Seeka Limited — AGM Information 2020

Apr 17, 2020

==> picture [88 x 57] intentionally omitted <==

Annual Shareholder Meeting 17 April 2020

Agenda

==> picture [50 x 32] intentionally omitted <==

Welcome to Seeka’s online meeting

1

Directors

2

Proxies and voting instructions

3

Chairman’s introduction

4

Chief executive’s report

5

Resolutions

6

General business

==> picture [960 x 15] intentionally omitted <==

2

Directors

==> picture [50 x 32] intentionally omitted <==

==> picture [133 x 189] intentionally omitted <==

==> picture [133 x 189] intentionally omitted <==

==> picture [133 x 189] intentionally omitted <==

==> picture [134 x 189] intentionally omitted <==

==> picture [133 x 189] intentionally omitted <==

Marty Brick

John Burke

Cecilia Tarrant

Ratahi Cross

Amiel (Mel) Diaz

==> picture [134 x 189] intentionally omitted <==

Ashley Waugh

Chair audit and risk committee

==> picture [133 x 189] intentionally omitted <==

Fred Hutchings

Chairman

==> picture [960 x 15] intentionally omitted <==

3

Proxies

==> picture [50 x 32] intentionally omitted <==

Chair	6,527,708
Te Horipo Karaitiana	1,714,410
New Zealand Shareholders' Association	993,107
Marty Brick	83,000
Total	9,318,225

==> picture [960 x 15] intentionally omitted <==

4

Voting and asking questions

==> picture [50 x 32] intentionally omitted <==

==> picture [650 x 423] intentionally omitted <==

----- Start of picture text -----

The voting box Question box
----- End of picture text -----

==> picture [960 x 15] intentionally omitted <==

5

==> picture [50 x 32] intentionally omitted <==

Chairman’s Introduction Fred Hutchings

==> picture [960 x 15] intentionally omitted <==

Introduction

==> picture [50 x 32] intentionally omitted <==

Protecting our stakeholders in 2020

2019 Review

• −Progressing our strategy

• −Focus on achieving excellence

• −Strategic growth through capacity builds

• −Implementation of NZ IFRS 16 Leases

• −Financial highlights

• −Balance sheet strength

• −Dividend and directors’ fees

==> picture [960 x 15] intentionally omitted <==

7

Protecting our stakeholders in 2020

==> picture [50 x 32] intentionally omitted <==

Day 23 of Government lockdown

Seeka is a registered essential business

We continue to pick, pack and ship this season’s crop

We are keeping our people safe

COVID-19 will impact 2020 earnings

• −Too early to quantify

• −Examining all expenditure

• −Impact may be offset to some extent by ongoing orchard sales programme

50% of SunGold and 25% of Hayward kiwifruit harvest completed

• −Scheduled to finish early June

• −Update shareholders once harvest complete

Confidence in Seeka’s leadership team to achieve the best outcomes for all stakeholders

• −Industry leaders

==> picture [960 x 15] intentionally omitted <==

==> picture [50 x 32] intentionally omitted <==

2019 Review

==> picture [960 x 15] intentionally omitted <==

9

Progressed Seeka’s growth strategy Disciplined investment and divestment strategy being enacted

==> picture [50 x 32] intentionally omitted <==

Continuing investment in New Zealand post harvest capacity

−$15.9m Kerikeri new packhouse and grader – with new coolstores in 2020

−$21.4m Oakside grader upgrade and coolstore expansion

Aongatete acquisition

−$24.5m acquisition including $10.5m assumed debt

• −Accretive acquisition performing ahead of expectations

Orchard sales reducing debt as planned, restoring balance sheet strength

−$34.6m Northland orchards sold and settled with term supply to Seeka

−$27.1m held for sale at year end

• −$10.1m subsequently settled in 2020

==> picture [960 x 15] intentionally omitted <==

10

Focused on achieving excellence

==> picture [50 x 32] intentionally omitted <==

Positioning a resilient business for growth

Australian sale and lease back project

−Project remains in progress – held up due to COVID-19

−Likely requires Australian Foreign Investment Review Board approval – can take 6 months

