New Zealand King Salmon Investments Ltd. · NZX:NZK
New Zealand King Salmon Investments — FY2020 Earnings Presentation
40 slides from New Zealand King Salmon Investments's earnings presentation, August 2020
Slide 1: Annual Results FY20
New Zealand King Salmon ANNUAL RESULTS FY20
Slide 2: Highlights
01 HIGHLIGHTS ANNUAL RESULTS FY20 2
Slide 3: Facts and Figures
FACTS AND FIGURES REVENUE OF 173 P R O - F O R M A O P E R AT I N G E B I T D A 160 155 7,336 NZ$m $155.3 114 136 30 25 26.2 MILLION 25.2 25.1 METRIC TONNES HARVESTED 20 21.6 DURING FY20 15 16.0 10 5 FY16 FY17 FY18 FY19 FY20 GAAP EBITDA 37% 2% 2% NZ$m 3% 50 40 38.5 6% 30 36.1 6% 20 28.5 23.1 10 13.8
Slide 4: Financial Highlights
FINANCIAL HIGHLIGHTS Good financial result, despite challenges posed by COVID-19 and disruptions to supply chains: • Sales volumes of 6,331 tonnes, down 16% on FY19, sales dropped by 50% during lockdown but have now recovered to ~80% of prior year run rate by August. • Revenue of $155.3m, down 10% o
Slide 5: Operating Highlights
OPERATING HIGHLIGHTS Strong sales price growth with volumes initially constrained by supply Successful implementation of the new Aquaculture model: and sales later constrained by COVID-19. • Adoption of best possible biosecurity practices and fallowing between crops. • Use of upwelling systems to im
Slide 6: Health, Safety and Wellness
HEALTH, SAFETY AND WELLNESS We are uncompromising in our commitment to Health, Safety and Wellness FY20 saw three incidents take place that required WorkSafe notification; in all cases detailed investigations have taken place and improvements were implemented to prevent reoccurrence. Key lagging Hea
Slide 7: Sustainability
02 02 S U S TA I N A B I L I T Y ANNUAL RESULTS FY20 7
Slide 8: Operating Sustainably
OPERATING SUSTAINABLY New Zealand King Salmon’s mission is that every stakeholder is better off because we exist. We aim to improve the lives of our people, our community and our stakeholders whilst minimising our long term footprint. With a growing interest from customers, consumers, community and
Slide 9: Operating Sustainably
OPERATING SUSTAINABLY Our company continues to be assessed very positively for our farming and processing practices in independent third-party reviews. • Renewal of our 4-star rating with the Global Aquaculture Alliance’s Best Aquaculture Practices (BAP) certification programme. • First Aquaculture
Slide 10: Financial Overview
03 03 FINANCIAL OVERVIEW ANNUAL RESULTS FY20 10
Slide 11: Summary Financial Information
SUMMARY FINANCIAL INFORMATION • Pricing is positive • Sales volumes and market accessibility negatively impacted by COVID-19 in 2H20, with impact on Gross Margin (increased working / cost base). • GAAP results are positively impacted by fair value gains due to slower harvest and larger fish. Group F
Slide 12: Harvest by Farm
HARVEST BY FARM Our aquaculture model means farms may be harvested in alternative years. Timing variances, fish performance and harvest management programmes also give rise to individual farm production variances. 480 980 705 Ruakaka 1,520 815 Otanerau 1,265 Clay Point FY20 2,100 FY19 Te Pangu 1,030
Slide 13: Balance Sheet
Group Financial Position BALANCE SHEET Jun-20 Jun-19 NZ$000s Audited Audited Assets Current Assets Cash and cash equivalents 7,115 6,231 New Zealand King Salmon maintains its strong financial position. Receivables 12,777 13,502 Inventories 35,612 20,830 Biological assets 81,784 68,052 Our balance sh
Slide 14: Business Update
04 04 BUSINESS U P D AT E ANNUAL RESULTS FY20 14
Slide 15: New Aquaculture Model
