953)
Total comprehensive income/(loss) for the period- (244) (1,709) - 11,350 9,397
Employee share scheme loans repaid2516 - - - - 16
Share based payment expense- - - 170 - 170
Dividends paid25- - - - (7,131) (7,131)
Balance as at 30 June 2019122,595 (639) (1,391) 575 47,612 168,752
Balance as at 1 July 2017122,518 (515) 2,168 142 34,362 158,675
Profit for the period- - - - 16,125 16,125
Other comprehensive income/(loss)10- 120 (1,850) - - (1,730)
Total comprehensive income/(loss) for the period- 120 (1,850) - 16,125 14,395
Shares issued2561 - - - - 61
Share based payment expense- - - 263 - 263
Dividends paid25- - - - (7,093) (7,093)
Balance as at 30 June 2018122,579 (395) 318 405 43,394 166,301
20192018
Note$000$000
Operating activities
Receipts from customers171,892 161,212
Payments to suppliers(115,747) (97,453)
Payments to employees(39,731) (35,029)
Interest received138 164
Interest paid(850) (597)
Insurance and settlement income500 150
Income tax paid(5,361) (3,609)
Net cash flows from / (used in) operating activities2910,841 24,838
Investing activities
Proceeds from sale of property, plant and equipment10 19
Purchase of property, plant and equipment(14,191) (14,022)
Purchase of intangible assets(2,709) (88)
Net cash flow (used in) / from investing activities(16,890) (14,091)
Financing activities
Drawdown of revolving loan- 124
Proceeds from borrowings5,000 -
Government grants received100 148
Gross proceeds from share issue16 42
Repayment of shareholder advances- (89)
Payment of finance lease liabilities(134) (98)
Dividends paid(7,131) (7,093)
Net cash flows (used in) / from financing activities(2,149) (6,966)
Net increase/(decrease) in cash and cash equivalents(8,197) 3,781
Cash and cash equivalents at 1 July1214,428 10,647
Cash and cash equivalents at 30 June126,231 14,428
The above consolidated statements of changes in equity should be read in conjunction with the accompanying notes.
The above consolidated statements of cash flows should be read in conjunction with the accompanying notes.
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
6968
CONSOLIDATED STATEMENT OF CHANGES IN EQUITYCONSOLIDATED STATEMENT OF CASH FLOWS

NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1. CORPORATE INFORMATION
The consolidated financial statements of New Zealand King Salmon Investments Limited (the Company) and its subsidiaries (together
the Group) for the year ended 30 June 2019 were authorised by the directors on 28 August 2019.
New Zealand King Salmon Investments Limited is a profit-orientated company incorporated and domiciled in New Zealand. The
Company is registered under the Companies Act 1993 and listed on the NZX Main Board (“NZX”) and the Australian Securities Exchange
(“ASX”). The Company is an FMC reporting entity under the Financial Markets Conduct Act 2013 and the Financial Reporting Act 2013.
The Group is principally engaged in the farming, processing and sale of premium salmon products.
2. BASIS OF PREPARATION
a. Statement of compliance
The consolidated financial statements comply with New Zealand Equivalents to International Financial Reporting Standards (IFRS) and
also with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS). The financial statements are prepared
under NZ GAAP and FMC Act 2013.
b. Basis of measurement
The financial statements have been prepared on a historical cost basis except for biological assets and financial instruments which have
been measured at fair value. The carrying values of recognised assets and liabilities that are designated as hedged items in hedging
instruments otherwise be carried at amortised cost are adjusted to recognise changes in the fair values attributable to the risks that are
being hedged in effective hedge relationships.
The consolidated financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand ($000),
except when otherwise indicated.
The consolidated financial statements provide comparative information in respect of the previous period.
c. Significant accounting judgements, estimates and assumptions
The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and
assumptions that affect the reported outcomes of revenues, expenses, assets, liabilities and the accompanying disclosures. The Group
based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Uncertainties
about these assumptions and estimates could result in an outcome that requires a material adjustment to the carrying amount of
assets or liabilities in future periods.
Specific areas requiring significant estimates and judgements include:
Valuation of biological assets
The Group recognises stocks of live fish at fair value less costs to sell according to the principles of NZ IAS 41 Agriculture. The fair value
is measured using a valuation model that relies on various assumptions and information available at balance date. Inputs include
anticipated market prices, quality mix, current weights of livestock relative to expected harvest weight, mortality rates, growth rates and
production costs. The income or loss that is ultimately recognised at time of sale may be significantly different from that implied by the
fair value adjustment at the end of a reporting period. The fair value uplift from accumulated costs to date has no cash impact. Further
details of the valuation and sensitivity to change in key inputs are given in note 15.
Impairment testing of intangibles
The Group reviews the carrying value of goodwill on an annual basis and assesses whether it is impaired according to the principles of
NZ IAS 36 Impairment of Assets. This requires the goodwill to be allocated to cash generating units with which it would naturally be
associated and the value in use of the cash generating units to be estimated. The value in use is estimated using a standard industry
model that relies on various assumptions and information available at balance date. Inputs include estimations of the growth rate of the
Group, future market conditions, prices, and discount rates. Further details of the value in use assessment are given in note 17.
Valuation of financial derivatives
The Group recognises financial derivatives at fair value according to the principles of NZ IFRS 13 Fair Value Measurement. The value is
calculated by a third party expert using an industry standard model. Inputs to the model are obtained externally by the service provider.
Further details of the valuation are included in note 24.
Useful lives of assets
The Group estimates the useful lives of property, plant and equipment and intangible assets based on historical performance and
currently consented future asset uses.
Revenue from contracts with customers
The Group reviews individual transactions to determine the amount and timing of revenue from contracts with customers.
d. Foreign currency translation
Functional and presentation currency
The Group’s consolidated financial statements are presented in New Zealand dollars, which is also the parent Company’s functional
currency. The Australian subsidiary’s functional currency is Australian dollars which is translated into the presentation currency in these
financial statements. The USA subsidiary’s functional currency is United States dollars which is translated into the presentation currency
in these financial statements.
Transactions and balances
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange at balance date.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the
date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates
at the date when the fair value was determined.
3. SIGNIFICANT ACCOUNTING POLICIES
a. Basis of consolidation
The financial statements comprise the financial statements of New Zealand King Salmon Investments Limited and its subsidiaries
(per note 27) as at 30 June each year. Subsidiaries are all those entities over which the Company has control.
The financial statements of the subsidiaries are prepared for the same reporting period as the Parent company using consistent
accounting policies.
