Tassal Group Limited. FY2017 Results. Mark Ryan, Managing Director & CEO Andrew Creswell, CFO. 23 August 2017

Transcription

1 Tassal Grup Limited FY2017 Results Mark Ryan, Managing Directr & CEO Andrew Creswell, CFO 23 August

2 A recrd result underpinned by Tassal s fcus n sustainability The essence f sustainable develpment is that tday s generatins meet their needs withut prejudicing future generatins ability t meet theirs. 2

3 FY2017 key highlights A recrd result underpinned by a fcus n sustainability Favurable salmn pricing in whlesale and exprt markets Lcal and glbal salmn stcks adversely affected by envirnmental factrs in CY2016 leading t lwer harvests, smaller fish and increased csts f grwing Mre than ffset by significantly higher salmn prices - histrical highs fr the dmestic whlesale market and are anticipated t cntinue in FY2018 Favurable grwing cnditins allwed a fcus n ptimising bimass and size Salmn was kept in the water lnger t ptimise grwth and deliver ptimised margins Step change in underlying bimass achieved 21,760 tnnes (30 June 2017) vs 15,164 tnnes (30 June 2016) Increased fish size fish size harvested by the end f FY2017 c4.8kg hg and frecast t imprve in FY2018 Sales mix managed t ptimise returns and deliver grwing earnings Lwered retail sales t arund 52% f ttal sales (FY2016: 68%) Ttal salmn revenue up 3.5%, while vlume dwn (6.2%). Average selling ($/hg kg) price up 10.4% Operatinal EBITDA up 8.3% t $89.0m (FY2016: $82.2 millin) De Csti Seafds driving seafd sales and categry grwth Successful integratin nw leading t increasing returns EBITDA up 11.4% t $12.7 millin (FY2016: $11.4 millin). Acquired n a sustainable EBITDA f $10 millin 3

4 FY2017 key highlights A recrd result underpinned by a fcus n sustainability Increased scrutiny f Salmn farming in Tasmania Tassal welcmes increased scrutiny and cnstructive dialgue Maintained Aquaculture Stewardship Cuncil (ASC) certificatin fr all harvest fish Als strengthened partnership with WWF-Australia Macquarie Harbur is recvering Since May 2017 all leases in Macquarie Harbur returned t cmpliance and in-fauna abundance is returning Tassal cntinues t evlve practices Lessns learned will imprve future perfrmance Maintained cmmitment t sustainable reprting Reprting t Glbal Reprting Initiative (GRI) framewrk Successful capital raising $82.3 millin (net f fees) raised in March

5 Recrd earnings; sustainable grwth Operating EBITDA: $89.0m Operating NPAT: $42.2m Statutry EBITDA up 17.7% t $114.6 Statutry NPAT up 19.8% t $58.1m A$m Operating Cashflw: $51.4m Full year Dividend: 15.0 cps, fully franked FY13 FY14 FY15 FY16 FY17 5

6 Safety N jb is s imprtant that it cannt be dne safely Overall: Tassal s Bard has endrsed a health & safety strategy which has a can-d safely culture at its cre Tassal s safety perfrmance imprved ver FY2017 externally, safety achievements wuld be cnsidered excellent Hwever, until Tassal delivers its cre value f Zer Harm we will rank urselves as perating at an unacceptable level Definitins: LTIFR Lst Time Injury Frequency Rate: (Number f Lst Time Injuries/Ttal Number f Hurs Wrked) X 1,000,000 hurs MTIFR Medical Treated Injury Frequency Rate: (Number f Medically Treated Injuries/Ttal Number f Hurs Wrked) X 1,000,000 hurs TRIFR Ttal Injury Frequency Rate: LTIFR + MTIFR 6

7 Right t Operate Tassal has and will cntinue t invest in the cmmunities we directly perate in and als cmmunities we reach thrugh ur brader supply chain. 7

8 Sustainability & Envirnment Fr Tassal and its stakehlders, ur shared challenge is t achieve a balance acrss envirnmental, scial and ecnmic dimensins Tassal is independently assessed by bth WWF-Australia and ASC Maintaining ASC certificatin fr harvest fish is a pririty it is very difficult t btain and then maintain Tassal was the first salmn prducer glbally t achieve ASC acrss its entire business and remains as ne f nly tw (Petuna) wh glbally have this Tassal has 100% ut f lease cmpliance n all its leases including nw Macquarie Harbur leases The Waste Capture System, apprved by the Envirnment Prtectin Authrity (EPA), is an excellent slutin fr safeguarding envirnmental cnditins in lw energy sites A clear example f industry innvatin that seeks t cnsistently lwer envirnmental ftprint Tassal s apprach t sustainability encmpasses a balance f envirnmental, financial, peratinal and scietal/cmmunity value principles and practices Tassal wns its envirnmental utcmes. We cntinue t drive adaptive management and practices thrugh science and innvatin 8

