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Sanford’s 2019 integrated report is available at https://www.sanford.co.nz/investors/reports-1/company- reports/ The report outlines Sanford's Business Excellence Framework – this enables each part of the business to map out its role in helping to deliver on our goals We strive to inform in a transparent and open manner and welcome feedback from our stakeholders throughout the year 2
FY19 : A challenging start, but value strategy enabled a satisfactory recovery CATCH/HARVEST VOLUME REVENUE (Like for like¹ ) ADJUSTED EBIT² EBIT GW kg 113k GWT $558 M 56 c* $64.8 M -4% +8% Flat +2c/kg ADJUSTED EBITDA² NPAT EPS ANNUAL DIVIDEND $85.7M $41.7 M ** 45 C 23 CPS Flat Stable -1% 2% ¹Like for like views revenue (and gross profit) comparable to 2018 without implementing the new revenue accounting standard (NZ IFRS 15) ² See Appendix for adjusted EBIT and adjusted EBITDA reconciliation to GAAP Reported EBIT$62.6m and NPAT $41.7m *Without factors of San Granit and algal blooms, we estimate the EBIT GW kg would have been 60c ** Including gain on sale of the pelagic business of $5.1m, prior year includes earthquake insurance settlement of $6.8m
Value strategy driving adjusted EBIT improvement Key Drivers of ADJUSTED EBIT change NZD m 80 Strategy in Action +11m One-off -4m Climate -4m Fair Value -3m 5 70 6 2 3 5 60 5 2 4 2 50 8 40 64.8 64.7 30 20 10 FY18 FY Adj San Granit Mussel Salmon FY18 one-off Biological Salmon Mussel Hoki Product Marketing & Opex FY19 FY Adj EBIT Outage Biotoxin Biotoxin Salmon Value (in margin margin Cascade * Innovation Investment EBIT Model Adj Water) (Channel) investment 4 * Net of volume impact of industry voluntary shelving of Hoki (5,000 tonnes impact)
FY19 : Balance Sheet strengthening further NET DEBT DEBT / EBITDA GEARING* $130.7 M 1.52x 23.6% -14% FY18 1.81x TOTAL EQUITY RETURN ON AVERAGE down from 26.6% TOTAL EQUITY $588 M 7.13 % +1% Down from 7.3% Operating Cash Flow $m 80 $48.7m 60 40 20 -33% 0 FY 17 FY 18 FY19 5 * Debt/Equity
Volume vs Revenue and Cost Over Time NZD $m GW K Tonnes $600 160 140 $500 120 $400 100 $300 80 60 $200 40 $100 20 $0 0 2013 2014 2015 2016 2017 2018 2019 Total Sales Total Cost GW Sold
Strategy driving Value Creation AMBITION $1 EBIT/GW KG 2023 NZD $m
Sanford in 1900 8
Shifting the Focus onto Consumers 2014 2019 Creating value: commodity fish -> seafood -> beyond food
Evolving our Business Model TO CREATE VALUE INVESTING INTO DEVELOPING OUR VALUE CHAIN …………………………………………………………………………………………………………………………………… Innovation People and Safety and Technology Operations Communication Sustainability Business Customer BMT S&OP Marketing Consumer Culture Wellbeing Development Strategies Processes Business Excellence Framework Six Outcomes driving a Sustainable Business ‹#›
The Sanford Journey – Tackling Challenges People Infrastructure Consumer Preferences Climate Change & Public Perception New York Times, 4 March 2019
Integrated thinking and delivery across our businesses Sanford Strategy Business Excellence Framework Sustainability as the Foundation PURPOSE AMBITION VISION We share the natural To be the Best Seafood $1 EBIT GW kg by goodness of our oceans with Company in the World 2023 uncompromising care ORGANISATIONAL OPERATIONAL INNOVATION BRANDING SOCIAL LICENCE CAPABIILTY EXCELLENCE INVESTMENT PLAN FRESH FROZEN INNOVATION SALMON MUSSELS Cross Functional Business Teams
Achieving Together in FY19 • Elevated people engagement • Overall 72% • Safety 85% • Expanded organisational capability through training • Ongoing investment in wages • Improved communications – Toolbox Toolkit, Officers’ Conference • Development of centres of excellence in South Island • Sale of pelagic assets in Tauranga • Launched / built Big Glory Bay, Sea to Me, and Sanford and Sons at the Auckland Fish Market Our focus on people will continue as a priority in FY20 13
Safety at Sanford Steffan was lost in a tragic accident in November • Training investment including 146 2018 leaders given Just Culture training His loss has • Investment in growing the Health and focused all at Sanford on what Safety resource is truly important • Safety awareness across Sanford at 85% 14
Looking forward – Innovation at Sea Video appears here in live presentation. Please contact Sanford to access this video. dmcintosh@sanford.co.nz We are proud users of Precision Seafood Harvesting on deepwater and inshore vessels. 15
Looking forward – Innovation on Land Sanford Marine Extracts Facility - Blenheim Moving ‘beyond food’ through innovation • $20m+ investment • Planned opening in December 2020 16
FY19 Capital Investments FY20-22 Capital Investments • Capital expenditure of $38.3m, +55% vs LY • Priority areas: • Supporting the brand - more fresh fish through the Auckland Fish Market • Marine Extracts facility and equipment • ‘Beyond food’ strategy – 2 new dryers for Enzaq • Scampi vessel replacements • Vessel optimisation - new sonar technology, • Mussel water space expansion vessel surveys and safety improvements • Salmon capacity growth • Value add initiatives on vessels to improve the • San Core Project – Information system and return per kg - improved handling techniques processes and greater use of Precision Seafood Harvesting • Australia footprint • Salmon farm optimisation through new feed barge 17
Why Sanford? • Our strategy addresses major risks (changes in climate and consumer preferences) • Our strong values attract great skills • We aim to create value for all stakeholders. We focus on the following areas in 2020: Wild Catch Mussels Salmon • • • Channel / customer focus Product diversification Expansion of the BGB brand • • • Product cascade Food Diversification of product improvements on vessels formats • Extracts • • Processing automation in Volume increase • Country and sales channel Timaru strategy • Volume increase 18
Thank You! 19
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