In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and
losses resulting from intra-group transactions have been eliminated in full.
Subsidiaries are fully consolidated from the date on which control is obtained by the Group and cease to be consolidated from the date
on which control is transferred out of the Group.
b. Business combinations
Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination is
measured at fair value which is calculated as the sum of the acquisition date fair value of assets acquired by the Group and the liabilities
assumed by the Group. Acquisition related costs are expensed as incurred and included in administrative expenses. Any contingent
consideration to be transferred by the Group is recognised at fair value at acquisition date.
c. Financial instruments
All financial instruments are initially recognised at the fair value of the consideration received, less directly attributable transaction costs
in the case of financial assets and liabilities not recorded at fair value through profit or loss. Subsequently the Group applies the following
accounting policies for financial instruments:
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and call deposits. For the purpose of the statement of cash flows,
cash and cash equivalents consist of cash and short-term deposits net of outstanding bank overdrafts.
Trade and other receivables
Short term trade and other receivables are not discounted and are initially stated at cost. Gains and losses are recognised in the profit or
loss when the receivables are derecognised or impaired.
Loans
Loans and amounts owing from related companies are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. After initial recognition such assets are carried at amortised cost using the effective interest method. Gains
and losses are recognised in profit or loss when the loans are derecognised or impaired.
Trade and other payables
Trade and other payables are carried at cost due to their short term nature and are not discounted. They represent liabilities for goods
and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to
make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within
30-60 days of recognition.
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
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NOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS

Interest bearing borrowings
After initial recognition interest bearing borrowings are subsequently measured at amortised cost using the effective interest method.
Fees paid on establishment of loan facilities that are yield related are included as part of the carrying amount. Borrowings are classified
as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the
balance date. Borrowing costs are generally recognised as an expense when incurred with the exception of borrowing costs associated
with a qualifying asset which are capitalised as part of the cost of that asset.
Financial guarantee
Financial guarantee contracts issued by the Group are those contracts that require a payment to be made to reimburse the holder
for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument.
Financial Guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributed
to the issuance of the guarantee. Subsequently the liability is measured at the higher of the best estimate of the expenditure required to
settle the present obligation at balance date and the amount recognised less cumulative amortisation.
Derivative financial instruments and hedging
The Group uses derivative financial instruments including forward currency contracts, options and interest rate swaps to hedge risks
associated with interest rate and foreign currency fluctuations. Such derivative financial instruments are initially recognised at fair value
on the date on which a derivative contract is entered into and are subsequently re-measured to fair value at balance date. Derivatives
are carried as assets when their fair value is positive and as liabilities when their fair value is negative.
The fair values of forward currency contracts are calculated by reference to current forward exchange rates for contracts with similar
maturity profiles. The fair values of interest rate swaps are determined by reference to market values for similar instruments.
The Group designates its derivative financial instruments as hedges of a particular risk associated with a recognised asset or liability
or a highly probable commitment that could affect profit or loss. The effective portion of the gain or loss on the hedging instrument is
recognised directly in other comprehensive income in the hedge reserve, while the ineffective portion is recognised in profit or loss as
other income or expenses.
Amounts accumulated in equity are transferred to profit or loss when the hedged item affects profit or loss.
d. Inventories
Inventories including raw materials, work in progress and finished goods are valued at the lower of cost or net realisable value. Costs
incurred in bringing each product to its present location and condition are accounted for as follows:
Raw materials – the cost of fish is measured at fair value at harvest date. The cost of other raw materials is based on the purchase price
including import duties and other taxes, transport, handling and other costs directly attributable to the acquisition of the goods and
materials. Costs are determined on a weighted average basis.
Manufactured finished goods and work in progress – cost of direct materials, labour and a proportion of manufacturing overheads
appropriate to the state of manufacture. Costs are assigned on the basis of weighted average costs. The cost of items transferred from
biological assets is their fair value less costs to sell at the date of harvest.
Net realisable value – the estimated selling price in the ordinary course of business less estimated costs of completion and the estimated
costs necessary to make the sale.
e. Biological assets
Biological assets include fish livestock measured at fair value less estimated costs to sell. The net gain or loss resulting from the fair value
measurement is recognised in profit or loss.
The fair value of fish livestock is derived from the amount expected to be received from the sale of the asset in an active market. The
target live weight of the harvestable fish is defined as a fish with a live weight of 4kg or greater. Many fish are harvested with a live
weight above or below this weight.
For brood stock and fish where little biological transformation has taken place since initial cost was incurred, cost less impairment
is used as an approximation of fair value. This value is used up to the point at which fish are transferred to sea water. Fish stock is
transferred to inventory at the time of harvest. The transfer is recorded at its fair value which is deemed to be cost for the purposes
of inventory valuation.
f. Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment. Depreciation is provided on
a straight line basis over the estimated useful lives of the assets as follows:
Freehold land not depreciated
Freehold buildings twenty to fifty years
Building fit out three to twenty five years
Leasehold improvements five to ten years
Plant, furniture and fittings three to twenty years
Motor vehicles five years
Sea vessels ten to twenty years
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end
and adjusted prospectively if appropriate. An asset’s carrying value is written down immediately to its recoverable amount if its carrying
value is greater than its estimated recoverable amount.
An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected
from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.
g. Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an
assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement
conveys a right to use the asset.
Group as a lessee
A lease is classified at the inception date as a finance lease or an operating lease. Finance leases, which transfer to the Group
substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair
value of the leased asset or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between
the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are recognised as an expense in profit or loss.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term if there is no
reasonable certainty that the Group will obtain ownership by the end of the lease term.
Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. Lease incentives are
recognised in profit or loss as an integral part of the total lease expense.
h. Intangibles
Intangible assets acquired separately or in a business combination are initially measured at cost. The cost of an intangible asset acquired
in a business combination is its fair value as at the date of acquisition. Following initial recognition intangible assets are carried at cost
less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets are not capitalised
and the expenditure is recognised in profit or loss in the year in which the expenditure is incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over
the useful life and tested for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation
period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial year-end.
Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are
accounted for prospectively by changing the amortisation period or method, as appropriate, which is a change in accounting estimate.
The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the
function of the intangible asset.
Intangible assets with indefinite useful lives are not amortised but are tested for impairment annually, either individually or at the
cash-generating unit level. The assessment of useful life is reviewed annually to determine whether the indefinite life continues to be
supportable. If not, the change in useful life from indefinite to definite is made on a prospective basis.
