Seeka announces its 31 December 2017 result
Seeka Limited
12 Months to 31 December 2017 [Audited]
Commentary
A seasonal reduction in New Zealand yields reduced kiwifruit harvested and processed by Seeka for
the 2017 season by 21% compared to 2016. Within this total, the Hayward (green) component
reduced by 33%. The scale of this reduction and its potential to significantly impact the company’s
operational earnings was identified early. Seeka updated shareholders and took steps to minimise
costs and maximise earnings.
The steps taken by Seeka and outlined in this commentary led to a better profit from operations than
forecast given the scale of the reduction in New Zealand kiwifruit volume.
Seeka’s investment in new and upgraded plant, precooling and cool storage capacity in anticipation of
higher crop volumes, particularly Zespri SunGold fruit, meant the company was able to optimise plant
configuration and staff utilisation. Growers benefited through record low fruit loss while operational
efficiencies reduced costs.
A significant change to the banana sourcing arrangements of a key retail customer led to Seeka’s
retail services business losing a supply contract. Annually the carrying values of all assets are
reviewed for impairment, the loss of this supply contract resulted in an impairment of $2.031m in the
carrying value of goodwill.
Seeka ended the year with an excellent operational result and enters 2018 with a strong financial and
operational outlook.
Highlights
•
Profit after tax of $5.833m (2016: $10.385m), a decrease of 44%
(2016 comparative included the one-off after tax gain from insurance proceeds of $3.092m)
•
Improved earnings from Seeka Australia with earnings before interest, tax and depreciation
(EBITDA) of NZD$2.251m (2016: $1.029m), up 119%.
•
Record low fruit loss to Seeka’s New Zealand kiwifruit growers of 1.18% for Hayward (green)
conventional, 0.42% for Hayward (green) organic growers and 0.73% for Zespri SunGold
growers. Comparatively good results within the industry and specifically the best Seeka has
ever delivered.
•
Successful completion of the New Zealand 2016/17 avocado selling season with Seeka
handling a record 487,095 export trays (2015/16: 225,656 export trays) delivering $24.85 per
tray to growers (2016: $26.86). The forecast 2017/18 returns are in excess of $40.00 per export
tray.
•
Successful and safe harvest seasons for all crops across Australia and New Zealand including
kiwifruit, avocados, nashi, plums, pears and cherries.
•
Installation of a new $6.0m Compac Spectrim packing machine at Main Road Katikati that offers
automated grading. Also the relocation of the existing machine to the Peninsula packhouse to
handle increases in the Coromandel-grown crop.
•
Completion of the coolstore and pre-cooling capacity upgrades at Main Road, Katikati and at
KKP and Transcool, Te Puke, an investment in excess of $8.6m.
•
Implementation of Seeka’s Australian orchard plan resulting in the development of 60 hectares
of new kiwifruit orchard over the next five years along with the introduction of exciting new pear
varieties.
•
Establishment and commissioning of the Delicious Nutritious Food Company delivering a first
year earnings before interest, tax and depreciation of $0.294m.
•
Net debt (bank loans less bank deposits) totalled $83.121m (2016: $72.757m); an increase of
$10.364m. Total assets increased from $197.309m to $222.023m; an increase of $24.714m.
Dividend announcement
A dividend of $0.12 per share has been declared by the Board. The dividend is fully imputed and will
be paid on 23 March 2018 to those shareholders on the register at 5pm, 16 March 2018. The dividend
reinvestment plan will apply to the distribution. This dividend will bring the total dividends distributed in
the last 12 months to $0.22 (prior twelve months $0.20).
Outlook
Seeka is anticipating a return to average Hayward (green) kiwifruit yields along with a steady increase
in the Zespri SunGold volumes. The improvement programmes underway in Australia are expected to
progressively improve earnings, and along with the anticipated increased New Zealand avocado
earnings and continuing development of the Delicious Nutritious Food Company give Seeka a positive
earnings outlook. Seeka is anticipating an improvement to earnings at an EBITDA level of between
5% and 10%.
For more information contact
Michael Franks Stuart McKinstry
Chief Executive Chief Financial Officer
021 356 516 021 221 5583
23 February 2018
Reporting period for year ended 31 December 2017.
Financial summary
Revenue from ordinary activities ($000) $ 186,814 down 2%
Profit from ordinary activities before tax
attributable to security holders ($000) $ 9,908 down 27%
Net profit attributable to security holders ($000) $ 5,833 down 44%
EBITDA before revaluations and impairments ($000) $ 23,128 down 7%
Year ended Year ended
Per share values 31 December 2017 31 December 2016
Basic earnings per share $ 0.35 $ 0.65
Diluted earnings per share $ 0.34 $ 0.62
Net asset backing per share $ 5.63 $ 4.89
Net tangible assets per share $ 5.18 $ 4.34
Notes and Tables
1. This announcement should be read in conjunction with the attached 2017 annual report (Audited).
A copy of the 2017 annual report can also be found on Seeka's website www.seeka.co.nz.
2. EBITDA before revaluations and impairments is considered by the board to be a key measure of
performance and a reflection of cash flow generation.
3. The Directors consider turnover a useful measure for the readers of the Group financial
statements as it provides an indication of the Group's operating activity including the value of
sales as an agent made on behalf of growers and suppliers but where the Group is considered as
the vendor by the end customer.
