Seafarms Group Limited · ASX:SFG
Seafarms — Shareholder Meeting (November 2017)
67 slides from Seafarms's shareholder meeting presentation, Nov 24, 2017
Slide 1: ASX announcement: AGM addresses to shareholders
Our Ref: SFG ASX Announce AGM Presentation 2017 (547) 24 November 2017 ANNOUNCEMENT 547 Company Announcements Office Australian Securities Exchange Level 4 By ASX Online 20 Bridge Street Number of pages: 67 SYDNEY NSW 2000 (including this page) Dear Sir RE: ANNUAL GENERAL MEETING OF SHAREHOLDERS ADD
Slide 2: Annual General Meeting November 2017
Annual General Meeting November 2017 Transformation of Australia’s largest aquaculture shrimp producer into a global player Seafarms Group Limited 1
Slide 3: Disclaimer
Disclaimer This presentation is provided for information purposes only. The information in this presentation is in a summary form, does not propose to be complete and is not intended to be relied upon as advice to investors or other persons. The information contained in this presentation was prepare
Slide 4: Acknowledgement of Country
Acknowledgement of Country We’d like to begin by acknowledging the Traditional Owners of the land on which we meet today, the Wurundjeri, Boonwurrung, Taungurong, Dja Dja Wurrung and the Wathaurung people of the Kulin nation and pay my respects to Elders past and present. 3
Slide 5: Seafarms Group Limited Overview
Seafarms Group Limited Overview Chairman’s Overview Overview of Seafarms Group FY17 Overview Operations PSD – Overview PSD – Investment Opportunity PSD – Design CO2 Australia 4
Slide 6: Chairman's Overview
RL “Seafarms Chairman’s Overview
Slide 7: Chairman's Overview
Chairman’s Overview Welcome Ladies and Gentlemen to the Seafarms Group Limited 2017 Annual General Meeting. The 2017 year has been a very significant year for the Company with all the major licences and agreements needed to build and operate the company’s world class Project Sea Dragon (PSD) project
Slide 8: Chairman's Overview cont.
Chairman’s Overview cont. Given that the company has now successfully secured all the major licences and agreements needed to build and operate PSD, the level of engagement with potential investors, financiers, JV partners, product offtakers, processors and retail channels has significantly increase
Slide 9: Overview of Seafarms Group
RL “Seafarms Overview of Seafarms Group
Slide 10: Overview of Seafarms Group Operations
Overview of Seafarms Group Operations Seafarms Group Limited (SFG) is currently Australia’s largest producer of farmed prawns, underlining its operational aquaculture expertise. SFG is an ASX listed Australian agri‐food company, Queensland Aquaculture Operations with a current market capitalisation
Slide 11: Overview of Seafarms Group Team
Overview of Seafarms Group Team Highly experienced management team across project development and management, aquaculture operations, finance and business development. Key SFG Management Team Members Ian Trahar Dr. Chris Mitchell Ian Leijer Dallas Donovan Jairo Llanos Rod Dyer Executive Chairman Man
Slide 12: Achievements Since November 2016 AGM
Achievements Since November 2016 AGM November 2017 Non Pastoral Use Permit issued. This allows aquaculture activities to be undertaken at Legune Station. September 2017 Secured a banking facility with HSBC for its Queensland Operations. Finalised the Project Development Agreement with the NT Governm
Slide 13: Achievements Since November 2016 AGM
Achievements Since November 2016 AGM April 2017 NT Environmental Protection Authority approves the proposed development of PSD key breeding facility at Bynoe Harbour in NT. March 2017 NT Government Environmental Protection Authority approves the Stage 1 development of PSD at Legune Station. February
Slide 14: Financial Overview FY17
Seafarms Financial Overview FY17 13
Slide 15: SFG Financial Outcome for the 12 months ending 30 June 2017
SFG Financial Outcome for the 12 months ending 30 June 2017 For the 12 months reporting period to 30 June 2017, Seafarms has reported a loss in the order of $19.8 million, reflecting the positive cash contributions of domestic shrimp and carbon operations whilst fully expensing all PSD development c
Slide 16: Seafarms Group Limited Corporate Overview
Seafarms Group Limited Corporate Overview ASX Listing Code SFG Market capitalisation (November 2017) $97m Shares on Issue 1,403m Cash, Debtors & Inventories (as at 30 June 2017) $25.7m Long Term Debt (as at 5 July 2017) $5.5m Financial Year End 30 June Directors Shareholdings 36.1% Directors Ian Tra
Slide 17: Operational Overview
RL “Seafarms Operational Overview
Slide 18: Current Operations
Current Operations Hatchery (A) Innisfail Domestication program R&D Project with ARC Research Hub for Advanced shrimp Breeding Farms Cardwell (B) 128 ha of ponds A B Processing plant Maintenance division Farm administration Ingham (C) 32 ha of ponds Founder Stock Centre Exmouth (D) Biosecure broodst
