Seeka Limited · NZX:SEK
Seeka — Seeka Kiwifruit Industries — Investor Presentation (June 2006)
34 slides from Seeka's investor presentation, June 2006
Slide 1: Delivering on the Promise …
Seeka Kiwifruit Industries Limited Delivering on the Promise … June 2006
Slide 2: Background
Background > Seeka has initiated a number of business improvement initiatives that are designed to ensure the strategic plan delivers exceptional returns for shareholders > This presentation seeks to measure the impact of these initiatives, using the 2005/06 financial year as the base > The objectiv
Slide 3: Seeka's Business
Seeka’s Business > Post harvest – mix of efficiency and sophisticated service » Harvest, pack, store and distribute fruit for low cost, high service » Using leading edge technology to enhance grower returns > Orcharding – certainty of supply and exposure to fruit upside » Orchard portfolio structure
Slide 4: Our Growers – our customer base
Our Growers – our customer base > Seeka has a broad range of growers geographically spread from Auckland to Gisborne > Strong ethos of constant improvement, quality products, information sharing and innovation > Understand the market imperatives > Sophisticated communication and payment system > Foc
Slide 5: Our staff
Our staff > Experienced, loyal client relationship staff > 200 permanent staff who are passionate about kiwifruit > 2,000 seasonal staff across 18 post harvest facilities > Research & Development programme led by Murray Judd, ex Hort Research scientist > Large sophisticated laboratory employing 30 s
Slide 6: Understanding the post harvest business
Understanding the post harvest business 20 2500 Millions Trays packed 2000 Hectares supplied 15 Hectares supplied 1500 Trays packed 10 1000 5 500 0 0 2000 2001 2002 2003 2004 2005 2006 The key driver for this business division is volume Volume = supplying hectares x yield per hectare Investor Presen
Slide 7: Orchard Operations
Orchard Operations Leased and managed orchards > Seeka’s orchard operations » 1,240 hectares » 52% of Seeka’s post harvest throughput » 12% of New Zealand production Long term leased Leased Managed Contracted growers 0 500 1000 1500 2000 2500 3000 Supplying hectares Investor Presentation June 2006 S
Slide 8: Lease arrangements
Lease arrangements Tenure of Seeka’s Supply arrangement supply exposure to fruit prices Managed 1 to 3 year None >Seeka manages and maintains growers contracts orchards year round for a management fee >Seeka receives certainty of supply and quality without fruit price exposure Leased 1 to 3 year Sha
Slide 9: Orchard lease performance
Orchard lease performance Trays per Hectare 10,000 Green contract 10,000 Gold contract Green leased Gold leased 8,561 8,624 8,101 7,871 7,685 7,763 7,500 7,194 7,500 6,897 6,4016,425 5,890 5,270 5,000 5,000 2,500 2,500 0 0 2004 2005 2006 2004 2005 2006 Investor Presentation June 2006 SEEKA
Slide 10: Long term orchard developments
Long term orchard developments > In 2001 Seeka developed 106 hectares of kiwifruit orchards under 20 year land lease arrangements > Of these 75 hectares are planted in Hort16A (ZESPRI™ GOLD) > These orchards are coming into full production over the 2006 and 2007 harvest seasons > To date $8.7m of de
Slide 11: Seeka Orchard Gate Return
Seeka Orchard Gate Return 2006 2004 2002 Green Gold 2000 0 2 4 6 8 Orchard Gate Return per tray The long term leases are fully exposed to the movement in OGR. OGR is impacted by foreign currency, commodity prices, market mix. Investor Presentation June 2006 SEEKA
Slide 12: Foreign Currency Movements
Foreign Currency Movements 90 0.70 80 0.60 70 0.50 60 50 0.40 40 0.30 30 0.20 20 JPY 0.10 EUR 10 0 0.00 Apr 2000 Apr 2001 Apr 2002 Apr 2003 Apr 2004 Apr 2005 Apr 2006 Apr 2000 Apr 2001 Apr 2002 Apr 2003 Apr 2004 Apr 2005 Apr 2006 Rule of Thumb GREEN OGR ORGANIC OGR GOLD OGR JPY drops ¥1 +.02 +.04 +.
