Annual Meeting CEO’s Address

13 December 2019

Sanford Limited 2019 Annual Meeting
Mr Volker Kuntzsch
Chief Executive Officer’s Address



(Slide 1)
Ladies and Gentleman,

Thank you for the opportunity to address you, both in person and via webcast, to report
back on the financial year, ended 30 September 2019. Our Chairman has already
commented in some detail on the year gone by and I thank him for that. I will expand on
some of the most relevant topics and also connect this speech with our Annual Report,
which you might have a copy of already. Sanford introduced sustainability reporting exactly
20 years ago, amongst the first to do so within the global seafood industry. The last six
reports, which you see on this slide, are Integrated Reports, bringing together the financial
and sustainability reports into one document. This naturally represents the integrated way in
which we see and run the company.

(Slide 2)
We have come a long way in reporting our progress in a transparent manner and I would
highly recommend perusing a copy to understand the fascinating journey we are on. The
title ‘Together’ reflects the fact that it takes a team to achieve our vision of being the best
seafood company in the world.

The title also reflects the belief that we have come much closer together across the company
in embarking on a successful future during the course of this year. The fatal accident of
Steffan Stewart’s on board the San Granit started the year off in the most tragic manner, and
we are still dealing with the loss we never wanted to happen. The repercussions do appear
to have created a shift in our attitudes towards each other at Sanford and it does feel as if
our values of care, passion and integrity have grown in importance and personal relevance. I
will reflect a little more on people engagement later in my address.

(Slide 3)
Paul Norling has already reflected on some of the key financials for the past year, but I
wanted to share a few more insights. Our sales revenue continued to increase year on year,
primarily driven by good pricing for a range of our products. Improved pricing is partly due to
some commodities being in high demand, but generally the result of our more focused
approach to a diverse customer and product portfolio. Sales volume was down as we took
the San Granit out of operation for three months following the accident. Furthermore, due
to algal blooms in the Marlborough Sounds and in Stewart Island, mussel and salmon
harvests were impacted as well. Although the operations team caught up to cover the gap

quite impressively, leading to our aquaculture business performing very well, we couldn’t
quite achieve the volume target we had set ourselves due to the shortfall in the fishing
business. However, I am very satisfied that we managed to keep our earnings before interest
and tax (EBIT) on the same level as prior year, with EBIT per kg of product caught or
harvested improving by 2c to $0.56/kg. Without the San Granit shortfall, this number would
have been approximately $0.60/kg.

(Slide 4)
This slide highlights the positive and negative shifts in our result in comparison to prior year.
I would like to point out two one-off negative impacts, namely the San Granit outage of $4m
and the prior year posting of an $8m one-off improvement in the fair value of our salmon in
water, due to improved technologies that allowed us to more accurately measure the
biomass. This benefit was not repeated this year.

The implementation of our strategy during the course of the year delivered positive
contributions in both aquaculture and fishing. This strategy in action on the fishing side – in
this case for the hoki – resulted from a greater focus on producing higher value products at
sea, namely fillets instead of block-frozen product. We had also decided to shift 1,000T of
hoki from our inshore fleet to our frozen at sea vessels. While our focus on fresh does
generally create greater value for us, in the case of hoki, the frozen at sea product is
preferable and often more profitable.

There are many other positive developments and innovations I could highlight here if time
allowed such as our work improving the quality of our deepwater fish which has enabled us
to move our products up the value chain or the success breeding Greenshell mussel spat at
SpatNZ. For more of these success stories, please refer to our annual report.

Regarding the impact of climate and continuing investment in operational capability, I will
come back to these later in the presentation.

(Slide 5)
We’ve been able to strengthen our balance sheet further by reducing our debt, therefore
improving our debt/EBITDA ratio to well within our target of 1.75x.

This improvement resulted from proceeds from the sale of our 50% share in the processing
facility we co-owned with our Korean fishing partner Dong Won in Weihai, China, and the
sale of our pelagic business in Tauranga in April this year. Both transactions were undertaken
as part of our strategic review of our portfolio and balance sheet to focus on adding value to
our resources in New Zealand.

(Slide 6)
Taking a multi-year approach to our numbers, I want to highlight how over the last 5 years
our catch and harvest volume has reduced while the focus on creating value has led to a

significant increase in revenue over the same period. The volume reduction has primarily
been due to the sale of our international purse seine business and reductions in mussel
harvests following stronger mussel growth previously. We expect our catch volume to
reduce further this year as a result of the sale of the pelagic business in Tauranga in April this
year. We do believe though that we will continue increasing our revenue as we continue the
implementation of our strategy. Attractive commodity pricing driven by global demand for
our healthy protein should also contribute positively.

