NZK FY20 Full Year Results Announcement

Market Announcement
27 August 2020
NEW ZEALAND KING SALMON ANNOUNCES FY20 RESULTS
New Zealand King Salmon Investments Ltd (NZX & ASX: NZK) reports its financial results for the 12 months
ended 30 June 2020 (FY20) today.
The business delivered strong performance with operating EBITDA of $25.1 million, despite the challenges
of Covid-19 and a drop in harvest volume.
Key highlights include:
• Operating EBITDA of $25.1m, within guidance
• Sales volumes of 6,331mt, down 16% on FY19.
• Revenue of $155.3m, down 10% on FY19.
• Net profit of $18.0m, up 59% on FY19
• Strong pricing achieved of $24.54/kg, up 7% on FY19.
Chairman John Ryder said: “This has been one of the most challenging periods I have experienced in my
business career.
“I want to take this opportunity to thank the team members who have seen us through this difficult Covid-
19 period. They have all adapted to the challenges that have been thrown at them.
“In light of these pressures, we are proud to have achieved this result. Our strong performance was a
sound base as we entered lockdown in March.
“Much of our resilience during this period has been due to the support of our customers, partners,
suppliers, and shareholders – we are stronger together because of these relationships,” Mr Ryder added.
Managing Director and CEO Grant Rosewarne said: “Covid-19 has certainly tested our resilience with sales
revenue dropping by 50% during Level 4 lockdown, but I’m proud to say we have adapted to the crisis
and, with the aid of the Government’s wage subsidy, been able to keep all 550 team members employed.
“At the introduction of lockdown, our priority was the safety of our team members and to keep our
production going. With the support of Ministry for Primary Industries (MPI) we registered as an essential
service which enabled us to keep harvesting and selling our King salmon. Trading is currently around 20
per cent below pre-Covid levels but there are encouraging signs, particularly in the US, despite this key
market being hit so hard by the virus.
“I’d like to thank the Government for their leadership in re-establishing market access for exporters like
us to continue supplying our premium food and beverage to markets around the world. With around half
of our volume sent to international markets, consistent access to cargo routes is critical to business
sustainability.

Mr Rosewarne said: “Despite these challenging times the future of the industry and our company is bright
with the Government’s Aquaculture strategy recognising the opportunity for the industry to grow from
its current $625 million to $3 billion in 2035.
“Our Blue Endeavour application to farm in the Cook Strait, 7kms north of Cape Lambert, is progressing
well with a hearing expected by the end of the year. We expect the result of the application to be
confirmed by mid CY2021, and assuming a positive outcome, first harvest expected in Q4 of CY2023.
“If granted there will be a significant economic impact to the region eventually delivering 300 jobs to the
Top of the South.”
With the departure of our Chief Operating Officer, a decision has been made to split the role to allow
more focus on our aquaculture and processing operations respectively. We are pleased to announce the
internal promotion of Grant Lovell to the new role of General Manager Aquaculture, bringing over 20
years’ experience farming the King salmon species. Further announcements on our processing operations
will be made in due course.
Due to uncertainty caused by the impact of Covid-19, higher levels of inventory and ensuring prudent cash
availability, the Board has decided not to pay a final dividend in respect of the FY20 year. The payment of
dividends will be reviewed next year.

Ends

Contact: Grant Rosewarne
Managing Director and CEO, New Zealand King Salmon Investments Ltd.
Email: grant.rosewarne@kingsalmon.co.nz



About New Zealand King Salmon
New Zealand King Salmon is the world’s largest producer of the premium King salmon species. We operate
under four key brands: Ora King, Regal, Southern Ocean and Omega Plus, and the New Zealand King
Salmon label. We have been growing and selling salmon to consumers for more than 30 years. Today we
employ over 500 people. New Zealand investors make up a significant percentage of the ownership of NZ
King Salmon, and the communities of Marlborough, Nelson and Tasman are well represented with around
400 of the approximately 2,800 shareholders being from the Top of the South.

More information can be found at www.kingsalmon.co.nz

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A N N U A L R E S U L T S F Y 2 0
2
H I G H L I G H T S
01

A N N U A L R E S U L T S F Y 2 0
114
136
160
173
155
G E O G R A P H I C S P R E A D
O F R E V E N U E
FACTS AND FIGURES
37%
3%
6%
44%
2%
$155.3
R E V E N U E O F
M I L L I O N
7,336
M E T R I C T O N N E S H A R V E S T E D
D U R I N G F Y 2 0
2%
P R O-F O R M A O P E R A T I N G E B I T D A
N Z $ m
N Z $ m
G A A P E B I T D A
3
6%
16.0
21.6
26.2
25.2
25.1
5
10
15
20
25
30
FY16FY17FY18FY19FY20
13.8
38.5
28.5
23.1
36.1
10
20
30
40
50
FY16FY17FY18FY19FY20

A N N U A L R E S U L T S F Y 2 0
FINANCIAL HIGHLIGHTS
Good financial result, despite challenges posed by COVID-19 and disruptions to supply chains:
•Sales volumes of 6,331 tonnes, down 16% on FY19, sales dropped by 50% during lockdown but have now recovered to ~80% of prioryear run rate by August.
•Revenue of $155.3m, down 10% on FY19.
•Achievement of strong pricing with average of $24.54/kg, up 7% on FY19.
•Solid Pro Forma Operating EBITDA of $25.1m*, in line with FY19 and within the FY20 earnings guidance range of $25.0m –28.5m.
•COVID-19 Wage subsidy helped us to protect all jobs.
•GAAP NPAT of $18.0m, up 59% on FY19 due to an increase in biomass and average fish size as we slowed harvest.
Due to uncertainty caused by the impact of Covid-19, higher levels of inventory and ensuring prudent cash availability, the Board has decided not to
pay a final dividend in respect of the FY20 year. The payment of dividends will be reviewed next year.
4
* A full reconciliation between GAAP and Pro Forma results is shown on slide 36 of this presentation.

A N N U A L R E S U L T S F Y 2 0
Strong sales price growth with volumes initially constrained by supply
and sales later constrained by COVID-19.
Sales volume of 6,331 tonnes, down 15.8% on FY19:
•Sales volume was impacted by:
►Constrained 1H20 volume resulting from FY19 summer mortality and strong
demand.
►The COVID-19 pandemic during 2H20 which particularly impacted global
foodservice market.
►Disruptions to global supply chains which limited airfreight capacity and
increased cost for fresh export product.
Strong increase in sales prices, up in all key markets and ahead of
FY19:
•Positive average price increases across all markets.
Successful implementation of the new Aquaculture model:
•Adoption of best possible biosecurity practices and fallowing between crops.
•Use of upwelling systems to improve environmental conditions.
•Targeted approach to fish husbandry reducing fish handling, eliminating towing,
and rotating and repairing fish nets more often.
We expect to refine this model over the coming years.
Regal smoked range grows international sales
•Now in over 600 stores in North America and with solid growth in SE Asia.
Omega Plus continues to gain traction in export markets
•FY20 saw a significant increase in revenue from sales of Omega Plus in China to
~$650k via online pet retailer Boqii.
OPERATING HIGHLIGHTS
5
* A glossary of terms is included on slide 38 of this presentation.

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HEALTH, SAFETY AND WELLNESS
We are uncompromising in our commitment to Health, Safety and Wellness
6
FY20 saw three incidents take place that required WorkSafe notification; in all cases detailed investigations have taken place and improvements
were implemented to prevent reoccurrence.
Key lagging Health, Safety and Wellness metrics for the period saw a pleasing improvement:
•Total Recordable Incident Frequency rate (TRIFR), an indicator of severity, was 207.2 compared to 248.4 for FY19.
•Lost Time Injury Frequency Rate (LTIFR) was 13.7, down from 28.1.
Our key leading Health, Safety and Wellness indicator, near miss reporting, decreased to 560 compared with 832 in FY19, with increasing reporting rates and frequency now
a key area of focus.
NZKS continues building an engaged and motivated workforce, and measures its levels of team member engagement through an annual engagement survey. Health, Safety
and Wellness continues to be our highest scoring area from the survey and that reflects our ongoing commitment to this area.

