Seeka announces its 31 December 2016 result

12 Months to 31 December 2016 [Audited] 2016 was an exciting year for Seeka, one with considerable change including shortening our name to Seeka Limited as a result of a rebranding programme that presents us in a more modern and fresh way. In addition to Seeka producing a record profit and delivering operational improvements, outstanding fruit handling results were achieved for our growers and customers. The company successfully handled record kiwifruit volumes in New Zealand, delivered leading avocado returns from its targeted export programmes, initiated its Australian business operations and continued to develop its retail services business centred on its tropical fruits category in New Zealand. Our strategy of focussing on excellence in everything we do has delivered outstanding results for our stakeholders. Key Financial metrics o $191.32m total revenue -- up 35% on the previous corresponding period (pcp) o $24.76m EBITDA -- up 78% on pcp o Excluding the effect of insurance settlement ($ 3.63m), EBITDA totalled $21.14m -- up 52% on pcp. o $16.96m EBIT -- up 135% on pcp o $10.39m net profit after tax -- up 143% on pcp o $0.65 basic earnings per share -- compared with $0.29 pcp -- up 124% o $197.31m total assets -- up 20% o $4.88 net asset backing per share -- compared with $4.34 at 31 December 2015 o $68.73m long term borrowings -- up 31% o $1.25 increase in share price for the year Seeka's audited profit after tax for the year ended 31 December 2016 totals $10.39m which is within the forecast range of $9.5m to $10.6m. The resulting basic earnings per share of $0.65 is also within the forecast range of $0.59 to $0.66. Key Operational highlights o Handling a record 32.44m trays of New Zealand kiwifruit -- up 17% on pcp o Excellent New Zealand kiwifruit performance; 2.68% fruit loss for Hayward conventional, (pcp 7.66%), 1.11% for Hayward organic ( pcp 3.58%) and 0.35% for SunGold (pcp 1.85%) o Excellent avocado returns of $26.86 per tray (pcp $16.64) -- again delivering industry-leading returns to growers o First harvest of produce grown by Seeka Australia o Construction of additional coolstores and new kiwifruit packing machine in Australia o Establishment of Australian nursery operations and the trialling of approximately 10 hectares of new varieties in Australia o Integration of Seeka Australia team and systems o Settlement of the Oakside mitigation losses at $3.63m o Reinstatement of the Oakside facility following the March 2015 fire o Purchase of the Kiwi Crush range of products o Successful rebrand of Seeka o Major infrastructure and capacity build with coolstore and precooler expansion at two of our main sites at Main Road Katikati and KKP in Maketu o 9,500 new Seeka Surestore plastic bins added to the business o Purchase of Seeka 360 property at Young Road, Paengaroa, and initial site refurbishment for Seeka's new headquarters Dividend The directors have declared a fully imputed dividend of $0.10 per share. The dividend will be paid 24 March to those shareholders on the register at 5pm on 17 March, 2017. The dividend reinvestment plan will apply. This dividend declaration brings fully imputed dividends distributed to shareholders relating to the 2016 financial year to $0.20 per share, compared to $0.19 per share relating to the 2015 financial year. Shares issued Seeka issued 1,132,922 shares during the year: o 68,698 for the dividend reinvestment plan o 398,100 to the Seeka employee scheme -- approximately 4% of company shares are held for employees under this scheme with the first vesting occurring in October 2017 o 666,124 for the final year of the successful grower share scheme By helping nearly all growers become shareholders, the grower share scheme secured loyalty during the period of uncertainty created by Psa, with participating growers benefiting from Seeka's strong performance from secure crop volumes. In return for committing to supply Seeka over the scheme's three-year period, growers were issued 2,010,226 shares (11.5% of Seeka's total shares) at a total issue value of $7.26m. By the end of 2016, these shares had a market value of $9.45m. Combined with $0.57m of dividend payments, this represents a total capital and dividend gain of $2.76m -- a 38% return to growers on the issue value. Commentary Seeka remains in a strong period