Consolidated our business to capture improvements

−Company structure reset, senior management structure reset

• −Aongatete team integrated into Seeka

• −More synergies in 2020

Debt well positioned

• −Continues to reduce

• −Sales programme on track – but taking longer

• −Disciplined process around investments

==> picture [960 x 15] intentionally omitted <==

11

Strategic growth through capacity builds

==> picture [50 x 32] intentionally omitted <==

Building capacity to handle increasing produce volumes

==> picture [489 x 386] intentionally omitted <==

----- Start of picture text -----

Capacity builds
$16m $41m $21m $31m $35m
2015 2016 2017 2018 2019
$8m $20m $3m $18m Major projects $18m $21m
Northland
Australia
Coromandel
KKP &
Katikati
Transpack
Oakside Oakside
12
----- End of picture text -----

• $144m invested in post harvest over 5 years

• −Built to handle forecast volumes

• −Supply and demand driven

• −Capacity in place for next two seasons once Kerikeri completed

Next innovation is offshore storage

==> picture [125 x 114] intentionally omitted <==

• −Managed by post harvest companies

• −Industry innovation

==> picture [960 x 15] intentionally omitted <==

12

Implemented international accounting standard for leases NZ IFRS 16 Leases

==> picture [50 x 32] intentionally omitted <==

All reported results comply with NZ IFRS 16 Leases

• −Including 2018 comparatives

Seeka’s reported financial results change

At the start of a lease

• −Lease interest costs and lease depreciation are higher than actual lease costs

• −But lower later in the lease period

When Seeka sells then leases back an orchard

	2019	IFRS 16	2019
NZD millions	Pre IFRS 16	adjustment	Reported
Revenue	238.2	( 1.3)	236.9
Gross profit	40.6	6.9	47.5
EBITDA	27.6	6.9	34.5
Net profit after tax	8.1	( 1.2)	6.9

• −The full gain on sale is not recognised in the statement of financial performance

• −But Seeka still pays tax on the full gain

$1.2m impact on net profit after tax

• −Net effect of changes to lease depreciation, lease interest and the recognition of income and tax on orchard sales

Significant effort by Seeka’s accounting team

==> picture [960 x 15] intentionally omitted <==

13

Financial highlights

==> picture [50 x 32] intentionally omitted <==

Year ended 31 December 2019 – audited

$237m record revenue – up 16%

−Revenue growth in orcharding and post harvest

$34.5m EBITDA – up 4%

−EBITDA exceeds October guidance ($32.5m ~ $33.5m)

$6.9m Net profit after tax – up 3%

$368m of assets – up $67m – 22% increase

−Includes $45m of right-of-use lease assets

	2019	2018	Growth
NZD millions		Restated
Revenue	236.9	203.7	16%
Cost of sales	189.4	158.0	20%
Gross profit	47.5	45.8	4%
EBITDA	34.5	33.3	4%
Net profit after tax	6.9	6.7	3%
Total assets	368.2	300.9	22%
Right-of-use lease assets	44.7	32.7	37%

==> picture [960 x 15] intentionally omitted <==

All results and comparatives consistent with NZ IFRS 16 Leases

14

Disciplined focus on bank debt

==> picture [50 x 32] intentionally omitted <==

$116.8m net bank debt at 31 December 2019

Net bank debt

−$31.3m repaid since 30 June 2019

$34.6m of asset sales in 2019

• $32.1m of assets for sale or sold at year end

• −Acquired as part of strategic entry into new regions

• −Orchards refurbished for on sale

• $10.1m sold at year end and settled February 2020

• −$22.0m being marketed and expected to settle in 2020

==> picture [77 x 19] intentionally omitted <==

----- Start of picture text -----

$116.8m
----- End of picture text -----

==> picture [407 x 233] intentionally omitted <==

----- Start of picture text -----

1
$32.1m
$84.7m
3.38x 2.45x
Debt to EBITDA
Debt to EBITDA
December Orchard assets Debt after
2019 held for sale or sold orchard sales
----- End of picture text -----

==> picture [960 x 15] intentionally omitted <==

1. $27.1m of assets held for sale plus $5.0m of related debtors

15

Dividend and directors’ fees

==> picture [50 x 32] intentionally omitted <==

Cancellation of the dividend prudent in current business environment

$0.12 per share dividend was declared

• −$0.08 from normal operating earnings

• −$0.04 from asset sale settled in February

Payment scheduled for 17 April cancelled

• −Prudent to cancel due to COVID-19 and associated uncertainty

• −To be reconsidered at June Board meeting

Director fees reviewed

• −Proposed $80k increase to $530k per annum

• −Fee increase was withdrawn

==> picture [960 x 15] intentionally omitted <==

16

==> picture [50 x 32] intentionally omitted <==

Chief executive’s report Michael Franks

==> picture [960 x 15] intentionally omitted <==

Safety

==> picture [50 x 32] intentionally omitted <==

2019 results

• 3 serious harm injuries in 2019

• −Aongatete, Oakside, Bunbartha

2020 H&S targets	2019 Actuals	2020 Targets
Total recordable injury frequency	5.0	Less than 4.5
Notifiable injuries	3	0
Notifiable injuries including incidents	3	1
Severity rate	10.5	Less than 4.5

