PRESENTATION TO ARCTIC SECURITIES / INTRAFISH INVESTOR SEMINAR HONG KONG SEPTEMBER 8, 2011 This presentation contains not only a review of operations, but also some forward looking statements about Sanford Limited and the environment in which the company operates. Because these statements are forward looking, Sanford Limited’s actual results could differ materially. Media releases, management commentary and analysts presentations, including those relating to the March 2011 half year results announcement, are all available on the company’s website and contain additional information about matters which could cause Sanford Limited’s performance to differ from any forward looking statements in this presentation. Please read this presentation in the wider context of material previously published by Sanford Limited. All Figures are in NZ dollars and volumes are in metric tonnes unless expressly shown otherwise. 1
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Five Year financial performance highlights 6 Mths NZ$m 2006 2007 # 2008 # 2009 # 2010 # 2011 # Revenue 390.4 367.9 436.6 433.1 421.1 228.0 EBITDA * 63.3 52.2 65.9 68.4 49.0 26.0 NPAT 26.1 20.1 53.3 39.1 25.0 13.1 * Earnings before interest, taxation, depreciation and amortisation, impairment of investments, total currency gains and profits on disposal of investments and fixed and long term assets. # Prepared in accordance with New Zealand equivalents to international Financial Reporting Standards 5
Performance Comparison to NZX 50 and US$ Exchange Rate 6
Organisation structure Organisation structure New Zealand Seafood Australian Other Seafood Deepwater Inshore Aquaculture NZ quota NZ quota Mussel, Pacific Australian Skipjack tuna deepwater inshore fishing Oyster & seafood in South fishing Salmon auction Pacific Onshore farming market Toothfish processing China Lobster, Australian Processing of Charter International scallop & quota fishing Sanford catch & domestic Frozen at sea dredge oyster Reprocessing sales product operations of third party Land based catch Onshore operations Investments & processing at associates Bluff 7 7
Diverse operations Diverse operations Approximate revenue by species split (2010) 8
Diverse operations Diverse operations Kaeo Oyster Plant Coromandel Mussel Farms Auckland Fish Market and Processing Tauranga Fish and Mussel Processing Marlborough Mussel Farms and Processing Christchurch Mussel Processing Timaru Deepwater Base and Fish Processing Bluff Fish and Salmon Processing Stewart Island Salmon and Mussel Farms 9
Historical Pricing for Seafood Products 250 3 225 t a Prices driven higher by : 0 0 200 1 Increased demand: health, diet, o t 1 fashion food d 0 175 e 0 x Reduced supply: fisheries management 2 e r d systems e n 150 b I g m n e i c c i 125 e r D P r a l 100 l o D S 75 U Hoki Orange Roughy Hoki Fillet Block 50 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Source: ANZ Seafood Commodity Index. 10
Commentators say that the New Zealand dollars is overvalued by 20% but little sign of weakening. Markets for many products have recently stabilised at relatively high levels for example – ling, toothfish, skipjack tuna, squid, mackerel and greenshell mussels although mixed results for other species (Hoki Fillet prices down 10% but Hoki H&G prices up 30%.). Some statistics (7 Months to 31 July 2010 versus 2011) to underpin this. Jack Mackerel H&G Prices up 13% Squid Whole Prices up 8% Toothfish H&G Prices up 25% Half Shell Mussels (Volume up 18%) Prices up 26% And of interest to the Hong Kong Market Ling Fillets Prices up 15% Squid Heads and Tentacles Prices up 9% 11
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Worldwide customer base Worldwide customer base Sanford sells to over 200 customers in 60 countries around the globe We export to the world’s biggest fish importers Top 10 importers of fish (2006) 1 Sanford export markets (2010) South Korea UK 5% 6% Denmark Japan Germany 5% 23% 6% China 7% USA Italy France 22% 8% Spain 8% 10% 14
Sustainability increasingly of concern for Major retailers committed to MSC customers and governments Sainsbury’s The Marine Stewardship Council’s (UK) (“MSC”) fishery certification program Carrefour Walmart recognises and rewards sustainable (France) (US, UK) fishing Loblaw Certified fisheries Sanford operates in are Marks & Spencer (UK) (Canada) New Zealand Hoki Ross Sea and South Georgia Toothfish Migros Dutch Retail (Switzerland) Under certification process Hake, Ling, Association Southern Blue Whiting Target (US) Under investigation for Snapper See www.msc.org for a complete list. 15