9 Envirnment Macquarie Harbur Full cmpliance achieved fr all leases Waste Capture System (WCS) has been apprved by the EPA Middle Harbur lease 214 and Grdn lease 219 remain with 100% full cmpliance Franklin lease 266 is nw als 100% ut f lease cmpliant, and empty with n salmn n the lease as per EPA directin Clsest lease t a Wrld Heritage Area, and cannt be stcked until an abundance f in-fauna (i.e. critters ) is evident expectatin is that this lease will be stcked again in 2018 Recent surveys (March, April and May) have shwn signs f bilgical recvery in the benthic cmmunities demnstrating that Macquarie Harbur is nt a dead zne and is respnding well t the changing natural cnditins Any salmn grwer in Macquarie Harbur can stck up t 28 tnnes f fish per hectare if it is using an EPA apprved Waste Capture System. When Tassal stcked its 2016 salmn input year fish the tnnes allwed was tnnes f fish per hectare Tassal is cmmitted t maintaining a sustainable peratin in Macquarie Harbur. Waste Capture Systems have been installed n cages with bimass in excess f 13 tnnes per hectare, and als n a number f the cages belw this level f tnnage All waste will be dispsed f at an apprved facility, r at a beneficial re-use site, with EPA apprval 9

10 FY2017 delivered a recrd result The cmbinatin f high pricing, favurable sales mix and keeping fish in the water fr lnger, allwed Tassal t ptimise its cntributin margin despite the increased cst f grwing. 7

11 FY2017 delivered a recrd result High pricing and favurable sales mix ptimised margins Financial Perfrmance (A$m) Statutry results Financial Perfrmance Change Revenue % EBITDA % EBIT % NPAT % Operating results Operating EBITDA % Operating EBIT % Operating NPAT % Operating cashflw % Final dividend - cps % Ttal dividend - cps % Gearing Rati 12.4% 33.5% Funding Rati 24.3% 44.6% Operating Revenue (A$m) Operating Revenue Change Dmestic (2.8%) Exprt % Ttal Revenue % Operating Revenue Salmn & Seafd Operating Revenue (A$m) Change Salmn % Seafd % Ttal Revenue % SGARA uplift was $32.3m in FY2017 (FY2016: $15.1m) pre tax De Csti Seafds: Cntingent Cnsideratin increased by $6.7 millin based n the mst recent assessment fr frecast earnings fr FY

12 Optimising sales mix Dmestic revenue dwn 2.8% Dmestic Sales (A$m) Change Salmn (4.6%) Seafd % Ttal (2.8%) Exprt revenue up 238.3% Exprt Sales (A$m) Change Salmn % Seafd % Ttal % Dmestic market rebalanced dmestic sales mix (retail 57.6%: whlesale 42.4%) and ensured apprpriate pricing Harvesting and sales held back t ptimise salmn bimass grwth and fish size Lng term fcus remains n increasing dmestic salmn & seafd per capita cnsumptin and ptimising margins Exprt market attractive due t glbal supply cnstraints, increased pricing and favurable A$ Medium-term dynamics supprt current pricing Strategically imprtant fr bigger fish (which attract a premium price) 12

13 Rebalancing mix twards whlesale Retail revenue dwn 20.6% Dmestic Retail Market Salmn Vlume (Hg equiv tnnes) Salmn Average Price ($/Hg kg equivalent) Change 12,541 18,330 (31.6%) % Salmn Revenue ($m) (25.3%) Seafd Revenue ($m) % Ttal Revenue ($m) (20.6%) Retail market cntinues t be an imprtant channel Required rebalancing as it is a high vlume but lwer margin market Mving frward, cntinue t manage sales mix t ptimise lng term returns Whlesale revenue up 39.7% Dmestic Whlesale Market Salmn Vlume (Hg equiv tnnes) Salmn Average Price ($/Hg kg equivalent) Change 9,669 7, % % Salmn Revenue ($m) % Seafd Revenue ($m) % Ttal Revenue ($m) % Whlesale market prvides greater flexibility re pricing and timing f harvest / sales vlume hwever mre vlatile Mving frward, this market will be imprtant fr extending the timing f harvest fundamentals in ptimising salmn grwing and scale & cst f grwing efficiencies 13

