NZK FY21 Full Year Results Announcement
Market Announcement
31 March 2021
NEW ZEALAND KING SALMON ANNOUNCES FY21 RESULTS
New Zealand King Salmon Investments Ltd (NZX & ASX: NZK) reports its financial results for
the 7 months ended 31 January 2021 (FY21) today.
Key points include:
- Revenue of $95.2m
- Pro Forma EBITDA of $10.0m (7 months), compared to $25.1m in FY20 (12 months)
- Statutory NPAT is ($7.1m) (7 months), compared to $18.0m in FY20 (12 months),
affected by Covid
- Proforma NPAT is $2.3m (7 months) vs $11.2m to 30 June 2020 (12 months)
- Sales volume of 4,117mt (7 months), slightly up on the same FY20 period (4,070mt)
Chairman John Ryder said: “It is a creditable outcome considering we are recovering from the
challenges of the Covid-19 pandemic. The full financial impact of excess inventory, caused by
the pandemic, has been absorbed into these results with appropriate contingencies built in.
“Going forward, our average price will return to pre-Covid levels, however margins will still
be affected by higher freight and distribution costs. We are seeking to increase prices globally
around the middle of the calendar year with a view to recovering some of these ongoing costs.
“Pleasingly, we have come through summer in reasonable shape with sea temperatures
around average,” Mr Ryder added.
Managing Director and CEO Grant Rosewarne agreed the recent trading period had been
tough.
"I am looking forward to the coming months and returning to our pre-Covid momentum. As
a company we continue to diversify, our brands remain strong and we are highly optimistic
that our plans to farm in the open ocean on the Blue Endeavour site will come to fruition later
this year.
“New markets continue to deliver, including speciality retail and e-commerce. For example,
we’ve recently placed a new Ōra King cold smoked product into a high end Italian speciality
retailer, and we’re about to launch our Omega Plus pet treats into North American speciality
pet retailers.
“Launches of our new Ōra King whole fish varieties continue to inspire our global chef
community – we introduced Ōra King June Hog before Christmas and Ōra King Keiji, a young,
delicate salmon, is being launched now.
“We also launched our Regal Maple range in New Zealand to capitalise on our consumers’
appetite for salmon over Christmas and summer months.
“Our Blue Endeavour application to farm in the Cook Strait, 7 kms north of Cape Lambert is
likely to go to a hearing in August once submitters have been fully consulted,” Mr Rosewarne
said.
“If successful this will drive significant economic benefits to the region, eventually delivering
hundreds of green jobs to the Top of the South. It will provide better waterspace and
conditions to grow our fish. The earliest possible harvest is mid CY24.
“The move into the open ocean will be a first for New Zealand and we believe it is a critical
cornerstone to deliver on the Government’s Aquaculture Strategy to grow the industry from
its current $625 million to $3 billion by 2035.
“Meanwhile, we expect climate change to continue to impact our business, so we are
optimising inshore space via our new Prescient Aquaculture Model, which focuses on having
the right sized fish in the optimal locations. This is achieved by introducing smaller fish into
cooler sites and moving them as they grow, to ensure they are in the best sites for each stage
of growth and have access to upwelling of colder water when at harvest-size. Once Blue
Endeavour is up and running, our warmer Pelorus sites may be farmed outside of summer to
minimise risk.
“We are also working through the salmon farm relocation process with Iwi and Government.”
We expect to provide market guidance in mid to late 2021. The Board has yet to make a
decision on the resumption of dividends.
Ends
Contact: Grant Rosewarne
Managing Director and CEO, New Zealand King Salmon Investments Ltd.
Email: grant.rosewarne@kingsalmon.co.nz
About New Zealand King Salmon
New Zealand King Salmon is the world’s largest producer of the premium King salmon species. We
operate under four key brands: Ora King, Regal, Southern Ocean and Omega Plus, and the New
Zealand King Salmon label. We have been growing and selling salmon to consumers for more than 30
years. Today we employ over 500 people. New Zealand investors make up a significant percentage of
the ownership of NZ King Salmon, and the communities of Marlborough, Nelson and Tasman are well
represented with around 400 of the approximately 2,900 shareholders being from the Top of the
South.
More information can be found at www.kingsalmon.co.nz
---
ANNUAL RESULTS FOR THE
7 MONTHS TO 31 JANUARY 2021
ANNUAL RESULTS FY21
HIGHLIGHTS
01
2
ANNUAL RESULTS FY21
22.8
16.1
11.4
18.0
(7.1)
(10)
(5)
-
5
10
15
20
25
FY17FY18FY19FY20FY21
(7 mos)
NZ$m
STATUTORY NPAT
21.6
26.2
25.2
25.1
10.0
-
5
10
15
20
25
30
FY17FY18FY19FY20FY21
(7 mos)
NZ$m
PRO-FORMA OPERATING EBITDA
GEOGRAPHIC SPREAD
OF REVENUE
FACTS AND FIGURES
36%
8%
4%
43%
7%
2%
$95.2
FY21( 7mos) REVENUE OF
MILLION
4,880
METRIC TONNES HARVESTED
DURING FY21( 7mos)
3
ANNUAL RESULTS FY21
FY21SUMMARY
Change in balance date to 31 January to align with summer seasonality.
•FY21therefore 7 month reporting period.
•Sales volumes of 4,117 MT up 1% compared to prior 7 month period.
•Revenue of $95.2m, down 6% compared to prior 7 month period.
Profitability impacted by COVID-19 and related clearance of excess inventory at lower prices. Impacts are expected to be
temporary.
•Pro Forma* Operating EBITDA of $10.0m, compared with $19.6mfor FY20(7 mos).
•Proforma NPAT of $2.3m, compared with $10.4mfor FY20(7 mos).
•Statutory NPAT of ($7. 1 m), compared with $18.0mfor FY20(7 mos).
Continuing to invest in, innovate, develop brands and launch new products in line with our global premium strategy.
4
* A full reconciliation between GAAP and Pro Forma results is shown in Appendix II of this presentation.
ANNUAL RESULTS FY21
5
SUSTAINABILITY
02
ANNUAL RESULTS FY21
OPERATING SUSTAINABLY
Care for the environment is a key pillar in our business strategy – we want to minimise our footprint, whilst
helping our people, our community and our stakeholders in the long-term.
To independently verify our aquaculture and supply chain sustainable practices, we have committed to a self-imposed
assessment regime with regular audits or assessments by third-party organisations. We are also focused on using
resources responsibly.
Our progress:
•Reconfirmation of our4- star certification with Best Aquaculture Practices.
•Achieved ASC certification on Clay Point farm – currently the onlyactiveASC certification in NZ.
•Developed a supplier Code of Conduct in line with the UNGlobal CompactTen Principles (a voluntary code addressing
fundamental responsibilities in the areas of human rights, labour, environment and anti-corruption).
•Collaborated on the UN Global Compact's "Sustainable Ocean Principles"for investors in ocean-focused business.
•Completed a TCFDGap analysis for future climate reporting.
•Reported on ourcarbon footprint in the FY20Annual Report.
•Secondannual Communication of Progress (COP) submitted in November 2020 as part of our participation in the UN Global
Compact.
6
ANNUAL RESULTS FY21
SUSTAINABLY ACHIEVEMENTS
We continue to look to the future.
•Launching a GoGreenfund for team contribution to sustainability.
•Committed to 100% reusable, recyclable or compostable packaging across our business by 2025.
New product development includes:
►Recyclable hotsmoketray using post-consumerrecycled material andplant basedmaterial.
►PVC material no longer used.
►Polypropylene boards will be embossed withfrom June 2021.
►ARL(Australasian Recycling Label) logos to be used on our packaging, telling consumers how to treat our
packaging.
•Continued engagement with the community through events and newsletters.
7
ANNUAL RESULTS FY21
FINANCIAL
OVERVIEW
8
0303
ANNUAL RESULTS FY21
•Results impacted by:
►COVID-related expenses and clearance of excess inventory at lower prices.
►Fair value adjustments on livestock due to COVID margin impact.
►Treatment of FX close-outs.
SUMMARY FINANCIAL INFORMATION
* A full reconciliation between GAAP and Pro Forma results is shown in Appendix II of this presentation.
9
Group Financial Performance
NZ$000s
FY21
(7mos)
FY20
(7mos)
% chg.FY20
(12mos)
FY21
(7mos)
FY20
(12mos)
Volume Sold (MT)4,117
4,0701%6,3316,3316,331
Revenue95,239101,126-6%155,34495,239155,344
Gross Margin20,38035,086-42%47,34614,15258,349
Gross Margin %21%35%30%15%38%
Other Operating Income6,2851294786%4,2475414,247
EBITDA9,96419,604-49%25,071(2,008)36,074
EBITDA %10%19%16%-2%23%
EBIT4,97515,199-67%17,123(7,977)26,689
NPAT2,34810,388-77%11,240(7,079)18,004
Pro-Forma*GAAP
ANNUAL RESULTS FY21
•Our results have been impacted by a number of items, primarily related to COVID. These include:
COVID AND OTHER IMPACTS
10
►Provisions made against frozen
whole fish inventories (FY21has
provision for expected loss on sale
during 1H22).
►Additional airfreight expenses.
►NZ retail price promotions.
►Sales of excess frozen fish at a loss.
►Additional storage and distribution
costs on excess frozen inventory.
►Increased mortality rates due to
holding fish longer.
►Mitigated by early FX closeouts.
Reconciliation of COVID and Other Impacts
Pro Forma
Operating
Financial
Information
Inventory
provisioning
(frozen whole
fish)
Additional
Airfreight
Expenses
FX Close-
Outs
Retail
Promo
Costs
Frozen
Fish
Sales
Storage &
Distribution
Expenses
Increased
Mortality
Adjusted Pro
Forma
Operating
Results
Revenue95,2392,40090098,539
Cost of goods sold(63,243)2,2002,100(58,943)
Freight costs to market(11,616)2,100(9,516)
Gross Profit20,3802,2002,100 - 2,400900 - 2,10030,080
Other operating income6,285(5,744)541
Overheads
Sales, marketing and advertising(7,702)400(7,302)
Distribution overheads(3,131)800(2,331)
Corporate expenses(4,979)(4,979)
Other expenses(889)(889)
9,9642,2002,100(5,744)2,8009008002,10015,120
COVID and Other Impacts
FY21
NZD 000s
EBITDA
ANNUAL RESULTS FY21
Continued strong financial position.
•Net debt of $38.8m(out of total debt facilities of $65.0m):
►Ongoing sale of excess inventories, with material sales expected 1H22.
•No material change in PP&E, capex for the 7 month period $5.4m.
•‘Other’ current and non-current assets increase due to mark-to-market valuation of foreign
exchange contracts.
•Given the continued macroeconomic uncertainty, no dividend will be declared for the
7 month period to January 2021.
BALANCE SHEET
11
Group Financial Position
Jan-21Jun-20
NZ$000sAuditedAudited
Current Assets
Cash and equivalents3,4797,115
Receivables16,18612,777
Inventories42,48935,612
Biological Assets69,58881,784
Other5,413907
137,155138,195
Non-current Assets
Property, plant & equipment60,71660,481
Right of use assets6,8104,581
Biological assets18,60010,594
Other66,86660,333
152,992135,989
Total Assets290,147274,184
Current Liabilities
Loans (external)(3,024)(1,132)
Lease Liabilities(1,580)(1,347)
Payables(18,597)(14,847)
Other(9,810)(10,767)
(33,011)(28,093)
Non-Current Liabilities
Loans (external)(39,250)(37,000)
Lease Liabilities(5,389)(3,258)
Other(19,954)(21,519)
(64,593)(61,777)
Total Liabilities(97,604)(89,870)
Net Assets192,543184,314
Net Cash / (Debt)(38,795)(31,017)
ANNUAL RESULTS FY21
CAPITAL EXPENDITURE
12
Investment in capex slowed to preserve cash.