(Slide 7)
While volumes have reduced over time and revenue has increased, our EBIT has not shown a
corresponding increase as we have invested quite heavily into organisational capability. I
have explained this to some degree in the past but will provide some context in the
subsequent slides.

(Slide 8)
As you know, Sanford’s beginnings were very much focused on fishing in the Hauraki Gulf
some 140 years ago. As one of the photos from the 1900s shows on this slide, fish wasn’t
always treated with the respect we deem appropriate today for this beautiful resource. This
may also be the reason why the seafood industry has a somewhat challenging reputation
and we continue working on building trust with our communities to ensure the
understanding that our livelihoods depend on sustainable ecosystems. The focus on volume
had to give way to an appreciation for what our marine resources can offer.

(Slide 9)
Back in 2014, we were still a commodity business, often sending our product to wholesale
traders and were not putting customer and consumer expectations front and centre. Since
then, we’ve managed to highlight our beautiful New Zealand seafood in much closer
proximity to consumers – one example being the Auckland Fish Market that showcases our
very diverse species portfolio. Subsequent to that, we’ve also introduced a more innovative
approach that goes beyond food and provides valuable benefits on the basis of marine
extracts, like mussel powder and collagen from hoki skins. While this journey required a
tremendous effort in changing attitudes and culture, it also necessitated substantial
investment into our organisational capability.

(Slide 10)
Our business model evolved over the last few years to enable the introduction of our
strategy around value creation through operational effectiveness and efficiency, innovation,
product branding, sales channel optimisation and an array of other capabilities ranging from
communication to sustainability and from asset management to business development.
These processes were much needed to realise the tremendous opportunities Sanford holds.
The introduction of new people and new processes take time to add real value and for a
while this process appears to have added more cost without increasing value.

But as noted in previous slides, it is now we are seeing the benefits of our strategy starting
to counter the challenges we have experienced and are going to be confronted with in
future.

(Slide 11)
Our journey had its fair share of headwinds and, while our operational diversity across many
species and fishing and farming activities provides great advantages, there is no shortage in
challenges either. I mentioned the need for a changing mind set earlier and this is
particularly difficult in an environment where the financial results always appeared
acceptable to the many involved. The reason to change has only become clearer as trust in
leadership grew and better results enabled improved conditions for our people.

We indicated increased levels of capital expenditure above depreciation for the financial
years 2019 and 2020, with a significant share dedicated to the rejuvenation of our
operational assets. Our infrastructure is ageing, leading to outages and suboptimal
performance. We continue to invest into updating our fleets and aquaculture assets and
expect this process to take another 3 to 5 years before the general state of our assets and
preventative maintenance will lead to more predictable operations.

Challenges that have recently become more relevant include the impact of climate change
and changes in consumer behaviour. Over the last few years, our result has been impacted
by warmer ocean temperatures, algal blooms in a number of regions around New Zealand
and increasingly volatile weather conditions out at sea.

As you are aware, we have implemented a number of measures to mitigate the risks of
climate change and we will continue to sharpen our focus on this aspect of our business. It is
highly likely that customer and consumer expectations will similarly reflect the changing
nature of our environment, increasing the need for our awareness and understanding of
global food trends. Our ability to provide transparency and deliver on the environmental and
social components is already well underway.

The reputation of the commercial fishing industry still suffers from misinformation and some
poor historic behaviours seem to linger on for a long time in the public mind. While we are
not perfect, we have all come a long way in building our social license. Our dependency on
sustainable marine resources underlines the need for doing the right thing and we will
further develop our communication and transparency to highlight the comparatively low
environmental impact of seafood and our activities as an industry.

(Slide 12)
This slide contains a lot of information around Sanford’s strategic direction and what’s
important to us. The business excellence framework on the left highlights that sustainability
is the foundation of the way we work. The word ‘sustainability’ is often still associated solely
with an environmental focus and I would like to point out that we take a more holistic

approach, with the care for the environment and our oceans being one of the six pillars of
our business excellence framework. The other pillars focus on our employees, our customers
and consumers, the communities we work in, including partnerships with strategic
stakeholders like the Graeme Dingle Foundation and Paralympics New Zealand, the product
we produce and, naturally, the economic wellbeing of Sanford, without which we wouldn’t
be able to contribute any value to all our share- and stakeholders.

The right hand side of the slide depicts our strategy in more detail. You are aware of our
ambitious vision, which we suggest is built on the ability of developing Sanford into a well-
respected company that creates healthy and valuable products from our diverse marine
resources coupled with the New Zealand provenance. Our customers, employees,
communities and shareholders will be the judges!