Revenue ($000s) 2017
Turnover 217,902
Value of sales made as agent ( 31,088)
Revenue $ 186,814
EBITDA ($000s) 2017
Net profit before tax $ 9,908
Impairment charges and revaluations
Impairment of assets 102
Impairment of intangible assets 2,031
(Gain) on revaluation of land and buildings ( 1,396)
Depreciation expense 8,218
Amortisation of intangibles 484
Interest 3,781
EBITDA before impairments and revaluations $ 23,128
---
ANNUAL REPORT
2017
Contents
From the chairman and chief executive 2
2017 financial statements 13
statement of financial performance 14
statement of comprehensive income 15
statement of financial position 16
statement of changes in equity 17
statement of cash flows 18
notes to the financial statements 19
Auditors’ report 59
Corporate governance 64
Corporate governance statement 65
Director profiles 74
Interests register 76
Directors’ interests in seeka Limited securities 77
subsidiary companies 78
employee remuneration 79
other disclosures 80
operating assets statistics 81
securities statistics 82
Directory 83
Annual report 20172
From the ChAIrmAn AnD ChIeF exeCutIve
seeka is pleased to provide you with this report covering the 2017 financial year
A seasonal reduction in new Zealand yields reduced kiwifruit harvested and processed by seeka for the 2017 season by 21% compared
to 2016 Within this total, the hayward (green) component reduced by 33% the scale of this reduction and its potential to significantly
impact the company’s operational earnings was identified early seeka updated shareholders and took steps to minimise costs and
maximise earnings
the steps taken by seeka and outlined in this commentary led to a better profit from operations than forecast given the scale of the
reduction in new Zealand kiwifruit volume
seeka’s investment in new and upgraded plant, precooling and cool storage capacity in anticipation of higher crop volumes, particularly
Zespri sunGold fruit, meant the company was able to optimise plant configuration and staff utilisation Growers benefited through
record low fruit loss while operational efficiencies reduced costs
A significant change to the banana sourcing arrangements of a key retail customer led to seeka’s retail services business losing a
supply contract Annually the carrying values of all assets are reviewed for impairment, the loss of this supply contract resulted in an
impairment of $2 031m in the carrying value of goodwill
seeka ended the year with an excellent operational result and enters 2018 with a strong financial and operational outlook
highlights
• Profit after tax of $5 833m (2016: $10 385m), a decrease of 44%
(2016 comparative included the one-off after tax gain from insurance proceeds of $3 092m)
• Improved earnings from seeka Australia with earnings before interest, tax and depreciation (eBItDA) of nZD$2 251m (2016:
$1 029m), up 119%
• record low fruit loss to seeka’s new Zealand kiwifruit growers of 1 18% for hayward (green) conventional, 0 42% for hayward
(green) organic growers and 0 73% for Zespri sunGold growers Comparatively good results within the industry and specifically
the best seeka has ever delivered
• successful completion of the new Zealand 2016/17 avocado selling season with seeka handling a record 487,095 export trays
(2015/16: 225,656 export trays) delivering $24 85 per tray to growers (2016: $26 86) the forecast 2017/18 returns are in
excess of $40 00 per export tray
• successful and safe harvest seasons for all crops across Australia and new Zealand including kiwifruit, avocados, nashi, plums,
pears and cherries
• Installation of a new $6 0m Compac spectrim packing machine at main road Katikati that offers automated grading Also the
relocation of the existing machine to the Peninsula packhouse to handle increases in the Coromandel-grown crop
• Completion of the coolstore and pre-cooling capacity upgrades at main road, Katikati and at KKP and transcool, te Puke, an
investment in excess of $8 6m
• Implementation of seeka’s Australian orchard plan resulting in the development of 60 hectares of new kiwifruit orchard over the
next five years along with the introduction of exciting new pear varieties
• establishment and commissioning of the Delicious nutritious Food Company delivering a first year earnings before interest, tax
and depreciation of $0 294m
• net debt (bank loans less bank deposits) totalled $83 121m (2016: $72 757m); an increase of $10 364m total assets increased
from $197 309m to $222 023m; an increase of $24 714m
3
historical summary of financial performance
12 months to 31 December
new Zealand dollars2013
2
2014201520162017
Gross packed trays (excluding punnets and kiwiberry)
19,595,16621,272,27127,751,49632,438,54425,541,753
turnover
$109,387 $148,568 $184,740 $229,397 $217,902
revenue ($000s)
$97,371 $115,672 $142,112 $191,317 $186,814
eBItDA
1
($000s)
$9,942 $11,529 $13,925 $24,764 $23,128
eBItDA
1
as a percentage of sales
10.2%10.0%9.8%12.9%12.4%
nPBt ($000s)
$3,001 $4,263 $5,246 $13,612 $9,908
nPAt ($000s)
$2,295 $3,168 $4,272 $10,385 $5,833
earnings per share
$0.16$0.22$0.29$0.65$0.35
operating cashflow ($000s)
$8,829 $8,529 $1,804 $21,252 $14,058
operating cashflow per share
$0.61$0.55$0.11$1.22$0.80
total assets ($000s)
$98,681 $109,791 $164,318 $197,309 $222,023
net bank debt (000s)
$14,674 $17,242 $52,960 $72,757 $83,121
net assets per share
$4.02$4.07$5.23$4.89$5.63
1 eBItDA, a non-GAAP measure, is earnings before interest, tax, depreciation, amortisation and revaluations
2 the Group's financial statements were restated in 2013 to comply with an amendment to nZIAs41 "Agriculture" and IAs16 "Property, plant and equipment"
as related to bearer plants
Annual report 20174
orcharding
$48 58m
Post harvest
$96 70m
retail
services
$24 29m
seeka
Australia
$16 54m
operating segment revenue 2017
Orcharding, New Zealand
Growing export crops of kiwifruit, avocado and kiwiberry from more
than 220 orchards via management, lease and long-term lease
contracts
$48 58m revenue 2017
Post harvest, New Zealand
A contract processing service to harvest, pack, coolstore and
supply kiwifruit, avocado and kiwiberry from more than 700
orchards, including all produce from our orchard operations and for
independent growers
$96 70m revenue 2017
Retail services, New Zealand
seeka markets local and imported produce in new Zealand, exports
to Australia and niche international markets, plus manufactures and
sells the high-value nutritional foods Kiwi Crush and avocado oil
$24 29m revenue 2017
Seeka Australia
owns nine large orchards plus post harvest facilities that supply
Australian retailers with a large portion of Australia's locally-grown
kiwifruit, nashi and pears
$16 54m revenue 2017
revenue by operating segment overview
seeka supplies high-value produce to world markets Founded on new Zealand's kiwifruit industry, our new Zealand operating