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S U S TA I N A B I L I T Y
0202

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OPERATING SUSTAINABLY
New Zealand King Salmon’s mission is that every stakeholder is better off because we exist. We aim to improve the lives of our people, our
community and our stakeholders whilst minimising our long term footprint.
Withagrowinginterestfromcustomers, consumers,communityand investorsin our sustainable business practices, including our positive contribution to mitigating
climate change, our sustainability programbecomes more important every year.
Our certification programme provides independent verification of our sustainable practices with regular assessments by expertthird party organisations.

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OPERATING SUSTAINABLY
Our company continues to be assessed very positively for our farming and processing practices in independent third-party
reviews.
•Renewal of our 4-star rating with the Global Aquaculture Alliance’s Best Aquaculture Practices (BAP) certification programme.
•FirstAquacultureStewardshipCouncil (ASC)certificationspecific to our Clay Point farm.
•Renewal of theNew Zealand King salmon industry’sGreen/'Best Choice' rating from the globally respected Monterey Bay Seafood Watch programme
•Completion of a life cycle analysis research reporttobetterunderstandourcompany’scarbon emissions.Due to the nutritional requirements of our unique King salmon
speciesand our decision to minimise marine protein in our King salmon diets, our carbon footprintfalls at the higher end of aquaculture species, but remainsa very
good choice when compared with proteins derived from land animals.
•Opportunities to reduce our carbon footprint align with operational goals to improve survival rates and feed conversion ratios, butincremental gainsalso possible in the
reduction of waste in packaging,consumablesand energy usage.

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F I N A N C I A L
O V E R V I E W
10
0303

A N N U A L R E S U L T S F Y 2 0
•Pricing is positive
•Sales volumes and market accessibility negatively impacted by COVID-19 in 2H20, with impact on Gross Margin (increased working /cost base).
•GAAP results are positively impacted by fair value gains due to slower harvest and larger fish.
SUMMARY FINANCIAL INFORMATION
* A full reconciliation between GAAP and Pro Forma results is shown on slide 36 of this presentation.
11
Group Financial Performance
Pro-Forma*Statutory
NZ$000sFY20FY19% chg.FY18% chg.FY20FY19% chg.
Volume Sold (tonnes)6,331 7,520 -16%7,779 -19%6,331 7,520 -16%
Revenue155,344 172,609 -10%160,271 -3%155,344 172,609 -10%
Gross Margin47,346 46,925 1%47,499 -4%58,349 44,822 30%
Gross Margin %30%27%30%38%26%
EBITDA25,071 25,166 0%26,165 -4%36,074 23,063 56%
EBITDA %16%15%16%23%13%
EBIT17,123 18,932 -10%21,060 -19%26,689 16,829 59%
NPAT11,240 12,864 -13%14,457 -22%18,004 11,350 59%

A N N U A L R E S U L T S F Y 2 0
705
815
1,285
2,275
595
1,265
980
Ruakaka
Otanerau
Clay Point
Te Pangu
Waitata
Ngamahau
Kopaua
FY19
7,920 tonnes
480
2,100
2,200
1,030
1,520
Our aquaculture model means farms may be harvested in alternative years. Timing variances, fish performance and harvest management
programmes also give rise to individual farm production variances.
HARVEST BY FARM
12
* Based on FY20 harvest volumes, note that a further 6 tonnes was harvested from our hatcheries (11 tonnes for FY19).
FY20
7,330 tonnes

A N N U A L R E S U L T S F Y 2 0
New Zealand King Salmon maintains its strong financial position.
Our balance sheet is strong with debt increasing due to higher inventory levels.
•Net debt of ($31.0m).
►We consider our funding facilities have sufficient headroom on debt and covenants to manage
through temporary FY21 impact of higher inventory / debt.
•Inventories increase significantly to $35.6m due to:
►Slow down of sales during COVID-19.
►The need to harvest fish to ensure optimal fish health and grow-out, plus compliance with consented
feed discharge levels.
►Further inventory growth is forecasted for FY21 (until sales return to pre COVID levels).
•Property, Plant & Equipment increased by $8.6m, see slide 19 for details
•‘Other’ non-current assets of $60.3m includes goodwill of $39.3m and increases due to increases in the
fair value of derivatives.
•‘Other’ non-current liabilities of $21.5m reflects deferred tax on fair value gains.
BALANCE SHEET
13
Group Financial Position
Jun-20Jun-19
NZ$000sAuditedAudited
Assets
Current Assets
Cash and cash equivalents7,115 6,231
Receivables12,777 13,502
Inventories35,612 20,830
Biological assets81,784 68,052
Other907 494
138,195 109,109
Non Current Assets
Property, plant and equipment60,481 51,843
Right-of-use Assets4,581 -
Biological assets10,594 10,180
Other60,333 50,928
135,989 112,951
Total Assets274,184 222,060
Liabilities
Current liabilities
Loans (external)1,132 416
Lease liabilities1,347 -
Payables14,847 16,499
Other10,767 5,274
28,093 22,189
Non-current liabilities
Loans (external)37,000 15,000
Lease liabilities3,258 -
Other21,519 16,119
61,777 31,119
Total Liabilities89,870 53,308
Net Assets184,314 168,752
Net Cash / (Debt)(31,017)(9,185)

A N N U A L R E S U L T S F Y 2 0
B U S I N E S S
U P D AT E
14
0404

A N N U A L R E S U L T S F Y 2 0
This is our key initiative for FY20 and FY21 years, it targets the protection of fish health, improved survival rates and theadoption
of the best possible biosecurity practices. This year, we achieved:
•Upwelling systems installed on all farms to improve flow and provide cooler water from lower depths. The initiative also helpedmitigate the effects of Algal blooms and
Jellyfish inclusion on nets.
•An increased focus on net cleaning and maintaining the best possible environmental conditions on farms.
•Reduced handling of stock, freeing up team member time for husbandry focus –all stock entered into their eventual harvest farm and no stock graded or pumped.
•A greater focus on feed management–especially during summer –with pleasing improvements seen from tide specific feeding regimes and altered feeding practices
during the warmest periods.
The farming of low flow sites continues to pose a challenge in terms of feed discharge and compliance with consent conditionsaspreviously detailed in the MPI Salmon
Relocation Process.
Improvements seen to date are pleasing with further improvements to fish health and survival expected over the next 2-3 years asthe model is refined.
NEW AQUACULTURE MODEL
15

A N N U A L R E S U L T S F Y 2 0
Future harvest volumes impacted by challenges with consenting and compliance
•FY21 harvest increases on previous guidance due to slowing of harvest in FY20.
•Slower increase than previous guidance due to:
FORECAST VOLUMES –FY21-FY23
16
Harvest Volumes (tonnes) *
►The delay of the permitted feed discharge increase at Waitata, with our application
for additional feed discharge and pens declined.
►The extended fallowing of the Forsyth farm due to challenges in compliance with
resource consent, as agreed with Marlborough District Council.
►Maximum volume from existing sites is forecast at 10,000 –11,000 tonnes with this
down on previous guidance as environmental management of the Kopaua site is
proving more challenging than originally expected.
Guidance for future periods is dependent on respective summer fish performance
* Harvest volumes have been forecast based on utilisation of existing resource consents, historic performance and our new aquaculture model. They do not include any impact of farm
relocation or open ocean initiatives.
7,931
7,336
~8,500~8,500
~9,000
FY2019FY2020FY2021FY2022FY2023

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FUTURE FARMING –FARM RELOCATION
17
This slide provides an update on future farming volumes:
Farm relocation (MPI Salmon Relocation Process):
•The 2017 Hearing Panel recommendation to the Minister on which farms to relocate is unlikely to have any material impact on sitecapacity, however it may result in
modest fish performance improvements.
•A revised proposal from Iwi and NZKS was provided to MPI in June 2019, including use of the proposed site at Mid Waitata.
•Any potential production benefit from relocation would be achieved in FY24 or beyond due to process timing and existing production cycles.
•We support the relocation proposal concurrently with Blue Endeavour, as this ensures better production continuity.