Capital expenditure of $5.4m in the 7 months to January 2021, including:
•Investment in hatchery facilities including a ‘first-feeding’ and incubation facility at Tentburn($1.1m), with the project now nearing completion.
This investment will improve our hatchery capacity and smolt quality (as smolt will be reared in a controlled environment).
•Blue Endeavour Resource Consent application ($0.8m).
•Other regular maintenance and replacement capex.
ANNUAL RESULTS FY21
BUSINESS
UPDATE
13
04
04
ANNUAL RESULTS FY21
FUTURE FARMING
14
This slide provides an update on future farming volumes:
Farm relocation (MPI Salmon Relocation Process):
•Adoption of the 2017 Panel recommendation would be unlikely to have any material impact on site capacity 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 calendar year 2024 or beyond due to process timing.
Open Ocean Farming -NZKS has applied for its first open ocean farming consent comprising two farm sites, in the Marlborough region:
•The region has been named “Blue Endeavour” representing a step towards the long term sustainability of the industry.
•The RMA consenting process is underway and submitter meetings are expected for mid-2021, with a hearing to follow later in the year.
•The earliest possible harvest from the region would be in the middle of the 2024 calendar year.
•Capital costs for the infrastructure associated with Blue Endeavour are estimated at ~$35m with some ability for this spend to be staged. This
investment would be expected to generate an eventual production volume of ~4,000 MT per site per 18 month cycle.
•Blue Endeavour is both a volume and unit value driver.
ANNUAL RESULTS FY21
BRANDING INITIATIVES
15
We are creating innovative strategies for our markets:
•Connecting with our end-users through:
►Launch of the ŌraKing Global Ambassador Programme.
►Regal consumer research – segmenting and gap analysis.
•Product innovation momentum maintained through:
►Regal Maple.
►ŌraKing June Hog.
►ŌraKing Keiji(to be launched mid-April).
ANNUAL RESULTS FY21
BRANDING INITIATIVES (CONT.)
16
•Continued geographical, category and channel diversification:
►Sale of Regal Fresh in the USA through a multi-store premium retailer.
►Launch of ŌraKing speciality range (100gcold smoked) into
high-quality Italian retail stores.
►E-commerce and new USA geographies, e.g. the record sale of the
ŌraKing TYEE salmon via Goldbelly.com.
►USA launch of Omega Plus petfood treats (launch later this year).
ANNUAL RESULTS FY21
OPERATIONAL UPDATE
17
05
ANNUAL RESULTS FY21
JanFebMarAprMayJunJulAugSepOctNovDec
201920202021
SALES PERFORMANCE
Sale volumes display year on year increases to above pre-COVID levels:
•Benefit of retail promotions continued in January.
•Sales resource focussed on retail channels whilst foodservice market is impacted by implications of COVID.
•Anticipate significant clearance sales of excess frozen inventory during first half of CY21, then demand to exceed supply once again by late-CY21.
Continued recovery in sales in 2021
18
Total Sales Volumes by Month, 2019 through 2021 (MT)
Global lockdowns
AklLvl3
lockdown
NZ retail
promotions
ANNUAL RESULTS FY21
19
SALES BY MARKET
Overall sales volumes in line with prior 7 month period
•Demand from North America remains strong:
►Strong sale volumes to this market whilst maintaining price in a challenging environment (excluding discrete disposal sales at alower price).
►New sales channels cultivated (e.g. online delivery, fishmongers and specialty retail) to replace foodservice channels. These channels provide
a platform for accelerated growth as this market emerges from COVID restrictions.
•Australia exhibiting positive sales growth compared to the prior 7 month period as NZKS continues to establish its premium positioning in
foodservice markets.
•Asia (ex Japan and China) continues to track well (albeit this market has been impacted by the short-term loss of airline customers) and displays
potential as a future growth market.
•Excess frozen volumes were partially cleared through Japan resulting in increased volumes to this market but with margins temporarily impacted.
•Sales to China continue to be restricted due to challenges presented by COVID.
•Strong and pleasing growth in sales to Europe (albeit off a relatively low base), as increased resources in this market have delivered record sales
volumes for this region.
•Disruption to export and foodservice markets created the opportunity to renew domestic retail interest, grow the market, and build brand
awareness. Domestic sale volumes have trended upwards and are back to levels consistent with the prior period.
ANNUAL RESULTS FY21
20
FISH PERFORMANCE
Fish performance continues to be a key focus for the business
•Harvest volumes for the 7 months of 4,880 MT.
•Feed Conversion Ratio consistent with results generally achieved during the second half of each calendar year.
•Mortality levels impacted by higher levels of fish maturation with the harvest delayed through the April to June 2020 period.January mortality
elevated due to warmer temperatures, however has since declined (February ~$2.2m, March ~$1.8m(estimate)).
•Biomass in the water has now been returned to normal levels.
Biological Performance
FY21
(7 mos)
2H21
(1 mo)
1H21
(6 mos)
Harvest Volume (MT)4,880 730 4,150
Feed Conversion Ratio (FCR)1.691.541.73
Mortality Value ($000s)8,253 3,175 5,077
Closing Livestock Biomass6,866 6,866 6,944
Feed Cost ($ / Kg of feed)2.532.422.54
ANNUAL RESULTS FY21
OUTLOOK
21
06
ANNUAL RESULTS FY21
7,931
7,336
4,880
~7,800
~8,600
~8,600
~9,100
FY19
(Jun)
FY20
(Jun)
FY21
(Jan)
(7mos)
FY22
(Jan)
FY23
(Jan)
FY24
(Jan)
FY25
(Jan)
•The peak mortality for the 2020/2021 summer is now over. Whilst January
mortality was above-trend, mortality through the remainder of summer was
below trend and overall mortality results during FY22are expected to be
superior to recent years.
•FY22harvest volumes lower than previous guidance due to:
►A refinement of the production model.
►Ensuring fish are located in the most beneficial locations over the summer
period.
•Once fully developed, forecast volumes from existing inshore sites remains at
between 10,000 to 11,000 tonnes.
Future harvest volumes continue to be impacted by consent and compliance challenges
FORECAST VOLUMES – FY22-FY25
22
Harvest Volumes (tonnes) *
* 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.
ANNUAL RESULTS FY21
FY22OUTLOOK
FY22expectations:
•Return to pre-Covid momentum during FY22.
•The peak mortality for the 2020/2021 summer is now over. Whilst early-Summer mortality (Dec-20 to Jan-21) was above-trend, mor tality for
the remainder of summer has been below-trend.
•Whilst sale volumes are now running at above pre-COVID levels, we caution that ongoing uncertainty and the ripple-effects of COVID will
continue to have an impact on our results for FY22, especially through the first half.
•Harvest expectations for FY22 are forecast at ~ 7,800 tonnes.
•Clearance of excess inventory is ongoing. This programme is expected to complete near the middle of calendar 2021, and we anticipate that
demand will exceed supply in the latter parts of this calendar year.
•Opportunity for price increases to recover lost margins likely from late-CY21.
•FY22 capital expenditure expected to be ~$10m, broadly in line with depreciation.
23
ANNUAL RESULTS FY21
24
APPENDICES
07
ANNUAL RESULTS FY21
25
REALIGNMENT OF DATA
02
I
ANNUAL RESULTS FY21
CHANGE OF BALANCE DATE, AND HISTORIC TABLES REALIGNED
As New Zealand King Salmon has changed its balance date to 31 January, it will report its results to the market as follows:
•Interim (first half) financial results for six months to 31 July.
•Full year audited financial results for year ended 31 January each year, except for FY21when a 7 month period to 31 January 2021 is being reported.
To assist investors in comparing future performance against similar historic periods, a presentation including charts and
tables for July / January periods for the three years ended 31 January 2020 was recently submitted to the NZX.
The following slides provide information for the period 1 February 2020 to 31 January 2021.
26
ANNUAL RESULTS FY21
SUMMARY FINANCIAL INFORMATION
27
* Results restate historic information to new January year end / July half year.
Sale Prices and Exchange Rates
H1 July / H2 January
FY21H1FY21H2FY2021
Average Gross Sales Price per kg
Domestic SalesNZD25.0723.6824.29
Export Sales (All Markets)NZD24.7523.2223.87
Foreign Exchange Rates
NZD:AUD0.950.950.95
NZD:USD0.670.660.67
NZD:JPY66.5870.0269.01
Group Financial Performance
H1 July / H2 January
NZ$000sFY21H1FY21H2FY2021
Volume Sold (MT)2,7453,6356,380
Revenue69,13480,567149,701
Gross Margin16,25123,12939,380
Gross Margin %24%29%26%
EBITDA7,0828,88015,961
EBITDA %10%11%11%
EBIT2,8294,5667,394
NPAT1,3282,5673,895
ANNUAL RESULTS FY21
28
* Results restate historic information to new January year end / July half year.
H1 July / H2 January / FY February to January
New Zealand (MT)North America (MT)China (MT)
Australia (MT)Asia (ex Japan & China) (MT)
Japan (MT)Europe (MT)
KEY:H2
H1
1,970
1,597
1,686
1,205
2,365
1,987
1,550
1,550
FY2018FY2019FY2020FY2021
1,055
1,033
1,177
1,047
1,187
1,179
1,279
1,301
FY2018
FY2019
FY2020FY2021
325
230
238
169
345
296
218
240
FY2018FY2019FY2020FY2021
161
203
200
146
169
200
190
134
FY2018FY2019FY2020FY2021
179
127
139
93
302
117
136
313
FY2018FY2019FY2020FY2021
47
64
52
54
62
75
71
82
FY2018FY2019
FY2020FY2021
22
49
109
31
26
53
79
15
FY2018FY2019FY2020FY2021
SALES BY MARKET
ANNUAL RESULTS FY21
Biological Performance
H1 July / H2 January
FY21H1FY21H2FY2021
Harvest Volume (MT)3,5434,2627,805
Bio Feed Conversion Ratio (BFCR)1.951.701.81
Mortality Cost $m8.37.816.1
Closing Livestock Biomass ('000)6,5126,8646,864
Feed Cost ($/kg of feed)2.422.552.49
29
* Results restate historic information to new January year end / July half year.
BIOLOGICAL PERFORMANCE
ANNUAL RESULTS FY21
30
RECONCILIATIONS
02
II
ANNUAL RESULTS FY21
FY21(7 MONTHS) RECONCILIATION BETWEEN
GAAP RESULTS AND PRO FORMA FINANCIALS
31
Statutory
Financial
Statements
Fair Value
Adjustments
IFRS 16 Lease
Adjustments
FX Close-
Outs
Pro Forma
Operating
Financial
Information
Revenue
95,23995,239
Cost of goods sold(98,820)
36,562 (984)(63,243)
29,350(29,350) -
Freight costs to market(11,616)(11,616)
Gross Profit14,1527,212 (984)20,380
Other operating income5415,7446,285
Overheads
Sales, marketing and advertising(7,702)(7,702)
Distribution overheads(3,131)(3,131)
Corporate expenses(4,979)(4,979)
Other expenses(889)(889)
(2,008)7,212(984)5,7449,964
Depreciation and amortisation(5,969)981(4,988)
(7,977)7,212(3)5,7444,975
Finance income55
Finance costs(1,353)140(1,213)
Net finance costs(1,349) - 140 - (1,208)
Profit / (loss) before Tax(9,326)7,2121375,7443,767
Income tax (expense) / credit2,247(2,019)(38)(1,608)(1,419)
Net Profit / (loss) for the Year(7,079)5,193984,1362,348
EBIT
FY21
NZD 000s
Fair value gain / (loss) on biological transformation
EBITDA
ANNUAL RESULTS FY21
FY20(12 MONTHS) RECONCILIATION BETWEEN
GAAP RESULTS AND PRO FORMA FINANCIALS
32
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
ANNUAL RESULTS FY21
UNDERSTANDING OUR GAAP RESULTS
Our GAAP results are impacted by Fair Value gains or losses arising from the application of NZ IAS-41 Agriculture,
NZ IAS-2 Inventory and the classification of leases under NZ IFRS-16. The impact of these standards are explained below:
Fair Value under NZ IAS-41 Agriculture andNZ IAS-2 Inventory
When we record a change in biomass at sea, or where the expected future profit we realise on fish that we sell changes, thesestandards require
us to quantify and recognise the gain or loss in the current period. This applies to both biomass at sea and inventories of finished products.