Our financial target of achieving $1 EBIT per kilogram of fish caught or harvested remains
valid. It is our intention to get there by 2023 by focusing on those strategic pillars ranging
from organisational capability and operational excellence to innovation, branding and social
license, as laid out in the slide. The introduction of business management teams across
frozen and fresh wildcatch, mussels, salmon and innovation last year proved to be very
valuable in that these cross-functional teams provide tremendous strategic insight into the
diverse divisions of our company. Their work has clearly led to a much sharper focus on
longer-term outcomes.

The Board had agreed to an underlying investment plan of $120m for the financial years 19-
20, of which we spent approximately $38m in FY19. We are planning on spending the
remaining $82m during the 2020 financial year and I will cover this in more detail in a later
slide.

(Slide 13)
The previous slides dealt with our financials for 2019 and provided context from a strategic
perspective. I would now like to highlight a few other achievements over this period. One
number that we are incredibly proud of is the improvement in people engagement over the
last year. You may remember that we’ve had overall people engagement at around 50% for
three years in a row, so the 72% achieved in 2019 is remarkable progress. This is very much
due to ongoing investment into leadership training and internal communications (like weekly
videos and bi-weekly newsletters). Furthermore, our entry level wages are now significantly
above minimum wage for almost all our employees, reflecting our ambition to pay everyone
a fair wage.

We restructured our businesses in Tauranga and Bluff to focus our operations on
strategically important species at those particular sites.

We progressed the introduction of brands across our product range both domestically and in
overseas markets. I am proud to see the Big Glory Bay brand called out by name on many

high-end restaurant menus in Auckland and the US. The opening of the Auckland Fish
Market, including Sanford and Sons Fishmonger, earlier in the year has been very successful.
The fish market enables us to bring our beautiful seafood directly to consumers. The
utilisation of the Precision Seafood Harvesting fishing method across many of our vessels has
led to the ability to showcase fish of the highest quality.

All of these successes, and many more, were only possible through the hard work of our
teams across the country and I would like to thank them all for their often tireless input and
commitment to achieving our goals together.

(Slide 14)
Paul Norling has reflected in some detail on how important the health, safety and wellbeing
of our people is to us at Sanford. You will have noticed on the previous slide that the
awareness of safety at Sanford is very high at 85% across our workforce and I am proud of
the team around the country making safety top of mind.

With our focus on people, safety is undeniably the most important component. We have
invested increasingly into training, from the frontline to leadership at all levels in the
organisation with the aim of building trust and engagement. The implementation of a Just
Culture enables everyone to speak up to ensure safety at their workplace. This has the
desired effect of higher awareness and leads to increased reporting of near misses. All of this
culminates in a more caring environment – one where we all look after each other.

Needless to say then, that Steffan Stewart’s tragic accident earlier in the year had a
devastating effect on the Sanford team, but may have also helped in shifting the mind set
towards making safety at work far more personal, leading to an even greater appreciation of
our need to always be vigilant. In memory of Steffan, the deepwater team in Timaru is
placing a plaque on San Granit and it will always remind us how important it is to look after
each other.

(Slide 15)
Precision Seafood Harvesting, as mentioned previously, is a game changer in fishing
technology worldwide and we are proud to have been part of this Primary Growth
Partnership with Sealord, Moana, Plant and Food Research and the Ministry for Primary
Industries over the last 7 years. The project is now concluded with the methodology being
deployed across many of our inshore and deepwater vessels already, delivering significant
benefits in quality and value. The potential commercialisation of this technology is currently
being investigated in collaboration with PWC.

The following video is an excerpt from Ocean Bounty, a series produced by Graeme Sinclair
for TV3 and describes the benefits of this fishing method from the mouths of our own
people, totally unscripted and with no prompting from us.
(Play Video)

(Slide 16)
Sanford has recently announced an investment of $22m into a marine extracts facility to be
built in Blenheim during 2020. The centre will increase our mussel powder production
capacity and provide opportunity to manufacture other nutraceuticals, for example mussel
oil, collagen and species-specific fish oils. A section of the building will be committed to
ongoing innovation, while the premises are large enough to allow for future expansion.

We selected this South Island location due to its proximity to our largest mussel growing
areas and other science providers.

(Slide 17)
Our capital expenditure can be broken down into the rejuvenation of ageing assets,
innovation and growth. The list for FY19 covers those areas and is fairly self-explanatory. In
addition to those projects, we’ve been busy preparing capital expenditure projects that will
be initiated soon. One of the larger ones is the investment into three new scampi vessels
over the next two to three years. Our current fleet is on average 35 years old and does not
enable the production of consumer grade pack sizes. The vessels will possibly be run on
diesel electric engines and allow for state of the art production facilities at cooler
temperatures.

