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Please accept this latest update to our Growers and Stakeholders – bringing you up to speed with the latest Seeka and Industry . Seeka Limited Update You may have seen the recent movement in Seeka’s share price and I thought it was important to give you some context to what’s going on. Firstly, Seeka has performed much better financially from our base business than we might have reasonably expected. We have had some significant head winds to contend with in the current year including COVID-19 and drought, and we didn’t receive any Government wage subsidy for the lockdown. We have focussed on controlling our costs, taken some innovative steps like inviting people to reduce excessive leave levels and concentrated on growth in some of our new business areas (Avocados and SeekaFresh as examples) to improve our base operational performance. In addition to that, we have sold some of our Australian kiwifruit orchards (and leased them back) and this has yielded profit. Seeka lifted its earnings guidance at a profit before tax level for the 2020 full year from between $9m to $12m to between $15m and $17m. It’s a big movement. The AUD$26.5m from the Australian sale has now been received and will continue the development of our orchard business in Australia and to repay some debt to allow us to expand in other areas within New Zealand. Our lease in Australia is for an initial term of 10 years with the ability to extend right out to 30 years. We are committed to that business. So at this point in the update – our earnings are up and our debt is down. This morning Seeka has announced a dividend to be paid to our shareholders. The dividend is $0.12 per share and will be paid to all shareholders on the register at the end of business on December 24 and will be paid to them on January 27 (2021). So as a result – our earnings are up, our debt is down and we have put in place a competitive dividend to reward our patient shareholders. Zespri and China Many growers and stakeholders have been talking to us about the issue of the unlicensed SunGold in China. Zespri have announced that they intend to enter commercial arrangements to procure SunGold in China as a trial to try and limit the impact. Actually, this is not as straight forward as it seems. The Regulations were amended in 2017 so that PVR ownership and 12-month supply were no longer core business, and activities that were not considered core business needed KNZ approval or a “producer vote” approval. In 2019, there was a producer vote that enabled 12-month supply but specifically excluded procurement in Chile or China. In order for Zespri to put in place a trial commercial mechanism then it will either need KNZ approval or approval from a producer vote, noting the last one was a couple of years ago and noting that vote excluded China, something that seemingly Zespri now wants to do. It’s a fascinating situation – one which growers should watch carefully as the requirements are in the Regulations – its simple KNZ or Producer Vote. As we head to the close of 2020, please accept our kind regards and thanks for your support. We wish you and your family a safe and happy COVID free Christmas and look forward to working with you toward a successful 2021. Kind regards Michael |
Seeka Key
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