A summary of the policies applied to the Group’s intangible assets is as follows:
Goodwill and trade marks
Useful lives: Indefinite
Internally generated or acquired: Acquired
Intellectual property, marine farm and hatchery licences and marina berth
Useful lives: Finite
Amortisation method used: Straight line, five to thirty five years
Internally generated or acquired: Acquired
Computer Software
Useful lives: Finite
Amortisation method used: Straight line, four to seven years
Internally generated or acquired: Acquired
i. Research and development costs
Research costs are generally expensed as incurred. Development expenditures are capitalised as intangible assets when the Group
can demonstrate:
-Costs can be reliably measured.
-Completion of the project is technically feasible.
-Resources are available to complete the project.
-There is an intention to use the resulting asset and it will generate future economic benefits.
During the period of development the asset is tested for impairment annually.
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
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NOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS

j. Employee benefits
Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries including non-monetary benefits, annual leave and accumulating sick leave expected to be settled
within 12 months of the reporting date are recognised in respect of employees’ services up to the reporting date. They are measured
at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the
leave is taken and are measured at the rates paid or payable.
Long service leave
The liability for long service leave is recognised and measured at the present value of expected future payments to be made in respect
of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected
future wage and salary levels, experience of employee departures and periods of service.
Defined contribution plans
Contributions made to a defined contribution plan are expensed as incurred.
k. Contributed equity
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity
as a deduction net of tax from the proceeds. Other capital raising costs are expensed as incurred.
l. Revenue Recognition
The Group is in the business of growing, processing and selling King Salmon to New Zealand based retailers, New Zealand food service
and export markets. Revenue from contracts with customers is recognised when control of the goods are transferred to the customer
at the amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods. The Group has
generally concluded that it is the principal in its revenue arrangements because it typically controls the goods before transferring them
to the customer.
NZ IFRS 15 supersedes NZ IAS 11 Construction Contracts, NZ IAS 18 Revenue and related Interpretations and it applies, with limited
exceptions, to all revenue arising from contracts with customers. NZ IFRS 15 establishes a five-step model to account for revenue arising
from contracts with customers and requires that revenue be recognised at an amount that reflects the consideration to which an entity
expects to be entitled in exchange for transferring goods or services to a customer.
Interest income
Revenue is recognised as interest accrues using the effective interest method.
Insurance proceeds
Insurance proceeds are recognised in the financial statements when receipt is virtually certain and can be measured reliably.
m. Taxes
Income taxes
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to
the taxation authorities based on the current period’s taxable income. The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted by the balance sheet date.
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised
deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable
that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised
or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST, except when:
-The GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is
recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable.
-Receivables and payables, which are stated with the amount of GST included.
-The net amount of GST recoverable from or payable to the taxation authority is included as part of receivables or payables in the
balance sheet.
-Commitments and contingencies are disclosed net of the amount of GST recoverable from or payable to the taxation authority.
-The Group recognises uncertain tax positions as a liability where it is probable that an outflow of resources will be required.
n. Share-based payments
Certain employees of the Group receive remuneration in the form of share-based payments, whereby employees render services as
consideration for equity instruments (equity-settled transactions). The cost of equity-settled transactions is determined by the fair value
at the date when the grant is made using an appropriate valuation model, further details of which are given in Note 25.
That cost is recognised in employee benefits expense, together with a corresponding increase in equity (other capital reserves), over the
period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense
recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period
has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the
statement of comprehensive income for the period represents the movement in cumulative expense recognised as at the beginning
and end of that period.
Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards,
but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of equity instruments
that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached
to an award, but without an associated service requirement, are considered to be non-vesting conditions. Non-vesting conditions
are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or
performance conditions.
No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions have not
been met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective of whether the
market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.
When the terms of an equity-settled award are modified, the minimum expense recognised is the grant date fair value of the
unmodified award, provided the original terms of the award are met. An additional expense, measured as at the date of modification,
is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial
to the employee. Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award
is expensed immediately through profit or loss.
4. NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
Various new standards, amendments to standards and interpretations are effective for annual periods beginning on or after the current
reporting period and have not been applied in preparing these consolidated financial statements. The following changes may have a
significant effect on the consolidated financial statements of the group:
a. New and amended standards and interpretations
NZ IFRS 9: Financial Instruments
NZ IFRS 9 Financial Instruments replaces NZ IAS 39 Financial Instruments: Recognition and Measurement for annual periods
beginning on or after 1 January 2018, bringing together all three aspects of the accounting for financial instruments: classification and
measurement; impairment; and hedge accounting.
Under NZ IFRS 9 debt instruments are subsequently measured at fair value through profit or loss, amortised cost or fair value
through other comprehensive income. The classification is based on two criteria: the Group’s business model for managing the
assets; and whether the instruments’ contractual cash flows represent ‘solely payments of principle and interest’ on the principle
amount outstanding.
The assessment of the Group’s business model was made as of the date of initial application, 1 July 2017, and then applied
retrospectively to those financial assets that were recognised before 1 July 2017. The assessment of whether contractual cash flows
on debt instruments are solely comprised of principle and interest was made based on the facts and the circumstances as at the
initial recognition of the assets.
The classification and measurement requirements of NZ IFRS 9 did not have a significant impact on the Group. The Group continued
measuring at fair value all financial assets previously held at fair value under NZ IAS 39. The Group has reclassified Trade receivables
as Debt instruments at amortised cost, these were previously classified as Loans and receivables.
The adoption of NZ IFRS 9 has changed the Group’s accounting for impairment losses for financial assets by replacing NZ IAS 39’s
incurred loss approach with a forward-looking expected credit loss (ECL) approach. NZ IFRS 9 requires the Group to recognise an
allowance for ECLs for all debt instruments not held at fair value through profit or loss and contract assets. The assessment of the ECL
was made at balance date 30 June and it was deemed that no material provision was required due to the negligible risk of credit loss.
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
7574
NOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS

Impairment
Financial assets measured at amortised cost being cash and cash equivalents, and trade receivables are subject to the impairment
provisions of NZ IFRS 9
The Group applies the simplified approach to recognise lifetime expected credit losses for the above financial assets as required or
permitted by NZ IFRS 9. In general, the application of the expected credit loss model of NZ IFRS 9 results in earlier recognition of credit
losses and increases the amount of loss allowance recognised for those items.
Hedge accounting
As the new hedge accounting requirements align more closely with the Group’s risk management policies, with generally more qualifying
hedging instruments and hedged items, an assessment of the Group’s current hedging relationships indicated that they qualified as
continuing hedging relationships upon application of NZ IFRS 9. Similar to the Group’s current hedge accounting policy, the directors are
not excluding the forward element of foreign currency forward contracts from designated hedging relationships.
