Finance
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2009 Financial Year
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Seeka achieved a $3.98m operating surplus after tax for the year ended 31 March 2009, compared with $2.58m in 2008. Profit before tax totalled $5.59m, an increase of $3.56m over the prior year. The 2009 result includes an allowance of $779k for the impairment of orchard work in progress, reflecting uncertainty of market returns for green kiwifruit; and a $992k write down of the Company's position in interest rate hedging. In spite of these charges, March 2009 profit before tax exceeded the upper range forecast to shareholders at the half year.
Cash flow from operations totalled $12.59m, up from $5.25m in 2008. This increased cash flow enabled the Company to carry lower debt by $4.54m. A dividend distribution was made to shareholders of $1.51m on 10 December 2008. $6.45m was invested in plant upgrades during the year reflecting the Company's investment strategy. The Directors continue to review assets and investment holdings. The Berry packhouse, formerly a class 2 site, was sold realising $957k.
As outlined in the Half Year Report, all aspects of the Company were reviewed as a result of a difficult 2008. The resulting changes delivered improvements to operational performance, returns to orchard owners and earnings. The Company continues to innovate to improve earnings and operational results, knowing that further enhancements are available and required.
2008 Financial Year
— Seeka recorded an audited operating surplus after tax for the year ended 31 March 2008 of $2.576m compared with $5.459m in 2007. This result is consistent with the forecast in the interim report and reflects the effect of reduced orchard earnings.
Orchard revenues were significantly reduced, impacting on the profitability of orcharding and orchard leasing. The reduction was due to lower market pricing, particularly from Europe, high supply chain and compliance costs, and the effects of a high New Zealand dollar against key trading currencies.
Financially, the Company's post harvest operations performed strongly. However the division delivered high fruit loss. The Company has implemented a series of significant changes to return this key performance indicator to best practice.
Cash flow from operations for the year totalled $5.252m, comparing with $4.297m in 2007. The improvement is largely the effect of the sale of South Auckland Pack and Cool and does not fairly reflect the impact of reduced orchard earnings.
Uncertainty about the forecast orchard gate returns at the time of the interim report, combined with likely slow distributions from Zespri, led the Company to review its capital programme and suspend the dividend. Such action was dramatic, but given the level of uncertainty, prudent.
During the year Seeka fully transitioned to International Financial Reporting Standards (IFRS). All results included in this report are compliant with the new standards and the conversion to IFRS has affected both the 2008 financial results and the 2007 comparatives.