A N N U A L R E S U L T S F Y 2 0
FUTURE FARMING –OPEN OCEAN
18
This slide provides an update on future farming volumes:
Open Ocean Farming -NZKS has applied for its first open ocean farming consent comprising two stages, in the Marlborough region:
•The project has been named “Blue Endeavour” representing a step towards the long term sustainability of the industry.
•NZKS is currently in the process of providing the Marlborough District Council (MDC) with additional information as requested, apre hearing meeting is expected in Nov
/ Dec 2020 with any public hearings to follow in early 2021.
•The earliest possible harvest from the region would be in the 4
th
quarter of the 2023 calendar year.
•Capital costs for the infrastructure associated with Blue Endeavour are estimated at ~$35m with some ability for this spend to be staged.
•Our consent application is for up to 5,000 tonnes of harvest per annum, per stage.
•NZKS submitted on the fast track resource management bill to ensure Aquaculture could be part of this process. However we have chosen not to use the fast track
process as the Blue Endeavour application is already well advanced and ensures we continue to positively engage with current submitters and the community.

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CAPITAL EXPENDITURE
19
Additional capital investment has been made to build capacity and improve performance:
FY20 Capital expenditure was $17.8m, allowing NZKS to undertake the following key projects:
•Completion of the Thomas Song Barge, replacing temporary barging infrastructure and increasing long term capacity ($2.7m in FY20 of a total $4.9m investment).
•Investment in future farming projects: site relocation, open ocean monitoring and consenting ($1.0m).
•Investment in hatchery facilities to build resilience, decrease risk and increase capacity: first feeding and grading building ($2.0m in FY20 of a total $4.1m
investment).
•Processing automation, risk mitigation, health and food safety improvements including automated filleting, sprinkler install andbin wash ($2.8m)
•Implementation of new aquaculture model including: installation of additional pens, lighting, nets and upwelling pontoons ($3.2m)
Balance of capital expenditure relates to routine replacement of existing assets.

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CAPITAL EXPENDITURE –KEY PROJECTS (FY20)
20
Rendering of the Tentburn first feeding facility (first eggs transferred August, expected
completion November 2020).
This facility is the first recirculation facility to be built for the commercial rearing of Salmon in
New Zealand and will be used to grow our fry prior to transfer to outdoor raceways.
This facility reduces risk posed by variable (upstream)water quality, builds resilience and is
expected to benefit fish performance in both freshwater and seawater.
Our latest barge the Thomas Song installed at our Waitata farm in
October 2019.

A N N U A L R E S U L T S F Y 2 0
O P E R AT I O N A L U P D AT E
21
05

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SALES BY MONTH
COVID-19 had a significant impact on H2 sales
The impact of COVID-19 on 2H20 sales has been estimated at between 600 –700 tonnes with this impact being felt across all markets.
•New Zealand foodservice was essentially shut down when NZ went to Level 4 lockdown on the 25
th
of March.
•Despite NZKS being listed as an essential service provider, disruptions to global supply chains meant that we were unable to fulfil all available orders.
•Where air freight was able to be secured for export customers it was significantly in excess of normal rates.
•The need to maintain our farming and processing operations through this period also saw NZKS incur an increased cost of working.
•By April the full global impact of COVID-19 was being felt restricting demand despite New Zealand being in a position to loosen lockdown restrictions.
Sales have continued to recover and are currently at ~80% of pre COVID-19 levels but with increased freight costs impacting margins.
JULAUGSEPOCTNOVDECJANFEBMARAPRMAYJUN
Actual Sales
Forecast Sales

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STRONG PARTNERSHIPS
Our strong brand partnerships and collaborative approach supported a prompt pivot into e-commerce and specialty retail to replace lost foodservice sales.
We featured on the ‘NZ
special’ of Chef Massimo
Buttora’s hugely successful
Kitchen Quarantine
IGTV/YouTube session.

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COMMUNITY SUPPORT
NZKS committed to protecting and supporting team members and community.
Team member Graeme Aldridge with a donation of
salmon to TeAtiawaIwi.
District Nurses in Blenheim who also received a
donation of salmon.

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SALES BY MARKET -EXPORT
Demand from North America remains strong despite challenges
We continue to deliberately target the North American market and are pleased to see the resilience shown in this
market.
•Demand for King Salmon remains strong with NZKS looking to build on this momentum.
•The North American market accounts for 75% of all Ōra King sales (FY19 74%).
•Retail brands continue to develop well with Regal sales up five fold to ~120 tonnes.
•In Q4 of FY20 we successfully redeployed our North American sales team to focus on opportunities in the
ecommerce, specialty retail and business to consumer channels.
•We are looking to invest further in the profitable North American retail segment as this aligns with strategy but
also allows us to spread risk.
Sales to China decrease but market continues to show promise.
•FY20 Sales to China decreased by 16% on FY19, with significant challenges in this market since the January
announcement of the COVID-19 virus.
•We expect to encounter challenges with our targeted growth of this market over the next 12 months.
Continuing to target branded premium markets
North America (tonnes)
China (tonnes)
1,241
1,718
2,175
2,377
2,315
FY2016FY2017FY2018FY2019FY2020
24
71
150
126
FY2016FY2017FY2018FY2019FY2020

A N N U A L R E S U L T S F Y 2 0
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SALES BY MARKET -EXPORT
Strong growth in average sales price offset by volume decreases
Limited 1H20 supply and 2H20 global foodservice shutdown impact volumes
•Australia –focus continues to be on premium branding, with high competition from Australian producers at the low end of the market.
•Asia (ex Japan and China) –this market is growing in significance for New Zealand King Salmon. The shutdown of foodservice in 2H20 significantly impacted fresh sales, this
was however partially offset by sales of our retail Regal range up 83% on 2H19 and up 46% on 1H20.
•Japan –ongoing premiumisation has affected sales in this market with sales further impacted by the focus on foodservice.
•Europe –volumes remain flat due to price rebalancing, 2H20 volumes in line with 2H19.
Australia (tonnes)
Asia (tonnes)
Excludes Japan and China
Japan (tonnes)Europe(tonnes)
594
703
584
544
389
FY2016FY2017FY2018FY2019FY2020
269
312
409
433
353
FY2016FY2017FY2018FY2019FY2020
302
331
442
249
234
FY2016FY2017FY2018FY2019FY2020
77
88
121
127
120
FY2016FY2017FY2018FY2019FY2020

A N N U A L R E S U L T S F Y 2 0
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SALES BY MARKET -DOMESTIC
We continue to focus on branding and value added products
•With limited available salmon we have prioritised branded premium markets particularly export over the last
few years, with this limiting supply in the domestic market.
•Improved domestic pricing underlines our focus on branded premium products.
•2H20 sales volumes were down 27% on 2H19 with this largely driven by COVID-19 disruption to the
foodservice channel which saw a 34% decrease in sales vs 1H20.
•Overall sales decrease by 23% on FY19 with this being driven by:
•COVID-19 impact on the foodservice channel in 2H20.
•Our strategy of focusing on the top end of the salmon category.
•Increased competition at the lower end of the market.
•Limited promotion in the fresh salmon category.
Sales impacted by foodservice shutdown and cheaper substitutes
Domestic Market(tonnes)
3,632
4,047
3,976
3,640
2,794
FY2016FY2017FY2018FY2019FY2020

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DIVERSIFICATION BUILDS RESILIENCE
We continue to see strong demand and growth in export markets
•Omega Plus is currently being sold domestically and exported to China and South Korea
•FY20 saw a significant increase in revenue from sales of Omega Plus in China, up 675% albeit off a low
base. We have partnered with online pet retailer Boqii in China.
•Domestically we continue to invest in growing Omega Plus and optimising our supply chain, whilst
investigating alternative distribution channels
Competition at the lower end of the market continues to grow with Atlantic taking a
greater share of the New Zealand salmon market.
•Our first Atlantic range -Regal Epicurean hot smoked was launched in November.
•NZKS has plans to gain a larger share of this segment; financial impact on FY21 is immaterial.
Sales of Atlantic and Omega Plus continue to grow, from a low base
Omega Plus(Revenue $000)
Atlantic Salmon (Revenue $000)
379
147
2,125
FY2016FY2017FY2018FY2019FY2020
153
457
1,013
1,598
FY2016FY2017FY2018FY2019FY2020