Our Statement of Financial Position shows biological assets at their fair value, with FY21seeing a reduction in fair value as the value of biomass in the sea
was revalued downwards reflecting COVID driven margin compression especially in offshore sales. Pro Forma Operating Financial Performance removes
gains / losses associated with the application of these standards. The company will present Pro Forma results for future reporting periods on this basis.
NZ IFRS-16Leases
Under NZ IFRS-16 a lessee will no longer make a distinction between finance leases and operating leases; all (material) leases will be treatedas
finance leases.
In the statement of financial position we are therefore required to recognize the asset (or right to use the asset) and the liability for the lease, while in the
statement of profit and loss we recognize the interest cost and the depreciation of the leased asset instead of the operatinglease 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 Agriculture, NZ IAS-2 Inventory and NZ IFRS-16 Leases
33
ANNUAL RESULTS FY21
34
GLOSSARY AND DISCLAIMER
02
III
ANNUAL RESULTS FY21
GLOSSARY OF TERMS
CY21Calendar year 2021
EBITDAEarnings before interest, tax, depreciation and amortisation
FCRFeed Conversion Ratio –the amount of feed (in kilograms) required to grow 1 kilogram of fish weight
FY20Financial results for the 12 months from 1 July 2019 to 30 June 2020
FY20(7mos)Financial results for the 7 months from 1 July 2019 to 31 January 2020
FY21/ FY21(7 mos)Financial results for the 7 months from 1 July 2020 to 31 January 2021
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 RateThe percentage mortality of salmon in seawater, calculated as the biomass of salmon mortalities in kg divided by the growth of salmon in kg
MTMetric tonnes
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 Appendix to this document. Pro Forma Operating EBITDA is a non-GAAP profit measure
Upwelling System
A system that allows dense cooler water to be moved towards the ocean surface, displacing the warmer water and increasing water flow
35
ANNUAL RESULTS FY21
36
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 any loss (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 contemplated in 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 ZealandKi ng 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.
ANNUAL RESULTS FY21
---
NEW ZEALAND KING SALMON INVESTMENTS LIMITED AND
SUBSIDIARIES
FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
CONTENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
Page
Corporate Information
1
Consolidated statement of comprehensive income
2
Consolidated statement of financial position
3
Consolidated statement of changes in equity
4
Consolidated statement of cash flows
5
Notes to the consolidated financial statements
1Corporate information6
2Basis of preparation6
3Significant accounting policies7
4New standards adopted and standards issued not yet adopted12
5Segment information13
6Other income13
7Expenses13
8Finance income and costs14
9Income tax14
10Components of other comprehensive income15
11Earnings per share15
12Cash and cash equivalents15
13Trade and other receivables16
14Inventories16
15Biological assets17
16Property, plant and equipment18
17Intangibles19
18Right of use assets19
19Lease liabilities20
20Interest bearing loans and borrowings20
21Trade and other payables20
22Employee benefits20
23Commitments and contingencies21
24Financial risk management21
25Fair value of financial instruments23
26Capital management24
27Capital and reserves24
28Events after balance date26
29Related party disclosure26
30Auditors remuneration27
31Reconciliation of net operating cash flow to profit/(loss)27
32Revenue from contracts with customers27
Auditor's Report
29
NEW ZEALAND KING SALMON INVESTMENTS LIMITED AND SUBSIDIARIES
CORPORATE INFORMATION
BOARD OF DIRECTORSBANKERSNEW ZEALAND KING SALMON
INVESTMENTS LIMITED
John William Dudley RyderThe Bank of New ZealandTicker: NZK
Independent Non-Executive ChairmanDeloitte CentreListed on the NZX Main Board and
Grantley Bruce RosewarneLevel 6, 80 Queen Streetas a foreign Exempt Listing on the
Chief Executive Officer and Managing DirectorAucklandASX
Jack Lee PorusNew ZealandNZ Company number: 2161790
Non-Executive Director
Paul James SteereAUDITORRegistered Office
Independent Non-Executive Director93 Beatty Street
Lai Po SingErnst & Young (EY)Annesbrook
Non-Executive DirectorLevel 4, 93 Cambridge TerraceNelson
Chiong Yong TiongChristchurch New Zealand
Non-Executive DirectorNew Zealand
Catriona MacleodPostal Address
Independent Non-Executive DirectorLAWYERSPO Box 1180 Nelson 7040
New Zealand
Audit and Finance CommitteeChapman Tripp
Paul Steere (Chair)Level 35, 23 Albert StreetTelephone
John RyderAuckland+64 3 548 5714
Jack Porus (Appointed 26 August 2020)New Zealand
Website
Nominations and Remuneration CommitteeGascoigne Wickswww.kingsalmon.co.nz
Paul Steere (Chair)79 High Street
Jack PorusBlenheimInvestor Relations
New Zealandinvestor@kingsalmon.co.nz
Health, Safety and Risk Committee
Catriona Macleod (Chair)Duncan Cotterill
Chiong Yong Tiong197 Bridge StreetSHARE REGISTRY
NelsonComputershare Investor
New ZealandServices Limited
Level 2, 152 Hurstmere Road
Takapuna
Auckland 0622
New Zealand
+64 9 488 8777
enquiry@computershare.co.nz
Computershare Investor
Services Pty Limited
Yarra Fall
452 Johnston Street
Abbotsford VIC 3001
Australia
+61 3 9415 4083
enquiry@computershare.co.nz
1
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
20212020
7 Months12 Months
to 31 Januaryto 30 June
Note$000$000
Revenue from contracts with customers3295,239155,344
Cost of goods sold including fair value uplift at point of harvest14(98,820) (145,768)
Fair value gain on biological transformation1529,35064,124
Freight costs to market(11,616) (15,351)
Gross profit
14,15358,349
Other income65414,247
Sales, marketing and advertising expenses(7,702) (12,473)
Distribution overheads(3,132) (4,131)
Corporate expenses7(4,979) (9,012)
Other expenses7(889) (906)
Earnings / (loss) before interest, tax, depreciation and amortisation
(2,009) 36,074
Depreciation and amortisation expense16,17,18(5,969) (9,385)
Finance income8512
Finance expenses8(1,353) (1,748)
(Loss) / profit before tax
(9,326) 24,953
Income tax credit / (expense)92,247(6,949)
Net (loss) / profit after tax
(7,079) 18,004
Other comprehensive income
Exchange differences on translation of foreign operations10(677) 154
Movement on cash flow hedges1022,0655,522
Income tax effect of movement on cash flow hedges10(6,178) (1,546)
Net other comprehensive income
15,2104,130
Total comprehensive income
8,13122,134
20212020
Earnings per share
7 Months12 Months
Basic earnings per share11(0.05)$ 0.13$
Diluted earnings per share11(0.05)$ 0.13$
Other comprehensive income that may be reclassified to profit or loss in subsequent periods:
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
2
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 JANUARY 2021
20212020
31 January30 June
ASSETSNote$000$000
Current assets
Cash and cash equivalents123,4797,115
Trade and other receivables1316,18612,777
Inventories1442,48935,612
Biological assets1569,58881,784
Derivative financial assets255,413907
Total current assets
137,155138,195
Non-current assets
Property, plant and equipment1660,71660,481
Biological assets1518,60010,594
Derivative financial assets2516,3549,120
Intangible assets179,1268,655
Right-of use assets186,8104,581
Goodwill1739,25539,255
Total non-current assets
150,861132,686
TOTAL ASSETS
288,016270,881
LIABILITIES
Current liabilities
Trade and other payables2118,59714,847
Employee benefi
ts222,8572,884
Borrowings203,0241,132
Lease liabilities191,5801,347
Other financial liabilities29233149
Derivative financial liabilities251,6463,868
Taxation payable5,0743,866
Total current liabilities
33,01128,093
Non-current liabilities
Employee benefits22696558
Borrowings2039,25037,000
Lease liabilities195,3893,258
Deferred tax liabilities916,92315,133
Derivative financial liabilities252042,525
Total non-current liabilities
62,46258,474
TOTAL LIABILITIES
95,47386,567
NET ASSETS
192,543184,314
EQUITY
Share capital27122,606122,606
Reserves18,2862,978
Retained earnings51,65158,730
TOTAL EQUITY
192,543184,314
Net tangible assets per share
Net tangible assets per share1.04$ 0.98$
For and on behalf of the Board, who authorised the issue of these financial statements on 30 March 2021
DirectorDirector
30 March 202130 March 2021
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
3
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
Share
Capital
Foreign
Currency
Translation
Reserve
Hedge
Reserve
Share
Based
Payment
Reserve
Retained
Earnings
Total
Equity
Note$000$000$000$000$000$000
Balance as at 1 July 2020
122,606(485) 2,58787658,730184,314
Loss for the period- - - - (7,079) (7,079)
Other comprehensive income/(loss)10- (677) 15,887- - 15,210
Total comprehensive income/(loss) for the period
- (677) 15,887- (7,079) 8,131
Share based payment expense- - - 98- 98
Balance as at 31 January 2021
122,606(1,162) 18,47497451,651192,543
Balance as at 1 July 2019
122,595(639) (1,391) 57547,612168,752
Profit for the period- -
-
- 18,00418,004
Other comprehensive income/(loss)10- 1543,978- - 4,132
Total comprehensive income/(loss) for the period
- 1543,978- 18,00422,136
Shares issued2711- - - - 11
Share based payment expense- -
-
301- 301
Dividends paid - ordinary27- - - - (6,886) (6,886)
- supplementary- - - - (211) (211)
- foreign investor tax credit- - - - 211211
Balance as at 30 June 2020
122,606(485) 2,58787658,730184,314
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
4
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
20212020
7 Months12 Months
to 31 Januaryto 30 June
Note$000$000
Operating activities
Receipts from customers92,449157,924
Payments to suppliers(73,283) (109,849)
Payments to employees(24,512) (42,212)
Interest received512
Interest paid(836) (1,210)
Insurance and settlement income- 311
Government grants received4903,869
Proceeds from foreign currency forward contracts closed early5,744-
Income tax paid(938) (4,777)
Net cash flows from / (used in) operating activities
31(881) 4,068
Investing activities
Proceeds from sale of property, plant and equipment- 24
Purchase of property, plant and equipment(4,837) (16,148)
Purchase of intangible assets(859) (1,643)
Net cash flow (used in) / from investing activities
(5,696) (17,767)
Financing activities
Proceeds from borrowings62,983163,489
Repayment of borrowings
(58,841) (140,773)
Gross proceeds from share issue- 11
Dividends paid- (6,886)
Payment of lease liabilities(845) (1,414)
Net cash flows (used in) / from financing activities
3,29714,427
Net increase/(decrease) in cash and cash equivalents
(3,280) 728
Net foreign exchange difference
(356) 156
Cash and cash equivalents at 1 July
127,1156,231
Cash and cash equivalents at period end
12
3,4797,115
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
1.CORPORATE INFORMATION
2.BASIS OF PREPARATION
a.Statement of compliance
b.Basis of measurement
c.Significant accounting judgements, estimates and assumptions
Valuation of biological assets
Inventory (Finished goods and work in progress) obsolescence
Impairment testing of intangibles
Valuation of financial derivatives
The consolidated financial statements for 7 months to 31 January 2021 provide comparative information in respect of the previous
period, 12 months to 30 June 2020
The Group has changed its balance date to 31 January following a Board resolution on 2 November 2020.