(Slide 18)
You may have read the Chairman and CEO review in our annual report which starts with the
question, “Why Sanford?”. I would like to take this opportunity to speak to that further.

Our business is amongst the most diverse seafood businesses globally and the amount of
change we have undergone over the last 5 years has been costly. With our earnings
seemingly stagnating, environmental challenges mounting and consumers being
increasingly, and rightly, demanding, the question why would I invest in Sanford, why would
I want to work for Sanford, or why would I trust Sanford to be a good corporate citizen
deserves to be answered by us.

Well, we are on the right path. We strongly believe our strategy of moving from a
commoditised business towards one that is less dependent upon volume and increasingly
able to extract value on the basis of innovation and consumer focus is clearly showing signs
of success. We have had to invest significantly into organisational capability and sales
volumes have reduced by 21% since 2013. But we have been able to more than double our
earnings, from 23c to 56c per kilogram of fish. With the recent turnaround in people
engagement, we are confident that we are on the right track. We also feel that our
geographic spread and operational diversity keep us resilient through rapidly changing
natural and consumer environments.

The incredible change our company has undergone over the last five years has taken many
of us outside our comfort zones but I believe we agree that it has made us a strong and

capable team that is extremely excited about becoming the best seafood company in the
world. Our priorities within the wildcatch, mussel and salmon divisions are primarily focused
on innovation, branding, and growth, the latter especially in aquaculture, with operational
excellence leading to greater efficiencies.

Against the background of seafood supplies being limited globally and this healthy protein
being highly sought after by discerning consumers, we find ourselves in an environment
where the challenge lies in finding the highest value proposition for this wonderful product,
especially when it originates from New Zealand!

(Slide 19)
Sanford’s exciting journey is only possible through the commitment of a strong team that
shares our ambitious vision. I feel incredibly proud of the Sanford people for taking on this
challenge and being wonderful ambassadors for our company in their communities and
much farther afield. Thank you all for making such a difference! Thank you also to my
Executive Team for making this trip quite an adventure.

I would like to thank the Board for their guidance and especially our Chairman, Paul Norling,
for his drive and engagement in realising our vision. We had many challenging conversations
over the last 5 years and I am sure both of us walked away from those with greater
appreciation for the task at hand. Thank you, Paul, for your hard work and focus, inspiring
and facilitating our tremendous progress and for your very positive view on what the future
holds for Sanford.

---

1

Sanford’s 2019 integrated report is available at
https://www.sanford.co.nz/investors/reports-1/company-
reports/
The report outlines Sanford's Business Excellence
Framework –this enables each part of the business to
map out its role in helping to deliver on our goals
We strive to inform in a transparent and open manner
and welcome feedback from our stakeholders throughout
the year
2

FY19 : A challenging start, but value strategy enabled a
satisfactory recovery
¹Like for like views revenue (and gross profit) comparable to 2018 without implementing the new revenue accounting standard (NZ IFRS 15)
² See Appendix for adjusted EBIT and adjusted EBITDA reconciliation to GAAP Reported EBIT$62.6m and NPAT $41.7m
*Without factors of San Granit and algal blooms, we estimate the EBIT GW kg would have been 60c
** Including gain on sale of the pelagic business of $5.1m, prior year includes earthquake insurance settlement of $6.8m
-4%
EBIT GW kg
+2c/kg
56c*
CATCH/HARVEST VOLUME
113kGWT
REVENUE (Like for like¹)
$558M
ADJUSTED EBIT²
$64.8M
Flat
EPS
45C
NPAT
$41.7M**
-1%
ANNUAL DIVIDEND
23CPS
Stable
Flat
+8%
ADJUSTED EBITDA²
$85.7M
2%

5
5
6
5
4
2
2
8
2
3
64.7
64.8
10
20
30
40
50
60
70
80
FY18 FY Adj
EBIT
San Granit
Outage
Mussel
Biotoxin
Salmon
Biotoxin
FY18 one-off
Salmon
Model Adj
Biological
Value (in
Water)
Salmon
margin
Mussel
margin
(Channel)
Hoki Product
Cascade *
Market ing &
Innovation
investment
Opex
Investment
FY19 FY Adj
EBIT
Key Drivers of ADJUSTED EBIT change
Strategy in Action +11m
Climate -4m
Value strategy driving adjusted EBIT improvement
4
Fair Value -3m
One-off -4m
NZD m
* Net of volume impact of industry voluntary shelving of Hoki (5,000 tonnes impact)

downfrom 26.6%
Operating Cash Flow
$48.7m
-14%
NET DEBT
$130.7M
TOTAL EQUITY
$588M
DEBT / EBITDA
1.52x
GEARING*
23.6%
-33%
+1%
FY18 1.81x
5
0
20
40
60
80
FY 17FY 18FY19
$m
* Debt/Equity
Down from 7.3%
RETURN ON AVERAGE
TOTAL EQUITY
7.13 %
FY19 : Balance Sheet strengthening further

