Thank you for standing by. Welcome to the New Zealand King Salmon half-year results conference call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you do wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Grant Rosewarne, Managing Director. Thank you. Please go ahead. Thank you, and good afternoon, everybody. Let's make a start on page three of our deck. Obviously, we are impacted by COVID-19. Many businesses around the world and in New Zealand are. I think the good news, as far as King Salmon is concerned, is we're through the worst of that now, and the effects that remain are temporary. Certainly, our profitability has been impacted. That is brought about by increased air freight costs. We have excess inventory, which is very unusual for us. Normally, demand exceeds supply by a great deal, but during the COVID situation, we've had excess inventory that we had to take care of, dispose of. We've worked our way through that, and I'll comment on that as we go through a bit further. We also took the opportunity, if we were going to have some so-called disposal sales, why not invest in our brand? The Regal brand in New Zealand, in our smoked products, and we use some of that money to increase our market share, and I'll take you through that, and that's been highly successful. The pro forma operating EBITDA results that we had for the first half was NZD 10.5 million. That compares with NZD 16.5 million last year. Our pro forma NPAT was NZD 3.7 million compared to NZD 8.7 million in the prior half. The statutory NPAT was a loss of NZD 4.3 million, compared with NZD 20.8 million in the first half of 2020. That is impacted greatly by a fair value calculation of our growing biomass in the water, and Andrew will comment on that further, as we go through the presentation. A further good piece of news is that we brought on an Atlantic program a few years ago now. As I mentioned, we've traditionally had a shortage of fish. One of the ways to address that was to import Atlantic salmon, and we're pleased that that's now making a positive contribution to our profitability. Quickly go to page four, first half summary continued. We've had a strong domestic and international recovery in sales. Our sales of about 3,440 tons is similar between the two halves. That's good news. A really important point is, none of our branded products have seen a decrease in their base price. We've held onto our pricing for Ōra King. We've held onto our pricing for Regal. The excess inventory has either been cleared with a temporary price promotion that doesn't affect the base price. There's no, for example, renegotiation with a retailer to try and reestablish that price. That just goes back automatically once we don't have as many price promotions on, or it was cleared in food service or retail channels, unbranded. The good news is Ōra King has remained at its premium price, and Regal has also. We're pleased with the way that our business in North America has handled the pandemic. That business is incredibly dynamic, as I think the whole American economy is actually, and been able to pivot away from Michelin and catered restaurants towards home delivery. Also, fishmongers, which is more into retail. We never really had Ōra King in fishmongers, but we do now. That probably puts us in a good place for the COVID recovery. We think we will retain that business going forward. I mentioned that we have had some price promotions, and we've seen our market share increase from 49% - 56% as a result of that. Actually, during the COVID period, we did a calculation on what we think our position in that market is, and many of you know the number of 55%, we're 55% of the world's total supply of aquaculture King Salmon. When we worked out what we are of smoked King salmon, it's about 95%. We, as a single company, supply about 95% of the world's smoked King salmon supply. That's a really strong position. Because of that's why we get such a positive reception from retailers, typically around the world, when we go and present our Regal Smoked salmon range. Something that has caught us out, though, is during COVID, none of those supermarket chains are listing new lines. They're not setting up new line appointments. What they're doing is focusing on toilet paper, sugar, flour, the basics of life. That will come back, and we will be able to roll out our international smoked salmon strategy going forward as the pandemic subsides. We had sales of NZD 82.3 million, which is down slightly on the comparable period. Something else that was really great during COVID or during this first half, we ran a trial on a new concept. Many of you would know we have Ōra King, and we could use some round numbers. Let's say that's worth NZD 20 FOB Nelson, and you know that we have this amazing fish called Tyee, and that's more like NZD 60 FOB Nelson. We didn't have anything in between. At the height of the pandemic, we thought, why don't we run this trial on a concept called June Hog? Many of you are going, "What the heck is a June Hog?" Well, it's a North American phenomenon. They come back in June, so they're six months out of cycle with the rest of the run, and they're as big as a pig, so they're called a June Hog. We had some of them available because our fish had stayed longer in the water. These were seven kilos plus, up to sort of 11 k size fish. We said, "Well, can we get a premium?" We did manage to get a premium, even though many of our restaurants were shut down, even though there was great financial uncertainty. We're convinced now that we have an intermediate value-added proposition between the Ōra King and the Tyee, and it's called June Hog. We're very pleased with that. Our outlook. We'll certainly make further comments on our full year, which actually ends now at the end of January. We'll have further to say then. We haven't cleared all our excess inventory yet, but we've certainly taken provision for it, and we've lost and learned it all. When COVID happened, and we had this surplus fish, we weren't sure what we were going to do with it. We've worked our way through that. We're pleased with the speed and the way our team has handled that. We're on track with the timeline, and we're pleased with our cash flow situation. We thought we were going to have a bad cash flow situation, and we've managed that extremely