Seeka Announces 2018 Year-End Financial Result

• Net profit after tax of $7.42m, up 27% on pcp

• EBITDA of $26.22m, up 13% on pcp

• Earnings per share of $0.37, up 16% on pcp

• Total of 31.4m trays of kiwifruit harvested and packed in New Zealand, an increase of 23% on pcp

• Completed acquisition of Northland kiwifruit packhouse, orchards, and related business from Turners and Growers Horticulture Limited (T&G Horticulture)

• Proactive response to Psa-V outbreak in Australia

Te Puke, 26 February 2019: Seeka Limited (NZX-SEK) has announced its audited financial results for the year ended 31 December 2018. Net profit after tax (NPAT) of $7.42m is up 27% on the $5.83m reported in the previous corresponding period (pcp). Earnings before interest, tax, depreciation and amortisation (EBITDA) is $26.22 (2017: $23.13m) an increase of 13%. Earnings per share of $0.37 (2017: $0.32) increased by 16%. The result reflects Seeka’s growth and achieving its financial, operational and strategic goals.

The New Zealand kiwifruit operations performed positively as volumes rebounded in 2018. Seeka packed its second highest volume being 31.4m trays of kiwifruit (2017: 25.7m), including 10.8m trays of SunGold.

Seeka’s Chief Executive, Michael Franks said, “In anticipation of this volume, infrastructure and personnel were put in place to ensure fruit was processed at its optimal maturity for fruit storage and quality. Fruit performance in store was good, particularly in SunGold, where Seeka delivered industry-leading results. Seeka conducted a safe and timely harvest without a serious Health & Safety incident”.

A highlight in 2018 for Seeka was the purchase of the Northland kiwifruit packhouse, orchards, and related business from Turners and Growers Horticulture Limited (T&G Horticulture).

“This significant and successful acquisition was the result of substantial planning as Seeka sought to grow its Northland operations alongside its loyal grower base. The business seamlessly transitioned mid-harvest, and performed operationally and financially to expectations. As planned, Seeka immediately commenced selling the Northland orchards to buyers prepared to commit to a long term Seeka supply contract”, explains Franks.

At balance date Seeka is holding 140 hectares of the Northland orchards, amounting to $25.9m, of which 54 hectares are sold under conditional contracts waiting on new titles to be issued. The remaining 86 hectares are being marketed and sold this year. The company achieved a modest gain of $0.616m on the orchards sold before year end with further gains expected in 2019. Seeka expects to pay for the remaining 28 hectare orchard purchased from T&G Horticulture when the land title is finalised, and in the meantime has taken possession of it through a lease.

Seeka is further investing in the Northland business with $17.62m in the construction of a new packhouse, packing machine and coolstores over the next two years.

Franks adds, “We are seeing a significant increase in trays supplied by new growers with 0.250m committed so far. Once complete our Northland facility will be world class and a leader in the Northland kiwifruit community.”

In addition to the Northland post-harvest investment, an investment plan is underway to handle forward growth in volume from growers at Oakside in Te Puke to increase packing and coolstore capacity totalling $18.56m over two years.

Seeka reported some operational challenges in the banana business and in Australia.

The banana business remains lacklustre with Seeka impairing Glassfield’s goodwill by $0.946m in the first six months of the year.

Franks said although Seeka faced a difficult year in Australia, effective measures were promptly put in place. “While Psa-V has been confirmed in a small area of the Australian orchards, this had little impact on Seeka’s 2018 earnings. Seeka took proactive and immediate steps to limit the impact, based on the experience gained on New Zealand orchards. Psa-V has led Seeka to reconsider the varietal mix on its orchards, and the orchards coming into production will be delayed a year. The orchard development will provide significant opportunity in future years. The development plan, together with management changes, provides a positive outlook for the Australian business.”

Outlook

Seeka remains focused on delivering its strategy to deliver incremental earnings and returns to both shareholders and supplying growers. Volume growth in kiwifruit, growing in Australia through orchard improvement and development, debt repositioning and further infrastructure investment all contribute to a positive outlook for the Company.

Franks is confident in Seeka’s future performance and growth. “We are expanding our coolstore capacity and packing capability to meet both growing kiwifruit production and additional market share. While kiwifruit is our foundation crop, the company has established competency and business operations in avocados, pears and kiwiberry. There is a strong focus to improve those parts of the business that are not meeting performance expectations. Investment and improvement programmes are expected to improve earnings. The company is in a strong position for growth when opportunities arise and remains interested in acquisitions that are consistent with strategy and deliver incremental earnings to shareholders”.

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Seeka’s Annual Report 2018 is available here

About Seeka

www.seeka.co.nz

Seeka (NZX: SEK) is an integrated horticultural and produce company that grows, processes, distributes and markets high quality produce to world markets. An international business based in New Zealand focused on orchard-to-market excellence.

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