The Group is principally engaged in the farming, processing and sale of premium salmon products.
The preparation of the Group's consolidated financial statements requires management to make judgements, estimates and
assumptions that affect the reported outcomes of revenues, expenses, assets, liabilities and the accompanying disclosures. The Group
based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Uncertainties
about these assumptions and estimates could result in an outcome that requires a material adjustment to the carrying amount of assets
or liabilities in future periods.
The Group recognises stocks of live fish at fair value less costs to sell according to the principles of NZ IAS 41 Agriculture. The fair
value is measured using a valuation model that relies on various assumptions and information available at balance date. Inputs include
anticipated market prices, quality mix, current weights of livestock relative to expected harvest weight, mortality rates, growth rates and
production costs. The income or loss that is ultimately recognised at time of sale may be significantly different from that implied by the
fair value adjustment at the end of a reporting period. The fair value uplift from accumulated costs to date has no cash impact in the
reporting period. Further details of the valuation and sensitivity to change in key inputs are given in note 15.
Specific areas requiring significant estimates and judgements include:
The Group reviews the carrying value of goodwill on an annual basis and assesses whether it is impaired according to the principles of
NZ IAS 36 Impairment of Assets. This requires the goodwill to be allocated to cash generating units with which it would naturally be
associated and the value in use of the cash generating units to be estimated. The value in use is estimated using a discounted
cashflow model that relies on various assumptions and information available at balance date. Inputs include estimations of the growth
rate of the Group, future market conditions, prices, and discount rates. Further details of the value in use assessment are given in note
17.
Inventories are stated at the lower of cost or net realisable value, and the Group uses judgment and estimates to determine the net
realisable value of inventory at the end of each reporting period.
Due to the rapid impact of the pandemic virus Covid-19 impacting significantly on finished stock holdings, the Group estimates the net
realisable value of inventory for obsolescence and unmarketable items at the end of reporting period and then writes down the cost of
inventories to net realisable value. The net realisable value of the inventory is determined based on assumptions of future demand and
pricing and estimates over the remaining shelf life of the inventory.
The consolidated financial statements of New Zealand King Salmon Investments Limited (the Company) and its subsidiaries (together
the Group) for the period ended 31 January 2021 were authorised by the directors on 30 March 2021
The consolidated financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand
($000), except when otherwise indicated.
New Zealand King Salmon Investments Limited is a profit-orientated company incorporated and domiciled in New Zealand. The
Company is registered under the Companies Act 1993 and listed on the NZX Main Board ("NZX") and the Australian Securities
Exchange ("ASX"). The Company is an FMC reporting entity under the Financial Markets Conduct Act 2013.
The Group recognises financial derivatives at fair value according to the principles of NZ IFRS 13 Fair Value Measurement. The value
is calculated by a third party expert using an industry standard model. Inputs to the model are obtained externally by the service
provider. Further details of the valuation are included in note 24.
The consolidated financial statements comply with New Zealand Equivalents to International Financial Reporting Standards (IFRS) and
also with International Financial Reporting Standards (IFRS). The financial statements are prepared under NZ GAAP and FMC Act
2013.
The financial statements have been prepared on a historical cost basis except for biological assets and certain financial instruments
which have been measured at fair value. The carrying values of recognised assets and liabilities that are designated as hedged items
in hedging instruments, otherwise carried at amortised cost, are adjusted to recognise changes in the fair values attributable to the
risks that are being hedged in effective hedge relationships.
6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
Useful lives of assets
Revenue from contracts with customers
d.Foreign currency translation
Functional and presentation currency
Transactions and balances
3.SIGNIFICANT ACCOUNTING POLICIES
a.
Basis of consolidation
b.
Financial instruments
Cash and cash equivalents
Trade and other receivables
The Group reviews individual transactions to determine the amount and timing of revenue from contracts with customers.
The financial statements of the subsidiaries are prepared for the same reporting period as the Parent company using consistent
accounting policies.
Transactions in foreign currencies are initially recorded in the functional currency and then translated by applying the exchange rates
ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of
exchange at balance date.
The Group estimates the useful lives of property, plant and equipment and intangible assets based on historical performance and
currently consented future asset uses.
The Group's consolidated financial statements are presented in New Zealand dollars, which is also the parent company's functional
currency. The Australian subsidiary's functional currency is Australian dollars which is translated into the presentation currency in these
financial statements. The USA subsidiary's functional currency is United States dollars which is translated into the presentation
currency in these financial statements.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the
date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates
at the date when the fair value was determined.
The financial statements comprise the financial statements of New Zealand King Salmon Investments Limited and its subsidiaries (per
note 29). Subsidiaries are all those entities over which the Company has control.
For trade receivables and contract assets, the Group applies a simplified approach in calculating an allowance for expected credit loss
(ECL). Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECL's at
each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for
forward-looking factors specific to the debtors and the economic environment.
Loans and amounts owing from related companies are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. After initial recognition such assets are carried at amortised cost using the effective interest method. Gains
and losses are recognised in profit or loss when the loans are derecognised or impaired.
In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and
losses resulting from intra-group transactions have been eliminated in full.
Subsidiaries are fully consolidated from the date on which control is obtained by the Group and cease to be consolidated from the date
on which control is transferred out of the Group.
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other
comprehensive income (OCI), and fair value through profit or loss. In order for a financial asset to be classified and measured at
amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’
on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Financial
assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business
model. Subsequently the Group applies the following accounting policies for financial instruments:
Cash and cash equivalents in the balance sheet comprise cash at bank and call deposits. For the purpose of the statement of cash
flows, cash and cash equivalents consist of cash and short-term deposits net of outstanding bank overdrafts.
Short term trade and other receivables are not discounted and are initially stated at cost. Gains and losses are recognised in the profit
or loss when the receivables are written off or impaired.
7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
Trade and other payables
Interest bearing borrowings
Financial guarantees
Derivative financial instruments and hedging
d.Inventories
e.Biological assets
Net realisable value - the estimated selling price in the ordinary course of business less estimated costs of completion and the
estimated costs necessary to make the sale.
Biological assets include fish livestock measured at fair value less estimated costs to sell. The net gain or loss resulting from the fair
value measurement is recognised in profit or loss.
Trade and other payables are carried at cost due to their short term nature and are not discounted. They represent liabilities for goods
and services provided to the Group prior to the end of the financial year that are unpaid, and arise when the Group becomes obliged to
make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within
30-90 days of recognition.
Amounts accumulated in equity are transferred to profit or loss when the hedged item affects profit or loss.
Inventories including raw materials, work in progress and finished goods are valued at the lower of cost or net realisable value. Costs
incurred in bringing each product to its present location and condition are accounted for as follows:
Manufactured finished goods and work in progress - cost of direct materials, labour and a proportion of manufacturing overheads
appropriate to the stage of manufacture. Costs are assigned on the basis of weighted average costs. The cost of items transferred from
biological assets is their fair value less costs to sell at the date of harvest.
After initial recognition interest bearing borrowings are subsequently measured at amortised cost using the effective interest method.
Fees paid on establishment of loan facilities that are yield related are included as part of the carrying amount. Borrowings are classified
as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the
balance date. Borrowing costs are generally recognised as an expense when incurred, with the exception of borrowing costs
associated with a qualifying asset which are capitalised as part of the cost of that asset.
Financial guarantee contracts issued by the Group are those contracts that require a payment to be made to reimburse the holder for a
loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument.
Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributed
to the issuance of the guarantee. Subsequently the liability is measured at the higher of the best estimate of the expenditure required to
settle the present obligation at balance date and the amount recognised less cumulative amortisation.
The Group uses derivative financial instruments including forward currency contracts, options and interest rate swaps to hedge risks
associated with interest rate and foreign currency fluctuations. Such derivative financial instruments are initially recognised at fair
value on the date on which a derivative contract is entered into and are subsequently re-measured to fair value at balance date.
Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative.
The fair values of forward currency contracts are calculated by reference to current forward exchange rates for contracts with similar
maturity profiles. The fair values of interest rate swaps are determined by reference to market values for similar instruments.
The Group designates its derivative financial instruments as hedges of a particular risk associated with a recognised asset or liability or
a highly probable commitment that could affect profit or loss. The effective portion of the gain or loss on the hedging instrument is
recognised directly in other comprehensive income in the cash flow hedge reserve, while the ineffective portion is recognised
immediately in the statement of profit or loss.
Raw materials – the cost of fish is measured at fair value at harvest date. The cost of other raw materials is based on the purchase
price including import duties and other taxes, transport, handling and other costs directly attributable to the acquisition of the goods and
materials. Costs are determined on a weighted average basis.
The fair value of fish livestock is derived from the amount expected to be received from the sale of the asset in an active market. The
target live weight of the harvestable fish is defined as a fish with a live weight of 4kg or greater. Many fish are harvested with a live
weight above or below this weight.
For brood stock and fish where little biological transformation has taken place since initial cost was incurred, cost less impairment is
used as an approximation of fair value. This value is used up to the point at which fish are transferred to sea water. Fish stock is
transferred to inventory at the time of harvest. The transfer is recorded at its fair value which is deemed to be cost for the purposes of
inventory valuation.
8
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
f.Property, plant and equipment
Freehold landnot depreciated
Freehold buildingstwenty to fifty years
Building fit outthree to twenty five years
Leasehold improvementsfive to ten years
Plant, furniture and fittingsthree to twenty years
Motor vehiclesfive to ten years
Sea vesselsten to twenty years
g.Leases
Right of use assets
The Group's lease portfolio
Property leases
Vehicle leases
Plant and Equipment Leases
Contracts not recognised as leases
An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from
its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.
At the inception of a contract, the group is required to assess whether a contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end
and adjusted prospectively if appropriate. An asset's carrying value is written down immediately to its recoverable amount if its carrying
value is greater than its estimated recoverable amount.
Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment. Depreciation is provided on
a straight line basis over the estimated useful lives of the assets as follows:
The Group’s real estate includes office buildings and storage facilities. The group classified these office spaces as operating leases
under NZIAS 17, and has recognised some storage contracts that meet the identifiable criteria as a Right of use asset and
corresponding liability portfolio under NZIFRS 16.
The Group lease vehicles are predominantly used by sales staff and the transportation of personnel between operating locations.
These vehicles were classified as operating leases under NZIAS 17 and are generally held for a term of 3 years. During the Covid-19
pandemic Level 4 restrictions several lease contracts were due to expire and were renewed for an additional period of one year as
replacement negotiations were not accessible during this time.
The Group sometimes leases machinery used for the production or processing of salmon. The current leases relate to equipment being
utilised for the upwelling on sea farms and various forklifts operated throughout the company. The Group has elected to apply the
recognition exemption for short-term leases for all other machinery employed for less than 12 months duration and for leases where the
underlying asset is of low value.
The Group has transport contracts that have not been recognised as leases on balance sheet but can be identified as an asset to
which the contract relates. These leases have been assessed as variable lease payments linked to future performance. These
contracts have an operating expense value of $2.2m in the 7 months to 31 January 2021 (Year to 30 June 2020: $1.7m).
The Group applies short term lease recognition exemption to its short term leases of equipment. It also applies the lease of low-value
assets recognition exemption to leases of of equipment that are considered to be low value. Lease payments on short term leases and
leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
The Group recognises right of use assets at the commencement date of the lease (i.e. the date the underlying asset is available for
use). Right of use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any
remeasurement of lease liabilities.
The cost of right of use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments
made at or before the commencement date less any lease incentives received. Right of use assets are depreciated on a straight-line
basis over the shorter of the lease term and the estimated useful lives of the assets.