Focus areas

• −Traffic management

• −Moving plant

• −Machine guarding

• −Fatigue

==> picture [270 x 386] intentionally omitted <==

==> picture [960 x 15] intentionally omitted <==

18

Seeka’s value chain

==> picture [50 x 32] intentionally omitted <==

A New Zealand company feeding the world

Orcharding, NZ

Growing kiwifruit, avocado and kiwiberry

• Owned, leased, managed and long term leased orchards

• Orchard development

• Largest kiwifruit grower

Post harvest, NZ

Picking, packing, coolstoring and dispatch of produce

• 8 modern facilities

• Delicious Nutritious Food Company

• Innovation and maintenance team

Retail services, NZ Marketing produce in NZ and Australia

• Adding value

• Marketing and distribution of produce

• Growing wholesale business in Auckland and Christchurch

Seeka Australia Own orchards plus post harvest facilities

• Adding value

• Kiwifruit, nashi, European pears

• Largest kiwifruit grower

• Fully integrated business

==> picture [446 x 132] intentionally omitted <==

----- Start of picture text -----

of export kiwifruit of export kiwifruit
8 [%] 20 [%]
APPROX are grown by Seeka APPROX are packed by Seeka
----- End of picture text -----

==> picture [66 x 47] intentionally omitted <==

Innovative services and products from our value chain

==> picture [54 x 54] intentionally omitted <==

Growing and retailing our Australian fruit direct to the markets

==> picture [960 x 15] intentionally omitted <==

19

Orchard operations – New Zealand

==> picture [50 x 32] intentionally omitted <==

Growing kiwifruit, avocado and kiwiberry – led by Kevin Halliday and Simon Wells

$72.4m revenue – up 37% on 2018

• −Lift in kiwifruit returns

• −Long term leased orchards reaching full production

• −Increased demand for management services

• −Includes Aongatete

• −But Hayward yields 17% down from dry summer

Financial performance - Orchard operations

	2019	2018	Growth
NZD millions		Restated
Revenue	72.4	52.8	37%
EBITDA - as reported	5.0	4.2	19%
EBITDA - pre NZ IFRS16 Leases	3.6	3.4	6%
Total assets	54.2	39.0	39%
Right-of-use lease assets	13.0	3.5

$5.0m EBITDA – up 19%

• −Benefited from IFRS 16 Leases standard

Operational performance

NZ kiwifruit grown Millions of trays

New long term leases in development

56 hectares of kiwifruit and avocados

• −Term commercial arrangements with land owners

• −New income streams from 2020

==> picture [426 x 154] intentionally omitted <==

----- Start of picture text -----

11.2 11.4
10.7
9.2
2.3 8.5
3.1 3.9 SunGold
1.2
8.9
2.6
8
7.6 7.5 Hayward
5.9
2015 2016 2017 2018 2019 20
----- End of picture text -----

==> picture [960 x 15] intentionally omitted <==

New NZ IFRS16 Leases standard implemented FY19, with FY18 results restated.

Post harvest operations – New Zealand

==> picture [50 x 32] intentionally omitted <==

Harvesting, packing, coolstoring, dispatching and processing produce – led by Kevin Halliday and Lance Tasker

• $140.1m revenue – up 13%

• −Includes Aongatete

• −Increase in overall trays

• −Per tray margins and efficiencies achieved

• −But Hayward volumes down on expectation

• −DNFC earnings affected by lower kiwiberry volumes

Financial performance – Post harvest operations

	2019	2018	Growth
NZD millions		Restated
Revenue	140.1	123.8	13%
EBITDA - as reported	41.0	37.2	10%
EBITDA - pre NZ IFRS16 Leases	35.1	32.1	9%
Total assets	222.9	165.4	35%
Right-of-use lease assets	23.8	22.5