well. The thing that has been more difficult is the margin on the disposal sales. I think you all know King salmon, in full flight, a 1,000 marketing lead company can get great margins on its product. Demand exceeding supply, lots of great concepts to sell our fish under. Let's just use a theoretical number. Let's say we make NZD 8 margin per kilo on that. When we went to disposal sales, we thought we'd probably make plus NZD 2, but the reality is, it's more like - NZD 2. If we stay true to our strategy, a 1,000 marketing lead company, we're like an NZD 8 per kilo margin company. If we stray into that commodity territory, we know we go to great lengths to stay out of that, but COVID has forced a little bit of that. We're into a potential loss per kilo situation, and that was more than we anticipated. If you go onto the next slide, which has got a map there and some key financials. The only point I really want to talk to here is how little those volume numbers have changed there. That shows our revenue per country or per region, and there really hasn't been much of a change. Overall, the revenue split has remained remarkably constant. Now I'll hand over to our CFO, Andrew Clark. Thanks, Grant. Turning now to slide seven, which is the summary financials. As Grant mentioned, the sales volumes have recovered strongly. He'll talk a little bit more about that further into the presentation. We've had our margins very significantly affected in the first half by air freight costs, disposal sales, or the provisioning towards those sales, and the New Zealand retails brand building and the promotion that we carried out this summer. The other thing that has generated a difference between the GAAP and pro forma results is fair value of livestock. That's around a combination of slightly smaller fish in the water at balance date, and also the margin squeeze from air freight and disposal sales. We do see these impacts as temporary. As we've mentioned in the outlook slide, we expect to be through all of the excess fish, frozen fish sales by about the middle of 2021 calendar year, so within six months' time. Then by late 2021 calendar, we anticipate that we'll be back to what's a much more normal situation for us, which is that we don't have enough fish available to meet the demand from markets globally. Part of the reasons for that is when you look at the U.S., for example, you see that we've sold the same or slightly more volume than we sold first half last year, despite all the restrictions. We've found new channels to market, and once some of those restrictions ease, there's a lot of opportunity to continue to grow our business. We anticipate then being able to optimize our sales and tune up profitability along the way. Slide eight shows our harvest by farm, just a couple of comments there. Harvest up a little bit in this period. We slowed it during COVID, and then we've accelerated it since then, to get some of the fish back into the right position, balancing up our sales program and then our frozen program. You might ask a couple of questions there around Kopāua, that's been harvested January, February, and then Waitata, the current in at the moment. Slide nine, the balance sheet remains very strong despite having to fund a lot of extra livestock and inventory. During the period, we have taken on the Business Finance Guarantee Scheme loan that the government's provided, which is done through our bank, but with government support. That's NZD 5 million. In addition, we've got our usual banking funding facility for NZD 60 million. Plenty of headroom there. Supportive bank and no compliance issues. We do anticipate selling down inventory during the first half, as you mentioned. Haven't seen any collection issues, which has been a combination of hard work, probably a little bit fortunate in some aspects. We had to work with one or two customers, but a very successful outcome there. As previously advised, we've slowed the CapEx a little just to preserve cash. The focus has been on our Tentburn hatchery first feeding facility, and also some routine replacement items. Again, in the interest of preserving cash, we aren't declaring a dividend at this point. That will remain under review at each reporting period. Other comment to note on our balance sheet is during the COVID period, so going back between March and June last year when the kiwi tanked against other currencies, we took the opportunity to significantly increase our hedging portfolio. That's now created, with the New Zealand dollar recently strengthening against U.S. in particular, but also yen, that's created a significant asset on our balance sheet. I'll hand back to Grant. Slide 11. Yeah. Thanks, Andrew. The main point here is to have a look at the chart at the bottom. 2019 is in light blue, 2020 in dark blue. You can see the effect that COVID had and where the excess inventory came from. As I mentioned, that's a pretty unusual situation for us and something I've not experienced over the 11 years that I've been here. We had planned for all sorts of potential things that might go wrong, and we had all sorts of freezing programs and other markets we might open up. I must admit, we just did not see COVID coming, where every food service market in the world would go into a very difficult situation, being locked down and many restaurants even closed. Also that retail, that we normally engage with so well, wouldn't be open for new business. You can see how we fought our way back out of that. You see again the effect of the second Auckland lockdown. The fairly quick recovery out of that one. You see in our fourth quarter, we're back to a very normal situation, or even in December when we ran those price promotions on our smoked products, a very good result there. Really, that picture paints 1,000 words about the initial problem, some follow-up problems, how we've worked our way out of that, and then with a good result at the end then when it comes to volume. To look at the individual markets. Our export markets, first off. North America, always a bright star for us. Even though this country has been through a whole range of difficult things from election cycles, COVID, mismanagement, everything, our team there has done a stunning job. As I mentioned, I think it's an incredibly dynamic market. They love the story that