NEW AQUACULTURE MODEL This is our key initiative for FY20 and FY21 years, it targets the protection of fish health, improved survival rates and the adoption of the best possible biosecurity practices. This year, we achieved: • Upwelling systems installed on all farms to improve flow and provide cool
Slide 16: Forecast Volumes – FY21-FY23
FORECAST VOLUMES – FY21-FY23 Future harvest volumes impacted by challenges with consenting and compliance • FY21 harvest increases on previous guidance due to slowing of harvest in FY20. • Slower increase than previous guidance due to: Harvest Volumes (tonnes) * ~9,000 ~8,500 ~8,500 ► The delay of t
Slide 17: Future Farming – Farm Relocation
FUTURE FARMING – FARM RELOCATION This slide provides an update on future farming volumes: Farm relocation (MPI Salmon Relocation Process): • The 2017 Hearing Panel recommendation to the Minister on which farms to relocate is unlikely to have any material impact on site capacity, however it may resul
Slide 18: Future Farming – Open Ocean
FUTURE FARMING – OPEN OCEAN This slide provides an update on future farming volumes: Open Ocean Farming - NZKS has applied for its first open ocean farming consent comprising two stages, in the Marlborough region: • The project has been named “Blue Endeavour” representing a step towards the long ter
Slide 19: Capital Expenditure
CAPITAL EXPENDITURE Additional capital investment has been made to build capacity and improve performance: FY20 Capital expenditure was $17.8m, allowing NZKS to undertake the following key projects: • Completion of the Thomas Song Barge, replacing temporary barging infrastructure and increasing long
Slide 20: Capital Expenditure – Key Projects (FY20)
CAPITAL EXPENDITURE – KEY PROJECTS (FY20) Rendering of the Tentburn first feeding facility (first eggs transferred August, expected completion November 2020). This facility is the first recirculation facility to be built for the commercial rearing of Salmon in New Zealand and will be used to grow ou
Slide 21: Operational Update
05 O P E R AT I O N A L U P D AT E ANNUAL RESULTS FY20 21
Slide 22: Sales by Month
SALES BY MONTH COVID-19 had a significant impact on H2 sales Actual Sales Forecast Sales JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN The impact of COVID-19 on 2H20 sales has been estimated at between 600 – 700 tonnes with this impact being felt across all markets. • New Zealand foodservice was e
Slide 23: Strong Partnerships
STRONG PARTNERSHIPS Our strong brand partnerships and collaborative approach supported a prompt pivot into e-commerce and specialty retail to replace lost foodservice sales. We featured on the ‘NZ special’ of Chef Massimo Buttora’s hugely successful Kitchen Quarantine IGTV/YouTube session. ANNUAL RE
Slide 24: Community Support
COMMUNITY SUPPORT NZKS committed to protecting and supporting team members and community. Team member Graeme Aldridge with a donation of District Nurses in Blenheim who also received a salmon to Te Atiawa Iwi. donation of salmon. ANNUAL RESULTS FY20 24
Slide 25: Sales by Market - Export
SALES BY MARKET - EXPORT Continuing to target branded premium markets North America (tonnes) Demand from North America remains strong despite challenges We continue to deliberately target the North American market and are pleased to see the resilience shown in this market. 2,377 2,315 2,175 • Demand
Slide 26: Sales by Market - Export
SALES BY MARKET - EXPORT Strong growth in average sales price offset by volume decreases Limited 1H20 supply and 2H20 global foodservice shutdown impact volumes • Australia – focus continues to be on premium branding, with high competition from Australian producers at the low end of the market. • As
Slide 27: Sales by Market - Domestic