A N N U A L R E S U L T S F Y 2 0
AVERAGE SALE PRICES
Key markets experienced price growth with the optimisation of our product mix, and demand exceeding supply pre Covid-19.
Challenging current environment –core sales maintain pricing despite temporary decrease in demand due to foodservice disruptions.
Branding underpins ongoing improved value to our business
29
* Volume weighted average sales price for all exported salmon based on foreign exchange rates achieved as outlined on the table above.
Sales Prices and Exchange Rates
FY16FY17Fy18FY19FY20
Average Sales Price per KG
Domestic SalesNZD17.9718.7720.2222.1124.91
Export SalesNZD20.1220.4621.7023.8525.05
NZD:AUD0.910.930.930.940.94
NZD:USD0.680.690.690.680.66
NZD:JPY77.577.175.671.368.3

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ŌRA KING SALES
2H20 and full year impacted by COVID-19
Ōra King sales down 9% on FY19, a respectable result given the challenges posed by the disruption
to the foodservice industry globally.
Ōra King sales of 1H20 of 1,444 tonnes up 5% on 1H19 were followed by sales of 1,084 tonnes in 1H20 due to COVID-
19 disruption to foodservice channels and a lack of airfreight capacity.
This small decrease reflects:
•Continued demand from North America with 2H20 seeing demand in excess of the available cargo capacity.
•The resilience of the Ōra King brand in the face of the challenges in the wider global foodservice market in 2H20.
As an organisation we continue to focus on:
•Reaching themenus of more premium restaurants, via a combination of branding campaigns in key markets and
targeted sales activity.
•Re-establishing Ōra King sales and supporting key industry partners.
Ōra King Sales (tonnes)
1,689
2,149
2,706
2,772
2,528
FY2016FY2017FY2018FY2019FY2020

A N N U A L R E S U L T S F Y 2 0
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FISH PERFORMANCE
Feed Conversion Ratio (FCR) continues to improve, to 1.76 in FY20
Key challenges:
•Harvest volume decreased as we faced the disruption of global foodservice markets due to COVID-19.
•Significant increase in closing livestock biomass, with harvest volumes set to increase in the next 6 months.
•Mortality as a % of biomass decreased from 23.2% to 15.0% (2018: 20.4%), with this also impacted by smolt entry timings.
•Feed cost decreased slightly with seawater feed now exclusively purchased from Australian feed suppliers.
Biological Performance
FY20FY19% chg.FY18% chg.
Harvest Volume(tonnes)7,336 7,931-8%8,018-9%
Feed Conversion Ratio (FCR)1.761.80-2%1.81-2%
Mortality as a % of Biomass15.0%23.2%-35%20.4%-26%
Closing Livestock Biomass6,2935,12523%5,39117%
Feed Cost ($/Kg of feed)2.482.50-1%2.2212%

A N N U A L R E S U L T S F Y 2 0
O U T L O O K
32
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A N N U A L R E S U L T S F Y 2 0
OUTLOOK
Expectations for FY21 and beyond
•COVID-19 continues to cause ongoing uncertainty in both the foodservice and retail sectors (many supermarkets are not currently considering new products).
•The current sales rate (August) is around 80% of pre COVID-19 levels and we anticipate continuing improvement. We are investing in additional sales resource
in key export markets to support recovery and growth, in both foodservice and new retail opportunities.
•Our species remains scarce and aspirational and our diversification strategy has proven its worth during COVID-19.
•Harvest for FY21 and FY22 is forecast at ~8,500 tonnes with the carry over of stock from FY20 and FY21 used to provide sales andvalue growth.
•FY20 capital expenditure is expected to be ~$10m, largely in line with depreciation, targeting key projects (including first feeding) and replacement rather
than growth.
•Water space initiatives remain key and we are hopeful of a decision on both our Blue Endeavour Open Ocean resource consent application and the MPI farm
relocation, within FY21.
•Given the uncertain global environment due to COVID-19 and usual summer fish performance uncertainty, providing any forward earnings guidance at this
stage is difficult.Taking these factors into account as well as higher freight costs, it may be challenging for FY21 EBITDA to exceed FY20. By FY22 we do
expect to again be moving towards demand exceeding supply, leading to improved earnings.
33

A N N U A L R E S U L T S F Y 2 0
34
A P P E N D I C E S
07

A N N U A L R E S U L T S F Y 2 0
UNDERSTANDING OUR GAAP RESULTS
Our GAAP results are impacted by Fair Value gains arising from the application of NZ IAS-41 Agriculture, NZIAS-2 Inventory and the classification
of leases under NZ IFRS-16 Leases. The impact of these standards are explained below:
Fair Value under NZ IAS-41 Fair Value andNZ IAS-2 Inventory
When we record a change in biomass at sea, or to the expected future profit on fish sales, these standards require us to quantify and recognise the gain in the current
period. This applies to both biomass at sea and inventories of finished products.
The fair value for FY20 has been positively impacted by the number of large fish on hand at balance date compared with the prioryear as harvest has been slowed due to
the impacts of COVID-19. This resulted in a larger % of the total fair value being recognised, with this increase in fair value being partially offset by a increase in cost of
working and decrease in the margin per kg (and therefore expected future profits).
NZ IFRS-16 Leases
Under NZ IFRS-16 a lessee will no longer distinguish between finance and operating leases; all (material) leases will be treated as finance leases.
In the statement of financial position we are therefore required to recognise the asset (or right to use the asset) and the liability for the lease, while in the statement of
profit and loss we recognise the interest cost and the depreciation of the leased asset instead of the operating lease expenses.The application of this standard increases
EBITDA, assets and liabilities, however this impact is reversed in our Pro Forma results.
The impact of NZ IAS-41 Fair Value, NZ IAS-2 Inventory andNZ IFRS-16 Leases
35

A N N U A L R E S U L T S F Y 2 0
APPENDIX –FY20 RECONCILIATION BETWEEN GAAP RESULTS
AND PRO FORMA FINANCIALS
36
FY20
NZD 000s
Statutory Financial
Statements
NZ IAS-41 and NZ IAS-2
Fair Value Adjustments
NZ IFRS-16 Lease
Adjustments
Pro Forma
Operating Financial
Information
Revenue155,344 155,344
Cost of goods sold(145,768)54,705 (1,584)(92,647)
Fair value gain / (loss) on biological transformation64,124 (64,124)(0)
Freight costs to market(15,351)(15,351)
Gross Profit58,349 (9,419)(1,584)47,346
Other operating income4,247 4,247
Overheads
Sales, marketing and advertising(12,473)(12,473)
Distribution overheads(4,131)(4,131)
Corporate expenses(9,012)(9,012)
Other expenses(906)(906)
EBITDA36,074 (9,419)(1,584)25,071
Depreciation and amortisation(9,385)1,437 (7,948)
EBIT26,689 (9,419)(147)17,123
Finance income12 12
Finance costs(1,748)171 (1,577)
Net finance costs(1,736)-171 (1,565)
Profit / (loss) before Tax24,953 (9,419)24 15,558
Income tax (expense) / credit(6,949)2,637 (7)(4,319)
Net Profit / (loss) for the Year18,004 (6,782)17 11,240

A N N U A L R E S U L T S F Y 2 0
APPENDIX –FY19 RECONCILIATION BETWEEN GAAP RESULTS
AND PRO FORMA FINANCIALS
37
FY19
NZD 000s
Statutory Financial
Statements
NZ IAS-41 and NZ IAS-2
Fair Value Adjustments
NZ-IFRS 16 Lease
Adjustments
Pro Forma
Operating Financial
Information
Revenue172,609 172,609
Cost of goods sold(172,147)62,105 (110,042)
Fair value gain / (loss) on biological transformation60,002 (60,002)(0)
Freight costs to market(15,642)(15,642)
Gross Profit44,822 2,103 46,925
Other operating income857 857
Overheads
Sales, marketing and advertising(9,619)(9,619)
Distribution overheads(3,600)(3,600)
Corporate expenses(7,006)(7,006)
Other expenses(2,391)(2,391)
EBITDA23,063 2,103 25,166
Depreciation and amortisation(6,234)(6,234)
EBIT16,829 2,103 18,932
Finance income96 96
Finance costs(1,188)(1,188)
Net finance costs(1,092)-(1,092)
Profit / (loss) before Tax15,737 2,103 17,840
Income tax (expense) / credit(4,387)(589)(4,976)
Net Profit / (loss) for the Year11,350 1,514 12,864