14 Strengthened balance sheet Increased bilgical assets Value f live fish up 26.9% t $312.4m Bilgical assets supprt future revenue and earnings grwth Operatinal Return n Assets SGARA impact remved frm calculatin Operatinal Return n Assets sustainable mving frward Cntinuing t generate return > WACC Gearing and funding ratis Gearing decreased t 12.4% (FY2016: 33.5%) fllwing successful capital raising Apprpriate bank funding arrangements in place frm a structure, headrm and tenr perspective Funding rati, i.e. including RPF (net debt + RPF / equity) decreased t 24.3% (FY2016: 44.6%) 14

15 Grwing cash flws Supprting cntinued reinvestment t deliver sustainable grwth Free cashflw f $2.35 millin Operating Cashflw (A$m) Operating cashflw Investing cashflw (49.02) (98.53) Financing cashflw Net increase/(decrease) in cash held (0.80) Investing in fish grwth (number and weight) and risk mitigatin (new leases) while undertaking a respnsible capital spend t underpin sustainable grwth in lng-term returns Strng FY2017 perating cash flw despite a challenging peratinal envirnment, reflecting the strength f Tassal s underlying business and peratinal strategy: A$m Operatinal cash flw Harvesting and sales held back t ptimise fish bimass Additinal feed was used t take advantage f favurable grwing cnditins and increasing standing bimass 20 0 FY13 FY14 FY15 FY16 FY17 Standing bimass (i.e. live bimass) at 30 June 2017 was up 43.5% t 21,760 tnnes (30 June 2016: 15,164 tnnes) 15

16 Fully franked dividend and DRP Final FY2017 dividend declared f 7.5 cps fully franked (FY2016: 7.5cps, fully franked) The ttal dividend fr FY2017 was steady at 15 cps fully franked (FY2016: 15.0 cps; 87.5% franked) The Cmpany s Dividend Reinvestment Plan (DRP) will apply t the FY2017 final dividend, with a 2% discunt. It will nt be underwritten Recrd date 11 September 2017 and payment date 29 September

17 Right t Grw Psitive utlk t drive cntinued sustainable grwth Tassal seeks t deliver sustainable, cmpetitive grwing returns. Successful aquaculture and its grwth is abut finding cmmn grund n shared values arund envirnment and fr salmn, respecting the use f shared waterways 17

18 Strategic fcus Tassal has the right strategy in place t be a wrld leading seafd cmpany Tassal farms the cean t prduce a high quality/healthy surce f prtein, leveraging its industry leading scientific knw hw, being bth sustainable and efficient in its prductin, and respecting the resurces f the earth and the wider sciety in which the cmpany perates: Leveraging the scale f Tassal s vertically integrated supply chain t ptimise value and ensure prduct quality and freshness Accessing the market via multiple channels (i.e.., direct, retail, whlesale and exprt) t maximise penetratin, ptimise margins and deliver sustainable grwing returns Expanding the cnsumer ffer t cntinually meet mre f their seafd requirements 18

19 Flexibility t ptimise bimass Investing in bth fish size (target 5kg hg n average and survival (target 90%) is expected t deliver ptimal financial returns Selective Breeding Prgram is delivering imprved grwth and reductins in Amebic Gill Disease Current grwing cnditins are favurable fish size is being ptimised t supprt sales mix and ultimately ptimise margins Tassal has delivered a step change in underlying bimass nw accelerating investment in feeding and grwing salmn Investment in bimass is expected t drive future earnings grwth Optimises sales channel mix (and revenue) between the dmestic market (<5.0kg hg) and exprt market (>5.0kg hg) Delivers scale and peratinal cst efficiencies feed is circa 55%-60% f the cst f a fish with the balance f csts acrss the supply chain being predminantly fixed Strng balance sheet prvides Tassal with the peratinal and financial flexibility t supprt investment in bimass and lwer Tassal s risk prfile 60% f the cst f a Year Class is spent befre the first fish is harvested 19

20 Psitive utlk fr FY2018 Expect grwing revenues and peratinal earnings Tassal s Right t Grw strategic pririties are: Increasing vlume t psitin Tassal with the superir bimass in the Australian market, ptimal margins (whether thrugh price and/r cst ut) and greatest scale, t capture the increasing demand fr sustainable prtein in Australia and internatinally Enhancing salmn grwing perfrmance n the back f Tassal s Selective Breeding Prgram (SBP) t reduce perating csts and imprve returns Maintaining existing channels t market and further enhancing the Exprt strategy (i.e. Asia) Cntinuing t imprve traceability and freshness f prducts given cnsumer trends Psitining nw fr the next wave f grwth, given typical capital cycle lead times f up t 5 years 20