we tell. We get more questions and more interest from the U.S. than nearly anywhere else. In fact, you might have seen there was a Stuff article that we sold a single fish for $1,700. We put it on a platform called Goldbelly. It just goes to show, and I think the customer mentioned in there that he was aware of Ōra King from the various menus that he'd seen and chefs that he'd spoken to, and really wanted to have one. It's pretty rare for that to be available to an individual who's got $1,700. We're pretty pleased with that. You can see the June Hog concept there. It's still under the Ōra King brand, but it's got very different livery to both the standard Ōra King, if I put it that way, and the Tyee. As I mentioned, we're very excited that once COVID has cleared up, the fact that we got a good premium in the very eye of the storm means we'll be able to do even better than that once a more normal situation returns, and we're really pleased with the way that that's been embraced in North America. We will also roll that to other market. Looking at China. China has always been difficult for us. We build our business and then something goes wrong, some geopolitical thing or some faraway decision or whatever it might be. Things go wrong in this market. Our sales have been significantly decreased there. The good news is pet food goes from strength to strength. For some reason, salmon seems to have a geopolitical focus that pet food doesn't. We've got two people in Shanghai in China, and their attention now is nearly fully on pet food, and China is our most profitable pet food market. Turning over the page, you can see all of our other markets here, Australia, Asia, Japan, and Europe. You can see generally a good result in all of them. Australia, we've got a new manager in there. He's been there a while now, but the results are coming through, and we're making really good margins in Australia. Really, we engage with really top customers. They, like the Americans, appreciate the Ōra King story. You can see a lift in sales as a result, and that's not driven by low prices. That's at full price, high-margin products for Australia, we're very pleased with that. You see some products in Asia, excluding Japan and China, that's mainly airline and the lack of availability and problems associated with airlines into that market. That market has disproportionately suffered as a result of that. Generally, once we got out of that initial COVID emergency situation, we've had enough air freight, it's certainly been more expensive. It can be anything like 50%-60% up on what it was pre-COVID. Japan, we've had some great sales in Japan, so nice lift on the base there, and the same with Europe. Europe likewise is a very high-margin product or high- margin region for us. The domestic market. This is Ōra King in food service, plus Regal. We have Regal in food service, but Regal is mainly our smoke brand, and it is the retail part of the business that has performed disproportionately well with a 14% year-on-year growth in that particular sector. Pleased with the way that's gone. There's been some compression of margins there as a result of steep price promotions. Some of you would have seen our normal sort of NZD 18 Regal, 200 g hot smoke might have been available for as low as NZD 10 during Christmas. I hope you availed yourselves of that rare opportunity, because it's probably not ever going to come back. All right, now I'll hand over to Andrew. Okay, moving to slide 15 on pricing and exchange. Our focus right through this challenging period has been around pricing. Two aspects of our business sector. As Grant mentioned, making sure that we're not undermining ourselves in our Ōra King and Regal pricing and positioning. Looking for premium pricing, differentiation, and branding all the way to consumer, as has always been our strategy. That has been successfully preserved, other than our own choice to promote New Zealand retail during the period this summer. The second aspect has been looking to clear excess inventory as one-off sales to customers. Some of that's going into Japan, and some of that's going into the U.S. Some of that is still to come in the coming months. As we mentioned, we have provided for the cost of that. When you look at the selling price between domestic and export, there's a little bit of mix in there. The New Zealand retail promotion, the smoke is a much higher proportion of the sales, but it's at lower margin. The headline pricing there is off very slightly, but the product mix has reduced the margin. In the export markets, we have a little bit of pricing there with a small amount of disposal sales or excess sales, and also a bit of support from exchange rates, which you can see down below. Moving to slide 16 on fish performance. We've appointed Grant Lovell as our General Manager of Aquaculture during this period, and he's got around 20 years of King salmon experience. I guess his focus has been on combining the best of our various production models. Examples would be upwelling, we've seen working very well on some sites. We've trialed that last summer on all of our sites, and we've carried on with the sites where we've seen that successfully implemented this year, and some of the other practices. That's his focus. Our fish performance has been distorted this six-month period by COVID, frankly. We had to slow the harvest during the lockdown, then we've increased it since then. The consequences of that are that we've been harvesting some very large fish, which allowed us to trial June Hog on the positive side, as Grant mentioned, however, has led to some challenges around survival. There's some fish maturing, and that represents about nearly a third of our mortality in the period, and that's about NZD 2 million worth. We've also had other challenges around big fish, and that has also impacted our feed conversion ratio. There's not really a like-to-like comparison there. Those are temporary impacts, and we're just about through those now. Hand over to Grant. We're on to slide 17, which is the future farming and harvest volume. You're all aware that we've had the so-called relocation proposal for many years now, I think it's five or six by this point. I suppose one of the things to note is this proposal actually becomes more valuable with Blue Endeavour in the open