Seeka Limited — Interim / Quarterly Report 2017

Oct 18, 2017

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Stakeholder Update

October 2017

Agenda

Chairman’s introduction

Chief Executive’s business performance update

Future direction – new ventures Questions

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Introduction Chairman – Fred Hutchings

Our commitment: Orchard to market excellence

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We grow and supply tasty and nutritious produce to the world

An international business based in Te Puke We deliver premium returns to our growers and stakeholders

To do this, we think of new ways to deliver on our brand promise

Safety First Inspirational people Growing futures

Founded on relationships Quality obsession Independently ingenious

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Our business

NEW ZEALAND ORCHARD DIVISION

• Kiwifruit, kiwiberry and avocados

• Orchard leasing – short and long term

• Orchard management

• Pollen

• Equipment for harvest and operational support

• On orchard technical advice

NEW ZEALAND NEW ZEALAND POST HARVEST RETAIL

• Harvest coordination

• Bananas, tropical fruit

• Quality management

• Packing

• Wholesale

• Cool storage

• Retail service provision

• Inventory management

• • Logistics

• Delivery to customer

• Laboratory maturity testing

• Delicious Nutritious Food Company – downstream value add

SEEKA AUSTRALIA

• High value premium produce, kiwifruit, nashis, pears and other fruit

• Integrated fruit supply to key Australian and export customers

• Growth focus

• New variety development

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The BIG produce numbers in 2017

31m Grow kilos of kiwifruit in New Zealand 8.5m trays	92.4m kilos of kiwifruit in New Zealand Pack, store, send to export 25.5m trays	2.7m kilos of avocados in New Zealand 0.5m trays Pack, store, send to export	3m kilos of kiwifruit in Australia 2.5m kilos of pears in Australia 0.8m trays Produce, handle and sell Produce, handle and sell

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Financial performance

Six months to 30 June 2017, unaudited

EBITDA $21.9m EPS 69 cents NPAT $11.1m Full year NPAT from operations

increase by 38% on pcp increase by 53% on pcp increase by 56% on pcp down by up to 15%

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Drivers of higher net profit

Improvements from Seeka Australia’s earnings

▪ EBITDA $3.4m vs. $1.52m pcp

▪ Successful acquisition and business is in profit

Successful completion of 2016/17 New Zealand avocado season

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Forecast unchanged

Drivers

• Lower Hayward volumes harvested and in store at 30 June (Week 27) > 6.6m trays in 2017 vs. 10.8m trays in 2016

▪ Lower anticipated avocado volumes in 2017/18 harvest

Down by up to 15% on 2017 operational earnings of $7.8m [as signalled in December 2016].

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Capital expenditure

$13.2m invested in infrastructure for future growth – in the six months

$5.8m coolstores

$0.8m plastic bins

$3.3m Seeka360 complex $1.8m New Zealand plant, property and equipment

$1.5m Seeka Australia

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40.9
Capital expenditure (millions)
24.8 (six months to June)
16.4
13.2 (six months to June)
5.6
1.0 1.6
2012 2013 2014 2015 2016 2017
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Capital expenditure (millions)

Major investment to manage increased crop Infrastructure not fully utilised in 2017, ready for 2018

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Net bank debt and net asset backing

	6 MONTHS	UNAUDITED	YEAR END
	JUNE 2017	JUNE 2016	DEC 2016
Net debt	$94.5m	$76.9m	$72.8m
Net asset backing per share	$5.49	$4.71	$4.88

69 cents basic earnings per share, up 53% on pcp $94.5m net debt, up $21.7m

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Our growth strategy continues

Kiwifruit is our foundation, targeting integrated fruit supply opportunities that deliver accretive value Kiwifruit, Avocado, Nashi, European pears are the current core categories Geographically spread

Delivering to the brand values; safety always, inspirational people, growing futures, quality obsession, independently ingenious, and founded on relationships

Delivering superior returns to stakeholders

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Planned path to growth

71% shareholder return over two years

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$3.34 $5.30
Dividend payments 10c 10c 10c 10c
$1.96 lift in price
40 cents paid in dividends
Oct 15 Dec 15 Feb 16 Apr 16 Jun 16 Aug 16 Oct 16 Dec 16 Feb 17 Apr 17 Jun 17 Aug 17 Oct 17
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Business performance update Chief Executive – Michael Franks

Safety first

No notifiable injuries, improvement on last year

	2017	2016
	YTD
	(to 30 Sep)	(to 31 Dec)
Notifiable injuries	0	1
Notifiable incident or event	1	0
Lost time injuries	19	33
Medical treatment	48	58
First Aid treatment	39	40
Total recordable injury frequency
(Lost time and medical treatment injuries	3.06	3.6
per 100,000 hours worked)