A N N U A L R E S U L T S F Y 2 0
APPENDIX –GLOSSARY OF TERMS
FY20Financial results for the 2020 financial year covering the period 1 July 2019 to 30 June 2020
EBITDAEarnings before interest, tax, depreciation and amortisation
FCRFeed Conversion Ratio –the amount of feed (in kilograms) required to grow 1 kilogram of fish weight
G&GGilled and gutted. Note that all volumetric information presented is on a gilled and gutted basis unless otherwise stated
GAAPGenerally Accepted Accounting Practice
Mortality / Mortality Rate
The percentage mortality of salmon in seawater, calculated as the biomass of salmon mortalities in kg divided by the growth of salmon in
kg
NPATNet profit after tax, also reported as net profit for the period in our published financial results
NZKSNew Zealand King Salmon
Pro Forma Operating
EBITDA
Pro Forma Operating EBITDA refers to earnings before interest, tax, depreciation, amortisation after allowing for pro forma adjustments
as described in the Appendices to this document. Pro Forma Operating EBITDA is a non-GAAP profit measure
Upwelling SystemA system that allows dense cooler water to be moved towards the ocean surface, displacing the warmer water and increasing water flow.
38

A N N U A L R E S U L T S F Y 2 0
39
DISCLAIMER
The information in this presentation has been prepared by New Zealand King Salmon Investments Limited with due care and attention. However, neither New Zealand King Salmon Investments Limited
nor any of its directors, employees, shareholders nor any other person shall have any liability whatsoever to any person for anyloss (including, without limitation, arising from any fault or negligence)
arising from this presentation or any information supplied in connection with it.
This presentation may contain projections or forward-looking statements regarding a variety of items. Such projections or forward-looking statements are based on current expectations, estimates and
assumptions and are subject to a number of risks, uncertainties and assumptions. There is no assurance that results contemplatedin any projections and forward-looking statements in this presentation
will be realised. Actual results may differ materially from those projected in this presentation. No person is under any obligation to update this presentation at any time after its release to you or to
provide you with further information about New Zealand King Salmon Investments Limited.
Our results are reported under NZ IFRS. This presentation includes non-GAAP financial measures which are not prepared in accordance with NZ IFRS. The non-GAAP financial measures used in this
presentation include:
•EBITDA. We calculate EBITDA by adding back (or deducting) depreciation, amortisation, finance expense / (income), and taxation expense to net earnings / (loss) from continuing operations.
•EBIT. We calculate EBIT by adding back (or deducting) finance expense / (income), and taxation expense to net earnings / (loss) from continuing operations.
•Pro Forma Operating EBITDA refers to earnings before interest, tax, depreciation and amortisation after allowing for pro forma adjustments as described in the Appendix to this document.
We believe that these non-GAAP financial measures provide useful information to readers to assist in the understanding of our financial performance, financial position or returns, but that they should
not be viewed in isolation, nor considered as a substitute for measures reported in accordance with NZ IFRS. Non-GAAP financial measures may not be comparable to similarly titled amounts reported
by other companies.
Forward-looking statements are subject to any material adverse events, significant one-off expenses or other unforeseeable circumstances.
The information in this presentation is of a general nature and does not constitute financial product advice, investment advice or any recommendation. Nothing in this presentation constitutes legal,
financial, tax or other advice.

A N N U A L R E S U L T S F Y 2 0

---

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



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

contact@kingsalmon.co.nz

www.kingsalmon.co.nz

Results for announcement to the market
Name of issuer New Zealand King Salmon Investments Limited
Reporting Period 12 months to 30 June 2020
Previous Reporting Period 12 months to 30 June 2019
Currency NZD
NZ$ Amount (000s) Percentage change
Revenue from continuing
operations
$155,344 (10.0) %
Total Revenue $155,344 (10.0) %
Net profit/(loss) from
continuing operations
$18,004 58.6%
Total net profit/(loss) $18,004 58.6%
Interim/Final Dividend
Amount per Quoted Equity
Security
$ nil
Imputed amount per Quoted
Equity Security
$ nil
Record Date N/A
Dividend Payment Date N/A
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$0.96 $0.86
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
No final dividend was declared in respect of the.year ended 30
June 2020.
Authority for this announcement
Name of person

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

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

Date of release through MAP

27 August 2020

Audited financial statements accompany this announcement.

=== IR PAGE TRANSCRIPT: Investor Presentation Transcript ===

TRANSCRIPTION
Company: New Zealand King Salmon
Date: 27 February 2020
Time: 10:00am NZDT
Duration: 43 Minutes 51 Seconds
Reservation Number: 10003683

[START OF TRANSCRIPT]
Operator: Thank you for standing by and welcome to the New Zealand King Salmon FY20 H1 results
announcement. All participants are in a listen-only mode. There will be a presentation
followed by a question and answer session. If you wish to ask a question, you'll need to press
the star key, followed by the number one on your telephone keypad. I would now like to hand
the conference over to Mr. Grant Rosewarne, chief executive officer. Please go ahead.
Grant Rosewarne: Good morning, everybody. I've got Andrew Clark with me here today, our CFO, and as usual,
we'll split the presentation between us. Firstly, I'd like to say that we're very pleased with our
first half result and I'd like to set the scene for you. So as you all know, last summer we had a
poor outcome due to the high temperatures, but we still achieved the lower end of the
guidance that we gave. So as a result of that, we've had to slow and ration our product. So
this does two things. It sort of evens out our volume across the years, but more importantly it
creates more biomass. So when we have less fish because of the summer events, we grow the
remaining fish larger, and in that way we partially compensate for the loss of biomass. And
we've certainly done that this year. So when we slow styles, we do that by rationing, but also
by increasing the price.
And we try and do that in a coordinated, sensible way. For us, this is a one-way value creation.
So when we take our price up, we don't see that we have a need to bring it down when volume
does come back online. And the reason for that is, instead of doing that, we still profit our
sales, marketing efforts, and we expand our geographic base. And when I say that, that's a city
by city expansion, not a country by country expansion. So that sets the theme for the
remainder of the presentation. So as I said, we're pleased with our results. You see our price
up $1.50 per kilo, and that's going to move closer through to $2.00 by the completion of the
full financial year. You see our volume restrain from where it was, down to 3,442 metric
tonnes for the reasons that I've outlined.
This of course affects our revenue, so a revenue of 84.2 million, down from 87.8 due to the
reduced volume partially offset by the higher value. A pro forma operating EBITDAR of 16.5
compares reasonably well with 17.3 in the prior half, and our pro forma net profit after tax
was 8.7 million, compared to 9.7 in the prior half. Our statutory net profit after tax was that
5.7 million at 20.8 million compared to 15.1. We have our new aquaculture model in place