NZ IFRS 15: Revenue from contract with customers
NZ IFRS 15 requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying
each step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of
obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standard requires extensive disclosures.
The Group adopted NZ IFRS 15 using the modified retrospective method of adoption with the date of initial application of 1 July 2018.
Under this method, the standard can be applied either to all contracts at the date of initial application or only to contracts that are not
completed at this date. The Group elected to apply the standard to all contracts as at 1 July 2018.
The cumulative effect of initially applying NZ IFRS 15 is recognised at the date of initial application as an adjustment to the opening
balance of retained earnings. Therefore, the comparative information was not restated as there was no impact on transition from the
figures reported under NZ IAS 11, NZ IAS 18 and related Interpretations.
b. New and amended standards and interpretations not yet adopted
NZ IFRS 16: Leases
NZ IFRS 16, ‘Leases’, replaces the current guidance in NZ IAS 17. Under NZ IFRS 16, a contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Under NZ IAS 17, a lessee
was required to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance sheet). NZ IFRS 16
now requires a lessee to recognise a lease liability reflecting future lease payments and a ‘right-of-use asset’ for a number of the Group’s
applicable contracts.
The standard will have an impact on the balance sheet and EBITDA, once fully transitioned to the new standard. The estimated impact
on the consolidated income statements of the Group for the period ending 30 June 2020 is expected to be:
-An increase in Finance costs (interest expense) of $153k.
-Increase in depreciation and amortization expense $1.1m
-An increase in EBITDA of $1m.
-Rights-of-use assets on the balance sheet of $4.5m with corresponding liabilities.
The above has no cash effect to the Group and the change is for financial reporting purposes only.
Current estimations are likely to change for the period ending 30 June 2020, mainly due to:
-New lease contracts entered by the Group during the financial year.
-Any changes to exiting lease contracts; and
-Change in management’s judgements to exercise rights of renewals under lease arrangements.
In accordance with the transition provisions of NZ IFRS 16, the Group intends to elect to apply several practical expedients available for
transitioning into the new standard. These include:
-The use of hindsight to determine the lease term where the lease term contains options to exercise rights of renewal out of the final
term of the lease.
-Non-capitalisation of leases that expire within twelve months from adoption date. Costs relating to these leases will continue to be
recognised in the income statement as an expense.
In accordance with the transition provisions of NZ IFRS 16, comparatives will not be restated, with the cumulative effect being recognised
in opening retained earnings at the date of initial application of 1 July 2019. Right-of-use assets will be measured at 1 July 2019 at an
amount equal to the lease liability remaining at this time.
5. SEGMENT INFORMATION
Segment results
For management purposes, the Group is organised into three business units based on geographical sales market and customer
channel. The operating results of the business units are monitored for the purpose of making decisions about resource allocation
and performance assessment.
The Group’s reportable segments are:
New Zealand Retail
The company provides these customers with pre-packed value added products (including wood roasted and cold smoked product),
whole fresh fish and pre-cut fillets.
New Zealand Foodservice
The company provides these customers with a broad variety of salmon products including whole fresh fish, pre-cut fillets, portions
and a range of smoked products.
Export
Predominantly customers based outside New Zealand most of whom currently fall into the Foodservice category as described above.
Segment performance is evaluated at the EBITDA level and results are as follows:
New
Zealand
Retail
New
Zealand
Foodservice
Export
MarketTotal
$000$000$000$000
Year ended 30 June 2019
Revenue40,609 39,150 92,850 172,609
Segment EBITDA2,197 4,851 16,015 23,063
Year ended 30 June 2018
Revenue41,415 37,811 81,045 160,271
Segment EBITDA4,904 6,702 16,876 28,482
Depreciation, amortisation, finance income and costs, and fair value gains and losses on financial assets are not allocated to individual
segments as the underlying instruments are managed on a group basis.
Segment profit reconciles to profit before income tax as follows:
20192018
$000$000
Segment profit23,063 28,482
Depreciation, amortisation and impairment(6,234) (5,105)
Net finance costs(1,092) (690)
Group profit before tax15,737 22,687
The Group does not prepare information allocating assets and liabilities to the market facing segments as all material assets and
liabilities are managed on a group basis.
20192018
Revenue by geographical location of customers
$000$000
New Zealand79,759 79,226
North America58,479 48,435
Australia11,862 11,497
Japan5,893 8,265
China3,591 1,610
Europe3,117 2,860
Other export9,908 8,378
Total revenue172,608 160,271
Sales net of settlement discounts attributable to individual customers that were greater than 10% of gross revenue for the year
was nil (2018 two major customers accounted for $16,595k and $16,535k or 10.4% and 10.3%). These customers were included in the
New Zealand Retail segment.
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
7776
NOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS

6. OTHER INCOME
20192018
Other income
$000$000
Grants received 100 148
Rebate on supply- 1,135
Insurance settlements534 188
Claim received84 -
Contract penalties (received)- 175
Profit on sale of property, plant and equipment10 19
Other income129 157
Total other income857 1,822
7. EXPENSES
20192018
Corporate and other expenses include:$000$000
Trade receivables written off2 10
Impairment of trade receivables38 20
Research cost440 660
Water space process expense23 171
Loss on Assets Held for Sale12 113
Minimum lease payments - operating leases1,428 1,477
Directors' fees414 420
Other directors' expenses12 43
Donations22 17
20192018
Employee benefits expense$000$000
Wages and salaries32,473 29,616
Defined contribution plan expenses785 683
Restructuring costs(38) 40
Other employee benefits expenses4,800 3,933
Outsourced labour1,035 1,399
Total employee benefits expense39,055 35,671
8. FINANCE INCOME AND COSTS
20192018
Finance income$000$000
Interest income96 198
Total finance income96 198
20192018
Finance costs$000$000
Bank facility fees290 293
Interest on bank loans and overdrafts898 595
Total finance costs1,188 888
9. INCOME TAX
20192018
Recognised in the consolidated statement of comprehensive income$000$000
Current income tax expense3,943 6,143
Under provision - previous year285 127
Deferred tax relating to origination and reversal of temporary differences159 292
Total income tax expense/(credit) in the statement of comprehensive income4,387 6,562
Tax amounts posted directly to equity(723) (721)
Reconciliation of tax expense to statutory income tax rate
Profit /(loss) before tax15,737 22,687
Income tax using the company tax rate 28%4,406 6,352
Non deductible/non assessable items(50) 73
Under provision - previous year285 127
Prior period adjustment(242) (30)
Adjustment for varying tax rates(36) -
Other differences24 40
Total tax expense4,387 6,562
Statement of financial position deferred tax assets and liabilities20192018
Deferred tax liabilities $000$000
Accelerated depreciation for tax purposes (3,009) (2,807)
Fair value adjustment to biological assets(9,481) (10,300)
Gains on foreign currency hedges116 (426)
Increase accounting cost for finished goods(693) (462)
Total deferred tax liabilities(13,067) (13,995)
Deferred tax assets
Provision for doubtful trade debtors19 23
Provision for employee benefits739 793
Share based payments167 113
Losses on foreign currency hedges426 299
Other provisions652 824
Total deferred tax assets2,003 2,052
Net deferred tax liability(11,064) (11,943)
Statement of comprehensive income deferred tax assets and liabilities20192018
Deferred tax liabilities $000$000
Accelerated depreciation for tax purposes (202) (42)
Fair value adjustment to biological assets819 661
Increase accounting cost for finished goods(231) 53
Total deferred tax liabilities386 672
Deferred tax assets
Provision for doubtful trade debtors(4) 20
Provision for employee benefits(54) (222)
Impairment of non-current assets- 176
Share based payments- (74)
Other provisions(169) (280)
Total deferred tax assets(227) (380)
Deferred tax (credit)/expense159 292
Imputation credit account
The imputation credit account balance in the New Zealand King Salmon Company Limited as at 30 June 2019 is $8,638k (2018: $3,504k).