segments service the value chain from orchard to market, with the seeka group also owning and operating a fully-integrated orchard-
to-market business in Australia
5
operational performance
the following table outlines seeka’s performance for the year the 2016 result has been adjusted for non-recurring items including the
grower incentive scheme costs for comparison with 2017
Dividend announcement
A dividend of $0 12 per share has been declared by the Board the dividend is fully imputed and will be paid on 23 march 2018 to those
shareholders on the register at 5pm, 16 march 2018 the dividend reinvestment plan will apply to the distribution this dividend will
bring the total dividends distributed in the last 12 months to $0 22 (prior twelve months $0 20)
outlook
seeka is anticipating a return to average hayward (green) kiwifruit yields along with a steady increase in the Zespri sunGold volumes the
improvement programmes underway in Australia are expected to progressively improve earnings, and along with the anticipated increased
new Zealand avocado earnings and continuing development of the Delicious nutritious Food Company give seeka a positive earnings
outlook seeka is anticipating an improvement to earnings at an eBItDA level of between 5% and 10%
1 revenues reduced by $1 2m, and is made up of the increase for $2 9m ($2 1m after tax) for the grower incentive scheme, refer to note 3 and reduced by
$4 1m ($3 1m after tax) for insurance proceeds, refer to note 3 eBItDA was reduced by $1 6m and includes the above and also by $0 4m ($0 3m after tax)
relating to the early termination of long-term orchard lease agreements eBIt was reduced by $1 4m and includes the above and also adjusted for impairment
of property, plant and equipment $0 1m ($0 1m after tax, note 9), impairment of investments and shares $0 4m ($0 4m after tax, note 20 and 22) and gain on
revaluation of land and buildings $0 3m ($0 3m after tax, note 9) All are considered to be non-recurring items
2 underlying trading result is considered by the Board to be a key measure of the business operational performance
3 eBItDA was reduced by $0 4m ($0 3m after tax) for insurance proceeds received $0 1m ($0 1m after tax, note 3) and early termination of long-term
orchard lease agreements $0 3m ($0 2m after tax) eBIt was increased by $0 4m and includes the above and also adjusted for impairment of property, plant
and equipment $0 1m ($0 1m after tax, note 9), impairment of goodwill $2 0m ($2 0m after tax, note 10) and gain on revaluation of land and buildings $1 4m
($1 0m after tax, note 9 and 10) All are considered to be non-recurring items
4 eBItDA, a non-GAAP measure, is earnings before interest, tax, depreciation, amortisation and revaluations eBItDA is considered by the Board to be a key
measure of performance and a reflection of cash flow generation
5 eBIt, a non-GAPP measure is earnings before interest and tax
new Zealand dollars
reported
result
December
2016
non-recurring
items (note 1)
December
2016
underlying
trading result
(note 2)
reported
result
December
2017
non-recurring
items (note 3)
December
2017
underlying
trading result
(note 2)
(Decrease)
/ increase to
reported
2016 result
(Decrease)
/ increase to
underlying
2016
total revenue ($000s)
$ 191,317$(1,164)$ 190,153$ 186,814-$ 186,814(2)%(2)%
eBItDA
4
before impairments
and evaluations ($000s)
$ 24,764$(1,560)$23,204$ 23,128$(385)$ 22,743(7)%(2)%
eBIt
5
($000s)
$ 16,958$(1,411)$ 15,547$ 13,689 $ 352$ 14,041(19)%(10)%
nPAt ($000s)
$ 10,385$(1,017)$ 9,368$ 5,833$ 851$ 6,684(44)%(29)%
Basic earnings per share
$ 0.65$(0.06)$ 0.59$ 0.35$ 0.05$ 0.40(46)%(33)%
net bank debt ($000s)
$ 72,757$ 72,757$ 83,121$ 83,12114%14%
Annual report 20176
7
review of operations
revenue for the twelve months ended December 2017 totalled $186 814m (2016: $191 317m) the reduction reflects lower total new
Zealand kiwifruit volumes handled from 32 438m trays to 25 675m trays, a decline of 21% hayward (green) volume declined by 33%
Consolidated earnings before interest tax, depreciation and amortisation (eBItDA) totalled $23 128m (2016: $24 764m); down 6 61%
eBItDA from seeka Australia totalled $2 251m (2016: $1 029m); up 119%
seeka implemented a number of innovations to minimise the impact of lower new Zealand kiwifruit volumes along with concentrating
on the Australian business, the avocado business and emerging business units including the establishment of the Delicious nutritious
Food Company
Consolidated profit after tax for the year totalled $5 833m (2016: $10 385m); down 43 8% It should be noted that the 2016 result
includes $3 092m in after tax one-off insurance proceeds
Cash flow from operations totalled $14 058m (2016: $21 252m); down largely due to the gross insurance proceeds of $3 627m
received in 2016
Cash invested in property, plant and equipment totalled $20 870m (2016: $40 920m); down on the previous corresponding period
(pcp) major capital expenditure items included the installation of a new Compac grader at main road and the relocation of the
previous main road machine to the Peninsula packhouse Capital works also included the construction of coolstores and pre-coolers at
main road, KKP and transcool along with the programme of converting wooden bins to plastic
seeka’s new Zealand coolstore infrastructure is now largely in balance with expected crop volumes and the next large project under
consideration is replacement of the packing machine at KKP to handle expected greater Zespri sungold volumes in 2019
$191.32
$186.81
total revenue
NZ$million
$115.67
$142.11
$ 97. 3 7
2013 2014 2015 2016 2017
$9.45
$11.29
$13.93
$24.76
$23.13
eBItDA
NZ$million
2013 2014 2015 2016 2017
$2.30
$3.17
$4.27
$10.39
$5.83
net profit after tax
NZ$million
2013 2014 2015 2016 2017
$21.13
1
1 excludes effect of insurance settlement
$7.30
1
Annual report 20178
orchard operations in new Zealand
Activities include the servicing and growing of kiwifruit, kiwiberry and avocados through managed, leased and long term leased
arrangements. Orchard operations span from Northland through the Coromandel, Bay of Plenty and East Coast.
Kiwifruit volumes decreased in 2017 following an industry-wide drop in green kiwifruit yields For the 2017 kiwifruit harvest seeka grew
30 70m kilograms (8 45m trays) compared to 40 57m kilograms in 2016 (11 16m trays)
In addition seeka grew 0 54m kilograms of avocados (98,356 trays) in the 2016/17 harvest (2015/16: 0 054m kilograms, 9,739 trays)
seeka also grew 0 04m kilograms of kiwiberry (24,402 trays) for harvest 2017 (2016: 0 03m kilograms, 20,202 trays)
seeka is actively investing in long term leases to replace those which have expired
total revenue for orchard operations for the year was $48 582m (2016: $47 889m) eBItDA of $6 376m (2016: $5 638m)
Post harvest operations in new Zealand
Coordinate the harvest, packing, storage and dispatch of kiwifruit, kiwiberry and avocados to the market, or in the case of Zespri
kiwifruit to the port.