and we are pleased with the way that's been implemented and what it's doing for us. We have
a fully punitive final dividend of two cents per share declared and paid on the 20th of March
2020. Our guidance remains exactly where it was, reaffirmed by our board yesterday with an
operating EBITDAR somewhere between 25 and 28.5 million dollars.
Then flipping over the page, this shows graphically some of the things I've spoken to, so you
see our pro forma operating EBITDAR in a half on half comparison for the last three years. You
see that coming down, and that's all volume related. You see our gap EBITDAR going in the
opposite direction. That's with us creating more value. Then you see a geographic spread and
that's quite topical at the moment. You see that we have a relatively small commitment to
China. Commitment is the wrong word. They have a small amount of volume in China. China
probably has as much potential as the USA, but that's over the long, long term. Takes a long
time to develop that market. I'd say Europe has the same potential as the USA and would be
available now if we had the volume.
Grant Rosewarne: We've got Southeast Asia there at about 6%, equal to Australia. Again, probably has about half
the potential of the USA. Japan, we used to sell 100% of our product to Japan, it's down to 4%,
and in a still strong potential there but not, it will never be what it used to be to us. The other
important factor here is not only do we have a geographic spread, we have a channel spread.
So we have a mix between retail and through service and we can flex in and out of those. So
if people died out less, we can ramp up our retail sales. Now let's hand over to Andrew Clark.
Andrew Clark: Thanks, Grant. So moving now to slide number five, health safety and wellness. Health and
safety's job number one and we're not satisfied with our current performance. We continue
to focus on critical risks and have seen the long term injury, right? Generally being of a more
minor nature, so slips and strains and so on. And we're also seeing some pleasing results from
early intervention, hitting off an LTI in the first place.
Moving on to number seven, sustainability. We continue to rent out there if it's to ensure our
business operates in a way that's enduring and that we're proud of. And are very happy that
the Monterey Bay Aquarium's influential seafood watch recently renewed its green best
choice rating. That's for the entire New Zealand salmon industry, Is the leading sea water
producer that's, we are a key part of that.
Very proud to achieve agriculture stewardship council certification for our pilot site, which
was the Clay Point Farm. And that's part of our commitment to the global salmon initiative.
And that's a group of about half of the world's seven production companies and by overall
volume, and it's all about increasing transparency of operation of salmon industry and sharing
learnings to achieve best practise. So it's a key commitment that we've made over the last
seven years.
Slide number eight, we have committed to the United Nations global compact and that's got
some key responsibilities that we sign up to around human rights, labour and environment,
anti-corruption. So that's a new initiative that's about being, us being a responsible

community citizen. So that's part of our ongoing commitment to one of our key stakeholders,
which was the community that we operate in.
We're doing a lot of work to understand what our current position is. For example around
carbon footprint, and so we've done a life cycle analysis recently, and looking at packaging
and supply chain areas as well. Just to gauge where are and what opportunities there are to
improve and our sustainability situation.
Moving onto the financials on slide ten. As Grant mentioned in the first half, we had very solid
pricing. We had to restrain our sales somewhat to ensure that we do have supply for the
longer term and are able to deliver to our customers and look after them. We've seen margins
up and the EBITAR percentage consistent. The overall EBITAR slightly lower, is Grant
mentioned of it, a slightly smaller sales volume in the first half.
Our statutory net profit, after tax, improved year on year and that's driven by stronger fair
value gains, which is the future profit that we would expect to make off the fish after
deducting the costs to get them through to harvest and to market. On slide 11 just a word
around the difference between statutory and pro forma. So as usual, we've incorporated fair
value gains into the livestock and finished with symmetry. This slide provides a bit of
explanation on the process and there's a reconciliation, a couple of slides at the end of the
presentation.
There's a new standards, if for 16 leases which doesn't pick these results and so in essence,
what that's linked to is a 5 million dollar asset and liability being recognised in our balance
sheet relating to leased offices and vehicles. Again, there's a reconciliation slide at the end of
the presentation that illustrates the P and L impact.
Maybe now to do the harvest by farm on site 12. So a new agriculture production model is
now in place. We got the key implementation really cracked this summer, so that was
delivered in full on time by the team. That has changed the timing of our harvest. So for
example, ordinarily we would have harvested the Otanerau farm on the seek and find there
during our first half year. Whereas this cycle, it will actually be early in the new financial year
if by 21.
We have stood around 3,700 tonnes in the fist half is, as Grant mentioned, and you can see
the breakdown of which farms that came from. We do expect around, excuse me, the 800
tonnes for the full year, so indicative where that's going to come from and the second half on
that table.
On the next slide, water temperatures are just one factor in the survival. They've certainly
been relatively favourable so far this year. We are, of course, in the middle of the most
challenging time, which is February through to about the middle of April. So as usual, we will
come back after that period is completed and provide a post summer update in due course.

The shelf on slide 14. So a new agricultural production model, as I mentioned, it's in place.
There are quite a number of initiatives to protect fish health and therefore survival. In place,
before the summer, it means that we handle the livestock lists. So not towing pins with
livestock in them. We carry out a full site clean and fellow, which means leaving it empty for
a period after it harvests out the farm. We've got the upwelling in place, fits around generating
extra oxygen and flow, water flow on the sites and taking advantage of any [inaudible] a
difference in temperature between down close to the sea floor and the surface temperature.
And some of the farms we've seen a little over a degree difference, so that's been very useful.
At the farms there's less of a difference.
So we're learning that. It's generating some good support there, we think, for the summer
performance. Immunisation appears to have helped us manage the impact of one of the
bacteria that's present in the environment. The other ones now speculum does remain a
challenge that we're working on.
In summary, we're continuing put the new agriculture production model in place. We're
continuing to refine that, and we do expect that we'll be able to further reduce variability and
risk over the coming cycles. On a balance sheet, slide 15. So a balance sheet in a strong shape.
We hit net debt of 25 at the end of December. We have a 60 million dollar funding facility in
place, so plenty of hit room there.
At this December, we do have additional inventory and that's around stock build with harvest
and exclusive sales. Again, smoothing the supply so that we can deliver to our customers as
they're wanting. Major investments and fixed assets during the periods. So we completed the
[inaudible] Thomas Song. Quite a bit of investment and upwelling, and this new aquaculture
model, some additional pin infrastructure and farm infrastructure on poolside from working
now. And grading panels to maximise the harvest of each farm. As I mentioned, we've also got
the [inaudible] 16 which has a separate bio name for write of use assets and release liabilities.
I'd like to pass back now to Grant on the sales overview.
Grant Rosewarne: All right, thank you Andrew. So we'll just go through market by market. So firstly, North
America. Traditionally, this is where our marketing and story has been most understood,
appreciated and embraced, and that still remains the case. So we've seen continued growth
in this market and we expect that to go, to continue to go for some time. As I said earlier, we
add more cities if we need to grow volume. The last city that we added with support was New
Orleans, for example. And in Asia, it was Shanghai. So we haven't had to add new geographic
cities for some time, because we haven't had significant additional volume to deal with.
But just to make the point about flexing between food service and retail, those, as you know,
there's 400 supermarkets in New Zealand. If we wanted to add 2000 supermarkets carrying
our Regal smoke brand in the US, It'd probably take us about six months to do that. Then
looking at China. So our sales to China are temporarily suspended due to the Corona virus. We
reallocated all that volume seamlessly at equivalent margin, so no issue there at all. We're just

about to restart with testing whether the border is open. We expected that it will be and our
retail sales will pick up immediately and two thirds of our sales were in retail.
Then other export markets. So Australia has been a bit of a problem child over the years and
I would say that problem child is now fixed. That is a true premium market for us. Atlantic
seven prices are higher in Australia than anywhere else, and we would achieving the premium
there that we would have hoped, but we've now fixed that. So we've got a great team in place.
They're in the right customers. You'll see our brand name on more menus. Actually, even
though the volume is down. I remind you that we had to bring the volume down. We've largely
used Prost to do that. We've done that in Australia and we're now really pleased with the base
that we have there.
Asia including Japan and China is always been strong for us, continues to be so. A slight
pullback in volume there as a result of some of our initiative. Japan, as I mentioned, it's the
home of sushi. Salmon is more like chicken in New Zealand, perhaps, that is an issue that we
have to work hard up against. We have to prove ourselves to be in a true super premium up
against what is seen as a more commodity offering in Japan. And we've got a great chance
doing that in both food service and retail in Japan.
Europe has incredible potential for us. The tyranny of distance means we've never really been
able to engage as we would've liked, and we've never had the volume to do so. So we look
forward to developing that market at some future date.
Then looking at the domestic situation, this is slide 19. We really addressed our value creation
if in this market, if I put it that way. We've taken the opportunity to even out the margin across
all of our markets. So the U.S. used to be a bit of a standout for us and now all markets are
equal roughly including New Zealand. We've launched Regal Epicurean, which is our Atlantic
offering. So finally we are unbelted in volume. We can get as much as last seven as we need
to bring in to support the growth in this market. And importantly, Regal Epicurean Atlantic
salmon changes the power balance between us and the retailers, and improves our position
there because we can supply. We don't have to turn them away. We're not restrained from
developing our brand. And already within the food stuff with that product is raised added 2%
market share.
And why is this is also important to us from a margin proposition which just say average
margin. Let's just use a fictitious number. Let's say around about $8 a kilo. You're saying we've
gone up $1 50, so the huge effort to go from $8 to $9 50 in margin. But if we can bring in
Atlantic salmon, and only $1 50 margin is created the same value in fact. Because if we take
margin, take a product out at $8 margin and put it in somewhere at $9 50, we've only made
$1 50 because there's no upside in our volume buys. So Atlantic salmon filling the role of
supporting our brand, improving our power position, and for the longterm it assists with our
margins.
Then slide 20, average price. You can see that we've addressed the situation more in the
domestic markets than the export market. I know some of you are going to ask me questions