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
7978
NOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS

10. COMPONENTS OF OTHER COMPREHENSIVE INCOME
20192018
Movement in reserves$000$000
Forward currency contracts
Reclassification during the year to profit or loss13 12
Income tax effect(4) (2)
Realised/unrealised net gain/(loss) during the year (1,936) (2,436)
Income tax effect542 682
Interest rate swaps
Realised/unrealised net gain/(loss) during the year (451) (147)
Income tax effect126 41
Currency translation differences
Currency translation differences(244) 120
Net movement in reserves(1,954) (1,730)
11. EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing the profit for the year attributable to shareholders of the Company by the
weighted average number of ordinary shares on issue during the year. Diluted earnings per share are calculated by dividing the profit
attributable to shareholders of the Company by the weighted average number of ordinary shares outstanding during the year plus the
weighted average number of shares that would be issued on conversion of all dilutive potential ordinary shares into ordinary shares.
20192018
Earnings per share$000$000
Profit attributable to ordinary equity holders 11,350 16,125
# of Shares# of Shares
000000
Weighted average number of ordinary shares for basic and diluted earnings per share138,548 138,397
Basic earnings per share$0.08$0.12
Diluted earnings per share$0.08$0.12
12. CASH AND CASH EQUIVALENTS
20192018
Cash and cash equivalents$000$000
Cash at bank and on hand5,350 14,021
Short-term deposits881 407
Total cash and cash equivalents6,231 14,428
13. TRADE AND OTHER RECEIVABLES
20192018
Trade and other receivables$000$000
Trade receivables11,868 11,016
Allowance for expected credit losses(146) (110)
Prepayments1,195 1,103
Other receivables585 417
Total trade and other receivables13,502 12,426
Trade receivables generally have 20-30 day terms and are recognised at their realisable value. Collectability of trade receivables is
reviewed on an ongoing basis. Impairment losses are recognised net of insurance proceeds when there is objective evidence that the
Group will not be able to collect the debt.
20192018
Ageing analysis of trade receivables$000$000
> 90 days overdue76 112
31 - 90 days overdue(55) 141
15 - 30 days overdue321 784
< 15 days overdue739 356
Not yet due10,787 9,623
Total receivables11,868 11,016
20192018
Receivables impairment movement$000$000
As at 1 July110 153
Additional provisions for impairment142 130
Receivables written off during the year2 (10)
Reversal of unused amounts(108) (163)
As at 30 June146 110
14. INVENTORIES
20192018
Inventories$000$000
Raw materials11,902 9,822
Work in progress(1) 106
Finished goods8,929 6,654
Total inventories20,830 16,582
The closing cost of finished goods as at 30 June 2019 includes a fair value uplift at point of harvest of $3,428k (2018: $2,354k) and an
impairment provision of $1,261k (2018: $1,638k).
20192018
Amount of inventories recognised as an expense in the statement of comprehensive income$000$000
Cost of inventories recognised as an expense172,400 145,093
Movement in net realisable value (increase)/decrease of inventory(253) 227
Total cost of goods sold including fair value uplift at point of harvest172,147 145,320
The cost of inventories recognised as an expense for the year ended 30 June 2019 includes a fair value uplift at point of harvest of
$61,851k (2018: $47,988k). This cost is included in cost of goods sold in the Consolidated Statement of Comprehensive Income.
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
8180
NOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS

15. BIOLOGICAL ASSETS
The Group has three freshwater facilities in the South Island and nine operational marine salmon farms in the Marlborough Sounds.
The fish livestock typically grow for up to 31 months before harvest.
Cost Fair Value GainTotal
Biological assets$000$000$000
As at 1 July 201842,667 36,787 79,454
Increase due to biological transformation
1
85,636 57,567 143,203
Decrease due to harvest
2
(66,468) (62,926) (129,394)
Decrease due to mortality
3
(17,465) - (17,465)
Changes in fair value
4
- 2,434 2,434
As at 30 June 201944,370 33,862 78,232
1
Biological transformation fair value is impacted by volume increases and fish weight at reporting date relative to the target
fish harvest weight of 4 kgs (proportional recognition).
2
Harvested fair value is included in cost of goods sold in the statement of comprehensive income and is calculated by multiplying
the current years harvest (biomass) by the prior years estimated gross margin per kg (recognised at 100%).
3
Mortality cost is expensed directly to the statement of comprehensive income in the period which it occurs and is not subject
to a fair value uplift.
4
Changes in fair value are impacted by movements in margin primarily being changes in sales price and costs to sell
(fish cost, harvest, processing and freight to market).
Cost Fair Value GainTotal
Biological assets$000$000$000
As at 1 July 201745,087 34,429 79,516
Increase due to biological transformation67,846 36,692 104,538
Decrease due to harvest(57,768) (47,951) (105,719)
Decrease due to mortality(12,498) - (12,498)
Changes in fair value- 13,617 13,617
As at 30 June 201842,667 36,787 79,454
20192018
Fair value gain/(loss) recognised in profit and loss$000$000
Gain arising from growth of biological assets57,567 36,692
Movement in fair value of biological assets2,434 13,617
Total fair value gain on biological transformation60,002 50,309
20192018
Harvested biomasstt
Harvested live weight biomass9,013 9,112
Total live weight harvested for the period (metric tonne)9,013 9,112
20192018
Estimated closing biomasstt
Closing fresh water stocks100 105
Closing sea water stocks5,073 5,286
Total estimated closing biomass live weight as at period end5,173 5,391
Fair value measurement
Measurement of fair value is performed using a fair value model. The method of valuation therefore falls into level 3 of the fair value
hierarchy as the inputs are unobservable inputs.