In 2017 25 675m trays of new Zealand kiwifruit were packed (2016: 32 438m); a reduction of 6 724m trays being a direct effect of the
industry-wide fall in hayward (green) yields
seeka delivered a safe and timely harvest to growers the harvest was rain interrupted creating issues, however seeka coordinated the
harvest to optimise fruit quality and minimise fruit loss A new Compac spectrim grader was built and commissioned at main road
with the previous machine relocated to the Peninsula packhouse in the Coromandel new coolstores were built at main road, KKP and
transcool
seeka innovated to mitigate the potential earnings impact of reduced volumes sensibly seeka delayed capital expenditure and
implemented procurement reviews that successfully reduced costs Importantly seeka developed a new capacity planning tool, called
Blueprint Blueprint has improved management’s ability to match expected harvested crop volumes with optimised plant utilisation and
coolstore capacity It also ensures that a grower’s fruit receives an optimal harvest, and seeka is able to optimise packing, cooling and
inventory management to minimise costs
7. 0 2 m
11.16m
8.45m
2013 2014 2015 2016 2017
7.20m
9.21m
orchard revenue and volumes
NZ$million, millions of class 1 kiwifruit trays
$4.18m
$3.98m
$2.83m
$5.64m
$6.38m
2013 2014 2015 2016 2017
orchard eBItDA
NZ$million
orchard assets
NZ$million
$24.25$24.25
2014 2015 2016 2017
$33.56
$27.79
$38.05
$42.28
$33.49
$47.89
$48.58
9
Fruit loss results were the best in seeka’s history Fruit loss statistics, a measure of post-harvest performance included 1 18% for
hayward (green) conventional, 0 42% for hayward (green) organic growers and 0 73% for Zespri sunGold growers
Post-harvest revenue of $96 700m for the year is a reduction on the prior years $110 823m eBItDA of $21 958m down on the prior
year $26 784m
retail services operations
Includes the supply and sale of avocados, class 2 New Zealand kiwifruit, sale of New Zealand kiwifruit through approved
collaborative marketing programmes and imported tropical fruits.
revenue totalled $24 294m, ahead of the prior year of $16 847m eBItDA of $2 920m compares favourably against pcp of $1 941m
Avocado earnings continue to grow in importance in this division’s revenue and earnings and the tray return to growers continues to
lead the Industry seeka expects the current year sales programme (2017:2018) to approach $40 per export tray – well surpassing the
previous record of $26 80 seeka has gained a brand reputation for supreme quality throughout the customer base – with our retail
customers able to rely on a supply chain that delivers them high quality fruit every time
the tropical business including banana importation and ripening has delivered positive earnings A decision by a key customer to
rearrange their supply chain and source bananas direct from the market and only use seeka for ripening has led seeka to impair the
goodwill associated with its sourcing contract by $2 031m
seeka has established a new business, the Delicious nutritious Food Company as a wholly owned subsidiary the business manufactures and
markets a range of kiwi crush products, manufactures and supplies avocado oil and will include the packing and distribution of kiwiberry the
combined operations deliver a full year business cycle eBItDA for the partial first year of manufacturing totalled $0 294m and is included in the
overall eBItDA for retail services
Post harvest revenue and volumes
NZ$million, millions of kiwifruit trays
Post harvest assets
NZ$million
21.39m
2 7. 76 m
19.60m
32.44m
25.68m
2013 2014 2015 2016 2017
1. Excludes effect of insurance settlement.
Post harvest eBItDA
NZ$million
$12.56
$10.77
$13.29
2013 2014 2015 2016 2017
$26.78
$21.96
$23.16
1
$66.89
$83.44
2014 2015 2016 2017
$111.72
$125.13
$68.47
$88.27
$59.65
$110.82
$96.70
Annual report 201710
seeka Australia PtY Limited
Owns and operates predominately kiwifruit, nashi and pear orchards, packing and logistics infrastructure. The company markets
directly to retailers and wholesale markets for both Australian and New Zealand-grown fruit.
2017 kiwifruit harvest yields and quality were better than 2016 while nashi volumes were below expectation Across all varieties seeka
is concentrating on quality as well as increasing yields 2017 volumes by variety are outlined in the following table with comparatives
Class 1 and 2
2017
Kilograms
2017
tray equivalents
2016
Kilograms
2016
tray equivalents
Kiwifruit
2,981,834823,7112,374,720656,000
nashi
1,200,7861,523,000
Corella
553,592623,784
Packham
853,600996,300
other pears
83,421169,454
Plums
40,15031,500
Apricots
38,38343,682
Cherries
11,79916,074
seeka has concentrated on upgrading the orchards, post-harvest infrastructure, safety and business systems and the general
presentation of the business in Australia
seeka is further expanding its kiwifruit plantations with infill planting of existing orchards and the development of new orchards the
company has some 60 hectares of new kiwifruit orchards in development and purchased land adjacent to its existing orchards for
further development Developments will take three to five years to bear fruit, but seeka is confident in both the orchards and Australian
business
2016 2017 2016 2017 2016 2017 2016 2017
other fruit
Packham
Corella
nashi
Kiwifruit
seeka Australia production
Millions of kilograms
seeka Australia
revenue NZ$million
seeka Australia
eBItDA NZ$million
seeka Australia
assets NZ$million
5.76
$16.54$2.25$48.11
2.98
1.20
0.55
0.85
0.18
5.78
$15.17
$1.03
$35.53
2.38
1.52
0.62
1.00
0.26
11
Long range business planning has set AuD$8m as the targeted eBItDA for this business operation Innovation includes new variety
trials which are underway seeka is introducing new hybrid pear varieties to replace some commodity pears on its orchard
the Australian team is focused on improving the presentation and quality of fruit sold to market Goulburn valley is a highly regarded
fruit growing region in Australia with a hot climate, high sunshine hours and low rainfall Fruit grown in this environment has high dry
matter and great taste and is well received by the market as confirmed by independent consumer studies
seeka is actively investing in its Australian business as a future growth platform establishing new orchards and introducing new varieties
the quality of fruit grown in Australia, relatively low cost of establishment, established infrastructure and high value close domestic market
provides confidence in the investment programme
eBItDA of $2 251m is a significant improvement on prior year eBItDA of $1 029m
the seeka team
Inspirational people is a hallmark of our brand and we have focused on our people development strategy to ensure that seeka is well
resourced for the future
seeka is committed to the success of our people and has invested in the future by establishing a number of programmes During the year