ocean, because the Pelorus is a fantastic place to grow salmon for nine months of the year. Yep, definitely we have problems over summer, and the larger the fish are, the more problematic that can be. For the remaining nine months, the temperatures are great. When you grow King Salmon, it can be too cold, and that affects fish performance. Of course, once you get above 16, you can definitely get problems with mortality, and all sorts of issues can occur. We're working closely with iwi, we're working closely with the government. We think we can get a great outcome, both economically, environmentally, with iwi, socially. We think we really can get a good outcome. If we get Blue Endeavour, which we're highly confident about, by the way, the relocation becomes a more valuable prospect. We're very keenly pushing forward. The main prize is still the open ocean. That's Blue Endeavour. That enables us to increase in the first phase by 4,000 tonnes. I don't want you to be concerned about that. We know that that volume is coming. Assuming that we get the resource consent, and we would always put plans in place to ensure that demand exceeds supply from day one. Great plan. We know exactly how all the metrics work around how many people we need to put into food service. I think most of you know, every one of our food service people delivers between 350 tons and 500 tons per person. We normally just add to a city that's got a great culinary situation or large population. I think the last two that we added, one in New Orleans in USA, and we added one in Shanghai in China. Then we can develop that volume from there. Of course, we did have a hiccup in China, hence the focus on pet food. Normally, it's 300- 500 tons per person. Also, we can step up retailers quite quickly. They normally need sort of eight months notice to take on an increased distribution. When we've turned up, and we've got a proposition that only we can supply a smoked King salmon, both hot and cold, we normally receive a fairly good reception around that. Very excited with the new Blue Endeavour. Expecting the hearing to be June, the result in July, August. Somewhere around June, July for the hearing, July, August for the result. I've obviously seen our application. I think it looks really great, and we're very positive about that. With that, we might hand over to questions. Thank you. If you wish to ask a question, please press the star key then one on your telephone when you are ready to be announced. If you wish to cancel your request, please press the star key then two. If you are on a speakerphone, please pick up the handset to ask your question. Thank you. Your first question is from Guy Hooper from Forsyth Barr. Go ahead, thank you. Yeah. Good morning, everyone. Guy here. Look, I just wanted to focus first, I guess, on the inventory and the clearance sale. Can you just give us a little bit of a guide as to, you mentioned retail for some of the promo stuff, where else some of your promo and unbranded products have gone into? What markets? Yeah, I think I'll hand over. You know how I like to be very sort of open and candid and everything, but I do want to protect our other customers, so I'm going to hand this over to Andrew. In the first half, Guy, there's a little bit under 200 tons or so of excess sales, and that's predominantly gone into Asian markets. During the first half of calendar 2021, so the period we're now in, we do anticipate a combination of Japan and U.S. principally. Those are not normal customers, so it's different risk market. Again, that's trying to protect core business, the premium price differentiator business and branded, from what's essentially a cleanup operation. Okay. Just on your, you mentioned provisioning for those lower cost sales into the second half. That's just reflected in your inventory value? You got a lower margin or a lower value in there at the half? Yes. Yes, that's correct. Yeah. On, I guess, U.S. retail, a few news articles showing some of this month, you signed up a new distribution partner and made new hirings. Do you want to just touch on the success you've had in that market to date? I guess how big it could be? Yeah. Okay. Yeah, you might be alluding to Fresh Thyme, which is a 74-store Midwest American supermarket chain. I think we've now got, for example, they were open for business despite the COVID situation, and I think we've now got 100% of their shelf space for smoked salmon. I think they took out all the competitors. They're really enthusiastic about our fresh proposition as well. That is a new chain that we've picked up. I think you're aware, Guy, there's about 400 supermarkets in New Zealand, picking up 74 in the U.S. with a high market share is not bad. It's a pretty good outcome given the situation. That's probably the most, the biggest, most positive thing that's occurred. Also, they've really handed category management over to us. They've said, "Look, you guys know more about smoked salmon and fresh salmon than us, so we'd like you to be the category managers and help us to maximize the sales to our customers." That's worked out really well. As I mentioned, the other retailers, and we're in a number of other retailers, but we just haven't been able to get appointments with anybody else to any great degree. If we get an appointment, they say, "Look, we're not making any decisions until the travel situation is over." That's put a bit of a handbrake on there. We're very confident we can secure a number of those new chains, both in the U.S., both in Europe, in Australia, and other places, once they're not in COVID syndrome anymore and they're thinking about the future. All right. Thank you. Just on your relocation process, it continues to be ongoing, but can you give us a bit of color as to, I don't know, what it is MPI actually looking for? What do you think has been missing, or what's the catch in the process that is making it so long? Well, see, the RMA is just a difficult piece of legislation where it aims to both enable people to earn a living or to develop, but also protect the environment. It's trying to do both those two things, and we think aquaculture fits in beautifully with that. In terms of people's ability to submit on it, and they might not have any local outcome in the situation. Then the ability for commissioners and people