New Zealand King Salmon Investments Ltd. · NZX:NZK
New Zealand King Salmon Investments — H1 2019 Earnings Presentation
31 slides from New Zealand King Salmon Investments's earnings presentation, February 2019
Slide 1: 1H19 Half Year Financial Results
New Zealand King Salmon 1H19 HALF YEAR FINANCIAL RESULTS
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Slide 3: 1H19 Highlights
1H19 HIGHLIGHTS Financial performance consistent with 1H18 notwithstanding reduction in fish volume: * Sales volume 3,824 MT, down from 4,392 MT in 1H18 due to harvest seasonality and lower fish numbers carried forward from FY18. * Revenue of $87.7m, consistent with 1H18. * Pro Forma Operating EBITD
Slide 4: Facts and Figures
FACTS AND FIGURES ONLY : FEED CONVERSION RATIO (FCR) t t t t t t t site 1.8X SALMON e vs LAND PROTEIN UPTO 9x THe eetbettE PEHEPEHEEtEeEtE THEE Eetb ttt PeHteetetb ttt THHtHEH eet ettE PHEEePeeteettt THHHEHEEHE ETE PHEEhEP EEE EE ERE PeHEPbettoetttt WE SUPPLY MORE THAN 50% OF THE WORLD'S FARMED KING
Slide 5: Facts and Figures (continued)
FACTS AND FIGURES (CONTINUED) Ge ——i90 REGAL BRAND RESTAURANTS AWARENESS IN FEATURING NEW ZEALAND 8 ORA KING ON : T THE MENU : NEW ZEALAND KING SALMON IS THE Ww ¥ 5th os : LARGEST EMPLOYER IN Ww ! THE TOP OF THE SOUTH 503 EMPLOYEES 376 SHAREHOLDERS TOP OF THE SOUTH GEOGRAPHIC SPREAD OF REVENUE 1H19
Slide 6: Sustainability
A . New Zealand King Salmon SUST m 02
Slide 7: Operating Sustainably
OPERATING SUSTAINABLY We aim to pass on our land and water environments to the next generation and beyond in the same or better condition than we inherited them. During the period NZKS joined the United Nation's Global Compact Action Platform for Sustainable Ocean Business. This group aims to mobili
Slide 8: Our Accreditations
OUR ACCREDITATIONS A : Monterey Bay Aquarium | Seafood Watch Sustainable AQUACULTURE Kk KK First in Australasia to achieve 4 star Best Aquaculture Practices (BAP) Certification ) New Zealand King Saimon 1H19 HALF YEAR RESULTS 8
Slide 9: Health, Safety and Wellness
HEALTH, SAFETY AND WELLNESS We are uncompromising in our commitment to Health, Safety and Wellness The health safety and wellness of our team members is critical to the continued growth of our business. It’s well understood that good safety is good business, as a positive, safe and engaged workforce
Slide 10: 1H19 Half Year Results
New Zealand King Salmon H19 HALF YEAR RESULTS 10
Slide 11: Summary Financial Information
SUMMARY FINANCIAL INFORMATION g . G Fi ial Perf Key drivers of performance include: Pro-Forma* Statutory * A13% decrease in volumes sold (reflecting harvest — NZ$000s IH19___1H18_% chg. IM19__1H18_% chg. pecronalitonchthelerectstorlactvccnt Volume Sold (MT) 3,824 4,392 -13% © 3,824 4,392 -13% * Stab
Slide 12: Understanding Our GAAP Results
UNDERSTANDING OUR GAAP RESULTS Fair Value gains and losses arising from IAS 41 Agriculture and IAS 2 Inventory As expected, our results are significantly impacted by NZ IAS 41 Agriculture and NZ IAS 2 Inventory. These standards require us to record fair value adjustments associated with ongoing chan
Slide 13: Fish Health and Water Temperatures
FISH HEALTH AND WATER TEMPERATURES Water temperature is one of a number of factors that influence mortality: Pelorus Sound - Water Temperatures Dec-Apr * Year to date water temperatures are slightly above longer- term averages, but below temperatures recorded during the 20.0 aa FY18 summer. — 2018/2
Slide 14: Harvest by Farm
HARVEST BY FARM We note that: * The cost of fish harvested varies from site to site depending on scale and automation. * 1H19 volume harvested was below 1H18, but ahead of 2H18. Farm Indicative Size Water Other factors Volume Harvested (FY19F harvest) 1H18 2H18 1H19 2HI19F Ruakaka ‘ Low flow Low aut
Slide 15: Balance Sheet
BALANCE SHEET Group Financial Position New Zealand King Salmon is in a strong Dec-18 Jun-18 Dec-17 financial position. NZ$000s Unaudited Audited Unaudited . . Assets Our balance sheet is in a strong position: Current Assets . . . . Cash and equivalents 7,425 14,428 15,529 * Working capital influence