seeka established a leadership development programme to ensure that the future leaders are fully equipped to continue the success and
growth of seeka orchard cadetships are available for those looking to begin a career in horticulture and are exposed to the full remit of orchard
management and can go on to become trainee managers seeka has been collaborating with te Awanui Kiwi Leaders initiative to establish a
fully-mentored cadet programme seeka also offers an overseas experience programme to selected employees
the company has refined its health and safety strategy and systems to ensure that it complies with legislation and keeps its people,
contractors and stakeholders safe established key performance measures including total recordable Injury Frequency rate (tFIFr),
notifiable Injuries, notifiable Incidents and severity rate (average days lost from injury) as key performance indicators for the company
the key performance indicators set with management staff include these key components
the 2017 actual results and 2018 targets are shown in the following table below
2018 target2017 Actuals
total recordable injury frequency rate
1
Less than 4 65 8
notifiable incidents00
notifiable event 01
medical treatment53
severity rate
2
2 91
safety systems continue to be refined and actively managed to ensure our people are safe the Company is continuing to make
excellent progress with its health and safety strategy and deployment Further seeka continues to invest in training and systems, to
ensure contractor compliance non-compliant contractors are removed from the approved Company supplier list Generally contractors
have worked cooperatively with seeka to achieve compliance and seeka is satisfied with the compliance of its contractor community
1 total recordable injury frequency rate (trIFr) is a key measure that compares total lost time injuries and medical treatments against the total number of
hours worked trIFr = (number of recordable lost time and medical treatment injuries) x 200,000 / (number of employee hours worked)
2 severity rate = (number of lost time injuries) / (number of days lost)
seeka also has a team of dedicated employees to source and care for its seasonal workforce this includes the overseas workforce recruited
under the rse scheme which compliments the local new Zealand workforce our team ensures that we make all endeavours to employ new
Zealanders first, including working with the ministry of Business Innovation and employment on innovative schemes these schemes include
transport arrangements, training courses and innovative incentives to bring regional people to seeka’s employment hubs
Annual report 201712
seeka360 Campus
te Arikinui Kiingi tuheitia opened seeka’s new headquarters in march 2017 the building and campus is utilised by seeka, its growers,
and community
Progress is being made to address the deferred maintenance on the property and develop a commercial Gem avocado orchard to both
showcase this variety and generate income from the previous amenity property
seeka is now planning on relocating its laboratory operations from te Puke to the seeka360 hub to further create this produce centre of
excellence
Innovation
seeka continues to invest in innovation to support operations, fruit performance, automation and operational efficiency
more recent innovations include information systems deployed by seeka enabling faster decisions to be made at critical moments in
the business cycle Inventory managers are able to assess fruit in all stores, understand atmospheric conditions and fruit characteristics
to prioritise fruit for optimal shipment to the market
Information systems have been deployed to improve planning in increasingly complex situations Blueprint, seeka’s innovation to the
harvest of multiple varieties, maturities and sites, is now deployed in the business to improve operational efficiency
seeka’s laboratory business, vLs, has continued to innovate to support growers and the business seeka has recently been awarded a
contract to supply the kiwifruit industry with independent maturity testing services from 2018 – a highlight for seeka
summary
reduced new Zealand kiwifruit volumes primarily resulting from an industry-wide lower hayward yield impacted negatively on seeka’s
earnings the company responded to this challenge positively and innovated to mitigate the impact Australian operations and seeka
avocados delivered improved earnings and the emerging Delicious nutritious Food Company is now fully operational Changes in the
supply arrangements of a key customer led seeka to impair the goodwill in its banana sourcing business
seeka is constantly using innovative technological developments in the core kiwifruit business to optimise packhouse operations and
deliver continuous improvement in performance to growers plus minimise cost to the company
seeka would like to thank all stakeholders for their continued support and all growers who supply seeka for choosing seeka as their
preferred supply partner
seeka is well placed through the quality and focus of our people, our strategic investments in orchards and post harvest facilities, the
broadening of our retail services business and the support of our shareholders
Fred Hutchings Michael Franks
Chairman Chief executive
13
2017 FInAnCIAL stAtements
statement of financial performance 14
statement of comprehensive income 15
statement of financial position 16
statement of changes in equity 17
statement of cash flows 18
notes to the financial statements 19
Auditors’ report 59
Annual report 201714
stAtement oF FInAnCIAL PerFormAnCe
For the year ended 31 December 2017 - Audited
The accompanying notes form an integral part of these financial statements
new Zealand dollarsnotes
2017
$000s
2016
$000s
Turnover
1
2
217,902 229,397
revenue
3
186,814 191,317
Cost of sales
4
151,537 157,883
Gross profit
35,277 33,434
other income
3
404 370
Income from insurance proceeds
3
125 4,125
other costs
4
12,678 13,165
Earnings (EBITDA)
2
23,128 24,764
Depreciation expense
9
8,218 7,187
(Gain) on revaluation of land and buildings and interest in leased land
4
( 1,396) ( 347)
Impairment of investments in associates
- 38
Impairment of investments in shares
20
- 340
Impairment of property, plant and equipment
9
102 118
Impairment of intangible assets
10
2,031 -
Amortisation of intangible assets
10
484 470
Earnings (EBIT)
3
13,689 16,958
Interest expense
3,781 3,346
Net profit before tax
9,908 13,612
Current tax expense
6
2,860 4,325
Deferred tax expense
6
1,215 ( 1,098)
total tax charge
4,075 3,227
Net profit attributable to equity holders
5,833 10,385
earnings per share for profit attributable to the ordinary
equity holders of the company during the year
Basic earnings per share
17
$0.35$0.65
Diluted earnings per share
17
$0.34$0.62
1 turnover is a non-GAAP measure, see calculations in note 2
2 eBItDA, a non-GAAP measure, is earnings before interest, tax, depreciation, amortisation and revaluations