Slide 19: Production Overview – FY17
Production Overview – FY17 Production 1,714 tonnes – up 41% Black tiger production 69% – Black Tiger yields up 35% in FY17. All PLs from Seafarms’ hatchery – this further reduces disease risk. Significant increases in survival rates for FY17. Productivity up 33% Continues focus on productivity impro
Slide 20: Operational Outcomes – FY17
Operational Outcomes – FY17 Further significant operational improvements achieved at Cardwell. Key KPI outcomes for FY17 (when compared to 12 months FY16) include: Revenue 23% Gross margins 493% EBITDA 213% Production (t) 41% Yield (t/ha) 31% Survival 27% Processing rates 17% (kg/man hour) Fo
Slide 21: Operational – Outlook for FY18
Operational – Outlook for FY18 Company expects a similar production tonnage to FY17. A recent unseasonal period of low temperatures accompanied by a heavy rain event have triggered poor health of animals in some ponds resulting in reduced growth rates and survival. Independent testing by James Cook
Slide 22: Biosecurity
Biosecurity Cardwell issues – in 2015 Seafarms identified an east coast endemic disease which affected production in FY2016. Seafarms management has been working with both local and international experts and have developed and implemented operational management protocols for managing this endemic di
Slide 23: Biosecurity
Biosecurity Industry issues updates – In December 2016 White Spot Syndrome Virus (WSSV) was detected on prawn farms in the Logan River area in South East Queensland. All prawn farms in the area have undertaken a 2 year dry off and been a part of a focused eradication program with Biosecurity Queensl
Slide 24: Research and Development
Research and Development Australian Research Council Hub for Advanced Shrimp Breeding James Cook Uni, CSIRO, University of Sydney, Australian Genome Research Facility and Seafarms Over 400 families have been produced at Seafarms Queensland Operations RNA Sequence data assembled into a transcriptome
Slide 25: Marketing activities driving growth
Marketing activities driving growth New brand tag line “Taste the Deliciousness” captures the brand essence ‐ best tasting and highest quality. Video content centred on “Simple & Delicious Prawn Recipes” Recipe” videos have promoted ease of use and consumption. Consistent social media strategy has l
Slide 26: PSD – Overview
PSD – Overview At full production, PSD will produce up to 150,000 tonnes per annum of black tiger shrimp, in 10,000 hectares of production ponds. Full production to be achieved over several incremental stages. 25
Slide 27: PSD is Implementation Ready
PSD is Implementation Ready SFG has proven operational experience, strong leadership team and regulatory approvals and support required to commence PSD implementation SFG acquired the existing Queensland (QLD) aquaculture operations in January 2014 Operational SFG has since then developed operationa
Slide 28: Financing/JV discussions
Financing/JV discussions Program of vendor due diligence Project Sea Dragon commissioned a series of reviewers to undertake detailed due diligence on the feasibility study: Engineering – Breeding Program Facilities (Aurecon) Engineering – Grow‐out (GHD) Production System and Processing (Poseidon) Ma
Slide 29: Financing/JV discussions
Financing/JV discussions SFG has been working with an experienced team of advisors Key Advisors Lazard – Global financial advisory firm Pareto – Global investment bank which specializes in seafood Corrs – Australian law firm PwC – Global accounting and tax firm Technical and Engineering Aurecon GHD
Slide 30: PSD – The Investment Opportunity
PSD – The Investment Opportunity . 29
Slide 31: Key Investment Highlights
Key Investment Highlights PSD is a unique investment opportunity Highlight Comment 1 Global seafood demand is expected to exceed supply by >50Mt in 2030, driven by growth in middle class population PSD was conceived under secular trend of increased demand in protein and will produce up to 150,000 to
Slide 32: Key Investment Highlights (cont'd)
Key Investment Highlights (cont’d) PSD is a unique investment opportunity Highlight Comment 4 SFG has developed stringent biosecurity protocols and standards at its QLD operations, with best practice and key learnings to be applied to PSD Biosecurity has been designed into both physical structure an
Slide 33: Global Seafood Market
Global Seafood Market The global consumption of seafood has grown at a CAGR of 3.4% between 2009‐2014, driven by rising populations but also rising per capita consumption Consumption growth has been particularly high in Asia Increase in Seafood Consumption (2000 – 2013 CAGR) Annual Global Seafood Co
Slide 34: Global Seafood Market (cont'd)