The valuation of biological assets is carried out separately for each site at a brood and strategy level. Estimated actual cost up to
the date of harvest per site is used to measure the expected margin at the time the fish is defined as ready for harvest, being 4.0kg
live weight. Selling price is estimated at balance date based on the most relevant future market price at expected harvest date. The
expected gross margin is recognised proportionately based on average biomass at reporting date. Fair value measurement commences
at the date of transfer to sea water as this is considered the point at which the fish commence their grow out cycle.
Fair value risk and sensitivity
The Group is exposed to financial risks relating to the production of salmon stock including increasing climate change volatility, climatic
events, disease and contamination of water space.
The Group seeks to produce and market the highest quality salmon products. Extensive monitoring and benchmarking is carried out
to provide optimum conditions and diets to maximise fish performance during the grow out cycle. Sales are maintained in a range of
brands, products and markets to maximise returns from the quality mix of fish harvested. The Group has insurance to cover some of the
risks relating to the livestock.
The estimate of unrealised fair value gain from cost is based on several assumptions. Changes in these assumptions will impact the fair
value calculation. The realised profit which is achieved on the sale of inventory will differ from the calculations of fair value of biological
assets because of changes in key factors such as the final market destinations of inventory sold, changes in price, foreign exchange rates,
harvest weight, growth rates, mortality, cost levels and differences in harvested fish quality.
Leaving all other variables constant a 10% increase/decrease in average future sales prices would increase/decrease the fair value of
biological assets on hand and profit before tax by $10.2m (2018: 10% increase/decrease $10.8m) (excludes the impact of finished goods),
while a 10% increase/decrease in future harvest volume would increase/decrease the fair value of biological assets on hand and profit
before tax by $3.3m (2018: 10% increase/decrease $3.6m).
A 10% increase/decrease in costs to sell would decrease/increase the fair value of biological assets on hand and profit before tax by
$6.8m (2018: 10% increase/decrease $7.0m). Changes in fish health and environmental factors may affect the quality of harvested fish,
which may be reflected in realised profit via both achieved sales price and production costs.
16. PROPERTY, PLANT AND EQUIPMENT
Freehold
land and
buildings
Plant,
equipment
and fittings
Vehicles and
sea vessels
Construction
in progressTotal
Cost$000$000$000$000$000
As at 1 July 20179,695 51,207 2,365 2,934 66,201
Additions301 10,427 334 12,009 23,071
Disposals- (116) (97) (10,209) (10,422)
As at 30 June 20189,996 61,518 2,602 4,734 78,850
Additions860 11,072 1,120 14,196 27,248
Disposals- (1,352) (71) (13,057) (14,480)
As at 30 June 201910,856 71,238 3,651 5,873 91,618
Depreciation and impairment
As at 1 July 20171,659 27,148 1,668 - 30,475
Depreciation281 4,437 145 - 4,863
Impairment- - - - -
Disposals- (113) (97) - (210)
As at 30 June 20181,940 31,472 1,716 - 35,128
Depreciation363 5,337 248 - 5,948
Impairment- - - - -
Disposals- (1,248) (53) - (1,301)
As at 30 June 20192,303 35,561 1,911 - 39,775
Net Book Value
As at 30 June 20188,056 30,046 886 4,734 43,722
As at 30 June 20198,553 35,677 1,740 5,873 51,843
Borrowing costs
There were no borrowing costs capitalised in 2019 (2018: $nil).
Impairment
There were no impairment losses recognised in 2019 (2018: $nil).
Finance Leases
There is no property, plant and equipment held under finance leases as at 30 June 2019 (2018: $310k). There were no additions of
property, plant and equipment under finance leases in the 2019 year (2018: $nil). Leased assets are pledged as security for the related
finance lease liabilities.
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
8382
NOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS

17. INTANGIBLES
Development
in progressTrademarks
Farm and
hatchery
licensesSoftwareGoodwillTotal
Cost$000$000$000$000$000$000
As at 30 June 20178 242 4,379 2,121 39,255 46,005
Additions1,363 - 6 524 - 1,893
Disposals(541) - - - - (541)
Transferred from assets held for sale- - 308 - - 308
As at 30 June 2018830 242 4,693 2,645 39,255 47,665
Additions2,680 - 12 17 - 2,709
Disposals(17) - - (219) - (236)
Transferred from assets held for sale- - - - - -
As at 30 June 20193,493 242 4,705 2,443 39,255 50,138
Depreciation and impairment
As at 30 June 2017- 200 811 2,043 - 3,054
Amortisation- - 141 101 - 242
Disposals- - - - - -
Impairment- - - - - -
As at 30 June 2018- 200 952 2,144 - 3,296
Amortisation- - 168 118 - 286
Disposals- - - (220) - (220)
Impairment- - - - - -
As at 30 June 2019- 200 1,120 2,042 - 3,362
Net Book Value
As at 30 June 2018830 42 3,741 501 39,255 44,369
As at 30 June 20193,493 42 3,585 401 39,255 46,776
Goodwill
Goodwill resulted from the acquisition of The New Zealand King Salmon Co Limited and is subject to annual impairment testing. The
Group performs an annual impairment test in June each year. The Group considers the relationship between its market capitalisation
and its book value, among other indicators, when reviewing for indicators of impairment.
The goodwill is notionally allocated to the New Zealand King Salmon Company’s operating segments as cash generating units. The
recoverable amounts of the cash generating units have been determined based on a value in use calculation using future estimated
cash flows, capital expenditure and changes in working capital over a five year period, plus an estimated terminal value. The terminal
value calculation assumes sea farm consents expiring in 2021 and 2024 will be renewed on reasonable commercial terms to enable water
space to continue to be utilised. The forecasts were based on actual results and expected future use of water space licences currently
held, before fair value adjustments to biological assets. The growth rate used to estimate the cash flows of the unit beyond the five-year
period is 1.72% p.a. (2018: 1.70% p.a.). A discount rate of 7.61% p.a. (2018: 10.36% p.a.) has been applied to discount future estimated
cash flows to their present value. The net present value of these future estimated cash flows exceeds the carrying amount of goodwill
therefore the Company has concluded that there is no impairment to the goodwill.
