Slide 1: Stakeholder Meeting 26 September 2012
SEKA SEEKA Stakeholder Meeting 26 September 2012 Orchard Church, Te Puke SEEKA KIWIFRUIT INDUSTRIES LIMITED
Slide 2: Agenda
Agenda • Board update ▪ John Burke • Independent response to queries at 2012 ASM ▪ David Cameron-Brown • 6 month review ▪ Michael Franks • Strategy ▪ John Burke 2 Seeka Stakeholder Meeting ― 26 September 2012
Slide 3: Board update
Board update • Welcome • Board changes ▪ Kim Ellis Retirement ▪ Fred Hutchings Appointment • Independent director • 28 years experience at PwC • Agricultural experience • Produce experience 3 Seeka Stakeholder Meeting ― 26 September 2012
Slide 4: Board update
Board update • The Board has resolved that it will have an independent Chairman and will work through a process to achieve that before next year’s Annual Shareholder Meeting 4 Seeka Stakeholder Meeting ― 26 September 2012
Slide 5: Independent response to queries at 2012 ASM
SEKA SEEKA Independent response to queries at 2012 ASM David Cameron-Brown SEEKA KIWIFRUIT INDUSTRIES LIMITED 5 Seeka Stakeholder Meeting ― 26 September 2012
Slide 6: Important Information
Important Information • Cameron Brown Corporate Advisory Limited (“CBCA”) • High level independent review of Seeka’s financial and operational performance Assist Seeka’s Board to consider shareholder queries Limited input from Seeka management - independence Focus on absolute rather than relative pe
Slide 7: Summary of Shareholder Queries
Summary of Shareholder Queries • Queries by a shareholder at 2012 ASM • CBCA’s understanding of queries Seeka retained significant earnings but not grown shareholder wealth Not provided adequate dividends to investors in 2005 capital raising Purchased market share and then lost it to competitors Rec
Slide 8: Retained excess capital but added no value
Query 1 Retained excess capital but added no value • Until recently no significant excess capital FY2003 to FY2010 positive net cash flows in 3 of the 8 years • Net cash flow is net operating cash flow less capital expenditure • Surplus achieved FY2004, FY2006, FY2009 Effectively borrowed to pay div
Slide 9: Retained excess capital but added no value
Query 1 Retained excess capital but added no value •Capital expenditure not unduly high Stable FY2005 to FY2011 (Dec) • As a percentage of property, plant and equipment 8.4% low to 11.8% high No increase despite focus on reducing packhouse and coolstore sites • Consolidation reduces costs and makes
Slide 10: Retained excess capital but added no value
Query 1 Retained excess capital but added no value • Excess capital used to reduce debt Prudent given uncertainties associated with the global financial crisis • Spread of Psa-V makes decision even more appropriate • Gearing and debt levels down FY2010 (Dec) and FY2011 (Dec) Gearing peaked FY2005 at
Slide 11: Dividends not provided adequate return
Query 2 Dividends not provided adequate return $6.00 Seeka Share Price Italian orchard $5.00 Capital raising Dividend write down Psa-V payment cut announced $4.00 Huka Pak acquisition $3.00 $2.00 $1.00 $0.00 Jul 10 Jan 05 Jan 07 Jan 08 Apr 08 Jul 08 Apr 05 Jul 05 Apr 07 Jul 07 Oct 08 Oct 05 Oct 07 J
Slide 12: Buying market share & losing it
Query 3 Buying market share & losing it • Volumes increased 190% from FY2004 to FY2011 (Dec) 8.8 million trays FY2004 to 25.5 million trays FY2011 (Dec) • Market share increased from 14.5% FY2004 to 23.0% FY2011 24% in FY2007 before declining to 19.5% FY2009 • Volumes increased FY2006 due to Eleos a
Slide 13: Buying market share & losing it
Query 3 Buying market share & losing it • Static volumes and declining market share suggest loss of volumes associated with Bridgecool acquisition Growth offset losses in absolute terms, but not percentage terms Impacted by operational issues – high fruit loss FY2007 • Rationalising operations into
Slide 14: Psa-V write down and other observations
Query 4 Psa-V write down and other observations • Asset write down prudent Over capacity due to lower volumes reduces value Most other operators have now reported similar write downs • Seeka, Eastpack, OPAC and Satara all recorded write downs Any kiwifruit business should have, or will have to, incu