hearing the actual hearing, whether they can stay focused on the science versus get won over by some of the emotion. A lot of that was in the mix, in our view, on the first time around, and we were not happy with the outcome. We went back and refocused with iwi. In the first relocation process, I think we only had the support of one iwi. Now, we believe we have the support of seven, which is quite positive. We continue to check that and to shore that up. We think that's the real game changer. The minister has the powers under the RMA to grant that space and to enable the relocation. I note that the minister is also going to redo the entire RMA, so he obviously thinks it's not fit for purpose. We're positive about it, and we think it's a bit of a gamechanger to have that level of iwi support. As I mentioned, that space is more valuable with Blue Endeavour. We're trying to get that one first. We'll move them both forward, if there's an appetite for that or if there's an ability for that. The main prize is Blue Endeavour, and the relocation is a fantastic outcome for all stakeholders, both us and iwi. Yes. Thank you. I'm sorry, go on. Sorry. I was just going to ask, to gain the additional support, did that come with any, I guess, additional concessions for you? What it came is, we said, "Look, as a result of the relocation, even though it was done on the basis of no increase in net space, you actually retire old space and you create new. That actually creates a settlement obligation." We said, "Actually, you automatically, you as iwi, automatically get 20% of any new space that's granted." If you were to support this application, there'd be 20% coming to you as either cash or space. Most of them preferred space. That could be put on the end of Mid Waitata. That's the line that we've pursued. We said, "Okay, you would naturally obtain 20% of the resource." It's quite valuable. That's not a concession from us, that's a concession from government, and I think that's what's really helpful in moving this across the line. Also, we've gone back and done more engagement, explaining what the impacts are or aren't, allaying any concerns, and really demonstrating the government has a NZD 3 billion aquaculture strategy by 2035 for a reason. They both want green industry, and they want those green industries to protect the environment. If the government has that view, does that change your view as iwi? The government didn't have that strategy in the first relocation attempt whereas it does now. All the stars seem to be more aligned now. All right. Thanks, guys. I'll hand it back over to the line. Thank you. Your next question is from Nick Mar from Macquarie. Go ahead. Thank you. Hey, gu,ys. Just a couple on the U.S. as well. Those other channels that you've developed, what's the kind of pricing and margin like on those compared to existing channels in that market? Yeah. The pricing is exactly the same. The margin will be different because there's potentially higher freight costs to get it there. As Andrew and I both mentioned, what we're selling as Ōra King is at the same price as it ever was. We're not taking that down NZD 0.01. What we're selling through, say, the fishmongers is exactly at that old price. There's no diminishing in unit value in that segment, for example. Let's ask Andrew to comment. Yeah, Nick, I was just going to say, you can back solve it as well. Note 14, we've got U.S. revenue is up very slightly on the prior comparable period. There's actually a slight price mix, that of course includes FX effects in it. Is that also includes the freight cost as well, because you're selling FOB? That's just the headline pricing. We're selling CIF, so we're covering the freight cost, which is what sees our margin rather than our selling price. Yeah. While we're looking ahead, there will be lower prices on the excess product that goes into the U.S. Yeah. Nick, because we ran that June Hog trial, and it was in pretty dark days, we're very confident when we come out of it, we can use that concept to create a lot of additional value between the original Ōra King proposition and the Tyee proposition. Yeah. Do you think that those channels are something that you'll continue to invest in when food service opens up more broadly in the U.S.? Yeah, we do. The thing that we're very particular about is that Ōra King is never in mainstream supermarkets. Fishmonger, you could argue many people think, fresh fish, where do I want to get it from? A fishmonger, that's probably one of the most premium places to buy your fish from. We're very comfortable with Ōra King being there. If it's in fresh fishmongers and premium food service, we're comfortable with that. We're going to retain that distribution channel once we're back into a normal situation. Okay. I guess the key is we'll then be back with excess demand, so have choices around how we optimize that again. Yeah. No, that sounds good. Just in terms of going forward, I know you mentioned you're not giving any outlook commentary until the full year result, which will be next month. Just to confirm, are you guys still comfortable with the previous, I don't know if a full calendarize it, the production profile you updated at the last full year result? In terms of harvest volumes, you mean? Yeah. Yes. In principle, of course, there's a change in the balance date period. We will be publishing some comparative historic data for January and July periods to assist understanding between now and when we come back with the full year results. We'll put a bit of that out there. Won't issue any volume guidance. In principle, there's no reason to change it at this point around the harvest expectations. Okay. That's great. Any update on what was happening at Waitata and whether or not you've got those step-ups through or how you're working through that? No, I think we haven't got the step-ups at Waitata. We're going back and reapply for that, but we haven't got that at this stage yet. Okay, great. Thanks a lot. Thank you. Your next question is from Christian Bell from Jarden. Go ahead. Thank you. Yeah. Hi, guys. Just ignoring the new balance date, and given the current monthly run rate, would it have been safe to assume that total sales volume would've been closer to something like 2,500 tons for the year to June? Do you mean for the period