Food security Increasing consumption in emerging and developing nations Health and nutrition Sustainability 16
Driven by three distinct factors World population to continue growing 1.Increasing global population 10 2.Increasing GDP per capita of developing 9 ) s 8 regions driving increased protein n o i l l 7 i consumption per capita B ( 6 n o i 3.Constraints on food production t 5 a l u p 4 Particularly Asia and Middle East o P d 3 l r o 2 W 1 0 0 5 0 5 0 5 0 5 0 5 0 5 0 5 0 5 0 5 0 5 0 5 5 6 6 7 7 8 8 9 9 0 0 1 1 2 2 3 3 4 4 5 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 Source: United Nations, Population Division of the Department of Economic and Social Affairs. 17
Likely future supply-demand imbalance should support prices World capture fisheries production is flat/declining Only 20% of the world’s marine fishery resources are moderately or under exploited and maximum wild capture potential has probably been reached 1 Growth in aquaculture is required to meet demand growth – global industry may not grow fast enough (financial, environmental constraints etc) New Zealand’s Quota Management System gives increased confidence in future supply from our fisheries World marine fishery resources (2007) 1 Total world fisheries production 1 150 Over-exploited 125 20% 19% s e n 100 Depleted n 8% o t 75 n o i Recovering from l l i 50 1% depletion M 52% 25 Fully exploited 0 2002 2003 2004 2005 2006 Moderately or under- Total capture Total aquaculture exploited 1. Food and Agriculture Organisation of the United Nations, The State of World Fisheries and Aquaculture 2008. 18
Expanding middle class in emerging countries Rising incomes and diversification of diets in developing countries Continued consumption growth expected from industrialised countries, but at slower pace Per capita fish consumption by economic status & region 1 Historical global growth 1 ) ) 35 18 r r a a e e y y 16 / / 30 g g k k ( ( 14 n 25 n o o i i 12 t t p p 20 m m 10 u u s s n n 15 8 o o c c h h 6 s s 10 i i f f a a 4 t t i i 5 p p a a 2 c c r r 0 e e 0 P P 1960s 1970s 1980s 1990s 2005 1. Food and Agriculture Organisation of the United Nations, The State of World Fisheries and Aquaculture 2008. Note, “LIFDC” stands for Low Income Food Deficit Country 19
Global consumption of protein is increasing “If we replaced the protein we got from Population growth, rising incomes, fish with land based agriculture, we’d need increasing urbanisation extra grazing land equal to the entire Fish is high in protein world’s rainforest 22 times over, says 100g serving of fish provides ~30% 1 of an eminent fisheries scientist Professor Ray adult’s daily protein needs Hilborn.” 3 100g serving of Greenshell™ mussels provides 25% 2 of an adult’s daily protein Protein Content per 100g 1 needs 30 150g serving of King Salmon provides 70% 2 g 0 0 25 1 of an adult’s daily protein needs r e p 20 ) g ( t n 15 e t n o 10 C n i e t 5 o r P 0 Source: Tuna Lamb Cheese Mince Hoki Chicken Ham Beans 1.The New Zealand Seafood Industry Council. 2.Aquaculture NZ, “New Zealand Aquaculture Farm Facts”, June 2009. 3.http://www.prlog.org/10574686-replacing-global-fish-supply-would-cost-22-times-the-worlds-rainforests-scientist.html 20
Consumer preferences increasingly influenced by health and nutrition The vitamins, minerals, & Omega-3 fatty acids found in seafood have significant benefits Studies show that seafood has benefits for: brain, heart, joints, lungs, muscles, digestion and skin 1 The Heart Foundation recommends those at risk of cardio-vascular disease should eat two fish meals a week 1 Norwegian research has found Omega-3 absorption from eating fish is higher than from taking supplements 2 King Salmon is one of the best known sources of Omega-3 Low in carbohydrates and saturated fats Fish does not have the animal health and welfare concerns associated with other meat protein sources Source: 1.The New Zealand Seafood Industry Council. 2.Norwegian College of Fishery Science, Department of Marine Biotechnology, University of Tromsø, Norway (“Enhanced incorporation of n-3 fatty acids from fish compared with fish oils”, 2006) . 21
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