Seeka announces its 31 December 2019 result

Listed New Zealand produce handler Seeka Limited, with operations in New Zealand and Australia, has today reported its audited results for the year ended 31 December 2019. "Seeka has made excellent progress on its strategic growth pathway, including consolidating business units and reducing debt through orchard sales, while continuing to deliver excellent results to our grower clients," says Seeka chief executive Michael Franks. Seeka's financial performance was impacted by early 2019's long dry summer which lowered Hayward kiwifruit yields in both Australia and New Zealand. Hayward volumes were well down on forecast and prior year yields, and negatively impacted our financial results. Offsetting this, Seeka expanded our core business with the purchase of Aongatete, delivered cost efficiencies, made good gains on the sale of Northland orchard assets, and delivered significant improvements in our retail services business. Operationally, the performance and returns to supplying growers were excellent. Seeka continues to realise orchard assets held for sale to reduce debt. In some cases, the orchard sales are still awaiting subdivision or boundary adjustments, and once completed both the sale and gain will be recorded in 2020. Year end total net bank debt of $116.8m compares to $79.1m at year end 2018, and $148.1m at 30 June 2019. The successful sale of orchard assets currently being marketed will further reduce net bank debt by at least $27.1m, with $10.1m of properties conditionally sold at year end which were settled in February 2020. Seeka continued to invest in core infrastructure with the build of onshore New Zealand post harvest capacity. The Oakside $21.4m pack house and cool store project was completed in 2019 (the cool store build finished after the kiwifruit harvest) and a modern pack house and cool store complex is under construction in Kerikeri, with phase two underway. The company expects lower post harvest capital expenditure through 2020 and 2021. The Seeka Group is focused on consolidating operations following the acquisition of the Northland and Aongatete assets, including selling orchard assets to repay debt while securing supply to our core kiwifruit business. We are also investigating the sell down and lease back of the Group's Australian kiwifruit orchards which would release funds for debt reduction and potential expansion, as we continue to look for investment opportunities by acquisition to deliver continuing accretive growth and shareholder value. Impact of NZ IFRS 16 Leases: Seeka has fully adopted NZ IFRS 16 Leases (NZ IFRS 16 - the new NZ accounting standard for leasing arrangements), and these 2019 financial results and 2018 comparatives are consistent with the new standard. The transition to NZ IFRS 16 negatively impacts Seeka's financial results as the accounting for lease interest costs and depreciation are higher than the lease payment at the beginning of the lease period. Further the full gain on orchard sales is no longer recognised in the statement of financial performance when the property is leased back to Seeka. Dividend announcement: A dividend of $0.12 per share has been declared by Seeka's Board. The dividend comprises a normal dividend of $0.08 per share (following Board policy on a pre NZ IFRS 16 basis) and a special dividend of $0.04 cents per share following the completion of property sales negotiated in 2019 and completed in 2020. The dividend is fully imputed and will be paid on 17 April 2020 to those shareholders on the register at 5pm on 20 March 2020. The dividend reinvestment plan will apply with a 2% discount to the strike price. This dividend will bring the total dividends distributed in the last 12 months to $0.24 (prior twelve months $0.24). Outlook: Seeka is anticipating improved earnings in 2020 conditional on New Zealand and Australian crop volumes. The company has an increasing volume of Zespri SunGold with both new growers and new developments, along with a significantly improved SeekaFresh business and increasing avocado volumes. The company continues to consolidate the acquired businesses and complete Northland orchard sales, and is investigating the potential sale and lease back of the Group's Australian kiwifruit orchards. Seeka is anticipating earnings growth, noting market uncertainty from the current coronavirus outbreak. The company will provide current year earnings guidance at half year (once harvest is completed) and will update shareholders on key events as and when they occur. The full announcement is attached ENDS For more information, visit www.seeka.co.nz or please call: Michael Franks Chief executive + 64 21 356 516 Stuart McKinstry Chief financial officer + 64 21 221 5583 End CA:00349008 For:SEK Type:FLLYR Time:2020-02-26 10:47:30