about where we go from here, so I'll leave that to after questions. But I would say the limited
potential now in the New Zealand market, and some remaining potential in our export
markets.
Then slide 21, fish performance. So you can see the harvest decrease that we've talked about.
They're still looking to achieve a roundabout guidance level 7,800 metric tonnes. A really good
feed conversion results there, and that's partly due to the number of mould fish that we've
got. But we also had a standout performance of our Navajo farm. So fully harvest about large
size, a change in FCI of around about 1.5 maybe a bit more than that. So, that's a great
performance. It shows what can be achieved when all the styles align, so that says, technically
that's possible. So how can we now take that across our other farms, and I don't want to say
that simple not, but it shows if you can do it once, you can do it more than once. A fish survival
is in line with last year. We've had very strong winter growth which is right. Feed costs are up
slightly 2%. Going back to pricing creases, we can always, under all scenarios, recover at least
inflation as a minimum.
Then looking to our outlook, the future farming initiative. I hope you've all heard of Blue
Endeavour. That is our 1,800 hectare sites, 7k North of Marlborough Sounds. That is our
strategy to address many things. It addresses our volume situation. It's an opportunity for us
to further increase our margin in the long term because it enables us to grow a more
differentiated product in the future. It helps address climate change for us. In fact, we see it
as the main strategy to address climate change, so the Open ocean and all it offers is key to
our future and we're pushing very hard on that. We've got a hearing date for the 22nd of June
with the Marlborough district council and then there'll be a three day hearing approximately
and then we get a result 20 working days after that.
The capital cost for Blue Endeavour, it's far less than we first thought. We've got a range of 25
million to $35 million in capic. Phase one of Blue Endeavour will produce 4,000 metric tonnes
of additional salmon. That's on an 18 month cycle. So that's great news. I think it's the RMA
process. We don't have control of that process, but we've put our best foot forward with a
great application. We've had 39 people in support of it and only 14 opposed on local
environmental issues, which we believe, we know we can address. And I know that all of those
negative submitters have previously re-proposed that we should go into the Open ocean
which is great. The boundary location with the minister, really nothing's going to happen. This
thought of the election, we hope for a result in the following year.
Then onto our expectation, we are going to build our frozen inventory in the reminder of our
financial year. I want to reassure you though that's high value for us, so we make the same
margin at least on our frozen inventory as we do on our fresh products, which is not the way
it used to be. Our pricing remains very strong. In fact, I said we've done a great job with a $1
50 that's going to play out close as $2 over the full year. We're diversifying our offerings,
whether that be any our existing brands like our King Regal Atlantic salmon pet food, and
we're doing that to create resilience for our business. We've not seen an impact from the
Corona virus, as yet, we recognise this as an extremely fluid and dynamic situation. We're not
only looking at and what is the sales impact, which there hasn't been any yet. We're looking

at the reflect out of food service more into retail, and we're also looking at our supply chain
of our various inputs. How they affected by my potential disruption, but we do think we've
got that all under control.
We are able to reallocate product between markets and between channels which is great.
That will help us depending on how the Corona virus unfolds. We're on track to spend our $20
million with off capic. We've got a depreciation of $8.2 million. We're really pleased with the
way our new agriculture model has gone. That was a significant part of our capic, about $4
million I believe. There's no reason for us to change our guidance. Our board reaffirmed 25 to
28.5 million dollar per form EBITDA yesterday. We're working hard on that water space and
that is absolutely chief for the future. So expectations in terms of volume around about 8,000
metric tonnes FY 21, 9,200 a year after, and as always, summer is really key to our
achievement of results and volume. So with that, that's the end of our presentation and we're
turning that over to questions.
Operator: Thank you. If you wish to ask a question, please press star one on your telephone and wait for
your name to be announced. If you wish to cancel your request, please press star two. If you're
on a speaker phone, please pick up the handset task for question. The first question comes
from Guy Hooper with Forsyth Barr. Please go ahead.
Guy Hooper: Morning guys. This question for me just focusing on fish health. You mentioned that, forgive
me if I mispronounce it, but tenacibaculum consumes around the disease and can you just
provide a bit more colour on that?
Grant Rosewarne: Yeah, so I'll start, maybe Andrew can add something. Tenacibaculum is a ubiquitous organism
that exists around the world. As far as I'm aware, it's in every sea and ocean. It is a known
problem for aquaculture and other jurisdictions have learned how to live with it and control
it. We've recently increased our ability to be able to detect the organism, and therefore more
correlated with any issues that we've got. I note there are some vaccines that are available to
deal with the tenacibaculum. We've done some trials on that already. We think it is part of
the summer equation. So as usual, these things are never simple. They're multifactorial, and
definitely temperature into the equation. They are definitely microorganisms in the equation.
tenacibaculum is one of them. Other jurisdictions have learned how to deal with it, and we're
on our way to doing that we believe.
It's great that we've got this additional information about how and what is effect that, and of
course would have been really helpful in determining that. So we think, we'll increased
knowledge and learnings from around the world, we will get on top of the situation. Again,
we think the Open ocean is part of the answer to that. The environment is so good in the Open
ocean. We don't think tenacibaculum will be a problem out there. Certainly could be. It could
be if its conditions would as good, but as I say, we've got a dip, a temperature and a flow out
there, which is fantastic. So Andrew, any comments?
No. Okay.

Guy Hooper: Thanks Grant. I just following on from that, in terms of the farms that you have shifted your
operating model onto a single year class, can you give us a sense on what the performance,
the front is just seeing between those, between ones that have shifted, the ones that you hit
them?
Grant Rosewarne: I had said, God, for clarity, we haven't really relocation process, which is an effective shifting
of funds. So what we've done is taken all of our assets, and we reallocated how and when we
farm on those sites, and we've created a fallowing period for all of our funds. And that was
previously only true on our Pelorus farms. So we haven't actually shifted them. We're just
spread out our production. We brought some sites that had been fellow for a long time back
into production, for example, four sites. We're using new techniques on all of those sites and
we're seeing the results that we are pleased with. But summer is always a difficult time for us,
so far it's been a very cool summer but it's not over yet.
Guy Hooper: All right. Thanks. One last question from me. I mean you mentioned water applications under
the RMA process can continue to be dragged out perhaps this isn’t the best way to go about
it. Given the government's strategy announcement, do you see changes to how water space
gets allocated into the future?
Grant Rosewarne: I would say,
In the long term, yes, but in the short term it's still the RMA. But when we turn up to a hearing
and we say here's a government initiated strategy, so this wasn't born out of industry,
government came up with this strategy themselves. It's an all of government strategy, it's to
take the industry from 600 million to 3 billion, and a guy, I think you know my view is that
open ocean aquaculture could become New Zealand's most valuable industry, and it's
greenest primary sector, so it's incredibly helpful to us. However, we would like to see the
government come up with more concrete initiatives to enable open ocean aquaculture. So,
the RMA is not a great tool for allocating water space, and I think there are initiatives
underway to be more rational about that and to get a better allocation process. But for the
time being, we're working well with the Marlborough District Council.
That's where the decision will be made. We're going to the place that pretty much all of our
detractors have said we should go to, the open ocean. I don't think anybody, per se, opposes
it outright, it's more, okay, what does it look like when it goes out there? What's the sale of
it? Tell us how it operates. It's all those sorts of things, so we are hopeful that what we've got,
the RMA will deliver on or about the 22nd of June, but we think we need further central
government support with the enabling legislation, to really maximise aquaculture.
Guy Hooper: All right, thanks Grant. That's all from me.
Operator: Thank you. The next question comes from Jack Crowley with Jarden, please go ahead.
Jack Crowley: Morning Grant, Andrew, first one from me. I'm just trying to reconcile the full year sales
volume guidance which has come down a little bit with unchanged, if like 20 and 22, sorry, 21