9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
h.Intangibles
Useful lives: Indefinite
Internally generated or acquired:Acquired
Intellectual property, marine farm and hatchery licences and marina berth
Useful lives: Finite
Amortisation method used:Straight line, five to thirty five years
Internally generated or acquired:Acquired
Computer Software
Useful lives: Finite
Amortisation method used:Straight line, four to seven years
Internally generated or acquired:Acquired
i.Research and development costs
- Costs can be reliably measured.
- Completion of the project is technically feasible.
- Resources are available to complete the project.
- There is an intention to use the resulting asset and it will generate future economic benefits.
During the period of development the asset is tested for impairment annually.
j.Employee benefits
Wages, salaries, annual leave and sick leave
Long service leave
Defined contribution plans
k.Contributed equity
Ordinary shares
Contributions made to a defined contribution plan are expensed as incurred.
Research costs are generally expensed as incurred. Development expenditures are capitalised as intangible assets when the Group
can demonstrate:
A summary of the policies applied to the Group’s intangible assets is as follows:
Goodwill and trade marks
Intangible assets with indefinite useful lives are not amortised but are tested for impairment annually, either individually or at the cash-
generating unit level. The assessment of useful life is reviewed annually to determine whether the indefinite life continues to be
supportable. If not, the change in useful life from indefinite to definite is made on a prospective basis.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in
equity as a deduction net of tax from the proceeds. Other capital raising costs are expensed as incurred.
The liability for long service leave is recognised and measured at the present value of expected future payments to be made in respect
of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected
future wage and salary levels, experience of employee departures and periods of service.
Liabilities for wages and salaries including non-monetary benefits, annual leave and accumulating sick leave expected to be settled
within 12 months of the reporting date are recognised in respect of employees' services up to the reporting date. They are measured at
the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the
leave is taken and are measured at the rates paid or payable.
Intangible assets acquired separately or in a business combination are initially measured at cost. The cost of an intangible asset
acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are
carried at cost less any accumulated amortisation and any accumulated impairment losses.
The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over
the useful life and tested for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation
period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial year-end.
Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are
accounted for prospectively by changing the amortisation period or method, as appropriate, which is a change in accounting estimate.
The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the
function of the intangible asset.
10
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
l.Revenue and Income Recognition
Revenue from contracts with customers
Interest income
Insurance proceeds
m.Taxes
Income taxes
Other taxes
- Receivables and payables, which are stated with the amount of GST included.
NZ IFRS 15 established a five-step model to account for revenue arising from contracts with customers and requires that revenue be
recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or
services to a customer.
The Group is in the business of growing, processing and selling King Salmon to customers in New Zealand and overseas. Revenue
from contracts with customers is recognised when control of the goods is transferred to the customer at the amount that reflects the
consideration to which the Group expects to be entitled in exchange for those goods. The Group has generally concluded that it is the
principal in its revenue arrangements because it typically controls the goods before transferring them to the customer.
Revenues, expenses and assets are recognised net of the amount of GST, except when:
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has
become probable that future taxable profit will allow the deferred tax asset to be recovered.
- The GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is
recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable.
Revenue is recognised as interest accrues using the effective interest method.
Insurance proceeds are recognised in the financial statements when receipt is virtually certain and can be measured reliably.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to
the taxation authorities based on the current period's taxable income. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted by the balance sheet date.
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance
sheet date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.
- The net amount of GST recoverable from or payable to the taxation authority is included as part of receivables or payables in the
balance sheet.
- Commitments and contingencies are disclosed net of the amount of GST recoverable from or payable to the taxation authority.
- The Group recognises uncertain tax positions as a liability where it is probable that an outflow of resources will be required.
11
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
n.Share-based payments
o.
Comparatives
4.NEW STANDARDS ADOPTED AND STANDARDS ISSUED NOT YET ADOPTED
a.New standards adopted
a.New standards not yet adopted
There have been no new standards adopted during the 7 months to 31 January 2021
Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but
the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of equity instruments that will
ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award,
but without an associated service requirement, are considered to be non-vesting conditions. Non-vesting conditions are reflected in the
fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions.
No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions have not
been met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective of whether the
market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.
When the terms of an equity-settled award are modified, the minimum expense recognised is the grant date fair value of the unmodified
award, provided the original terms of the award are met. An additional expense, measured as at the date of modification, is recognised
for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the
employee. Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is
expensed immediately through profit or loss.
Certain employees of the Group receive remuneration in the form of share-based payments, whereby employees render services as
consideration for equity instruments (equity-settled transactions). The cost of equity-settled transactions is determined by the fair value
at the date when the grant is made using an appropriate valuation model, further details of which are given in Note 27.
That cost is recognised in employee benefits expense, together with a corresponding increase in equity (other capital reserves), over
the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative
expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting
period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The expense or credit in
the statement of comprehensive income for the period represents the movement in cumulative expense recognised as at the beginning
and end of that period.
Standards issued but not yet effective are not expected to have a material impact on the financial statements when they become
effective.
Certain prior year comparatives have been reclassified to align with the current period’s presentation. The areas impacted are the
netting of deferred tax liability against deferred tax asset on the Statement of Financial Position and the disclosure of the impact of
foreign exchange on cash balances in the Statement of Cash Flows.
12
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
5.SEGMENT INFORMATION
Segment results
Segment performance - Refer also Note 32 for detail of disaggregation of revenue by product, brand and geographical area.
20212020
7 Months12 Months
$000$000
Revenue
95,239155,344
Segment EBITDA
(2,009) 36,074
Segment profit reconciles to profit / (loss) before income tax as follows:
20212020
7 Months12 Months
$000$000
Segment EBITDA
(2,009) 36,074
Depreciation, amortisation and impairment(5,969) (9,385)
Net finance costs(1,349) (1,736)
Group (loss) /profit before tax(9,326) 24,953
6.OTHER INCOME
20212020
7 Months12 Months
Other income
$000$000
Grants received 4903,869
Insurance settlements- 311
Profit on sale of property, plant and equipment- 26
Other income5141
Total other income5414,247
7.EXPENSES
20212020
7 Months12 Months
Corporate and other expenses include:
$000$000
Trade receivables written off- 18
Impairment of trade receivables876
Research cost599278
Loss on sale of assets 251
Lease rentals 375357
Directors' fees271465
Other directors' expenses14
Donations814
20212020
7 Months12 Months
Employee benefits expense
$000$000
Wages and salaries20,23636,017
Defined contribution plan expenses514872
Restructuring costs10-
Other employee benefits expenses3,4955,301
Outsourced labour440593
Total employee benefits expense24,69542,783
The Group's strategy is to maximise longer term sales and overall margins by focusing on branded, premium priced and differentiated sales across its range of
markets, channels and customers. The operating results of the whole business are monitored for the purpose of making decisions about resource allocating
and performance. Accordingly, the Group is considered to consist of one operating segment.
13
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
8.FINANCE INCOME AND COSTS
20212020
7 Months12 Months
Finance income
$000$000
Interest income512
Total finance income512
20212020
7 Months12 Months
Finance costs
$000$000
Bank facility fees418586
Interest on bank loans and overdrafts795993
Interest on leases140169
Total finance costs1,3531,748
9.INCOME TAX
20212020
7 Months12 Months
Recognised in the consolidated statement of comprehensive income
$000$000
Current income tax expense4274,437
Deferred tax relating to origination and reversal of temporary differences(2,674) 2,512
Total income tax expense / (credit) in the statement of comprehensive income
(2,247) 6,949
Tax amounts posted directly to other comprehensive income
6,1781,546
Reconciliation of tax expense to statutory income tax rate
Profit / (loss) before tax(9,326) 24,953
Income tax using the company tax rate 28%(2,611) 6,987
Non deductible/non assessable items2349
Under provision - previous year- (196)
Prior period adjustment306(51)
Adjustment for varying tax rates3516
Other differences- 144
Total tax expense / (credit)
(2,247) 6,949
Statement of financial position deferred tax assets and liabilities
20212020
31 January30 June
Deferred tax liabilities
$000$000
Accelerated depreciation for tax purposes (3,109) (3,114)
Fair value adjustment to biological assets(9,286) (10,829)
Unrealised gains on foreign currency hedges
(6,095) (2,807)
Increase accounting cost for finished goods(564) (1,607)
Other provisions- (79)
Total deferred tax liabilities
(19,054) (18,436)
Deferred tax assets
Provision for doubtful trade debtors2945
Provision for employee benefits765787
Share based payments263167
Unrealised losses on foreign currency hedges5181,791
Other provisions556513
Total deferred tax assets
2,1313,303
Net deferred tax liabilities
(16,923) (15,133)
14
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
Statement of comprehensive income impact of deferred tax assets and liabilities
20212020
7 months12 months
Deferred tax liabilities
$000$000
Accelerated depreciation for tax purposes
(5) 105
Fair value adjustment to biological assets(1,543) 1,348
Increase accounting cost for finished goods(1,043) 914
Other provisions(79) 79
(2,670) 2,446
Deferred tax assets
Provision for doubtful trade debtors17(26)
Provision for employee benefits22(47)
Other provisions(43) 139
(4) 66
Deferred tax expense / (credit)
(2,674) 2,512
Imputation credit account
The imputation credit account balance in the New Zealand King Salmon Company Group as at 31 January 2021 is $5,450k (30 June 2020: $4,023k).
10.COMPONENTS OF OTHER COMPREHENSIVE INCOME
20212020
7 months12 months
Movement in reserves
$000$000
Forward currency contracts
Reclassification during the period to profit or loss38(45)
Income tax effect(11) 13
Realised/unrealised net gain/(loss) during the period 21,7695,796
Income tax effect(6,095) (1,623)
Interest rate swaps
Realised/unrealised net gain/(loss) during the period 258(229)
Income tax effect(72) 64
Currency translation differences
Translation of foreign operations(677) 154
Net movement in other comprehensive income15,2104,130
11.EARNINGS PER SHARE
20212020
7 months12 months
Earnings per share
$000$000
Profit / (Loss) attributable to ordinary equity holders (7,079) 18,004
# of Shares# of Shares
000000
Weighted average number of ordinary shares for basic and diluted earnings per share138,986138,986
Basic earnings per share(0.05)$ $0.13
Diluted earnings per share(0.05)$ $0.13
12.CASH AND CASH EQUIVALENTS
20212020
7 months12 months
Cash and cash equivalents
$000$000
Cash at bank and on hand2,5716,387
Short-term deposits908728
Total cash and cash equivalents3,4797,115
Basic earnings per share amounts are calculated by dividing the profit for the period attributable to shareholders of the Company by the weighted average
number of ordinary shares on issue during the period. Diluted earnings per share are calculated by dividing the profit attributable to shareholders of the
Company by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of shares that would be issued on
conversion of all dilutive potential ordinary shares into ordinary shares.
15
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
13.TRADE AND OTHER RECEIVABLES
20212020
7 months12 months
Trade and other receivables
$000$000
Trade receivables12,9689,921
Allowance for expected credit losses(97) (90)
Prepayments2,6961,604
Other receivables6191,342
Total trade and other receivables16,18612,777
20212020
7 months12 months
Ageing analysis of trade receivables
$000$000
> 90 days overdue441
61 - 90 days overdue733
31 - 60 days overdue11420
< 30 days overdue2,6291,226
Not yet due10,2148,601
Total receivables12,9689,921
20212020
7 months12 months
Receivables impairment
$000$000
As at 1 July90146
Additional provisions for impairment9754
Receivables written off during the period- 18
Reversal of unused amounts(90) (128)
As at period end9790
14.INVENTORIES
20212020
7 months12 months
Inventories
$000$000
Raw materials11,8539,184
Work in progress2,7481,192
Finished goods27,88825,236
Total inventories42,48935,612
20212020
7 months12 months
Amount of inventories recognised as an expense in the statement of comprehensive income
$000$000
Cost of inventories recognised as an expense90,092144,828
Movement in net realisable value provision (increase)/decrease of inventory8,728940
Total cost of goods sold including fair value uplift at point of harvest98,820145,768
The estimated unrealised fair value gain from cost at 31 January 2021 is decreased from the prior year end estimation due to expected increased costs of
working and selling due to Covid-19 and a change in product mix to incorporate a proportion of lower value frozen product sales. Core product sales volumes
are expected to return to pre Covid-19 levels later in calendar year 2021.