$41.0m EBITDA – up 10%

Operational performance

Capacity in place for next two years

• −Once Kerikeri completed

==> picture [106 x 22] intentionally omitted <==

----- Start of picture text -----

NZ kiwifruit handled
Millions of trays
----- End of picture text -----

==> picture [439 x 146] intentionally omitted <==

----- Start of picture text -----

33.5
32.4
31.4
27.8
25.7 Class 2 & other
7.4
4.4 10.8 14.4
23.5 8.7 SunGold
22.1
19.2
17.4
15.6 Hayward
2015 2016 2017 2018 2019 21
----- End of picture text -----

==> picture [960 x 15] intentionally omitted <==

New NZ IFRS16 Leases standard implemented FY19, with FY18 results restated. Values may not always sum due to rounding

Retail services operations – New Zealand

==> picture [50 x 32] intentionally omitted <==

Marketing produce, retail services and Kiwi Crush marketing – led by Verena Cunningham

$8.6m revenue – down 25%

• −Lower kiwiberry volumes from dry summer

• −Lower avocado volumes

• $1.7m EBITDA – down 26%

Business revitalised in 2019

Financial performance – Retail services operations

Financial performance – Retail services	operations
	2019	2018
NZD millions		Restated
Revenue	8.6	11.5	(25%)
EBITDA - as reported	1.7	2.3	(26%)
EBITDA - pre NZ IFRS16 Leases	1.3	1.6
Total assets	11.2	13.3	(16%)
Right-of-use lease assets	3.8	4.2

Significant improvement late 2019

• −Trading turnaround Q4

Growth in retail services set to continue

==> picture [960 x 15] intentionally omitted <==

New NZ IFRS16 Leases standard implemented FY19, with FY18 results restated.

22

Australian operations

==> picture [50 x 32] intentionally omitted <==

Growing, packing and retailing kiwifruit, nashi and European pears – led by Rob Towgood

$11.6m revenue – down 22%

• −Kiwifruit yields down 27% following hot summer

• −Green nashi unprofitable – have removed some plantings

Kiwifruit orchards marketed for sale and leaseback

• −Includes long-term supply commitment

2020 growing conditions are better

• −Removed some unprofitable green nashi

• −Improved growing techniques

Financial performance – Retail services operations

Financial performance – Retail services	operations
	2019	2018
NZD millions		Restated
Revenue	11.6	14.9	(22%)
EBITDA - as reported	(0.6)	(0.1)
EBITDA - pre NZ IFRS16 Leases	(0.7)	(0.1)
Total assets	52.2	49.2	6%
Right-of-use lease assets	0.1	0.1

Operational performance

Fruit handled

Planted areas being reset to match market opportunities

• 96 hectares in development

• −Investing in new Club pear varieties – Ricó and Lanya

• −Establishing Gold / Red kiwifruit variety

• −Renewing varieties

Thousands of tonnes

==> picture [235 x 124] intentionally omitted <==

----- Start of picture text -----

5.6
1.8 4.2
Other
1.4
1.3 Pears
0.9 Nashi
2.6
1.8 Kiwifruit
2018 2019
----- End of picture text -----

==> picture [960 x 15] intentionally omitted <==

New NZ IFRS16 Leases standard implemented FY19, with FY18 results restated.

23

Trends in financial performance

==> picture [50 x 32] intentionally omitted <==

EBITDA reflects the cash generated by the business

Improvement in EBITDA from $13.9m to $34.5m since 2015

EBITDA

2019 result downsides

• −Lower Hayward yields and volumes

• −Lower Kiwiberry volumes

• −Lower volumes in Australia

• −Lower earnings in SeekaFresh

2019 result upsides

==> picture [340 x 161] intentionally omitted <==

----- Start of picture text -----

$34.5m
$33.3m
$24.8m
$23.1m
$13.9m
2015 2016 2017 2018 2019
----- End of picture text -----

• −Gains on sales of assets

• −Increased volumes arising from Aongatete

• −Synergies in the Aongatete purchase

Overall EBITDA is behind expected earnings levels

• −Seeka focused on operational improvements

==> picture [960 x 15] intentionally omitted <==

24

Operating in growth industries

==> picture [50 x 32] intentionally omitted <==

Feeding the world with nutritious produce

Kiwifruit industry targeting $4.5b global revenue by 2025

−New Zealand industry volume to increase by 25%

Major investments in SunGold production

• −750 hectares of licence released each year through to 2022

Avocado industry targeting 10,000 hectares by 2046

• −Large commercial developments with a focus on Northland

Seeka’s goal is to efficiently handle the increased volumes

• −Avoid inefficient investment in New Zealand

• −Evaluate offshore coolstorage

Seeka’s kiwifruit outlook SunGold and Hayward trays to post harvest

==> picture [301 x 327] intentionally omitted <==

----- Start of picture text -----

45.8m
43.7m
40.7m
38.1m
37.1m
35.4m
2020 2021 2022 2023 2024 2025
SunGold Hayward Other
----- End of picture text -----