and 22 guidance, and the improvement in FCR. I guess if we were to assume that you guys
discharge the same amount of feed that your FCR had improved, that would imply that you
should be able to harvest more, and noting that harvest volumes are down a little bit in 20, or
at least sales volumes are down a little bit in 2020. I guess what that's implying is that either
the FCR rate isn't sustainable, or you think you can now discharge less feed because of the
average sea farm utilisation under the new operating model, and the way that there's
fallowing that needs to be offset with the use of lower quality farms. Could you just talk us
through exactly what dynamics are going into supporting the harvest volume expectations
despite the FCR that we've just seen.
Andrew Clark: Yep. Jack, it's Andrew. So I suspect you might be reading slightly too much into it at the
moment. But what's going on here is that we are signalling we had to restrain sales in the first
half of this year in order to make sure that we looked after our long-term supplier responsibly.
And so now we've started to step that up and that, because of timing, that does mean that
this year's sales and harvest will be slightly down on what we've previously guided, and talking
probably a couple of hundred tonnes thereabouts. So it's single digit, low single digit
percentages. The next thing that we're saying here is that there is no reason at this point to
move away from previous guidance around if by 21 being approximately 8,000 tonnes of
harvest and if by 22 being approximately 9,200 tonnes of harvest, both of those as always
subject to summer.
So nothing to change that view at this point, and of course we'll continue to give guidance as
we get closer to that. Now, you also asked about feed discharge and production volumes. I
guess, once those ... Those fish already in place on all of the farms, locked and loaded. So we
have to plan ahead, how many head of fish we are going to transfer onto the farm as smolt,
every time we stock them. And then, so you're always estimating what is the capacity of the
farm? What FCR do we expect? And therefore, what's production? And you will get a
variability in the ultimate output. So this is dealing with last summer and moving on, so that
we look after our customers for the longer term, and then no reason at this point to change
future guidance around harvest volumes.
Grant Rosewarne: Yeah, I'll just add to that Jack. I think you are maybe getting a bit ahead of where we are. So
we're saying, the FCR that we've just achieved, it really is positive for the longer term. We're
not counting our chickens before they're hatched in the second half. We both had a stunning
farm, Ngamahau, and we had this positive ... Small fish have a better FCR, the large fish. And
so that played into the mix a bit. But I think your right in terms of the long term, and by that I
mean Blue Endeavour, but I think it's just too optimistic to assume that we're going to have
anything significant in the short term. We've had a really good result that may be somewhat
one off.
Jack Crowley: Okay, that makes perfect sense I guess we'll kind of stick with the FCR type assumptions that
we've had today, but I cross our fingers that things come out better. I guess second question
would be, interested in ... There was a few comments about the second half pricing maybe
being up $2.50 Rather than $1.50 Or $2-

Grant Rosewarne: Stop you right there, right there. What I said is moving through to $2, no one said $2.50, Jack.
You really are, Jack, you are an absolute optimist.
Jack Crowley: Okay, sorry, maybe I interpreted that wrong cause I thought $2 across the first year implied
$2.50 in the second half after $1.50, first half. If we take on a $2 in the second half, $1.75
across the full year, is that the annualization of gains that you've seen in the first half? Or are
there other kind of mixed factors that you think provide you further price upside?
Andrew Clark: Yes Jack, you're exactly right, it is the annualization, and as Grant also said, I guess we've
consistently given this message. We'd be confident over time of achieving ongoing price
increases, in the order of CPI and wouldn't count on anything more than that. Now I know
that we have been able to deliver more than that, but we certainly wouldn't count on that
continuing with ... You can see in New Zealand in the first half, we've got a resistance there in
terms of a bit of volume impact, so we have probably pushed that relatively hard this time.
Grant Rosewarne: Yeah. And so when we talk about the future, Jack, we think we've ... I think the market
acknowledges things have gone extremely well with our Ora king brand, but as we go forward,
we're going to grow a more differentiated product, but that's predicated on the open ocean,
and that's where we get the next step up. The next significant step up in our margin is now
half of our Ora King volume will be differentiated products that don't exist at this time.
Jack Crowley: Got it, okay, thank you. The next one from me, just so that we completely understand this
Tenacibaculum circumstance, is it the case that obviously that's in all salmon growing locations
across New Zealand, but have you seen the effects of that escalate as warmer water
temperatures have been observed, and could you maybe just talk through, I guess in terms of
fish performance or fish quality? What the implications of Tenacibaculum are?
Grant Rosewarne: Okay, so I note that Tenacibaculum, it's been around a long time. It's in an MPI report that's
five years old and it mentions ... And we've known about it, and what's changed is where we're
pinning more of our summer problems on Tenacibaculum than we did in the past. So we were
going, okay, this seems to be definitely temperature, well it is definitely temperature related,
but it's multifactorial. And instead of now, it's multifactorial and we don't know what's causing
the other part of the problem. We're saying Tenacibaculum is a large part of the problem. It's
not the complete issue, but it's a large part of it. But as I mentioned, because other parts of
the world have had to come to terms with it and understood the impact perhaps earlier than
us, they do have solutions and that's around both husbandry practises, vaccines and those
sort of things.
So the thing that's changed is we're now understanding what the source of some of our
summer problems is, over and above the temperature. So in terms of is that escalating or not,
so I would say, we're in a bit of a race there, so we improve our practises, we improve our
sites and we try and get ahead of the curve on that. And when we have a good summer, we're
definitely ahead, and when we have a bad summer, like last summer, as you know, we didn't
get a good outcome in that.

So we're not complacent about the situation, we fully understand the importance of
addressing that summer mortality. The team are driving really hard to do that, and now they
know more about what they need to do. So they have more of an understanding of, okay, if
this is the last part of the problem, here are the practises around density, these are the
practises around fallowing and this is how we've got to manage the summer stress situation,
and these are the known types of solutions for Tenacibaculum and the team are going to apply
that. So I want to say our ability to control things has improved.
Jack Crowley: Excellent, that's very helpful. That is all for me, appreciate the time.
Operator: Thank you. Once again, if you wish to ask a question, please press star one.
There are no further questions at this time. I'll now hand back to Mr. Rosewarne for closing
remarks.
Grant Rosewarne: Yep. So as I said, we're really pleased with the way things have come out, given last summer.
So in some ways not too many things could have gone better. So the pricing has turned out to
be better than we anticipated. The summer, so far, has turned out to be better than we
anticipated. Our feed conversion ratio has gone better. And we understand that a little bit
more about what the total summer issue is, so that's good. So all those things are moving in
the right direction, but we're still affected by what happened last summer. And of course
there's still the possibility that this summer may ramp up from here. It's not looking like that,
but we were saying fairly positive things at this time last year, and then we had a very late,
long, hot summer, so ... And that turned out to be quite disappointing.
So we're not counting our chickens before they hatch. We do have the initiatives for the
longterm to solve these, that's tied up with Blue Endeavour. We have another 12 sites that
we're looking at down the coast, all the way down to Stewart Island. We note that Ngai Tahu
have a large application in for a salmon farm on Stewart Island, we think that's brilliant. That
shows that here's a very respected Iwi, that take environmental issues, and consideration, and
guardianship extremely seriously. So if they're prepared to endorse our industry in such a way,
we think that's a huge advantage. We'll obviously look to see if there is the opportunity to
work together. We have no issues or qualms about our ability to grow our brand and further
differentiate our products. So we see all of that as positive and in the mix. And that's why I
continue to say that with the right support, open ocean aquaculture could become New
Zealand's most valuable industry, bar none. And by far its greenest primary sector. So with
that we'll say goodbye. Thank you.

[END OF TRANSCRIPT]