ended June 2021? That's correct, yeah. If you were just to ignore the new balance date. You can see from slide 11 that we were actually selling quite a bit faster than that in December. That's with our choice around promotion. Then you will also see sales out of inventory during the next six months or so for frozen excess sales. The underlying business, yeah, it's recovered. It's probably running a bit ahead because we were previously restricted on fish availability, and that's been less of an issue this year. It's been the least of our issues, if you like. Yeah. Okay. Obviously, you've been selling into new retail channels in the U.S. quite a lot. Have you got any idea as to what the sort of sell-through is to the end customer? What's the demand been like there? Yeah. Do you mean, are we talking about the retail? Yeah, correct. For example, the Fresh Thyme distribution, what has the actual end consumer demand been like? Yeah. We check that all the time. I'm not sure if you're aware, Christian, that the rate of sale of smoked salmon in the US supermarkets is a lot less than here. A fairly average result is 15 units per store per week. In the States, it's about six units per store per week. The interesting thing is, they're about where we were 10 or 12 years ago. They've got a massive growth rate. Even though COVID and everything, I think the salmon category grew 24% for the half in California. In fact, yeah, we achieved the number one growth spot, actually, which was great. Regal achieved the number one growth spot in the whole of USA. In the smoked salmon category. In smoked salmon category as a fairly new entrant, which we're very pleased about. We buy scanned data, we know it's not selling into the retailer, but not selling out to the final consumer. We've got no concerns about that. We're pretty confident we can, with our experience about what we did here, we can lift that result of six units per store per week to seven, eight, nine, 10. Ultimately, you probably can get it. I don't see why we couldn't get it to what it is in New Zealand. When I joined, it was around about those levels, we've got it up to roughly 15. We know exactly what we did here. We can't do it under COVID, unfortunately, we can once we're out of that situation. Okay. Cool. Great. Still assuming June 30, 2021 year-end date, and given that that's kind of when you expect to have sold through most of the rest of your disposal inventory, do you think there'll be a further compression in, obviously prices held pretty firm in the first half year, but will there be a slight further compression in the second half pricing, just as you get rid of that final amount of inventory? I think we've taken the provision for what we know at the end of December. I think that's okay. I guess the sales, the overall balance is going to be a lower margin because we've written that down below its original cost. I'm talking about accounting cost rather than the fair value cost that we're obliged to report in our financials. Once that's gone, then with markets continuing to recover, we'll be short of fish. That will allow some optimization options. That's where we've put all the work into in the last four or five years around optimizing markets, products, brands, and customers, to deliver improving profitability over those years. We're not in that position right now. I'm absolutely confident we will be by, say, late this calendar year. Okay. Great. Thank you. Just thinking about mortality, obviously, it was higher, because of the reasons you highlighted, but that was attributed to being about 30% of the reason why mortality was higher. If you sort of rate get that out roughly, it still looks like a relatively high period of mortality and just noting that you reintroduced Waihinau now and Forsyth into the harbor. Yeah. How did it- The 30% is in terms of biomass. Without that, the 11.9% would have been therefore roughly 8%, the dollar cost of that was more significant. That's about NZD 2 million of the NZD 5 million is attributable to that maturation, which is a one-off impact, we believe. In addition, because we had slowed the harvest in sort of April, May, June period, and then accelerated it recently, we have been harvesting very large fish off all the farms this first half. That's probably a bit of extra mortality as well. We'd say, another NZD 500,000, maybe over what we would otherwise have expected. If you look at that NZD 5 million versus the prior period, I think about two and a half of that increase relates to one-off impacts, which are essentially one way or another traceable back to COVID. If you back all of that out, the mortality is still a little bit higher than what it was last year at this time. Yeah. Maybe a tiny bit higher. We hit 2.2 in the first half last year, we're talking sort of very similar numbers, very slightly higher, maybe 10% or something like that. That's not really summer-related. That's more this maturation problem. When you have large fish in the water and they start to undergo the maturation process that can be stressful for them and some of them suffer mortality as a result. That's what's happened there. You've got a very large, healthy fish undergoing maturation, which is a stressful biological thing for the fish to do. Okay. Just looking at the sea surface temperatures on your website, it looks like Tory is starting to creep up more recently. Have you got any concerns there? The least of our concerns is the Tory Channel. No, we don't really have any particular terms or concerns about the Tory Channel under any scenario. Our concerns are always for the farms that are either the Ruakākā in the Queen Charlotte or Ōtānerau. Both of those have upwelling though, and that works pretty well there. There's quite a thermocline, so it's much colder down the bottom in the Queen Charlotte. Pelorus doesn't have such a good thermocline, and it is susceptible to higher temperatures. So far, the summer's been pretty kind to us. We're in a reasonable place as we stand. There's nothing exceptional. Okay. Cool. Then just, will your debt covenant reset with the new balance date? No, we'd previously worked with the bank around a bit of extra headroom this period through till June, so that's still in place, and I don't believe we'll need any headroom past that. Yeah, I don't think we used it