3 eBIt, a non-GAAP measure, is earnings before interest and tax
15
stAtement oF ComPrehensIve InCome
For the year ended 31 December 2017 - Audited
new Zealand dollarsnotes
2017
$000s
2016
$000s
Net profit for the year
5,833 10,385
Items that will not be reclassified to profit or loss, net of tax
Gain on revaluation of land and buildings
4,455 2,071
Total items that will not be reclassified to profit or loss
4,455 2,071
Items that may be reclassified subsequently to profit or loss, net of tax
movement in cash flow hedge reserve
18
147 ( 57)
movement in foreign currency translation reserve
18
( 840) 611
movement in foreign currency revaluation reserve
18
743 ( 425)
Gain on revaluation of water shares
10
976 -
Gain on revaluation of investment in shares
20
4,141 864
Total items that may be reclassified subsequently to profit or loss
5,167 993
Total comprehensive income for the year attributable to equity holders
15,455 13,449
The accompanying notes form an integral part of these financial statements
Annual report 201716
stAtement oF FInAnCIAL PosItIon
As at 31 December 2017 - Audited
new Zealand dollarsnotes
2017
$000s
2016
$000s
equity
share capital
16
46,195 44,950
reserves
18
21,456 12,496
retained earnings
18
30,974 27,865
Total equity
98,625 85,311
Current assets
Cash and cash equivalents
2,389 1,688
trade and other receivables
12
17,401 20,589
Biological assets - crop
11
16,682 16,046
Inventories
13
4,808 3,389
Irrigation water rights
151 195
Total current assets
41,431 41,907
non current assets
trade and other receivables
12
1,066 3,350
Property, plant and equipment
9
155,371 134,489
Intangible assets
10
16,727 15,276
Investment in shares
20
7,428 2,287
Total non current assets
180,592 155,402
Total assets
222,023 197,309
Current liabilities
Current tax liabilities
6
1,404 2,365
trade and other payables
14
20,281 21,711
Interest bearing liabilities
15
10,827 5,716
Financial derivatives
28
128 332
Total current liabilities
32,640 30,124
non current liabilities
Interest bearing liabilities
15
74,683 68,729
Deferred tax
7
16,075 13,145
Total non current liabilities
90,758 81,874
Total liabilities
123,398 111,998
Net assets
98,625 85,311
The accompanying notes form an integral part of these financial statements
on behalf of the Board
F Hutchings A Waugh
Chairman Director
Dated: 23 February 2018
17
stAtement oF ChAnGes In equItY
For the year ended 31 December 2017 - Audited
new Zealand dollarsnotes
share
capital
$000s
Investment
in shares
revaluation
reserve
$000s
Cash
flow hedge
reserve
$000s
Foreign
currency
revaluation
reserve
$000s
Foreign
currency
translation
reserve
$000s
share
based
payments
reserve
$000s
Land and
buildings
revaluation
reserve
$000s
retained
earnings
$000s
total
$000s
Equity at 1 January 2016
40,651 1,075 ( 184) ( 51) 9 142 8,427 20,750 70,819
net profit
- - - - - - - 10,385 10,385
Foreign exchange movement
- - - ( 425) 611 - - - 186
other comprehensive income / (loss)
- 864 ( 57) - - - 1,943 128 2,878
Total comprehensive income / (loss)
- 864 ( 57) ( 425) 611 - 1,943 10,513 13,449
Transactions with owners
shares issued
16
3,207 - - - - - - - 3,207
employee share scheme receipts
16
1,092 - - - - - - - 1,092
movement in employee share
entitlement reserve
18
- - - - - 142 - - 142
Dividends paid
19
- - - - - - - ( 3,398) ( 3,398)
Total transactions with owners
4,299 - - - - 142 - ( 3,398) 1,043
Equity at 31 December 2016
44,950 1,939 ( 241) ( 476) 620 284 10,370 27,865 85,311
net profit
- - - - - - - 5,833 5,833
Foreign exchange movement
- - - 741 ( 840) - - 2 ( 97)
other comprehensive income
- 5,117 147 - - - 3,980 475 9,719
Total comprehensive income / (loss)
- 5,117 147 741 ( 840) - 3,980 6,310 15,455
Transactions with owners
shares issued
16
329 - - - - - - 329
employee share scheme receipts
16
916 - - - - - - - 916
movement in employee share
entitlement reserve
18
- - - - - ( 185) - 318 133
Dividends paid
19
- - - - - - - ( 3,519) ( 3,519)
Total transactions with owners
1,245 - - - - ( 185) - ( 3,201) ( 2,141)
Equity at 31 December 2017
46,195 7,056 ( 94) 265 ( 220) 99 14,350 30,974 98,625
The accompanying notes form an integral part of these financial statements
Annual report 201718
stAtement oF CAsh FLoWs
For the year ended 31 December 2017 - Audited
new Zealand dollarsnotes
2017
$000s
2016
$000s
operating activities
Cash was provided from:
receipts from customers
190,132 188,583
Interest and dividends received
519 204
Insurance proceeds - fruit loss mitigation claim and business interruption
3
125 3,627
Cash was disbursed to:
Payments to suppliers and employees
( 168,795) ( 166,863)
Interest paid
( 3,756) ( 3,325)
Income taxes paid
( 4,167) ( 974)
Net cash flows from operating activities
5
14,058 21,252
Investing activities
Cash was provided from:
sale of property, plant and equipment
1,267 4,124
sale of investments in shares
- 30
received from insurance proceeds for asset loss
3
- 3,478
repayment of advances
4,133 1,614
Cash was applied to:
Purchase of property, plant and equipment
( 20,870) ( 40,920)
Development of bearer plants
( 3,488) ( 882)
Investment in business combination and shares
( 1,000) ( 6,089)
Purchase of water shares
( 689) -
Advances
( 1,536) ( 1,192)
Net cash flows (used in) investing activities
( 22,183) ( 39,837)
Financing activities
Cash was provided from:
Proceeds of non current bank borrowings
11,880 38,886
Proceeds of current bank borrowings
29,880 23,140
Issue of shares
916 1,092
Cash was applied to:
repayment of non current bank borrowings
( 7,500) ( 16,003)
repayment of current bank borrowings
( 25,100) ( 24,770)
Payment of dividend to shareholders
19
( 3,190) ( 3,122)
Net cash flows from financing activities
6,886 19,223
Net (decrease) / increase in cash and cash equivalents
( 1,239) 638
effect of foreign exchange rates
1,940 ( 142)
opening cash and cash equivalents
1,688 1,192
Closing cash and cash equivalents
2,389 1,688
The accompanying notes form an integral part of these financial statements
Seeka 2017 Annual Report
Notes to the Financial Statements For the year ended 31 December 2017
This section contains the notes to the consolidated financial statements for Seeka Limited, its subsidiaries
and associates. To give stakeholders a clear insight into how Seeka organises its business, the note
disclosures are grouped into seven sections.
Basis of preparation
Accounting policies that apply to the full set of financial statements
Performance
Where revenues are generated against their associated operating costs
Assets
How Seeka allocates resources across its operations
Working capital
How Seeka manages its operating cash flow
Funding
How Seeka organises its capital structure
Investments
The financial performance of Seeka's investments in subsidiaries and associates
Other notes
All other note disclosures
Basis of Preparation
This section sets out the Group’s accounting policies that apply to the full set of financial statements.