Slide 13: Projections of financial impact
Projections of financial impact 1. Base position – financial year ended 31 March 2006 2. Potential impact over three years 3. Financial projections 4. Key ratios 5. Earnings to assets 6. Earnings to trays 7. Costs to trays 8. Assets to trays 9. Investments
Slide 14: Base position
Base position 2004/05 2005/06 2005/06 $000s Actual Prospectus Actual Earnings before Interest and Taxation, Depreciation and Amortisation Orchard division 844 398 (1,230) Long term leases 246 1,317 915 Post harvest 9,752 16,791 16,437 Less: Corporate overheads (2,883) (3,989) (4,164) Business develo
Slide 15: Incremental potential impact
Incremental potential impact 2006/07 2007/08 2008/09 $000s Projection Projection Projection Earnings before Interest and Taxation, Depreciation and Amortisation Orchard division 1,562 684 656 Long term leases 1,084 572 42 Post harvest 40 1,656 1,108 Less: Corporate overheads (151) 100 0 Business dev
Slide 16: Key initiatives
Key initiatives > Orchard division » Focus on achieving base margins in leasing portfolio > Long term leases » Continue above average orchard productivity > Post harvest » Focus on gains from economies of scale » Targeted capacity growth > Corporate overheads » Savings due to consolidation > Other I
Slide 17: Financial projections
Financial projections 2004/05 2005/06 2006/07 2007/08 2008/09 $000s Actual Actual Projection Projection Projection Earnings before Interest and Taxation, Depreciation and Amortisation Orchard division 844 (1,230) 332 1,016 1,672 Long term leases 246 915 1,999 2,571 2,613 Post harvest 9,752 16,437 16
Slide 18: Key Assumptions and Risks
Key Assumptions > Base of 2005/06 financial performance RISKS Orchard division >Significant escalation in on-orchard costs >Decline in ZESPRI return >Seasonal fluctuations Long term leases > Significant decline in ZESPRI return: foreign currency, price, market mix > Orchard productivity of good tast
Slide 19: Tray equivalents packed
Tray equivalents packed 25m 20m Trays packed 15m 10m 5m Actual Projection 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Investor Presentation June 2006 SEEKA
Slide 20: Operating EBITDA
Operating EBITDA $25m $20m $15m $10m $5m Actual Projection 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Investor Presentation June 2006 SEEKA
Slide 21: Key ratios
Key ratios 2004/05 2005/06 2006/07 2007/08 2008/09 Actual Actual Projection Projection Projection Operating EBITDA ($,000) 7,482 11,195 13,232 16,609 18,908 Net profit ($,000) 3,044 4,230 3,670 5,933 7,473 Earnings per share (quasi) 0.35 0.31 0.27 0.45 0.57 Earnings per share (real) 0.35 0.35 0.30 0
Slide 22: Earnings to Assets
Earnings to Assets 2004/05 2005/06 2006/07 2007/08 2008/09 $000s Actual Actual Projections Projections Projections Operating Earnings before Interest and Taxation, Depreciation and Amortisation Orchard division 844 (1,230) 332 1,016 1,672 Long term leases 246 915 1,999 2,571 2,613 Post harvest 9,752
Slide 23: Earnings to Assets
Earnings to Assets 40% Orchard division Long term leases Post harvest Seeka Kiwifruit Industries 30% 20% 10% 0% -10% 2004/05 2005/06 2006/07 2007/08 2008/09 Investor Presentation June 2006 SEEKA
Slide 24: Earnings to trays
Earnings to trays 2004/05 2005/06 2006/07 2007/08 2008/09 (000) Actual Actual Projections Projections Projections Operating Earnings before Interest and Taxation, Depreciation and Amortisation Orchard division 844 (1,230) 332 1,016 1,672 Long term leases 246 915 1,999 2,571 2,613 Post harvest 9,752
Slide 25: Costs to trays
Costs to trays 2004/05 2005/06 2006/07 2007/08 2008/09 Actual Actual Projections Projections Projections Key costs ($,000) Corporate Overheads 2,883 4,164 4,315 4,215 4,215 Business development 1,006 1,896 2,307 2,307 2,307 Interest 1,112 3,396 2,860 2,860 2,860 Depreciation 1,926 3,699 3,862 3,862
Slide 26: Costs to trays packed
Costs to trays packed $0.80 Corporate overheads Business development $0.70 Interest Depreciation $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 2004/05 2005/06 2006/07 2007/08 2008/09 Investor Presentation June 2006 SEEKA
Slide 27: Assets to trays
Assets to trays 2004/05 2005/06 2006/07 2007/08 2008/09 $000s Actual Actual Projections Projections Projections Total Assets Orchard division 13,188 19,554 19,680 19,680 19,680 Long term leases 10,934 11,147 10,531 9,888 9,245 Post harvest 43,856 56,223 57,076 56,687 56,298 Trays Orchard division, t
Slide 28: Investments
Investments 2005/06 2006/07 2007/08 2008/09 $,000 Actual Projections Projections Projections OPAC Return (after tax) 237 160 237 300 Investment 3,868 3,868 3,868 3,868 Return / Investment 6% 4% 6% 8% Vital Foods Return (after tax) 0 0 0 100 Investment 900 1,200 1,500 1,500 Return / Investment 0% 0%
Slide 29: OPAC
OPAC > Seeka has 20% cornerstone shareholding > OPAC is a major post harvest operator in Opotiki and Gisborne processing 3.8m trays > OPAC, together with its Italian partner Salvi, has developed 84 hectares of ZESPRI™ GOLD in Latina, Italy which is now coming into production > There is an important
Slide 30: Vital Foods
Vital Foods > Vital Foods are producers and marketers of kiwifruit-based nutraceuticals > Attracting strong interest from medical and associated fields > Marketing and distribution strategies yet to achieve objectives > Venture capital introduced to secure clinical trials and broaden marketing end u
Slide 31: Kiwi Produce
Kiwi Produce > Seeka is purchasing 25% of Kiwi Produce Limited, subject to due diligence > Pre-pack operation for kiwifruit > Key supplier to New Zealand supermarkets for fresh fruit and vegetables > Distribution links into Australian retail and wholesale markets > Complementary business for Seeka I
Slide 32: Conclusion
Conclusion > The financial impact of specific business improvement initiatives have been outlined in this presentation > Business improvement processes are an ongoing focus for management > Other areas of improvement are being planned and considered > These and key changes that may affect company pe
Slide 33: a strong company with a sensible growth path
SEEKA KIWIFRUIT INDUSTRIES LIMITED a strong company with a sensible growth path
Slide 34: Disclaimer
Disclaimer > We have provided this information in good faith > The financial analysis is based on the 2005/06 financial results and the projections are provided as an estimate of the effects of the various strategies we are employing > While every endeavour has been made to ensure the accuracy of th
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