The carrying value of finished goods as at 31 January 2021 includes a fair value uplift at point of harvest of $12,939k (30 June 2020: $7,939k) and an
impairment provision of $10,931k (30 June 2020: $2,201k).
The cost of inventory includes fish harvested measured at their fair value less costs to sell at harvest date, based on management’s expected future sales
pricing and mix of salmon products (“deemed cost”). At 31 January 2021, around 7% of forecast FY22 sales volumes are expected to be sold at returns
materially below deemed cost plus further manufacturing costs. As a result, the overall deemed cost of inventory on hand takes this into account and is
therefore reduced to carrying value by the impact of the lower expected FY22 sales prices.
The cost of inventories recognised as an expense for the period ended 31 January 2021 includes a fair value uplift at point of harvest of $29,857k (2020:
$54,802k).This cost is included in cost of goods sold in the Statement of Comprehensive Income.
Trade receivables generally have 20-30 day terms and are recognised at their realisable value.
16
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
15.BIOLOGICAL ASSETS
Cost Total
Biological assets
$000$000$000
As at 1 July 2020
53,70438,67492,379
Increase due to biological transformation
1
51,80733,72685,533
Decrease due to harvest
2
(42,233) (34,860) (77,093)
Decrease due to mortality
3
(8,253) - (8,253)
Changes in fair value
4
(4,377) (4,377)
As at 31 January 2021
55,02533,16388,188
Biological assets
$000$000$000
As at 1 July 2019
44,37033,86278,232
Increase due to biological transformation84,12667,399151,526
Decrease due to harvest(63,144) (59,312) (122,456)
Decrease due to mortality(11,648) - (11,648)
Changes in fair value- (3,275) (3,275)
As at 30 June 2020
53,70438,67492,379
20212020
7 months12 months
Fair value gain/(loss) recognised in profit and loss
$000$000
Gain arising from growth of biological assets33,72667,399
Movement in fair value of biological assets(4,377) (3,275)
Total fair value gain on biological transformation29,34964,124
20212020
7 months12 months
Harvested biomass
tonnestonnes
Total live weight harvested for the period 5,5458,336
20212020
7 months12 months
Estimated closing biomass
tonnestonnes
Closing fresh water stocks173158
Closing sea water stocks6,6916,136
Total estimated closing biomass live weight as at period end6,8646,294
1
Biological transformation fair value is impacted by volume increases and fish weight at reporting date relative to the target fish harvest weight of 4 kgs
(proportional recognition).
2
Harvested fair value is included in cost of goods sold in the statement of comprehensive income and is calculated by multiplying the current periods harvest
(biomass) by the prior periods estimated gross margin per kg (recognised at 100%).
4
Changes in fair value are impacted by movements in margin primarily being changes in sales price and costs to sell (fish cost, harvest, processing and freight
to market).
Fair Value Gain
The Group has three hatcheries in the South Island and nine operational marine salmon farms in the Marlborough Sounds. The fish livestock typically grow for
up to 31 months before harvest.
3
Mortality cost is expensed directly to the statement of comprehensive income in the period which it occurs and is not subject to a fair value uplift.
17
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
Fair value measurement
Fair value risk and sensitivity
16.PROPERTY, PLANT AND EQUIPMENT
Cost$000$000$000$000$000
As at 1 July 2019
10,85671,0923,4065,87391,227
Additions- - - 16,14816,148
Disposals- (727) (79) - (806)
Transfers from WIP51516,488235(17,238) -
As at 30 June 2020
11,37186,8533,5624,783106,569
Additions- - - 4,8374,837
Disposals- (210) - - (210)
Transfers from WIP3992,961166(3,526) -
As at 31 January 2021
11,77089,6043,7286,094111,196
Depreciation and impairment
As at 1 July 2019
2,30335,5561,521- 39,380
Depreciation4056,757279- 7,441
Disposals(681) (52) - (733)
As at 30 June 2020
2,70841,6321,748- 46,088
Depreciation2574,207137- 4,601
Disposals- (209) - - (209)
As at 31 January 2021
2,96545,6301,885- 50,480
Net Book Value
As at 30 June 2020
8,66345,2211,8144,78360,481
As at 31 January 20218,80543,9741,8436,09460,716
Borrowing costs
There were no borrowing costs capitalised in period ending 31 January 2021 ( Year to 30 June 2020: $nil).
Measurement of fair value is performed using a fair value model. The method of valuation therefore falls into level 3 of the fair value hierarchy as the inputs are
unobservable inputs.
The estimated unrealised fair value gain from cost at 31 January 2021 is decreased from the prior year end estimation due to expected increased costs of
working and selling due to Covid-19 and a change in product mix to incorporate a proportion of lower value frozen product sales. Core product sales volumes
are expected to return to pre Covid-19 levels later in calendar year 2021. Changes in these assumptions will impact the fair value calculation. The realised profit
which is achieved on the sale of inventory will differ from the calculations of fair value of biological assets because of changes in key factors such as the final
market destinations and product mix of inventory sold, changes in price, foreign exchange rates, harvest weight, growth rates, mortality, cost levels and
differences in harvested fish quality.
The valuation of biological assets is carried out separately for each site at a brood and strategy level. Estimated actual cost up to the date of harvest per site is
used to measure the expected margin at the time the fish is defined as ready for harvest, being 4.0kg live weight. Selling price is estimated at balance date
based on the most relevant future market price at expected harvest date. The expected gross margin is recognised proportionately based on average biomass
at reporting date. Fair value measurement commences at the date of transfer to sea water as this is considered the point at which the fish commence their grow
out cycle.
Leaving all other variables constant a 15% increase/decrease in average future sales prices would increase/decrease the fair value of biological assets on hand
and profit before tax by $18.3m (30 June 2020: $19.4m) (excludes the impact of finished goods), while a 15% increase/decrease in future harvest volume
would increase/decrease the fair value of biological assets on hand and profit before tax by $ 2.1m (30 June 2020: $5.8m).
A 15% increase/decrease in costs to sell would increase/decrease the fair value of biological assets on hand and profit before tax by $ 15m (30 June 2020:
$13.6m). Changes in fish health and environmental factors may affect the quality of harvested fish, which may be reflected in realised profit via both achieved
sales price and production costs.
The Group is exposed to financial risks relating to the production of salmon stock including increasing climate change volatility, climatic events, disease and
contamination of water space.
Property, Plant and Equipment is stated at historical cost less depreciation and any impairment adjustments. Historical cost includes expenditure that is directly
attributable to the acquisition of Property, Plant and Equipment. Asset residual values and useful lives are reviewed, and adjusted if appropriate, at each
balance day or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Group has considered the effects
Covid-19 may have on the carrying value of its specialised assets, and has concluded there is no evidence of technical or functional obsolescence which would
impact the carrying value of its assets in use.
Freehold land
and buildings
Plant,
equipment and
fittings
Vehicles and
sea vessels
Construction in
progress
Total
The Group seeks to produce and market the highest quality salmon products. Extensive monitoring and benchmarking is carried out to provide optimum
conditions and diets to maximise fish performance during the grow out cycle. Sales are maintained in a range of brands, products and markets to maximise
returns from the quality mix of fish harvested. The Group has insurance to cover some of the risks relating to the livestock.
18
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
17.INTANGIBLES
Cost$000$000$000$000$000$000
As at 1 July 2019
3,4932424,5842,44339,25550,017
Additions1,643- - - - 1,643
Disposals- - (289) - - (289)
Transfers from WIP(2,394) - - 2,394- -
As at 30 June 2020
2,7422424,2954,83739,25551,371
Additions859- - - - 859
Disposals - - - - - -
Transfers from WIP(741) - - 741- -
As at 31 January 2021
2,8602424,2955,57839,25552,230
Depreciation and impairment
As at 1 July 2019
- 2009982,042- 3,240
Amortisation- - 168341- 509
Disposals- - (287) - - (287)
As at 30 June 2020
- 2008792,383- 3,462
Amortisation- - 97290- 387
Disposals- - - - - -
As at 31 January 2021
- 2009762,673- 3,849
Net Book Value
As at 30 June 2020
2,742423,4162,45439,25547,909
As at 31 January 20212,860423,3192,90539,25548,381
Goodwill
Trademarks
18.
RIGHT-OF-USE ASSETS
Land &
BuildingsMotor Vehicles
Plant &
Equipment
Total
Cost
$000$000$000$000
Asset recognition on transition at 01 July 20193,6173804494,446
Additions- 1991,1051,304
Remeasurement268- - 268
As at 30 June 20203,8855791,5546,018
Additions2,231139432,413
Remeasurement7906- 796
As at 31 January 20216,9067241,5979,227
Depreciation
As at 1 July 2019- - - -
Depreciation7522254601,437
As at 30 June 20207522254601,437
Depreciation565145270980
As at 31 January 20211,3173707302,417
Net Book Value
As at 30 June 2020
3,1333541,0944,581
As at 31 January 20215,5893548676,810
Goodwill resulted from the acquisition of The New Zealand King Salmon Co Limited and is subject to annual impairment testing. The Group considers the
relationship between its market capitalisation and its book value, among other indicators, when reviewing for indicators of impairment.
Trademarks are externally acquired and are carried at cost less impairment. They have indefinite useful lives and are assessed annually for impairment. No
impairment has been recognised during the period ending 31 January 2021 (Year to 30 June 2020: Nil).
Trademarks
Farm and
hatchery licenses
SoftwareGoodwill
The goodwill is allocated to the New Zealand King Salmon Company's one cash generating unit. The recoverable amount of the cash generating unit has been
determined based on a value in use calculation using future estimated cash flows, capital expenditure and changes in working capital over a four year period,
plus an estimated terminal value. The terminal value calculation assumes sea farm consents expiring in 2024 will be renewed on reasonable commercial terms
to enable water space to continue to be utilised. The forecasts were based on actual results and expected future use of water space licences currently held,
before fair value adjustments to biological assets. The growth rate used to estimate the cash flows of the unit beyond the four-year period is 0.21% p.a at 31
January 2021 (30 June 2020: 0.83% p.a.). A discount rate of 5.14% p.a at 31 January 2021 (30 June 2020: 6.01% p.a.) has been applied to discount future
estimated cash flows to their present value. The net present value of these future estimated cash flows exceeds the carrying amount of the CGU, therefore the
Group has concluded that there is no impairment to the goodwill.
The calculation of value in use is most sensitive to changes in sales prices, exchange rates, sales volumes and fish performance. Reasonably probable
changes in the assumptions used would not cause the carrying value of cash generating unit to exceed the recoverable amount for the cash generating unit.
Total
Development in
progress
19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
19.