==> picture [960 x 15] intentionally omitted <==

25

Seeka is increasingly focused on sustainability

==> picture [50 x 32] intentionally omitted <==

==> picture [960 x 15] intentionally omitted <==

26

COVID-19 Coronavirus pandemic and 2020 commentary COVID-19 impacting 2020 operations and earnings

==> picture [50 x 32] intentionally omitted <==

Seeka is an essential service

• −Staff and stakeholder safety is not negotiable

• −2m distancing initially cut production by 50%

• −Innovation lifted production to 85%

• −Costs are higher per unit handled

Labour very short

• 370 experienced Seeka RSE workers not in the country

• −Reliable labour an issue with constant staff turnover

• −100 to 150 people short a day

• −Improved incentives for key staff

Industry challenges

• −Industry maturity testing added new complexity

• −Seeka’s lab VLS delivering valuable testing service

==> picture [451 x 323] intentionally omitted <==

SunGold crop harvesting to expectations Hayward yields currently below forecast

Seeka has the capacity, protocols and staff to safely harvest, pack and ship the 2020 kiwifruit crop

==> picture [960 x 15] intentionally omitted <==

27

==> picture [50 x 32] intentionally omitted <==

Resolutions Fred Hutchings

==> picture [960 x 15] intentionally omitted <==

Resolution 1

==> picture [50 x 32] intentionally omitted <==

Ordinary resolution

"To receive, consider and adopt the Annual Report of Seeka and the Financial Statements for the year ended 31 December 2019 together with the Auditor’s Report thereon."

==> picture [960 x 15] intentionally omitted <==

29

Resolution 2

==> picture [50 x 32] intentionally omitted <==

Ordinary resolution

Director elections

3 directors standing for re-election

Board supports the candidates for re-election

==> picture [133 x 188] intentionally omitted <==

==> picture [133 x 188] intentionally omitted <==

==> picture [133 x 189] intentionally omitted <==

Marty Brick

John Burke

Cecilia Tarrant

==> picture [960 x 15] intentionally omitted <==

30

Resolution 2a

==> picture [50 x 32] intentionally omitted <==

==> picture [133 x 188] intentionally omitted <==

2a. “To re-elect Martyn Brick as a Director.”

Marty Brick to address the meeting

3 minutes to address the meeting

==> picture [960 x 15] intentionally omitted <==

31

Resolution 2b

==> picture [50 x 32] intentionally omitted <==

==> picture [133 x 188] intentionally omitted <==

2b. “To re-elect John Burke as a Director.”

John Burke to address the meeting 3 minutes to address the meeting

==> picture [960 x 15] intentionally omitted <==

32

Resolution 2c

==> picture [50 x 32] intentionally omitted <==

==> picture [133 x 188] intentionally omitted <==

2c. “To re-elect Cecilia Tarrant as a Director.”

Cecilia Tarrant to address the meeting

3 minutes to address the meeting

==> picture [960 x 15] intentionally omitted <==

33

Resolution 3

==> picture [50 x 32] intentionally omitted <==

Ordinary resolution

"To record the re-appointment of PwC (PricewaterhouseCoopers) as auditor of the Company, and to authorise the Directors to fix the remuneration and expenses of the auditor for the coming year."

==> picture [960 x 15] intentionally omitted <==

34

Voting

==> picture [50 x 32] intentionally omitted <==

If you have not already done so, can shareholders now please cast your vote

==> picture [960 x 15] intentionally omitted <==

35

==> picture [50 x 32] intentionally omitted <==

General business

==> picture [960 x 15] intentionally omitted <==

My thanks

Directors

For diligent attention to the company

Management and staff

For an excellent year

Growers and contractors

For ongoing support

Customers and consumers

For buying our produce

Shareholders

For continuing interest in the company

You have 5 minutes left to cast your vote

==> picture [960 x 15] intentionally omitted <==

37

==> picture [204 x 141] intentionally omitted <==

seeka.co.nz