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New Health and Safety systems

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Permit to work procedure reviewed

System upgrades

Contractor compliance is leading the industry in safety, contractor and worker compliance

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New Zealand orchard operations

$5.8m EBITDA, up 5% on pcp

6 MONTHS UNAUDITED

JUNE 2017 JUNE 2016 Turnover/ revenue $36.8m $37.7 EBITDA $5.8m $5.5m

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New Zealand kiwifruit orchard operations

Less Green, Gold returns remain high

Class 1 kiwifruit trays (millions)

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11.2
9.2
2.3
8.5
7.4 6.9 7.2 1.2
2.6 Gold
1.2
0.1 0.4
Green
Total
6.2 6.8 6.8 8.0 8.9 5.9
2012 2013 2014 2015 2016 2017
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Lower Hayward volumes by 33%

▪ Forecast $6.06 per tray / $53,250 per hectare (pcp: $4.26/ $54,100)

Gold returns remain high, improving volumes on long term lease orchards ▪ Forecast $9.21 per tray/ $120k per hectare

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New Zealand post harvest operations

$17.1m EBITDA up 24% on pcp

	6 MONTHS	UNAUDITED
	JUNE 2017	JUNE 2016
Turnover/ revenue	$74.4m	$78m
EBITDA	$17.1m	$13.8m

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New Zealand post harvest operations Lower volumes will impact earnings

Class 1 and 2 kiwifruit trays (millions)

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32.4
27.8
25.5
21.8 21.4
19.6
2012 2013 2014 2015 2016 2017
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6 MONTHS UNAUDITED

	JUNE 2017	JUNE 2016
Green trays packed	16.2m	23.7m
Gold trays packed	9m	7.6m
Green UFI storage	0.3m	0.1m
Percent loaded to 30 June	64%	50%

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New Zealand retail services

• $1.3m EBITDA up 160% on pcp

Avocado market

• High volumes in the first half of the year

Competitive banana market

	6 MONTHS	UNAUDITED
	JUNE 2017	JUNE 2016
Turnover	$25.8m	$22.1m
Revenue	$10.9m	$5.1m
EBITDA	$1.3m	$0.5m

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Seeka Australia

$3.4m EBITDA, up 127%

Significant increase in earnings

6 MONTHS UNAUDITED

JUNE 2017 JUNE 2016 Turnover/ revenue $11.8m $13.3m EBITDA $3.4m $1.5m

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Seeka Australia

Increase in kiwifruit volumes, lower nashi volumes as trees recover from hail and mites

30 JUNE 2017 31 DECEMBER 2016

	KILOGRAMS	TRAYS	KILOGRAMS	TRAYS
Kiwifruit	2,990,826	826,195	2,374,720	656,000
Nashi	1,172,163		1,523,000
Corella	423,788		623,784
Packham	854,000		996,300
Other pears	83,421		169,454
Plums	25,605		31,500
Apricots (harvest second half of year)	-		43,682
Cherries (harvest second half of year)	-		16,074

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Our exciting new venture Getting more from our existing resources

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Delicious Nutritious Food Company

$0.2m EBITDA (six months)

New earnings stream to Seeka

6 MONTHS UNAUDITED JUNE 2017 Turnover/ revenue $0.6m EBITDA $0.2m

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EBITDA included in Retail Service Operations segment

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Healthy and nutritious products that taste great

Kiwi Crush and Kiwi Crushies

▪ From waste to functional food Avocado oil

• From waste to export markets

Kiwiberry processing

• High speed processing machine to deliver to premium markets

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Surplus fruit in, high value products out KCG building on Te Matai Road, Te Puke

Bespoke manufacturing plant Quality and compliance systems for food safety best practice Eight staff employed in local community

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Seeka Australia

Australia’s largest Kiwifruit and Nashi grower

Orchards in Shepparton, Victoria

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Kiwifruit, Nashi, European pears, plums, apricots and cherries

Nine orchards on 506 hectares

• 225 hectares in production

• 67 hectares in development

52 hectares greenfields and bare land

15 hectares being cutover

Post harvest and coolstore facilities 2650 mega litres of high-priority and temporary water shares

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Orchard development programme

$8m investment from 2016 to 2020

New kiwifruit orchards and new varieties

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Kiwifruit

Greenfield development, planting orchards on bare land

▪ Mirrabooka – 13 hectares

• Tarwin – 22 hectares

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Pears

Re-grafting European root stock over to brown nashi Infilling bare sidelands within NPO orchard with new nashi plantings

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Infrastructure and equipment

$5.3m investment from 2016 to 2020

New packing machine, packhouse extension, coolstores and orchard equipment

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Questions

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