LEASE LIABILITIES
Total
$000$000$000$000
Liability recognition on transition at 01 July 20193,6173804494,446
Additions- 1991,1051,304
Remeasurement268- - 268
Interest for the period1271330170
Lease payments made(698) (213) (502) (1,413)
Lease liabilities as at 30 June 20203,1873661,0524,605
Additions2,231139432,413
Remeasurement7906- 796
Interest for the period119714140
Lease payments made(512) (146) (187) (845)
As at 31 January 20215,6963659086,969
Short term leases
Low value leases
20212020
7 months12 months
$000$000
Current1,5801,347
Non-current5,3893,258
Total lease liabilities
6,969 4,605
20.INTEREST BEARING LOANS AND BORROWINGS
20212020
7 months12 months
Current interest bearing loans and borrowings$000$000
Secured bank loans75097
Other borrowings2,2741,035
Total current interest bearing loans and borrowings
3,0241,132
Non-current interest bearing loans and borrowings
Secured bank loans39,25037,000
Total non-current interest bearing loans and borrowings
39,25037,000
21.TRADE AND OTHER PAYABLES
20212020
7 months12 months
$000$000
Trade payables15,28212,969
Other payables3,3151,878
Total trade and other payables
18,59714,847
22.EMPLOYEE BENEFITS
20212020
31 January30 June
Current employee benefits$000$000
Bonuses257171
Employee annual and sick leave benefits 2,3502,453
Long service leave250260
Total current employee benefits
2,8572,884
Non-current employee benefits
Long service leave696558
Total non-current employee benefits
696558
Long service leave
Long service leave provisions are calculated based on the expected future payments to employees, discounted to their net present value.
Plant &
Equipment
Land &
BuildingsMotor Vehicles
The Company has facilities with BNZ for $60m, secured by a general security deed over the assets of the Group. The expiry date of facility A of $20m is 18
October 2022, facility B of $20m expires on 18 October 2023, and facility C of $20m expires on 18 October 2024. At balance date $20m of facility A was drawn,
$15m of facility B was drawn and facility C was undrawn (as at 30 June 2020 total: $37m). During the period, the financial covenants relating to interest
coverage and leverage ratios have been amended and are in place until 30 June 2021. The Company also secured a Business Finance Scheme Loan via BNZ
for $5m (expiry October 2025) that arose from the Government providing financial assistance following the pandemic virus Covid-19. At balance date the
Business Finance Scheme loan was fully drawn at $5m.
The Group recognised $375k of payments for short term lease equipment in the 7 months to 31 January 2021 (30 June 2020: $357k).
The Group does hold lease commitments for equipment that meets the definition under NZ IFRS 16 – Low value leases.
20
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
23.COMMITMENTS AND CONTINGENCIES
Capital commitments
Contingencies
Guarantees
24.FINANCIAL RISK MANAGEMENT
Market risk
Currency risk
The cash flows are expected to occur up to 60 months from 1 February 2021. Realised gains/losses on exercise of foreign exchange contracts and options is
recognised within revenue when the hedged transactions occur.
The Group has exposure to foreign exchange risk as a result of transactions denominated in foreign currency, arising primarily from normal trading activities,
but also from the net investment in the foreign subsidiary.
The Group has a contingent liability of $826k in respect of a fish transport contract requiring the Group to purchase three bulk tankers (including modifications
made in 2018), should the fish transport contract be terminated early (30 June 2020: $784k).
The Group has entered into agreements to purchase plant and equipment. As at 31 January 2021 the total commitment is $1,629k (30 June 2020: $2,598k).
The NZ dollar equivalent of unhedged currency risk on assets at balance date,31 January 2021 is $ 491k (30 June 2020: $474k) whilst the NZ dollar equivalent
of unhedged currency risk on liabilities at balance date, 31 January 2021 is $316k (30 June 2020: $133k).
- Differences in the timing of the cash flows of the hedged items and the hedging instruments
The Group manages its foreign currency risk by hedging its future exposure in respect of its import purchases and its export sales, over a maximum of five
years, when exposures are considered highly probable. The Group hedges this exposure with the use of forward foreign exchange contracts and options. The
Group has a policy of hedging foreign exchange exposures within a range of hedging limits broadly summarised as follows: Up to two years – 15% to 100%, two
to five years – 0% to 50%. The notional contract amounts of forward foreign exchange contracts and options outstanding at balance date were $ 95.7m on the
import side (as at 30 June 2020: $87.5m) and $ 213.4m on the export side (as at 30 June 2020: $ 283m), for delivery over the next five financial years, in line
with anticipated payment dates.
- Different indexes (and accordingly different curves) linked to the hedged risk of the hedged items and hedging instruments
The group has three guarantee facilities totalling $115k (30 June 2020: $115k).
The Group's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group uses derivative financial instruments to hedge
certain risk exposures. Financial risk management is the responsibility of the Chief Financial Officer in accordance with the Treasury Policy approved by the
Board of Directors. In addition, the Group has a Treasury Committee, a sub-committee of the Board's Audit and Finance Committee that oversees financial risk
management.
There is an economic relationship between the hedged items and the hedging instruments as the terms of the foreign exchange and commodity forward
contracts match the terms of the expected highly probable forecast transactions (i.e., notional amount and expected payment date). The Group has established
a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the foreign exchange and commodity forward contracts are identical to the hedged
risk components. To test the hedge effectiveness, the Group uses the hypothetical derivative method and compares the changes in the fair value of the hedging
instruments against the changes in fair value of the hedged items attributable to the hedged risks.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. This comprises of two
key types of risks; currency and interest rate risk.
The Group imports feed from Chile and Australia, purchases of which are in United States and Australian dollars respectively. The Group exports salmon to
many countries, the major ones being Australia, Japan and the United States. Sales are denominated in Australian dollars (AUD), Japanese yen (JPY) and
United States dollars (USD) respectively. In order to protect against exchange rate movements and to manage the inventory costing process, the Group has
entered into forward exchange contracts and options to hedge the net exposure to AUD, JPY and USD respectively.
The hedge ineffectiveness can arise from:
- The counterparties' credit risk differently impacting the fair value movements of the hedging instruments and hedged items
- Changes to the forecasted amount of cash flows of hedged items and hedging instruments
Foreign exchange forward contracts are designated as hedging instruments in cash flow hedges of highly probable forecast sales in USD, AUD and JPY and
forecast purchases in USD, and AUD. The Group has typically hedged 50-55% of the net exposure of these forecast transactions. The foreign exchange
forward contract balances vary with the level of expected foreign currency sales and purchases and changes in foreign exchange forward rates.
21
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
Currency sensitivity
EquityProfit
$000$000
31 January 2021+10%(6,722) (625)
-10%10,755764
30 June 2020+5%(2,652) (257)
-5%6,251284
EquityProfit
$000$000
31 January 2021+10%29,465556
-10%1,723(679)
30 June 2020+5%13,245328
-5%(7,031) (362)
EquityProfit
$000$000
31 January 2021+10%5,692152
-10%787(185)
30 June 2020+5%2,77514
-5%(262) (15)
Interest rate risk
Interest rate sensitivity
The following table demonstrates the sensitivity of the fair value of the interest rate swaps to a reasonably possible change in interest rates:
20212020
7 months12 months
$000$000
Impact of an increase of 50 basis points193224
Impact of a decrease of 50 basis points(198) (230)
Credit risk
Maximum exposures to credit risk as at balance date are:
20212020
7 months12 months
$000$000
Cash and short term deposits3,4797,115
Trade and other receivables16,18612,777
Derivative financial assets/(liabilities)19,8743,603
The above maximum exposures are net of any recognised provision for losses. No collateral is held on the above amounts.
Change in USD
rate
Change in JPY
rate
Change in AUD
rate
The Group has exposure to interest rate risk that arises mainly due to the Group's long term debt obligations with floating interest rates. Interest earned on call
deposits are based on the current interest rate. Interest rate swaps are used to manage interest rate risk, current swaps in place cover out to 2024. The amount
of company borrowing covered using swaps at balance date 31 January 2021 was $10m (30 June 2020: $10m).
Credit risk is the risk of financial loss that arises if a counterparty to a financial instrument does not meet its contractual obligations. Financial instruments which
potentially subject the Group to credit risk principally consist of bank balances, trade receivables, derivative financial instruments and financial guarantees.
Financial instruments are only entered into with banks that have in place an executed International Swaps and Derivatives Association (ISDA) Master
Agreement with the Group.
The Group has a policy of fixing interest rates within a range of 50% to 100% of the exposure. The fixed interest rates for the existing swaps range between
4.3% and 5.01% (30 June 2020: 4.3% and 5.01%) and the floating rate of 0.27% is aligned to the floating quarterly bank bill rate. The loss on interest rate
swaps at balance date 31 January 2021 was $1,491k (30 June 2020: $1,847k), which has been taken to reserves.
The following table demonstrates the sensitivity to a reasonably possible change in AUD, USD and JPY exchange rates. The impact on the Group's pre-tax
profit is the result of a change in fair value of monetary assets and liabilities. The impact on the Group's equity is due to changes in the fair value of forward
exchange contracts and options designated as cash flow hedges.
An impairment analysis is performed at each reporting date using the accounts receivable aging report to measure expected credit losses. The impairment
analysis is based on days past due for all customers with coverage by trade credit insurance. The calculation reflects the probability-weighted outcome, the time
value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future
economic conditions. Generally, trade receivables are written-off if past due for more than one year and are not subject to enforcement activity.
Customer credit risk is managed centrally subject to the Group’s established policy, procedures and control relating to customer credit risk management. Credit
quality of a customer is assessed based on an extensive external credit rating scorecard and individual credit limits are defined in accordance with this
assessment. Outstanding customer receivables and contract assets are regularly monitored and any shipments to major customers are generally covered by
trade credit insurance.
22
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
Concentrations of credit risk
Liquidity risk
The following table analyses the contractual cash flows for all financial liabilities:
As at 31 January 2021$000$000$000
Bank loans75075038,500
Credit card facilities350- -
Lease liabilities1,5801,302 2,311
Trade and other payables18,597- -
Financial guarantee contracts115- -
Total non-derivative liabilities
21,3922,05240,811
Forward foreign currency exchange contracts91,903 84,825 75,467
Forward foreign currency options27,998 13,539 5,402
Interest swaps429 428 756
Total derivative liabilities
120,33098,79281,625
As at 30 June 2020
Bank loans83436,263-
Lease liabilities350- -
Credit card facilities1,3471,3851,873
Trade and other payables14,847- -
Financial guarantee contracts115- -
Total non-derivative liabilities
17,49337,6481,873
Forward foreign currency exchange contracts83,31181,869135,606
Forward foreign currency options36,57620,21913,037
Interest swaps224253495
Total derivative liabilities
120,111102,341149,138
25.FAIR VALUE OF FINANCIAL INSTRUMENTS
Between one
and two years
The carrying value of the BNZ loan drawing of $40m is considered a reasonable approximation of its fair value due to the short term maturities of the drawings.
The Group has the discretion to roll these short term drawings out within facility A ($20m) to 18 Oct 2022 , and within facility B ($20m) to 18 Oct 2023.
The carrying value of cash and short term deposits, trade receivables, trade payables and other current liabilities is considered a reasonable approximation to
their fair value due to the short term maturities of these instruments.
The Group performs cash flow forecasting activities on a daily basis to ensure it has sufficient cash to meet operational needs and monitors performance
against bank covenants on a monthly basis. Surplus cash is invested in short-term or money market deposits.
Undrawn committed facilities and/or liquid assets are maintained at all times at an amount sufficient to cover the forecast cash payments to employees,
suppliers, tax authorities and banking institutions as they fall due.
Bank balances are maintained with several banks but mainly with Bank of New Zealand. There is a wide spread of debtors, in terms of size and geographical
location within New Zealand and overseas. Concentration of credit risk in trade receivables is not considered significant as the Group's customers operate in
different market channels and geographic areas.