The calculation of value in use is most sensitive to changes in sales prices, exchange rates, sales volumes and fish performance.
Reasonably probable changes in the assumptions used would not cause the carrying value of goodwill to exceed the recoverable amount
for any of the cash generating units. The amount of goodwill allocated to NZ Retail cash generating unit is $9.630m, NZ Food Service
cash generating unit is $14.573m, and Export cash generating unit is $15,052m.
Trade marks
Trademarks are externally acquired and are carried at cost less impairment. They have indefinite useful lives and are assessed annually
for impairment. No impairment has been recognised during the period (2018: Nil).
18. INTEREST BEARING LOANS AND BORROWINGS
20192018
Current interest bearing loans and borrowings$000$000
Finance lease liabilities- 133
Secured bank loans- -
Other borrowings416 328
Total current interest bearing loans and borrowings416 461
Non-current interest bearing loans and borrowings
Finance lease liabilities- -
Secured bank loans15,000 10,000
Other borrowings- -
Total non-current interest bearing loans and borrowings15,000 10,000
The Company has facilities with BNZ for $30m, secured by a general security deed over the assets of the Group. The expiry date
of facility A of $18m is 25 November 2020, and facility B of $12m expires on 18 October 2019. At balance date $15m of facility A was
drawn (June 2018: $10m).
19. TRADE AND OTHER PAYABLES
20192018
Trade and other payables$000$000
Trade payables10,294 11,170
Other payables6,205 2,754
Total trade and other payables16,499 13,924
20. EMPLOYEE BENEFITS
20192018
Current employee benefits$000$000
Bonuses85 1,193
Employee annual and sick leave benefits 2,264 2,022
Long service leave80 169
Total current employee benefits2,429 3,384
Non-current employee benefits
Long service leave566 473
Total non-current employee benefits566 473
Long service leave
Long service leave provisions are calculated based on the expected future payments to employees, discounted to their net present value.
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
8584
NOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS

21. COMMITMENTS AND CONTINGENCIES
Operating leases
The Group has entered into various operating lease arrangements with providers of premises, vehicles, water space and equipment.
Many of these arrangements are for specified terms with rights of renewal on expiry of the terms. The commitments under
non-cancellable operating leases take into account the renewal periods existing at balance date and are as follows:
20192018
Operating lease commitments as a lessee$000$000
Less than one year1,152 568
Between one and five years3,091 1,052
More than five years754 -
Total operating lease commitments as a lessee4,997 1,620
Finance leases
The Group has finance leases for various items of plant and machinery. The Group’s obligations under finance leases are secured
by the lessor’s title to the leased assets. Future minimum lease payments under finance leases, together with the present value of
the net minimum lease payments are as follows:
Minimum lease
payments
Present value
of payments
Finance lease commitments as at 30 June 2019$000$000
Less than one year- -
Between one and five years- -
Total finance lease commitments as at 30 June 2019- -
Finance lease commitments as at 30 June 2018
Less than one year133 133
Between one and five years- -
Total finance lease commitments as at 30 June 2018133 133
Capital commitments
The Group has entered into agreements to purchase plant and equipment. As at 30 June 2019 the total commitment is $3,265k
(2018: $1,547k).
Contingencies
The Group has a contingent liability of $809k in respect of a fish transport contract requiring the Group to purchase three bulk
tankers (including modifications made in 2018), should the fish transport contract be terminated early (2018: $1,066k).
Guarantees
The group has three guarantee facilities totalling $115k (2018: $115k).
22. FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group uses derivative financial
instruments to hedge certain risk exposures. Financial risk management is the responsibility of the Chief Financial Officer in accordance
with the Treasury Policy approved by the Board of Directors. In addition, the Group has a Treasury Committee, a sub-committee of the
Board that oversees financial risk management.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices.
This comprises of two key types of risks; currency and interest rate risk.
Currency risk
The Group has exposure to foreign exchange risk as a result of transactions denominated in foreign currency, arising primarily from
normal trading activities, but also from the net investment in the foreign subsidiary.
The Group manages its foreign currency risk by hedging its future exposure in respect of its import purchases and its export sales, over a
maximum of five years, when exposures are considered highly probable. The Group hedges this exposure with the use of forward foreign
exchange contracts and options. The notional contract amounts of forward foreign exchange contracts and options outstanding at
balance date were $54m on the import side (2018: $47.5m) and $151.9m on the export side (2018: $126.2m), for delivery over the next
five financial years, in line with anticipated payment dates.
The Group imports feed from Chile and Australia, purchases of which are in US and Australian dollars respectively. In order to protect
against exchange rate movements and to manage the inventory costing process, the Group has entered into forward exchange
contracts to purchase Australian and United States dollars
The Group exports salmon to many countries, the major ones being Australia, Japan and the United States. Sales are denominated
in Australian dollars, Japanese yen and US dollars respectively. The Group has entered into forward exchange contracts to sell Yen
and US dollars.
The cash flows are expected to occur up to 60 months from 1 July 2019. The profit and loss within cost of sales will be affected as
sales are made.
Foreign exchange forward contracts are designated as hedging instruments in cash flow hedges of forecast sales in USD, AUD and JPY
and forecast purchases in USD, and AUD. These forecast transactions are highly probable, and they comprise about 50% of the Group’s
expected sales in foreign currency and about 40% of its total expected purchases in USD and AUD. The foreign exchange forward
contract balances vary with the level of expected foreign currency sales and purchases and changes in foreign exchange forward rates.
There is an economic relationship between the hedged items and the hedging instruments as the terms of the foreign exchange and
commodity forward contracts match the terms of the expected highly probable forecast transactions (i.e., notional amount and
expected payment date). The Group has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the foreign
exchange and commodity forward contracts are identical to the hedged risk components. To test the hedge effectiveness, the Group
uses the hypothetical derivative method and compares the changes in the fair value of the hedging instruments against the changes in
fair value of the hedged items attributable to the hedged risks.
The hedge effectiveness can arise from:
-Differences in the timing of the cash flows of the hedged items and the hedging instruments
-Different indexes (and accordingly different curves) linked to the hedged risk of the hedged items and hedging instruments
-The counterparties’ credit risk differently impacting the fair value movements of the hedging instruments and hedged items
-Changes to the forecasted amount of cash flows of hedged items and hedging instruments
The NZ dollar equivalent of unhedged currency risk on assets at balance date is $143k (2018: $113k) whilst the NZ dollar equivalent of
unhedged currency risk on liabilities at balance date is ($83k) (2018: $31k).