anyway, did we? We haven't used it. They gave us extra headroom. We never used it. We took precautions, we haven't used them. Right. Okay. Just finally, have you got any update on Andrew's replacement? Not really. There's a search underway. There's big shoes to fill there, we all acknowledge that. Yeah, if you guys know a fantastic CFO available, maybe even one of yourselves, don't be afraid to put your best foot forward. Okay. Got it. Sweet. All right. No, that's all from me. Thanks, guys. Maybe outside of a school of fish. I can do the interview now, no problem. Thank you. Your next question is from Chris Byrne from Craigs Investment Partners. Go ahead. Thanks. Good morning, guys. What's the starting salary? We have no intention- Well, I think we pay pretty well. Chris, let's talk. We're humble salmon farmers. Is it unlimited salmon? That's a bonus. Yeah. Just on the excess inventory, is there a case for slowing that process down in terms of you've gone through a lot quicker, unexpected demand's been reasonably good. Is there a case for slowing it down and just letting it out to market more slowly and getting a higher margin for it? The challenge is that the only place where we've really had spare capacity to hold it in our system is as frozen whole fish. It's already been frozen down. We had to do that. We felt it once in April, May, June in particular, but also more recently. You sort of lock in your possible outcomes. We will be able to thaw some of that and smoke it in the coming months. We are trying to optimize that. Really, it's getting clear, getting that sold down, getting our debt levels back to where we'd like to be so that we can focus on the future. As an aside, we've been positively surprised by the first half sales and the resilience in the core business. Okay. If you had time, you would just leave it and smoke it all, and you'd end up with a better return than just selling it frozen? We would, but we couldn't get that all through our production facility, not as it currently stands. Okay. No, that's cool. That's obviously a major use of the frozen fish going forward is supplying our smoking plants. Okay. I really think there's a certainty effect here. It's not pretty in terms of having to sell some fish at a loss on what it originally cost us. You don't know what's around the corner, so I think we're better off to get on with that and then focus on our core business as we have been. Fair enough. Okay. In terms of freight- There's no right answer. Sorry? There's no right answer, of course. In terms of freight, what are you seeing in terms of cost and availability? Is it improving? Getting worse? Seems to be some mixed messages out there in terms of availability, et cetera. Cost's been pretty static during the COVID period. You can see in our financials, there's about a NZD 2 million hit first half versus prior first half. That's a reasonable indicator of our total freight because the market mix hasn't changed very much. You saw Grant talk about it on slide four, I think, or four or five. What we have seen is that the actual air freight component, so that's total freight out to market. There's a bit of road, there's a bit of handling, there's a bit of actual air freight component. Some of those have gone up by more than double, which is on some others have only gone up by 10% or 15%. The availability seems to be okay. We are a bit wary of making sure that we use rather than lose slots, if some of them are a bit on that basis. There's a lot of extra planning and execution goes into this and has done. Our supply chain team's done an awful lot of work in this space and executed it pretty well, frankly. We are grateful to Government for the support program, where they have the tender program in place, which is around all exporters, and I guess it's also keeping passenger routes open for Kiwis coming back. Both planes are flying, and there's a subsidy on some routes, which is not visible to us. That's between the Government and the airlines. I think that's contributed to making sure those services do run. Okay. Finally from me, how's the fish stock looking going into, obviously, March and April? February, March period. Have you got a lot of the older, bigger fish out? Is that something to be concerned or is it sort of you've harvested a lot of that now and the stock's in pretty good condition going into this period? Yeah, we've certainly maximized the harvest out of the Forsyth to the extent that we can. That's looking as positive as it can be. Andrew mentioned that our new General Manager of Aquaculture has taken the best of all the different models and taking what works best for us. Upwelling was a positive. One of the negatives of the prior model is we have large fish in the Forsyth, and that's why we harvest about a maximum extent possible. Anytime you've got larger fish on a warmer site, there is an increased risk associated with that. We're pretty pleased that the summer's been quite mild up to this point. Yeah, we've taken the maximum out that we can and still be in the position to supply our customers every day. Great. Okay. Okay. That's very good. It's been a tough period, but the price and performance has been quite impressive, so well done. Yeah. Thank you. Thanks. Thanks, guys. Thank you. Your next question is from Jason Familton from ACC. Go ahead. Thank you. Hi, guys. Just three for me. The first one, can you just talk about these non-compliance issues which came out in October and the local council, especially at Forsyth, I think. What's an update on that, and is there any potential risk to those licenses or other things? Yeah, it certainly won't lead to a loss of license, it's certainly not that issue. Pretty disappointed in what happened there, and we've certainly shored up the relationship with the council. One of our consent conditions is basically there has to be worms under the farm that break the organic matter that comes from the fish, and then you get a very good outcome. We have a methodology that only took three samples and three very small samples, and can you miss the worms when you do that? Well, yes, you can. All we did to fix the situation is we went back and took many large samples, and for the first time around, we found zero worms, and the second time, we found 70,000 worms. Took a long time to count them. Now the farm's compliant again. The council won't reverse the fine because they said, "Well, you agreed to that methodology," which we did, unfortunately, "And you agreed to the time that it had to be done, and now you've got this new methodology, and it's out of time." The good thing is the council has accepted that new methodology going forward, because it is a more thorough, larger sample that we're taking. It yields a more accurate result. The thing that they didn't mention is, yes, with that restricted sampling, we were found non-compliant. With the larger sampling, we were compliant, but the council also accepted that going forward. We're not really anticipating that will come up. We need to make sure that we change to a methodology that accurately reflect the situation and not use old techniques, from a bygone era that might mislead the situation. That's what basically happened. We're not concerned from that point of view, from a compliance point of view. We regret that it happened and partly on us for sure that it did. Glad that we did the retesting, because if we didn't do the retesting, then that would have affected our ability to farm that site. Now it's seen as an eminently compliant farm, and we can farm it again. We will use the new methodology going forward. Yeah, Jason, not really concerned about that, but very disappointed with the publicity and that we didn't proactively change that testing methodology ahead of time. Okay. The second question is just on Atlantic Salmon and I guess imports into New Zealand. I guess, is there anything in this result for that? Have you been importing salmon still? I'm guessing not. What I'm probably more interested in is how you see that playing a role as we're getting out of COVID and get to a more normalized demand environment again. Yeah. Now, we see it as an important part of our portfolio. It gives us flexibility to manage our own harvest and to meet demand when demand exceeds supply. Yeah, the Atlantic salmon margin is always going to be lower than what we produce ourselves. As I mentioned earlier, it made a positive contribution, and I expect it will make a positive contribution going forward. We're talking in the order of NZD 200,000. We're not talking in the order of millions or anything like that. Certainly, it will grow going forward. We'll grow into a substantial business. Our strategy is very much is to be single-minded up the aquaculture end, which is the most difficult thing we do. Actually growing these fish and now with all the requirements around different sizes and things, that's not easy to do. Let's not distract the aquaculture people by doing more than one species. Most of our competitors do. On the sales, branding, channel, market side, we'll be quite diverse there. At the moment, you can buy Regal Epicurean Atlantic Salmon, and that's proudly sold up against our Regal Marlborough King Salmon. We could well bring, and we will bring in a whole range of other products. For example, I said to the team, "Well, why didn't we have Regal Craytails or things like that?" We will get into other products that fit under our brand, complement what we do, and it provides a more resilient profit stream independent of the summer, and we're always looking at ways to do that. Obviously the main thing we can do is Blue Endeavour, but anything we can do on the sales and marketing side that yields profitability from other sources is a positive thing. That's the role of Atlantic Salmon, and we're really pleased with the way it's going. Okay, just a couple more from me. The next one, just on the lack of guidance for the full year, given full year's like three and a half weeks ago. I'm just wondering why you haven't provided any guidance and potentially just give us more information around what sales and things are like in January. I know that's a weird period and been several months and things, just interested to understand why you haven't given guidance or what risks there are around the number for the full year. Solid sales in January and starting to see some disposals. We just felt that we wanted to focus on getting this out of the way and we're still subject to audit, so get that out of the way and then be back in four weeks time with an update. Just on that, good luck with the hearing for Blue Endeavour in June, and I hope it goes well. Just what are the funding plans as we stand today around funding the CapEx that will be required? What sort of discussions have you had with the bank already around that? No decisions have been taken around how Blue Endeavour might be funded, assuming the resource consent is successfully obtained. I guess some of the feedback we've had from investors in the past around Blue Endeavour is that they'd want to see a clear path for that sales program. I guess in terms of timing, we'd want to have worked through the excess inventory before we have that conversation with investors, if that's where we're going. I guess, then we'd also look at what debt options there were that would, as an alternative to perhaps equity. Cool. Thanks, and good luck with your journey as well. Yeah, no decisions yet taken. I guess one of the questions is, depending on what the world looks like at that time, do we want to build out Blue Endeavour immediately, so to grow the volume very strongly, or do we want to balance that up against some of the inshore farms? We'd have those choices, though, which is a nice place to be. Okay. Thanks, guys. Thanks, Jason. Yeah. Bye. Once again, if you do wish to ask a question, please press the star key, then one on your telephone and wait for your name to be announced. Thank you. There are no further questions at this time. I'll now hand back to Mr. Rosewarne for closing remarks. Yeah. Thank you. Yeah. As you can see, Andrew and I are as enthusiastic about the sector as we've ever been. Andrew's definitely a regretted loss to the company. As evidenced by Norway, the aquaculture sector has amazing potential, and now reinforced by government policy. We as firmly as ever believe that aquaculture could be New Zealand's most valuable industry and its greenest primary sector at the same time. Thank you, and we'll do it all again in a few months' time. Thanks very much. That does conclude the conference call for today. Thank you all very much for attending. You may now disconnect.