SEK
23/12/2015 14:54
FORECAST
PRICE SENSITIVE
REL: 1454 HRS Seeka Kiwifruit Industries Limited
FORECAST: SEK: Seeka updates the market
Seeka updates current year profit guidance
Seeka revises its current year profit guidance for its New Zealand based
operations, with profit expected to be between 25% and 35% ahead of its 2014
earnings. Accordingly, Seeka expects its profit after tax for its New
Zealand based operations to be in the range of $3.960m and $4.277m (New
Zealand based operations FY2014: $3.17m).
Good results have been achieved across the business, including improved
results from the Glassfields division. However, offsetting those results
are a number of factors that have impacted on the forecast financial results
for 2015, including the impacts of the Oakside fire and resulting insurance
claims and the purchase of the new Australian business Seeka Australia PTY
Ltd as outlined below.
In the case of the Oakside fire, Seeka has a number of active insurance
claims. Firstly for the material damage to the Oakside site itself and
reinstatement. The minimum value for the physical damage has been agreed,
partially paid and included in the forecast for the current year. Secondly
Seeka and its growers suffered material fruit softening and loss as the
result of the fire and the strategy put in place to mitigate fruit loss.
While the strategy was successful, growers still suffered a material loss
that is the subject of a further insurance claim. This claim has partly been
agreed, but a substantial portion is still in the process of evaluation by
our Insurance underwriters. Seeka considered it important to stand by its
growers as it worked through the detailed insurance process and has advanced
$4.04m to the grower pool to maintain grower payments and minimise risk of
grower loss. In doing so, it was agreed that the advance will only be
recovered from any further insurance proceeds from the active claim should
the claim be accepted. The cost of the $4.04m is fully allowed for in the
forecast range above and will be potentially recovered from further insurance
recoveries, providing upside to our results. If this occurs before finalising
the 31 December 2015 Financial Statements all accepted insurance proceeds
will be accounted for in 2015, otherwise in the financial year it occurs.
While Seeka expects its Australian business to deliver an after tax loss of
between NZD$750k and $1.000m, due largely to transaction costs and stamp
duty, the Australian business has proceeded well. Crops in Australia look
good at this stage and has been largely unaffected by recent hail events in
Shepparton. The climate is hot with the El Nino weather pattern and Seeka
Australia has taken steps to purchase additional water allocation and shares.
The cherry harvest has successfully completed and major pear harvest expected
to commence on 10 January 2016. The Australian operation expects to expense
some NZD$550,000 in the current year for stamp duty associated with the
purchase and will trade at a small loss in 2015, as expected. The Australian
acquisition is planned to be profitable in 2016.
For further information please contact:
Michael Franks Seeka Chief Executive 021356516
Stuart McKinstry Seeka Chief Financial Officer 0212215583
End CA:00275693 For:SEK Type:FORECAST Time:2015-12-23 14:54:33