Accounting policies which are limited to a specific note are described in that note.
Reporting entity and statutory base
The financial statements presented are those of the consolidated Seeka group. Seeka Limited is referred to as the Company. The
group is referred to as the Group, Seeka, or Seeka Group.
Seeka Limited is a profit-orientated company registered in New Zealand under the Companies Act 1993 and a Financial Markets
Conduct (FMC) Reporting Entity for the purposes of the FMC Act 2013. Seeka Limited is listed and its ordinary shares are quoted on
the NZX main board equity security market (NZX Main Board).
Nature of operations
Seeka is a produce business operating in New Zealand and Australia.
In New Zealand the Group provides orcharding, post harvest and retail services to New Zealand’s kiwifruit, avocado and kiwiberry
industries. Seeka manufactures and sells the Kiwi Crush and Kiwi Crushies ranges along with avocado oil. The Group also provides
retail and ripening services for imported tropical produce, and operates a wholesale market.
In Australia, Seeka owns and operates orchards and associated post harvest assets, making the Group the largest producer and
supplier of Australian kiwifruit and nashi pears, a major supplier of European pears, plus lesser production of other temperate-climate
fruits.
Statement of compliance and basis of preparation
The consolidated financial statements for the Group have been prepared in accordance with the requirements of Part 7 of the FMC
Act 2013. The financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Principles
(GAAP), incorporating New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable
financial reporting standards as appropriate for profit-oriented entities. The Group financial statements also comply with International
Financial Reporting Standards (IFRS).
The financial statements are prepared on a historical cost basis, with the exception of:
· financial assets and liabilities (including derivative instruments) at fair value through the profit or loss (note 28 and 29)
· biological assets - crop at fair value (note 11)
· land and buildings are revalued (note 9)
· water shares at fair value (note 10)
The significant accounting policies applied in the preparation of the financial statements are set out below.
The financial statements were approved by the Board of Directors (the Board) on 23 February 2018.
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Seeka 2017 Annual Report
Basis of consolidation
Subsidiaries
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be
consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting
period as the Company, using consistent accounting policies. All intra-group balances, transactions, unrealised gains and losses
resulting from intra-group transactions and dividends are eliminated in full.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is
measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange.
Direct acquisition costs are expensed as incurred.
Intercompany transactions, balances and unrealised gains on transactions between companies are eliminated. Unrealised losses are
also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the policies adopted by the Group.
Foreign currency transactions
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing during the month of that
transaction. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in the income
statement.
Foreign operations
The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a
functional currency different from the presentation currency are translated into the presentation currency as follows:
· Assets and liabilities for each entity's balance sheet within the Group are translated at the closing rate at the date of that
balance sheet;
· Income and expenses for each entity's income statement and statement of other comprehensive income, are translated at
average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
· All resulting exchange differences are recognised in other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity
and translated at the closing rate. Exchange differences arising are recognised in other comprehensive income.
Accounting policies that summarise the measurement basis used and are relevant to the understanding of the financial statements are
provided throughout the accompanying notes. The accounting policies adopted have been applied consistently throughout the periods
presented in these financial statements, with the exception of a change in measurement basis for water shares in 2017. The water
shares, an intangible asset, have been revalued to fair value from cost to better reflect the true value of the shares and align them with
other shares held by the Group (note 29). Certain comparative information has been reclassified to conform with the current year’s
presentation. There are no new standards, amendments or interpretations that have been issued and effective, that are expected to
have a significant impact on the Group (note 30).
Critical accounting estimates and judgements
The Group makes estimates and assumptions concerning future operational and financial performance. By definition, these
assumptions may not always equal actual results. The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities are identified in the notes below. Estimates and judgements are continually
evaluated and are based on historical experience as adjusted for current market conditions and other factors, including expectations of
future events that are believed to be reasonable under the circumstances. Assumptions underlying management’s estimates can be
found in the following notes to the financial statements.
Going concern assumption
The consolidated financial statements have been prepared on a going concern basis.
Goods and services tax (GST)
The statement of financial performance and statement of comprehensive income has been prepared so that all components are stated
exclusive of GST. All items in the statement of financial position are stated net of GST, with the exception of receivables and
payables, which include GST invoiced.
Area of estimation or judgementNote
Property, plant and equipment9
Goodw ill10
Biological assets - crop11
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Seeka 2017 Annual Report
Performance
This section focuses on the Group’s financial performance and details the contributions made from the
individual operating segments.
Note 1. Segment information
The Group’s operating segments are entities that engage in business activities that earn revenues, incur expenses and are reported in
a manner consistent with the internal reports provided to the chief decision makers, being the Directors, who regularly evaluate the
allocation of resources alongside operational outcomes and are responsible for implementing strategic decisions.
The Group has five operating segments:
- Four New Zealand segments express the range of complementary services delivered to New Zealand’s produce industries and the
retail sector.
- A single Australian segment encompasses the integrated business associated with the Group’s Australian-grown produce.
Direct segment revenues and operating costs are allocated to each segment. Administration costs, overheads, grower service costs
and insurance proceeds recorded in the statement of financial performance are allocated to all other segments. Transactions between
segments are conducted at arm’s length and are eliminated on consolidation.
New Zealand segments
Orchard operations
The Group provides on-orchard management services to orchard owners who produce kiwifruit, avocado and kiwiberry crops.
The Group produces kiwifruit, avocado and kiwiberry crops from:
- Leased orchards (typically three-year rolling contracts) whereby the Group recovers costs and shares any profits with the orchard
owners.
- Leased land (long term contracts) which the Group has developed into productive orchards, pays all development and production
costs, owns all crops for the term of the lease, and shares profit with the landowner after all costs are recovered.
Post harvest operations
The Group provides post harvest services to the kiwifruit, avocado and kiwiberry industries. This includes all crops from the Group’s
orchard management and lease operations, plus crops from independent orchard owners.
Retail service operations
The Group provides fruit marketing services in New Zealand and internationally, particularly in the Australian and Asian markets. This
includes fruit from the Group’s New Zealand based orchard and post harvest operations. In New Zealand the Group also provides
retail and ripening services for imported fruit produce, and operates a wholesale market.
Following the Group's purchase of the Kiwi Crush and Kiwi Crushies product ranges in September 2016, retail service operations
include the production and selling of Kiwi Crush, Kiwi Crushies, and avocado oil to hospitals and the retail sector.