Currency sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in AUD, USD and JPY exchange rates. The impact on the
Group’s pre-tax profit is the result of a change in fair value of monetary assets and liabilities. The impact on the Group’s equity is due to
changes in the fair value of forward exchange contracts and options designated as cash flow hedges.
Change inEquityProfit
AUD rate$000$000
2019+5%(2,483) 14
-5%2,745 (15)
2018+5%(2,241) 93
-5%2,477 (1,033)
Change inEquityProfit
USD rate$000$000
2019+5%4,148 (330)
-5%(4,561) 365
2018+5%3,110 (31)
-5%(3,414) 344
Change inEquityProfit
JPY rate$000$000
2019+5%1,176 (30)
-5%(1,275) 33
2018+5%1,158 (22)
-5%(1,261) 24
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
8786
NOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS

Interest rate risk
The Group has exposure to interest rate risk that arises mainly due to the Group’s long term debt obligations with floating interest rates.
Interest earned on call deposits are based on the current interest rate. Interest rate swaps are used to manage interest rate risk, current
swap cover out to 2024. The amount of Parent borrowing covered using swaps at balance date was $10m (2018: $10m).
The Group manages its interest rate risk by hedging its future exposure with interest swaps, fixing a minimum of 50% of a rolling 12
month projected debt balance. Longer dated periods may be covered with forward starting swaps out to a maximum of 10 years.
Interest rate swaps in place at balance date cover 66% (2018: 100%) of the principal outstanding and are timed to expire in the next
eighteen to sixty three months. Forward starting swaps have been used to further extend maturities out to 2024 ($6m). The fixed
interest rates for the existing swaps range between 4.3% and 5.01% (2018: 4.3% and 5.01%) and the floating rate of 1.58% is aligned
to the floating quarterly bank bill rate. The loss on interest rate swaps at balance date was $1,608k (2018: $1,142k loss), which has been
taken to reserves.
Interest rate sensitivity
The following table demonstrates the sensitivity of the fair value of the interest rate swaps to a reasonably possible change
in interest rates:
20192018
$000$000
Impact of an increase of 50 basis points263 287
Impact of a decrease of 50 basis points(271) (298)
Credit risk
Credit risk is the risk of financial loss that arises if a counterparty to a financial instrument does not meet its contractual obligations.
Financial instruments which potentially subject the Group to credit risk principally consist of bank balances, trade receivables, derivative
financial instruments and financial guarantees.
Customer credit risk is managed centrally subject to the Group’s established policy, procedures and control relating to customer credit
risk management. Credit quality of a customer is assessed based on an extensive external credit rating scorecard and individual credit
limits are defined in accordance with this assessment. Outstanding customer receivables and contract assets are regularly monitored
and any shipments to major customers are generally covered by trade credit insurance.
An impairment analysis is performed at each reporting date using the accounts receivable aging report to measure expected credit
losses. The impairment analysis is based on days past due for all customers with coverage by trade credit insurance. The calculation
reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at
the reporting date about past events, current conditions and forecasts of future economic conditions. Generally, trade receivables are
written-off if past due for more than one year and are not subject to enforcement activity.
Financial instruments are only entered into with banks that have in place an executed International Swaps and Derivatives Association
(ISDA) Master Agreement with the Group.
Maximum exposures to credit risk as at balance date are:
20192018
$000$000
Cash and short term deposits6,231 14,428
Trade and other receivables13,502 12,426
Derivative financial assets /(liabilities)124 88
The above maximum exposures are net of any recognised provision for losses. No collateral is held on the above amounts.
Concentrations of credit risk
Bank balances are maintained with several banks but mainly with Bank of New Zealand. There is a wide spread of debtors, in terms
of size and geographical location within New Zealand and overseas. Concentration of credit risk in trade receivables is not considered
significant as the Group’s customers operate in different market channels and geographic areas.
Liquidity risk
The Group performs cash flow forecasting activities on a daily basis to ensure it has sufficient cash to meet operational needs and
monitors performance against bank covenants on a monthly basis. Surplus cash is invested in short-term or money market deposits.
Undrawn committed facilities and/or liquid assets are maintained at all times at an amount sufficient to cover the forecast cash
payments to employees, suppliers, tax authorities and banking institutions as they fall due.
The following table analyses the contractual and expected cash flows for all financial liabilities:
Less than
one year
Between
one and
two years
Between
two and
five years
As at 30 June 2019$000$000$000
Bank loans438 14,562 -
Credit card facilities300 - -
Trade and other payables16,499 - -
Financial guarantee contracts115 - -
Total non-derivative liabilities17,352 14,562 -
Forward foreign currency exchange contracts43,467 59,325 41,486
Forward foreign currency options13,105 16,144 39,887
Interest swaps583 658 726
Total derivative liabilities57,155 76,127 82,099
As at 30 June 2018
Bank loans(4,580) 431 9,149
Finance lease liabilities143 - -
Credit card facilities300 - -
Trade and other payables13,924 - -
Financial guarantee contracts115 - -
Total non-derivative liabilities9,902 431 9,149
Forward foreign currency exchange contracts42,518 47,088 25,788
Forward foreign currency options21,931 17,639 15,771
Interest swaps616 804 2,620
Total derivative liabilities65,065 65,531 44,179
23. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of cash and short term deposits, trade receivables, trade payables and other current liabilities is considered a
reasonable approximation to their fair value due to the short term maturities of these instruments.
The carrying value of the BNZ loan drawing of $15M is considered a reasonable approximation of its fair value due to the short
term maturities of the drawings. New Zealand King Salmon Investments has the discretion to roll these short term drawings
out to November 2020.
The following financial instruments of the Group are carried at fair value:
20192018
Current derivative financial assets$000$000
Forward exchange contracts224 662
Foreign exchange options270 395
Total Current derivative financial assets494 1,057
Non-current derivative financial assets
Forward exchange contracts708892
Foreign exchange options1,001 992
Total Non-current derivative financial assets1,709 1,884
Current derivative financial liabilities
Forward exchange contracts1,043 213
Foreign exchange options110 150
Interest rate swaps938 826
Total Current derivative financial liabilities2,091 1,189
Non-current derivative financial liabilities
Forward exchange contracts667 425
Foreign exchange options797 630
Interest rate swaps582 244
Total non-current derivative financial liabilities2,046 1,299
2019: BLUE FRONTIERSNEW ZEALAND KING SALMON | ANNUAL REPORT FY19
8988
NOTES TO THE FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS