High NZ Dollar Impacts on Half Year Result

News Release
For immediate release
September 13, 2005

High New Zealand Dollar Impacts on Half Year Result
Reduced By High New Zealand Dollar Says Satara Chief

Satara's post-harvest operation produced a good half year result, but its orchard division contribution to the bottom line is reduced because of falling export market returns due to the high dollar.

The current exchange rates will have their greatest impact on this year's result as management has already acted to ensure the company's exposure is minimised over the next two years.

Satara Group General Manager Murray Gough says the seasonal nature of the business makes half year reporting misleading, as a significant portion of Satara's profit comes in the second half of the year.

However, tSatara Group General Manager Murray Gough says the half year result does points to a drop in the full year bottom line profit, due to a forecast reduction in orchard division income of $0.81 cents per Green tray, recently announced by Zespri.

Gough says Satara has made full provision in these half year accounts for the estimated impact of Zespri's reduced forecast.

"Zespri has reported market prices for kiwifruit have remained strong in their local currencies, which gives us confidence kiwifruit returns will improve as the New Zealand dollar comes off its current highs."

Zespri has publicly stated the drop in income again this year is primarily the result of the continued strength of the New Zealand dollar relative to the currencies of its main trading partners of Japan and Europe.

Regardless of currency fluctuations Gough says his management team has set in place changes that will reverse the negative impact of the current level of Zespri return, and reduce the impact of any future price fluctuations on returns. If the dollar remains strong, the benefit of these changes will be realised progressively over the next three years.

"If, as expected, the currency weakens the results for the orchard division will improve a lot sooner."

Overall the 11.14 million trays harvested in 2005 is similar to the previous year, but the 2.41 million trays harvested from Satara's leased orchards in 2005 was slightly behind the previous year's crop of 2.74 million trays.

"All our facilities have been fully utilised and we're on track to achieve another year of great packing and storage results." Says Gough. "As a result our post-harvest operation comprising of our packhouse and coolstore business has traded well during the first half of the year." Gough also points to the seasonal nature of the business that makes half year reporting misleading as a significant portion of Satara's profit comes in the second half of the year making the half year result relatively meaningless.

He says there will be some who will incorrectly deduce that because the company is reporting a net surplus after tax for the six months ended 30 June 2005 of $137,061 then a full year profit will only be around $280,000.

"But while there will be some impact from the drop in the Zespri return, most of our shareholders are kiwifruit growers who understand the seasonal nature of our business".

Gough says he is comfortable with the position of the cooperative which has asset backing is of $1.245 per Investor share. le shares .

ENDS

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