of growth. Fuelled by increasing New Zealand kiwifruit volumes the company has invested in growing its New Zealand capacity and improving existing infrastructure. Kiwifruit volumes increased by 17% to 32.44m trays. At the same time Seeka integrated its Australian business and set a platform for growth in that market. As a result, the company has year-round branded produce in the Australian market. Turnover increased to $229.40m (up 24%) and revenue to $191.32 (up 35%). Profitability continues to improve reflecting economies of scale. EBITDA increased by 78% to a record $24.76m. Basic earnings per share is up to $0.65 compared to $0.29 in the pcp. Seeka invested $43.06m in its New Zealand kiwifruit business and in orcharding, packing and fruit storage in Australia. Investments included: o $16.94m developing New Zealand kiwifruit coolstore and packing infrastructure o $3.98m acquiring the strategic property of Seeka 360 o $2.01m acquiring the Pukenga orchard -- a strategic land bank for future post-harvest development o $2.36m in the ongoing rollout of plastic bins o $4.74m upgrading New Zealand kiwifruit packing equipment ahead of 2017 o $9.78m upgrading other New Zealand plant, property and equipment o $3.25m developing Australian orchards and post harvest facilities To finance these investments Seeka increased net debt (all interest-bearing debt less cash deposits) by $19.80m to $72.76m while total assets grew to $197.31m. Seeka continues to: o Focus on building and delivering shareholder wealth and increasing dividends. During the year the company successfully integrated Seeka Australia, including implementing our business systems into our Australian operations. At the same time the company focused on its core kiwifruit business by delivering packing and coolstorage capacity to process a record 32.44m trays in New Zealand and 0.66m trays in Australia, along with 1,523 tonnes of nashi pears and 1,790 tonnes of European pears; the other major crops Seeka grows in Australia. o Evaluate options to handle increasing kiwifruit volumes and minimise costly investments, and strive for improvements that deliver leading results. The company continues to look for opportunities to innovate, expand or diversify to secure long-term growth and sustainable profitability. o Focus and take advice on its financial position and balance sheet to pursue growth opportunities. Implementing Seeka's strategy may result in the company undertaking value-accretive acquisitions or further expanding geographical boundaries. Our vision remains to be "New Zealand's Premier Produce Business". For more information contact Michael Franks Stuart McKinstry Chief Executive Chief Financial Officer 021 356 516 021 221 5583 Reporting period for year ended 31 December 2016. FINANCIAL SUMMARY Revenue from ordinary activities ($000) $ 191,317 up 35% Profit from ordinary activities before tax attributable to security holders ($000) $ 13,612 up 159% Net profit attributable to security holders ($000) $ 10,385 up 143% EBITDA before revaluations and impairments ($000) $ 24,764 up 78% EBITDA before revaluations, impairments and income from insurance ($000) $ 21,137 up 52% EARNINGS PER SHARE Basic earnings per share $ 0.65 (31 Dec 2015 = $ 0.29) Diluted earnings per share $ 0.62 (31 Dec 2015 = $ 0.27) Net asset backing per share $ 4.88 (31 Dec 2015 = $ 4.34) Net tangible assets per share $ 4.34 (31 Dec 2015 = $ 3.76) Notes and Tables 1. This announcement should be read in conjunction with the attached 2016 annual report (Audited). A copy of the 2016 annual report can also be found on Seeka's website www.seeka.co.nz. 2. EBITDA before revaluations and impairments is considered by the board to be a key measure of performance and a reflection of cash flow generation. 3. EBITDA before revaluations, impairments and income from insurance removes the effect of the insurance settlement in 2016 and is a better reflection of ongoing cash flow generation. 4. The Directors consider that turnover is a useful measure for the readers of the Group financial statements as it provides an indication of the Group's operating activity including the value of sales as an agent made on behalf of growers and suppliers but where the Group is considered as the vendor by the end customer. See attached for the full text. End CA:00297482 For:SEK Type:FLLYR Time:2017-02-27 17:13:17