Global Seafood Market (cont’d) SFG seeks to tap into the accelerated demand for protein from a growing Asian middle class. A significant proportion of this new demand can only be met by seafood aquaculture 1 Global population expected to grow to 8.5 billion Growing Global Population and Middle Class
Slide 35: Role of Prawns in Global Seafood Demand
Role of Prawns in Global Seafood Demand Prawns represent one of the world’s most traded seafood products by value and is expected to be an important part of meeting the growing global seafood demand 2015 Seafood Production by Major Species 2015 Seafood Traded Value by Major Species 5% 5% 16% 2% 34%
Slide 36: Global Prawn Industry Structure
Global Prawn Industry Structure The global prawn industry has seen significant growth since 2000, driven by WP production in Asia. WP production has increased as a result of successful domestication programs leading to improved growth rates Volume Development (Farmed and Wild) Volume Development by
Slide 37: Black Tiger Prawn Market
Black Tiger Prawn Market Despite being a premium product, global volumes of BTP have remained in a 600‐800 Kt range since 2000 Global Black Tiger Prawn Production Black Tiger Prawn Production by Country India Vietnam Indonesia Kt Farmed Wild Mt China Bangladesh Philippines Myanmar Thailand Other 1,0
Slide 38: Benefits of Black Tiger Prawn Strategy
Benefits of Black Tiger Prawn Strategy The more advanced breeding techniques, larger optimal size and premium prices make BTP the ideal species for the Australian aquaculture industry Benefits of Black Tiger Prawn Black Tiger Prawn Price Premium vs. White Prawn Production US$/kg White Black Tiger 25
Slide 39: Black Tiger Prawns - Genetic Breeding
Black Tiger Prawns ‐ Genetic Breeding Much of the recent success in domestication and genetic breeding programs for BTP have been led by Australian researchers, working in conjunction with SFG Commentary Growth Rate Improvement in Domesticated Black Tiger Prawns BTP breeding programs have improved t
Slide 40: Biosecurity Is the Key Industry Risk Factor
Biosecurity Is the Key Industry Risk Factor Disease has a severe impact on aquaculture production, given the intensive nature of the industry, and will spread fast once established in a region As with other animal production systems prawn aquaculture is AHPND Outbreak and Impact exposed to disease r
Slide 41: PSD — The Project
RL “Seafarms PSD — The Project
Slide 42: Limited Number of Suitable Sites Globally
Limited Number of Suitable Sites Globally The ideal site for industrial scale prawn aquaculture has a number of key required characteristics, which significantly constrain the number of suitable sites globally Key Required Characteristics Suitable Prawn Farming Regions Globally 1 Geographic remotene
Slide 43: Project Sea Dragon – Location Overview
Project Sea Dragon – Location Overview The core facility of PSD, Legune Station in the Northern Territory, has been a carefully selected location. SFG holds an Access and Option Agreement over Legune Station. 42
Slide 44: A Fully Vertically Integrated Project
A Fully Vertically Integrated Project Complete end to end control of operations will allow SFG to ensure absolute biosecurity and process control Key Process Steps in PSD 1 2 3 4 5 Genetics Hatching / Sales, marketing Farming Processing & Broodstock juveniles and logistics Founder Stock Centre has H
Slide 45: Key Project Components
Key Project Components Stage 1 of PSD will involve the construction of 1,120 Ha of ponds as well as all supporting infrastructure for Stage 1 and subsequent stages Stage 1 of PSD will comprise of: Stage 1 Production System ‐ Founder stock centre Wild Broodstock Export Facilities ‐ Breeding facilitie
Slide 46: Industry-Leading Biosecurity Control
Industry‐Leading Biosecurity Control PSD’s strategic choice of locations is one aspect of a holistic approach to make PSD one of the most biosecure aquaculture projects in the world Industry‐Leading Biosecurity Standards and Control Natural Geographic Biosecurity Vertically Integrated Business Proje
Slide 47: Extensive Design Work Has Been Completed
Extensive Design Work Has Been Completed Through leveraging the knowledge of existing operations in QLD and the completion of bespoke design studies including a detailed feasibility study, SFG has de‐risked project development for PSD Commentary Significant Research and Resources Invested So Far All
Slide 48: PSD – Project Status
PSD – Project Status SFG has received key environmental approvals and the Northern Territory Government Project Development Agreement (PDA), and has agreed the Indigenous Land Use Agreement (ILUA) with the traditional owners. The start of significant construction is expected to commence in the dry s
Slide 49: Key Sources of Government Support for PSD
Key Sources of Government Support for PSD Strong Federal and State / Territory Government support for PSD will help facilitate project development and delivery of supporting infrastructure Component Benefit for PSD Description 1 Major Project Status Priority and streamlined access to individual PSD