Slide 16: »
» New Zealand King Salmon
Slide 17: Branding
BRANDING Our premium brands, Ora King and Regal, continue to strengthen. Ora King TYEE concept is positive commercially, scalability has yet to be proven. Realigning Southern Ocean value brand to include Atlantic salmon. Omega Plus beginning to scale in 2H19F. ORA KING TYEE OMEGA PLUS+# )» New Zeala
Slide 18: Sales by Market
SALES BY MARKET Solid returns from the Domestic and North American markets Domestic market (MT) Domestic sales lowered as volumes directed towards branded export markets: * Sales volume up 14% on 2H18. * Domestic consumption continues to increase, with local supply supplemented FY2015 FY2016 FY2017
Slide 19: Sales by Market - Export
SALES BY MARKET - EXPORT Pleasing performance from other export markets Rebalancing of sales volumes across markets to optimise overall returns. Australia (MT) Japan (MT) gg oes a fe 142 3 282 ees a) 291 128 147 146 FY2015 FY2016 FY2017 FY2018 FY2019 FY2015 FY2016 FY2017 FY2018 FY2019 Asia (ex Japan
Slide 20: Average Sale Prices
AVERAGE SALE PRICES Strong branding delivers improved value to our business Key markets saw price increases over FY2018, a function of intentional value adjustments against a backdrop of demand exceeding supply, and modest gains from FX rate improvements. Sale Prices and Exchange Rates FY2015 FY2016
Slide 21: Future Farming & Harvest Volumes
FUTURE FARMING & HARVEST VOLUMES This slide provides an update on future farming volumes based on subsequent developments: New Farms (Waitata, Ngamahau, and Kdpaua): * The consents for our three new farms provide for gradual increases in production in 3 yearly intervals - Waitata and Ngamahau are cu
Slide 22: Fish Performance
FISH PERFORMANCE \ ¢ 1H19 fish performance metrics on-track. As always, fish performance for the second half is the key focus: > > > Harvest volume decreased to 4,026 MT, 9% lower than 1H18. FCR maintained at 1.74x. Improved fish survival rates, in line with expectations in the lead up to the NZ sum
Slide 23: New Zealand King Salmon
New Zealand King Salmon
Slide 24: Future Volume
FUTURE VOLUME Lower fish numbers following challenging FY2018 summer required a period of consolidation before sale volumes once again increase * Based on harvests completed during 1H19, current biomass at sea and survival rates through the early periods of the summer, the FY2019 harvest is expected
Slide 25: Outlook
OUTLOOK A solid start to the year, Board reaffirms previous earnings guidance: * Sales volume for 2H19 expected to be higher than 2H18 (3,387 MT), accordingly, 2H19F EBITDA expected to be greater than 2H18. * Demand remains very supportive. * Feed cost has increased due to the use of more specialise
Slide 26: Appendices
Slide 27: Appendix - 1H19 Reconciliation Between GAAP Results and Pro Forma Financials
APPENDIX-1H192 RECONCILIATION BETWEEN GAAP RESULTS AND PRO FORMA FINANCIALS Non-recurring or infrequent items Statutory Marlborough Fair Value Pro Forma 1H19 Financial salmon Adjustments Operating Statements relocation costs Financial NZD 000s Information Revenue 87,681 87,681 Cost of goods sold (82
Slide 28: Appendix - 1H18 Reconciliation Between GAAP Results and Pro Forma Financials
APPENDIX-1H18 RECONCILIATION BETWEEN GAAP RESULTS AND PRO FORMA FINANCIALS Non-recurring or infrequent items Statutory Marlborough Fair Value Pro Forma 1H18 Financial salmon Adjustments Operating Statements relocation costs Financial NZD 000s Information Revenue 87,688 87,688 Cost of goods sold (76,
Slide 29: Appendix - Glossary of Terms
APPENDIX- GLOSSARY OF TERMS 1H19 1H18 CAGR EBITDA FCR G&G GAAP Mortality / Mortality Rate MT NPAT NZKS Pro Forma Operating EBITDA » New Zealand King Salmon Financial results for the first half of the 2019 financial year covering the period 1 July 2018 to 31 December 2018 Financial results for the fi
Slide 30: 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 31: New Zealand King Salmon
New Zealand King Salmon 1H19 HALF YEAR RESULTS
New Zealand King Salmon Investments — H1 2019 Earnings Presentation on 6ix