Seeka announces its 30 June 2019 half year result

REVIEW OF OPERATIONS FOR THE SIX MONTHS ENDED 30 JUNE 2019 Revenue for the six months ended 30 June 2019 increased 16.8% to $169.87m (pcp: $145.44m). Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) was $27.91m (pcp: $25.71m); up 8.6%. This includes an $0.15m EBITDA loss from Seeka Australia (pcp: $2.71m gain), from a very dry summer resulting in lower Hayward kiwifruit volumes and an underperforming nashi programme. Consolidated profit after tax was up 27.3% to $11.86m (pcp: $9.32m), with cash flow from operations up 107% to $5.15m (pcp: $2.49m). In the period, Seeka invested $25.82m in property plant and equipment, primarily building the Kerikeri pack house and commissioning a new packing machine and upgrading Oakside packing machine 2, pre-coolers and coolstores. Once additional pre-cooler and coolstore builds at Kerikeri are completed, Seeka's post harvest capacity is forecast to be able to handle fruit supply for the next two seasons. In the six months, $7.13m was realised from completed Northland property sales (of which $1.73m relates to a sale recorded in 2018), with $5.4m of orchard sales made in the period for a gain of $1.2m. Since 30 June 2019, Seeka completed a further $11.71m of orchard sales to realise a $1.5m gain and has $7.0m of conditional sales expected to settle before year end which will realise a further $1.6m gain. Seeka holds a further $21.65m in orchards at fair value. These are expected to be substantially sold this financial year with the sale proceeds returning debt to more conservative levels. Net debt at 30 June (bank loans less bank deposits) was $148.08m (pcp: $115.98m); an increase of $32.1m, driven by the investment in post harvest capacity and the Aongatete acquisition. RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2019 INCLUDE: - $11.86m profit after tax (pcp: $9.32m); up 28%. - $27.91m EBITDA (pcp: $25.71m); up 8.5%. - $407.43m of assets; up 31% from the pcp - $148.08m net debt; an increase of $32.1m. - $5.4m sale of Northland orchards for a realised gain of $1.2m, with a conditional $18.7m sale forecast to settle by year end, for a further $3.1m gain. - All of the shares in Aongatete Coolstores Limited were acquired for $14m. - $15.2m (note 1) investment in new packhouse and pack machine at Kerikeri; commissioned for harvest 2019, this large infrastructure build delivers capacity ahead of Northland's growing kiwifruit and avocado production. - $20.6m (note 1) refurbishment of Oakside machine 2, with additional pre-cooling and coolstores result in lifting site capacity by approximately 2.25m trays, delivering greater efficiency and providing our growers the ability to harvest at the optimal time for fruit quality lowering the risk of late harvest to our growers. - Successful harvest and processing operations across New Zealand and Australia including kiwifruit, avocados, kiwiberry, nashi and pears. - 33.5m tray equivalents of kiwifruit packed by New Zealand post harvest (pcp: 31.1m); 29.6m from Seeka's traditional post harvest operation (5% down on a seasonal drop in Hayward yields), plus 3.9m trays from the 2019 Aongatete acquisition. - Grower loyalty share scheme secures New Zealand kiwifruit, avocado and kiwiberry supply for three seasons; 2,061,803 shares allotted with an estimated 91% of growers are now Seeka shareholders. - Rewarding employee engagement with a new employee share scheme; 568,000 shares allotted with an estimated 70% of permanent employees are now Seeka shareholders. - One serious harm injury to a packer's finger at Aongatete post harvest. - New Seeka App gives growers online updates on their crop's performance in Seeka's supply chain. [Note 1: Costs to date since project inception in June 2018.] 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 9 October 2019 to those shareholders on the register at 5pm on 13 September 2019. The dividend reinvestment plan will apply with a 2% discount applied to determine the strike price. OUTLOOK Seeka is anticipating lower operational earnings for the second half of the financial year reflecting lower volumes of fruit in store at 30 June and an early selling season. The company continues to market, negotiate and sell Northland orchards and has started enacting a similar strategy in Australia. When completed these sales are expected to reduce debt and realise a gain on sale. The following guidance is based on Seeka's best estimate on the forward six months' earnings. The market will be updated if there is material deviation. New Zealand dollars 2019 guidance lower range EBITDA $32.5m 2019 guidance upper range EBITDA $33.5m 2018 full year restated EBITDA $31.0m This announcement should be read in conjunction with the attached announcements and half year report (unaudited). A copy of the half year report can also be found on Seeka's website Seeka.co.nz. FOR MORE INFORMATION CONTACT Michael Franks Chief Executive 021 356 516 Stuart McKinstry Chief Financial Officer 021 221 5583 End CA:00339787 For:SEK Type:INTERIM Time:2019-08-26 10:00:27