Slide 50: Government Support for PSD
Government Support for PSD SFG expects to secure major government support for the project from state and federal government agencies. Support to date highlighted below: Government Support Details WA Road WA government funding (Budget approved) Keep River Road 20% NT government funding, 80% federal f
Slide 51: Project Delivery Strategy
Project Delivery Strategy The project delivery strategy of PSD as a modular project underpins is scalability for future stages Project Delivery Strategy Contract and Procurement Plan Stage 1 of PSD is designed to be constructed mainly during the The key strategies proposed for the Execution Phase in
Slide 52: Project Delivery Allocations
Project Delivery Allocations Project Delivery Grow Out Facility Pond Earthworks The construction works have been broken down into defined The grow out pond earthworks represent a low complexity work packages with preliminary cost forecasts based upon construction project and will be performed using
Slide 53: PSD Design
RL “Seafarms PSD Design
Slide 54: Founder Stock Centre Overview
1 Founder Stock Centre Overview SFG has already acquired an existing fish hatchery at Exmouth WA and converted this into the Founder Stock Centre 1 1 1 2 3 4 5 SFG acquired the existing hatchery site six kilometres south of Founder Core Broodstock Exmouth WA in 2014 Grow Out Processing Export Stock
Slide 55: CBC and BMC Facilities Overview
1 CBC and BMC Facilities Overview SFG has selected Bynoe Harbour outside Darwin as the sites for the Core Breeding Centre and Broodstock Maturation Centre, based in large part on proximity to a clean source of seawater 1 1 1 2 3 4 5 Core Breeding Centre Founder Core Broodstock Grow Out Processing Ex
Slide 56: Hatchery Overview
2 Hatchery Overview SFG is finalising the selection of the hatchery site (HAC) from a select number of locations just outside Darwin. The most likely location is Gunn Point 1 1 1 2 3 4 5 The purpose of the HAC is to supply Specific Pathogen Free, Founder Core Broodstock selectively bred, juvenile pr
Slide 57: Grow Out Facility Overview
3 Grow Out Facility Overview The grow out facility will be located at Legune Station NT, which is currently used for cattle grazing under a Perpetual Pastoral Lease 1 1 1 2 3 4 5 Founder Core Broodstock The grow out facility will take PLs produced by the HACs and Grow Out Processing Export Stock Bre
Slide 58: Grow Out Facility Location
3 Grow Out Facility Location 34 57
Slide 59: Typical Grow Out Farm Layout
3 Typical Grow Out Farm Layout Source: Aurecon, Golder Associates. 58
Slide 60: Grow Out Facility Harvesting Cycle
3 Grow Out Facility Harvesting Cycle Each farm will be managed on a crop basis, with each crop cycle initially expected to take 31 weeks, consisting of a 25 week harvest and six week dry out period between each cycle Harvest Cycle Harvest Process Grow out ponds will be stocked with PLs, weighing les
Slide 61: Processing Plant Overview
4 Processing Plant Overview The Processing Plant will be located at Kununurra, 100 km or under two hours trucking time from Legune 1 1 1 2 3 4 5 At the Processing Plant, the BTP delivered on slurry ice will be Founder Core Broodstock cleaned, graded, frozen and packaged ready for transport to Grow O
Slide 62: Processing Plant – Staged Development
4 Processing Plant – Staged Development Prawn Direction Through Processing Plant Stage 1 + 2 Stage 3 Source: Wiley. 61
Slide 63: Export Facilities Overview
5 Export Facilities Overview Shipping will be used for the export of processed prawns to the international markets as well as for the import of bulk feed and fuel from overseas 1 1 1 2 3 4 5 Processed prawns at Kununurra will be slip sheet loaded into Founder Core Broodstock REFU containers for tran
Slide 64: Status of Key NT Approvals
Status of Key NT Approvals # Approval Relevant Legislation CBC & BMC HAC Grow‐out Point Ceylon Gunn Point Legune 1 Aquaculture Licence DPIR Fisheries Act 2 Surface Water Extraction (SWE) Licence Water Act, Marine Act (for DENR infrastructure to be located in n.a. n.a. waterways) 3 Wastewater Dischar
Slide 65: Seafarms Group – CO2 Australia Limited
Seafarms Group – CO2 Australia Limited 64
Slide 66: CO2 Australia Limited
CO2 Australia Limited CO2 provides carbon and environmental services 100% owned subsidiary Profitable business providing cash flows for SFG Continue to secure new business Owns a substantial portfolio of emissions credits Well positioned for resurgence in the carbon economy Normalised segment result
Slide 67: Directors and Officers
Directors and Officers Ian Trahar Executive Chairman Dr Chris Mitchell Executive Director Dallas Donovan Chief Operating Officer Harley Whitcombe Executive Director and CFO 66