Seeka announces its 30 June 2018 half year result

Seeka Limited Six Months to 30 June 2018 [Unaudited] This announcement should be read in conjunction with the attachments. Review of operations for the six months ended 30 June 2018 Revenue for the six months ended 30 June 2018 totalled $145.44m (2017: $134.01m). Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) totalled $23.47m (2017: $21.93m); up 7%. Included in the consolidated result was $2.70m EBITDA from Seeka Australia (2017: $3.41m); down by 21% from a dry summer growing period. Profits for the six months were impacted by a $1.53m write down of goodwill in the tropical business, Seeka Glassfields. Consolidated profit after tax for the six months was $10.37m (2017: $11.09m); down 6.5%. Cash flow from operations totalled $1.55m (2017: $4.73m); reflecting additional interest paid on debt and timing of tax paid. Seeka invested a total of $26.10m, which was partly offset by $6.33m of asset disposals. The investment includes payments for Northland assets some of which are now being marketed for sale via tender, including 15.5 hectares of Zespri SunGold in production and 18.6 hectares in development. As at 30 June, Seeka had paid $8.32m for the post harvest facility and $8.99m for the orchards with clear title. The remaining $22.63m purchase price will be paid when titles to the remaining orchards become available. At 30 June, Seeka has advanced its grower pools $12.9m (2017: $11.1m) to assist with cash flow. This advance was fully repaid by 20 July. Seeka has continued to review and refine its coolstore and packing capacity plans. The signalled replacement of the Seeka KKP packing machine was deferred in favour of an upgrade to machine number 2 at Seeka Oakside. Additional pre-cooling and coolstores will be built to balance capacity. The newly acquired post harvest facility in Kerikeri is also scheduled for an upgrade with a new packhouse and increased packing, precooling and coolstore capacity. These two projects are planned to balance Seeka's capacity with forecast demand for the next 36 months. Net debt at 30 June (bank loans less bank deposits) totalled $115.98m (2017: $94.55m); an increase of $21.43m noting both the investment in the Northland assets and the advance to Seeka Growers Limited. Highlights o Profit after tax of $10.37m (2017: $11.09m); a decrease of 6.5%. o EBITDA of $23.47m (2017: $21.93m); an increase of 7%. o Further impairment and accelerated amortisation of the goodwill and supplier contract in the tropical business, Seeka Glassfields, of $1.5m. o Increased New Zealand kiwifruit crop volumes with 31.1m tray equivalents handled (2017: 25.6m); up 21%. o Improvement in earnings for Seeka's emerging business, the Delicious Nutritious Food Company. Earnings at an EBITDA level of $0.40m compared to $0.16m for the first six months in 2017. o Record returns in the 2017/18 avocado selling season. Seeka successfully distributed and marketed 209,850 trays of avocados delivering an exceptional average return to growers of $40.81 (2016/17: $24.85). o Successful and safe harvest seasons for all crops across New Zealand and Australia including kiwifruit, avocados, nashi and pears. o Successful completion of the first year of maturity testing services for Zespri at Seeka's laboratory testing business VLS. o Successful acquisition and integration of the Northland post harvest business and related kiwifruit orchards from Turners and Growers Horticulture Limited (T&G Horticulture). The post harvest business was integrated into Seeka mid harvest without issue. o Continuing investment in Seeka Australia's orchard development which will significantly increase production in coming years. o The New Zealand High Court decided in favour of growers in their claim against the Crown for losses related to New Zealand's Psa outbreak. This includes Seeka as a grower. Seeka was unsuccessful in its claims related to losses as a post harvest operator. The decision was appealed by the Crown and subsequently cross-appealed by the plaintiffs including Seeka's claim as a post harvest operator. Dividend announcement A dividend of $0.12 per share has been declared by the Board. The dividend is fully imputed and will be paid on 21 September 2018 to those shareholders on the register at 5pm on 14 September 2018. The dividend reinvestment plan will apply to the distribution. Outlook Seeka is anticipating improved operational earnings for the remainder of 2018 compared to 2017, reflecting the rebound in volumes of New Zealand kiwifruit production and stronger avocado volumes and earnings. Operational earnings (EBITDA) are anticipated to be 4%-8% more than 2017. Net profit after tax is anticipated to be 12%-24% more than 2017. The market will be updated if there is material deviation. For more information contact Michael Franks Chief Executive 021 356 516 Stuart McKinstry Chief Financial Officer 021 221 5583 Notes 1. This announcement should be read in conjunction with the attached half year report (unaudited). A copy of the half year report can also be found on Seeka's website Seeka.co.nz. 2. EBITDA is considered by the board to be a key measure of performance and a reflection of cash flow generation. End CA:00322669 For:SEK Type:INTERIM Time:2018-08-23 14:43:26