SALES BY MARKET - DOMESTIC Sales impacted by foodservice shutdown and cheaper substitutes Domestic Market(tonnes) We continue to focus on branding and value added products • With limited available salmon we have prioritised branded premium markets particularly export over the last 4,047 3,976 3,632
Slide 28: Diversification Builds Resilience
DIVERSIFICATION BUILDS RESILIENCE Sales of Atlantic and Omega Plus continue to grow, from a low base Omega Plus(Revenue $000) We continue to see strong demand and growth in export markets • Omega Plus is currently being sold domestically and exported to China and South Korea • FY20 saw a significant
Slide 29: Average Sale Prices
AVERAGE SALE PRICES Branding underpins ongoing improved value to our business Key markets experienced price growth with the optimisation of our product mix, and demand exceeding supply pre Covid-19. Challenging current environment – core sales maintain pricing despite temporary decrease in demand du
Slide 30: Ōra King Sales
ŌRA KING SALES 2H20 and full year impacted by COVID-19 Ōra King Sales (tonnes) Ōra King sales down 9% on FY19, a respectable result given the challenges posed by the disruption 2,772 to the foodservice industry globally. 2,706 2,528 2,149 Ōra King sales of 1H20 of 1,444 tonnes up 5% on 1H19 were fol
Slide 31: Fish Performance
FISH PERFORMANCE Feed Conversion Ratio (FCR) continues to improve, to 1.76 in FY20 Key challenges: • Harvest volume decreased as we faced the disruption of global foodservice markets due to COVID-19. • Significant increase in closing livestock biomass, with harvest volumes set to increase in the nex
Slide 32: Outlook
06 O U T LO O K ANNUAL RESULTS FY20 32
Slide 33: Outlook
OUTLOOK Expectations for FY21 and beyond • COVID-19 continues to cause ongoing uncertainty in both the foodservice and retail sectors (many supermarkets are not currently considering new products). • The current sales rate (August) is around 80% of pre COVID-19 levels and we anticipate continuing im
Slide 34: Appendices
07 APPENDICES ANNUAL RESULTS FY20 34
Slide 35: Understanding Our GAAP Results
UNDERSTANDING OUR GAAP RESULTS The impact of NZ IAS-41 Fair Value, NZ IAS-2 Inventory and NZ IFRS-16 Leases Our GAAP results are impacted by Fair Value gains arising from the application of NZ IAS-41 Agriculture, NZ IAS-2 Inventory and the classification of leases under NZ IFRS-16 Leases. The impact
Slide 36: Appendix – FY20 Reconciliation Between GAAP Results and Pro Forma Financials
APPENDIX – FY20 RECONCILIATION BETWEEN GAAP RESULTS AND PRO FORMA FINANCIALS Statutory Financial NZ IAS-41 and NZ IAS-2 NZ IFRS-16 Lease Pro Forma Statements Fair Value Adjustments Adjustments Operating Financial FY20 Information NZD 000s Revenue 155,344 155,344 Cost of goods sold (145,768) 54,705 (
Slide 37: Appendix – FY19 Reconciliation Between GAAP Results and Pro Forma Financials
APPENDIX – FY19 RECONCILIATION BETWEEN GAAP RESULTS AND PRO FORMA FINANCIALS Statutory Financial NZ IAS-41 and NZ IAS-2 NZ-IFRS 16 Lease Pro Forma Statements Fair Value Adjustments Adjustments Operating Financial FY19 Information NZD 000s Revenue 172,609 172,609 Cost of goods sold (172,147) 62,105 (
Slide 38: Appendix – Glossary of Terms
APPENDIX – GLOSSARY OF TERMS FY20 Financial results for the 2020 financial year covering the period 1 July 2019 to 30 June 2020 EBITDA Earnings before interest, tax, depreciation and amortisation FCR Feed Conversion Ratio – the amount of feed (in kilograms) required to grow 1 kilogram of fish weight
Slide 39: Disclaimer
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 w
Slide 40: Annual Results FY20
ANNUAL RESULTS FY20
New Zealand King Salmon Investments — FY2020 Earnings Presentation on 6ix