Between two and five
years
Less than one
year
23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
The following financial instruments of the Group are carried at fair value:
20212020
7 months12 months
Current derivative financial assets$000$000
Forward exchange contracts4,509599
Foreign exchange options904309
Total current derivative financial assets
5,413907
Non-current derivative financial assets
Forward exchange contracts15,4548,361
Foreign exchange options900759
Total non-current derivative financial assets
16,3549,120
Current derivative financial liabilities
Forward exchange contracts941,684
Foreign exchange options61435
Interest rate swaps1,4911,749
Total current derivative financial liabilities
1,6463,868
Non-current derivative financial liabilities
Forward exchange contracts181,642
Foreign exchange options186883
Interest rate swaps- -
Total non-current derivative financial liabilities
2042,525
Valuation methods
Level 1: Quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date
Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs)
26.CAPITAL MANAGEMENT
Group capital
27.CAPITAL AND RESERVES
Share capital
20212020
7 months12 months
Issued shares000000
Ordinary shares138,986138,986
Total issued shares
138,986138,986
The capital of the Group consists of share capital, reserves and retained earnings. The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns for shareholders, benefits for shareholders and to maintain an optimal capital structure to
reduce the cost of capital.
In addition to this the Group aims to ensure that it meets financial covenants attached to the interest bearing loans and borrowings that define capital structure
requirements. There have been no breaches in the financial covenants of any interest-bearing loans and borrowings in the current period.
Ordinary shares are fully paid with no par value. Each ordinary share has an equal right to vote, to participate in dividends and to share in any surplus on
winding up of the Company. No dividend was declared nor paid during the 7 months to 31 January 2021 (Year to 30 June 2020: $0.03 paid on 20 Sep 2019,
and $0.02 paid on 20 March 2020).
Financial instruments have been categorised into the following hierarchy and valued according to the following definitions, based on the lowest level input that
is significant to the fair value measurement as a whole:
In order to maintain or adjust the capital structure the Group may adjust dividends paid to shareholders, return capital to shareholders, issue new shares or sell
assets to reduce debt.
All derivative financial instruments for which a fair value is recognised have been categorised within level 2 of the fair value hierarchy. Industry experts have
provided the fair values for all derivatives based on an industry standard model. There were no transfers between Level 1 and Level 2 during the period ended
31 January 2021.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly (i.e. as prices) or indirectly (i.e. derived
from prices)
24
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
2021202020212020
2021202020212020
Movement in ordinary share capital000000$000$000
As at 1 July
138,986138,571122,606122,595
Share issue for employee LTI share scheme415- -
Share issue recognised on repayment of employee loans- - - 11
Total share capital as at period end
138,986138,986122,606122,606
Shares held as treasury stock2324
Total shares outstanding at period end
138,754138,982
Reserves
Foreign currency translation reserve
Hedge reserve
20212020
7 months12 months
$000$000
11,751 3,978
4,136 -
Total gain / (loss) on hedge reserves 15,887 3,978
Retained earnings
Share based payment reserve
000000000000000000
LTI 201729/09/2017*295- - (3) (292) -
LTI 201827/09/2018300- - (29) - 271
LTI 20195/11/2019451- - (200) - 251
Total share scheme
1,046 - - (232)(292)522
Share allocation price for share schemes
LTI 2017$1.22$1.77- -
LTI 2018$1.30$1.95$2.78-
LTI 2019$1.41$2.13- $2.20
Share
scheme
Retained earnings represents the profits retained in the business.
Share Capital
Realised gain / (loss)
31 January 2021
shares not yet vested
Employee
Group 3
Employee
Group 4
New shares
issued to
custodianShares vested
Shares
allocated from
treasury stock
The share based payment reserve relates to one long term incentive (LTI) scheme and two employee share ownership schemes. All of these schemes involve
the Company making interest-free limited recourse loans to selected personnel to acquire shares in the Company. The employees must remain in employment
for the duration of the vesting or escrow periods before the employees receive the full benefit of share ownership subsequent to repayment of the loan balance
remaining at time of vesting.
The estimated value of share options was determined using the Black-Scholes pricing calculator and is being amortised over the restrictive periods. The option
cost is treated as an employee expense with the corresponding credit included in the share based payment reserve. The inputs into the option pricing valuation
model are the share price of the Group at time of allocation and the compounded risk free interest rate.
The hedge reserve represents the unrealised gains and losses on interest rate swaps and foreign currency forward contracts that the Group has taken out in
order to mitigate interest rate and foreign currency risks, net of deferred tax. Also included are the realised gains on early closed foreign currency forward
contracts where the hedged future cash flows are still expected to occur. (net of tax).
Unrealised gain / (loss)
# of Shares
Shares forfeited
to treasury
stockGrant date
Share
scheme
30 June 2020
shares not yet
vested
Employee
Group 1
Employee
Group 2
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of the foreign subsidiary.
* Fully vested in current period.
25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
28.EVENTS AFTER BALANCE DATE
Covid-19
29.RELATED PARTY DISCLOSURES
Subsidiaries
New Zealand King Salmon Investments Limited has the following trading subsidiaries.
SubsidiaryCountry of IncorporationEquity Interest
The New Zealand King Salmon Co LimitedNew Zealand100%
New Zealand King Salmon Exports LimitedNew Zealand100%
The New Zealand King Salmon Pty LimitedAustralia100%
New Zealand King Salmon USA IncorporatedUnited States of America100%
Transactions with related parties
20212020
7 months12 months
Related party payments$000$000
Good and services purchased from other related parties300238
Total related party payments
300238
Related party sales
Goods and services sold to related parties283,078
Total related party sales
283,078
20212020
Amounts owing to related parties
31 January30 June
Current amounts owing to related parties$000$000
Other amounts owing to related parties233149
Total current amounts owing to related parties
233149
20212020
31 January30 June
Amounts owing by related parties$000$000
Amounts owing by related parties37
Total amounts owing by related parties
37
20212020
31 January30 June
Compensation of key management personnel of the Group$000$000
Short-term employee benefits1,2241,770
Share based payment expense- 49
Post employment pension and medical benefits5361
Total compensation of key management personnel of the Group
1,2771,880
Sales to and purchases from related parties are made in arm's length transactions both at normal market prices and on normal commercial terms. The following
provides the total amount of transactions that were entered into with related parties for the relevant financial year:
At balance date Oregon Group Limited owned 40.02% (30 June 2020: 40.02%) and China Resources Ng Fung Limited owned 9.96% (30 June 2020: 9.93%) of
the shares in New Zealand King Salmon Investments Limited.
The principal activity of The New Zealand King Salmon Co Limited is the farming and processing of salmon. The activity of New Zealand King Salmon Exports
Limited, The New Zealand King Salmon Pty Limited, and New Zealand King Salmon USA Incorporated is the distribution of salmon.
No final dividend was declared in respect of the period ended 31 January 2021 (Year to 30 June 2020: Nil).
On 27th February 2021, the Government announced a fourth wave of Covid-19 outbreak in New Zealand and as a result, the Auckland region moved up to alert
Level 3 lockdown restrictions whilst the rest of New Zealand moved up to alert Level 2 lockdown restrictions. At the date of signing the financial statements
New Zealand is at alert level 1. We do not consider it practical to provide a quantitative or qualitative estimate of the potential impacts of any future outbreaks
on the Group at this time. The Group continues its farming and processing operations under Levels 1 to 4 and continues to pursue its strategy of marketing its
branded products across the range of customers, and markets and products. In the event of a Level 4 lockdown the Group anticipates being able to continue to
operate as an essential industry.
Sales to and purchases from related parties are made in arm's length transactions, both at normal market prices and on normal commercial terms.
26
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
30.AUDITORS REMUNERATION
20212020
7 months12 months
$000$000
Audit fees189191
Other assurance1040
Tax advisory and compliance - 4
Total auditors remuneration
199235
31.RECONCILIATION OF NET OPERATING CASH FLOW TO PROFIT/(LOSS)
20212020
7 months12 months
Reconciliation of the profit / (loss) for the period with the net cash from operating activities$000$000
Profit / (loss) before tax(9,326) 24,953
Adjusted for
Depreciation and amortisation5,9699,385
(Gain)/loss on sale of assets151
Share-based payments98301
Net foreign exchange differences5,428(50)
Net loss/(profit) on derivative instruments at fair value through profit or loss38(30)
(Increase)/decrease in trade and other receivables and prepayments(3,409) 725
(Increase)/decrease in inventories and biological assets(2,687) (28,928)
Increase/(decrease) in trade and other payables3,9452,438
Income tax paid(938) (4,777)
Net cash flow (to) / from operating activities
(881) 4,068
32.REVENUE FROM CONTRACTS WITH CUSTOMERS
- Ōra King
- Regal
- Southern Ocean
- Omega Plus
- New Zealand King Salmon
Other assurance services include performance of agreed upon procedures on sustainability information of the Group.
(a) Sale of goods with variable consideration
(b) Contract balances: contract liabilities
The Group recognises revenue from the following major brand sources:
- Volume rebates
The Group provides retrospective volume rebates to certain customers on the quantity of product purchased during the period. The rebate is charged at time of
settlement. Therefore the Group does not see the need to recognise a refund liability due to timeliness of the transaction.
A contract liability is the obligation to transfer goods to a customer for which the Group has received consideration from the customer. If a customer pays
consideration before the Group transfers goods to the customer, a contract liability is recognised when the payment is made or when the payment is due
(whichever is earlier). Contract liabilities are revenue when the Group performs under the contract.
Some contracts for the sale of goods provide customers with volume rebates. Under NZ IFRS 15, volume rebates give rise to variable consideration.
27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED 31 JANUARY 2021
Delivery to customer
On collection
Receipt into store
CIF, into hold
20212021
7 months12 months
Revenue by Product group
$000$000
Whole fish 46,057 76,501
Fillets, Steaks & Portions 18,606 32,082
Wood Roasted 8,555 12,075
Cold Smoked 16,504 26,605
Other 5,517 8,082
Total revenue by product group95,239155,344
Revenue by Brand
20212020
7 months12 months
$000$000
Ōra King 34,326 61,323
Regal 19,502 30,182
Southern Ocean 6,203 10,433
Omega Plus 1,408 1,549
New Zealand King Salmon 33,800 51,857
Total revenue by brand95,239 155,344
20212020
7 months12 months
Revenue by geographical location of customers$000$000
New Zealand41,78666,003
North America34,67158,432
Australia6,3859,280
Japan5,0235,275
China1,0213,746
Europe2,7933,625
Other3,5608,981
Total revenue by geographical location of customers95,239155,344
The performance obligation is satisfied upon delivery of salmon products when receipted into the customer's store and payment terms are generally on the 20th
of the month following invoice date.
(c) Performance obligations
The performance obligation is satisfied upon collection of salmon products by the customer and payment terms are generally on
Information about the Group's performance obligations is summarised below:
The performance obligation is satisfied upon delivery of salmon products to the customer, and payment terms generally range between cash on delivery and
20th of the month following invoice date.
Sales net of settlement discounts to one major customer for the period 1 July 2020 to 31 January 2021 totalled $10.7m or 11.24% of total gross revenue (Year
to 30 June 2020 one major customer totalled $15.63m or 10.06% of total gross revenue).
The performance obligation is satisfied upon delivery of shipping documents including either the bill of lading or way bill dependent on transportation mode.
Payment terms generally range between 7 days from invoice date and 20th of the month following invoice date.
28
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Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
93 Beatty Street, Tahunanui, Nelson 7011, New Zealand
+64 3 548 5714
contact@kingsalmon.co.nz
www.kingsalmon.co.nz
Results for announcement to the market
Name of issuer New Zealand King Salmon Investments Limited
Reporting Period 7 months to 31 January 2021
Previous Reporting Period 12 months to 30 June 2020
Currency NZD
NZ$ Amount (000s) Percentage change
Revenue from continuing
operations
$95,239 (38.7) %
Total Revenue $95,239 (38.7) %
Net profit/(loss) from
continuing operations
($7,079) (139.3)%
Total net profit/(loss) ($7,079) (139.3)%
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
$1.04 $0.98
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 7 months ended
31 January 2021.
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
31 March 2021
Audited financial statements accompany this announcement.
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