0
20
40
60
80
100
120
140
160
$0
$100
$200
$300
$400
$500
$600
2013201420152016201720182019
Total SalesTotal CostGW Sold
NZD $mGW K Tonnes
Volume vs Revenue and Cost Over Time

Strategy driving Value Creation
NZD $m
AMBITION
$1 EBIT/GW KG
2023

8
Sanford in 1900

2014
Shifting the Focus onto Consumers
2019
Creating value: commodity fish -> seafood -> beyond food

‹#›
BMT
Strategies
S&OP
Processes
Customer
People and
Culture
Safety and
Wellbeing
InnovationTechnology
Marketing
CommunicationBusiness
Development
SustainabilityOperations
Consumer
INVESTING INTO DEVELOPING OUR VALUE CHAIN
......................................................................................................................................................
TO CREATE VALUE
Business Excellence Framework
Six Outcomes driving a Sustainable Business
Evolving our Business Model

New York Times, 4 March 2019
People
Infrastructure
Climate Change
Consumer Preferences
& Public Perception
The Sanford Journey –Tackling Challenges

Sanford Strategy
Business Excellence Framework
Sustainability as theFoundation
AMBITION
$1 EBIT GW kg by
2023
VISION
To be the Best Seafood
Company in the World
PURPOSE
We share the natural
goodness of our oceans with
uncompromising care
ORGANISATIONAL
CAPABIILTY
OPERATIONAL
EXCELLENCE
INNOVATION
BRANDING
INVESTMENT PLAN
SOCIAL LICENCE
Cross Functional Business Teams
SALMONMUSSELS
FROZEN
FRESH
INNOVATION
Integrated thinking and delivery across our businesses

Achieving Together in FY19
•Elevated people engagement
•Overall 72%
•Safety 85%
•Expanded organisational capability through training
•Ongoing investment in wages
•Improved communications –Toolbox Toolkit,
Officers’ Conference
•Development of centres of excellence in South
Island
•Sale of pelagic assets in Tauranga
•Launched / built Big Glory Bay, Sea to Me, and
Sanford and Sons at the Auckland Fish Market
Our focus on people will continue as a
priority in FY20
13

14
Safety at Sanford
•Training investment including 146
leaders given Just Culture training
•Investment in growing the Health and
Safety resource
•Safety awareness across Sanford at
85%
Steffanwas lost in
a tragic accident
in November
2018
His loss has
focused all at
Sanford on what
is truly important

We are proud users of Precision Seafood Harvesting on deepwaterand inshore vessels.
15
Looking forward –Innovation at Sea
Video appears here in live presentation. Please contact Sanford
to access this video. dmcintosh@sanford.co.nz

Sanford Marine Extracts Facility -Blenheim
Moving ‘beyond food’ through innovation
•$20m+ investment
•Planned opening in December 2020
16
Looking forward –Innovation on Land

FY19 Capital Investments
17
•Capital expenditure of $38.3m, +55% vs LY
•Supporting the brand -more fresh fish through
the Auckland Fish Market
•‘Beyond food’ strategy –2 new dryers for Enzaq
•Vessel optimisation -new sonar technology,
vessel surveys and safety improvements
•Value add initiatives on vessels to improve the
return per kg -improved handling techniques
and greater use of Precision Seafood Harvesting
•Salmon farm optimisation through new feed
barge
FY20-22 Capital Investments
•Priority areas:
•Marine Extracts facility and equipment
•Scampi vessel replacements
•Mussel water space expansion
•Salmon capacity growth
•San Core Project –Information system and
processes
•Australia footprint

18
•Our strategy addresses major risks (changes in climate and consumer preferences)
•Our strong values attract great skills
•We aim to create value for all stakeholders.
We focus on the following areas in 2020:
Wild Catch
•Channel / customer focus
•Product cascade
improvements on vessels
•Processing automation in
Timaru
Mussels
•Product diversification
•Food
•Extracts
•Country and sales channel
strategy
•Volume increase
Salmon
•Expansion of the BGB brand
•Diversification of product
formats
•Volume increase
Why Sanford?

Thank You!
19