21 Psitive utlk fr FY2018 Expect grwing revenues and peratinal earnings The favurable salmn pricing and grwing cnditins experienced in FY2017 are expected t cntinue in FY2018 Current grwing cnditins are favurable fish size ptimised t supprt sales mix and cntributin margin Nt withut risk bth dmestic whlesale and glbal pricing are at histrically high levels The key initiatives fr FY2018 are: Increase fish size - targeting average 5kg hg Increase fish perfrmance survival (90%+) and feed cnversin rati (state f the art fish feeding barges and technlgies) Farming expansin - Okehamptn, Prt Arthur & Oceanic Sites in Strm Bay Prcessing expansin autmatin and prcessing capacity 21

22 Any questins? 22

23 Appendix 23

24 Statutry, underlying & perating results FY2017 vs. FY2016 Full Year ended 30 June 2017 Statutry Prfit $'000 Nn Recurring Items $'000 Underlying Prfit $'000 AASB 141 Impact $'000 Operatinal Result $'000 Revenue (frm all surces) $ 450,453 $ - $ 450,453 $ - $ 450,453 EBITDA $ 114,553 $ 6,727 $ 121,280 $ (32,312) $ 88,968 EBIT $ 93,618 $ 6,727 $ 100,345 $ (32,312) $ 68,033 Prfit befre incme tax expense $ 85,556 $ 6,727 $ 92,283 $ (32,312) $ 59,971 Incme tax expense $ (27,473) $ - $ (27,473) $ 9,694 $ (17,779) Net prfit after incme tax expense $ 58,083 $ 6,727 $ 64,810 $ (22,618) $ 42,192 Full Year ended 30 June 2016 Statutry Prfit $'000 Nn Recurring Items $'000 Underlying Prfit $'000 AASB 141 Impact $'000 Operatinal Result $'000 Revenue (frm all surces) $ 430,924 $ - $ 430,924 $ - $ 430,924 EBITDA $ 97,294 $ - $ 97,294 $ (15,111) $ 82,183 EBIT $ 76,284 $ - $ 76,284 $ (15,111) $ 61,173 Prfit befre incme tax expense $ 68,910 $ - $ 68,910 $ (15,111) $ 53,799 Incme tax expense $ (20,417) $ - $ (20,417) $ 4,533 $ (15,884) Net prfit after incme tax expense $ 48,493 $ - $ 48,493 $ (10,578) $ 37,915 24

25 Disclaimer This presentatin has been prepared by Tassal Grup Limited fr prfessinal investrs. The infrmatin cntained in this presentatin is fr infrmatin purpses nly and des nt cnstitute an ffer t issue, r arrange t issue, securities r ther financial prducts. The infrmatin cntained in this presentatin is nt investment r financial prduct advice and is nt intended t be used as the basis fr making an investment decisin. The presentatin has been prepared withut taking int accunt the investment bjectives, financial situatin r particular need f any particular persn. N representatin r warranty, express r implied, is made as t the fairness, accuracy, cmpleteness r crrectness f the infrmatin, pinins and cnclusins cntained in the presentatin. T the maximum extent permitted by law, nne f Tassal Grup Limited, its directrs, emplyees r agents, nr any ther persn accepts any liability, including, withut limitatin, any liability arising ut f fault. In particular, n representatin r warranty, express r implied is given as t the accuracy, cmpleteness r crrectness, likelihd f achievement r reasnableness f any frecasts, prspects r returns cntained in this presentatin nr is any bligatin assumed t update such infrmatin. Such frecasts, prspects r returns are by their nature subject t significant uncertainties and cntingencies. Befre making an investment decisin, yu shuld cnsider, with r withut the assistance f a financial adviser, whether an investment is apprpriate in light f yur particular investment needs, bjectives and financial circumstances. Past perfrmance is n guarantee f future perfrmance. The distributin f this dcument is jurisdictins utside Australia may be restricted by law. Any recipient f this dcument utside Australia must seek advice n and bserve such restrictins. 26

26 Tassal Grup Limited FY2017 Results Mark Ryan, Managing Directr & CEO Andrew Creswell, CFO 23 August