Slide 15: Psa-V write down and other observations
Query 4 Psa-V write down and other observations •2005 Bridgecool purchase now appears too expensive A drag on financial performance Seeka has not acknowledged or commented on this •Psa-V overshadows recent strong financial performance Strong cash operating surpluses FY2010(Dec) and FY2011 (Dec) Reso
Slide 16: Seeka 6 Month Review
SEKA SEEKA 6 Month Review Michael Franks SEEKA KIWIFRUIT INDUSTRIES LIMITED 16 Seeka Stakeholder Meeting ― 26 September 2012
Slide 17: Class 1 inventory performance
Class 1 inventory performance 2011 2012 Net time related Variety Packed Packed Loaded In store Seeka Industry Total per tray Hayward 19,136 k 16,630 k 14,292 k 2,227 k 0.68% 1.21% $ 7,433 k $0.45 Green Organic 274 k 465 k 400 k 59 k 1.32% 1.19% $ 163 k $0.35 Hort 16A 6,310 k 3,301 k 3,248 k - 1.47%
Slide 18: Financial summary
Financial summary • Overall volumes down 6 months 12 months 6 months 13.5% - Psa-V $000s June 2011 Dec 2011 June 2012 • Gold fruit volumes halved Class 1 & 2 trays packed 24.7m 27.1m 21.3m as Psa-V ravaged Te Puke Operating revenue 98,070 137,062 79,540 • Combined with reduced EBITDAF charges impact
Slide 19: $5.7m ~ $6.4m forecast year end profit before tax
$5.7m ~ $6.4m forecast year end profit before tax, impairments, revaluations & restructuring 19 Seeka Stakeholder Meeting ― 26 September 2012
Slide 20: Operating cash flows
Operating cash flows • Negative cash flow reflects early close to $26.0m the season and reduced creditors • Cash flow now strongly $18.3m positive in second half of year $12.6m $10.5m to • Capital expenditure $9.8m reduced to maintenance $7.6m levels Huka Pak 12 month contract $6.2m forecast • Focus
Slide 21: Bank debt
Bank debt • Focus on debt repayment since $55.4m Huka Pak acquisition • $9.3m of debt repaid $40.6m 2011 $39.0m $40.0m $31.5m • Expect similar 2012 • By year end a total $30.7m $34.5m will be $21.5m repaid off bank debt to since Huka Pak $20.8m acquisition Forecast March March December June Dec June
Slide 22: Balance sheet
Balance sheet $000s 12 months Dec 2010 6 months Jun 2011 12 months Dec 2011 6 months Jun 2012 • $9.3m reduction in current liabilities Total equity 64,848 67,116 50,475 59,054 reflects early season Cash 554 662 903 244 Other current assets 23,505 45,453 21,843 40,659 finish Total current assets 24,0
Slide 23: Psa-V
Psa-V • Psa situation remains dynamic but generally deteriorating • Psa present in all varieties ▪ Hayward has infection in males across the catchment and a sprinkling of females with serious infection ▪ Significant infection in G3 across all age classes ▪ G14 seemingly less infection at the moment
Slide 24: Psa-V
Psa-V • Company responding to support growers ▪ Sure technical advice when we have it ▪ Relationship ▪ Pollen milling venture ▪ Support community under stress ▪ Performance focus • Like most kiwifruit businesses, deliberate strategy being deployed to prepare the company for a green-only industry ▪ F
Slide 25: Strategy
SEKA SEEKA Strategy John Burke SEEKA KIWIFRUIT INDUSTRIES LIMITED 25 Seeka Stakeholder Meeting ― 26 September 2012
Slide 26: Strategy components
Strategy components • Board is committed to maintain stability and pursue deliberate strategy • Operational excellence • Compete for growers on price and performance • Financial stability ▪ Sell surplus assets and repay debt ▪ Withhold dividend ▪ Further review structure to reduce costs ▪ Sensibly l
Slide 27: Appropriate structure
Appropriate structure • At Seeka there is clear separation between Seeka Growers Limited and the Corporate • Seeka’s assets and debt are separated from grower funds • Seeka Growers Limited ▪ Own grower-controlled council of directors ▪ Separate bank accounts and audit • Grower funds are protected by
Slide 28: Summary
Summary • As you have seen Seeka remains in a strong financial position due to the strategy on reducing debt 28 Seeka Stakeholder Meeting ― 26 September 2012
Slide 29: END
SEKA SEEKA END SEEKA KIWIFRUIT INDUSTRIES LIMITED