All other segments - New Zealand
This represents the Group’s aggregated administration, grower services and overhead sections along with insurance proceeds
recorded in the statement of financial performance and impairment and revaluations of other assets not attributed directly to any other
segment.
Australian operations
The Group owns and operates Australian orchards, provides post harvest operations and markets the fruit produced from those
orchards, primarily in Australia. The main products are kiwifruit, nashi pears and European pears.
Turnover
Turnover (a non-GAAP measure) includes the value of fruit sales made on behalf of growers and suppliers where the Group acts as
the agent, and is considered the vendor by the purchasing party. (See note 2).
EBITDA and EBIT
EBITDA is earnings before interest, tax, depreciation, amortisation, impairments and revaluations. EBITDA is an indicator of
profitability and reflects operating cash flow generation.
EBIT is earnings before interest and tax; an indicator of profitability that excludes interest and income tax expenses.
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Seeka 2017 Annual Report
The following table details the operating segments at balance date.
1. Turnover is a non-GAAP measure, see calculations in note 2.
2. EBITDA, a non-GAAP measure, is earnings before interest, tax, depreciation, amortisation, impairments and revaluations.
3. EBIT, a non-GAAP measure, is earnings before interest and tax.
AustraliaGroup
O rc hard
operat ions
Post harvest
operat ions
Ret ail servic e
operat ions
All ot her
segment s
Aust ralian
operat ionsTot al
New Zealand dollars$000s$000s$000s$000s$000s$000s
2017
Incom e statem ent
Turnover
1
48,582 96,70054,15369917,768217,902
Gross segment revenue 48,582 101,96524,29469916,536192,076
Eliminations - 5,262- - - 5,262
Total segm ent revenue 48,582 96,70324,29469916,536186,814
Income f rom insurance proceeds- 125- - - 125
EBITDA
2
6,37621,9582,920( 10,377)2,25123,128
(Gain) on revaluation of land & buildings- ( 1,396)- - - ( 1,396)
Depreciation expense5476,241135898288,218
Amortisation of intangibles- - 30516712484
Impairment of assets- - - - 102102
Impairment of intangibles- - 2,031- - 2,031
EBIT
3
5,82917,113571( 11,133)1,30913,689
Net f inance costs- - - 3,1386433,781
Tax charge on prof it- - - 3,7533224,075
Profit after tax5,82917,113571( 18,024)3445,833
Balance sheet
Segment assets27,794125,1294,8565,07448,114210,967
Unallocated assets- - - 11,056- 11,056
Total assets27,794125,1294,85616,13048,114222,023
Segment liabilities16,84239,0276,1676,54942,850111,435
Unallocated liabilities- - - 11,963- 11,963
Total liabilities16,84239,0276,16718,51242,850123,398
2016
Incom e statem ent
Turnover
1
47,889 110,82353,69559016,400229,397
Gross segment revenue 47,889 116,62916,84759015,168197,123
Eliminations - 5,806- - - 5,806
Total segm ent revenue 47,889 110,82316,84759015,168191,317
Income f rom insurance proceeds- 3,627- 498- 4,125
EBITDA
2
5,63826,7841,941( 10,628)1,02924,764
(Gain) on revaluation of land and buildings- ( 347)- - - ( 347)
Depreciation expense5155,5501183676377,187
Amortisation of intangibles- - 3041588470
Impairment of investment in associates and shares- - - 378- 378
Impairments of asset- - - - 118118
EBIT
3
5,12321,5811,519( 11,531)26616,958
Net f inance costs- - - 2,8145323,346
Tax charge on prof it- - - 3,460( 233)3,227
Profit after tax5,12321,5811,519( 17,805)( 33)10,385
Balance sheet
Segment assets33,557111,7214,6966,61935,530192,123
Unallocated assets- - - 5,186- 5,186
Total assets33,557111,7214,69611,80535,530197,309
Segment liabilities12,60234,5514,17512,84136,778100,947
Unallocated liabilities- - - 11,051- 11,051
Total liabilities12,60234,5514,17523,89236,778111,998
New Zealand
20172016
New Zealand dollars$000s $000s
Note 2. Turnover
The follow ing table reconciles turnover to revenue.
Turnover217,902229,397
Value of sales made as agent( 31,088)( 38,080)
Revenue186,814191,317
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Seeka 2017 Annual Report
Turnover
The Board considers turnover a useful measure of the Group's operating activity as it represents the total transactional value of
goods and services provided to external customers during the year. As such turnover includes the value of fruit sales made on
behalf of growers and suppliers where the Group acts as the agent, and is considered the vendor by the purchasing party. This
includes all produce sales both local and export.
In the second half of 2016 the Group entered a direct buying arrangement for the importation and supply of bananas in New Zealand
whereby total revenues and expenses are reported in the statement of financial performance. Previously the Group had imported
bananas on an agency arrangement whereby the Group only reported commission revenue.
The three year grower incentive scheme ended 31 December 2016. Revenue in 2016 is shown net of discounts and included $2.93m
for the cost of the grower incentive scheme.
Impact of seasonality
Group revenues are generated from seasonal horticultural operations, with post harvest revenues recognised as services are provided
and orchard revenues recognised once the fruit is harvested. Retail revenues are generated at the point of sale. In New Zealand
kiwifruit are harvested from March to June, avocados from August to January, and kiwiberries from February to March. In Australia
nashi and European pears are harvested January to March, and kiwifruit from March to May. As a result of these harvest timings
around 80% of orchard revenues are recognised in the first six months of the financial year. The timing of the provision of post harvest
services can vary from year to year. Normally 70% is recognised in the first six months of the financial year, but seasonal fluctuations
can alter this.
20172016
New Zealand dollars$000s $000s
Note 2. Turnover
The follow ing table reconciles turnover to revenue.
Turnover217,902229,397
Value of sales made as agent( 31,088)( 38,080)
Revenue186,814191,317
20172016
New Zealand dollarsNotes$000s $000s
Note 3. Revenue and other incom e
Total revenue186,814191,317
Other Income
Interest- 1
Dividend558202
Net movement in f air value of irrigation w ater rights( 154)167
404370
Income f rom insurance proceeds - asset loss- 498
Income f rom insurance proceeds - f ruit loss mitigation claim and business interruption1253,627
1254,125
Total other incom e5294,495
Total revenue and other incom e187,343195,812
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Seeka 2017 Annual Report
Oakside fire - insurance proceeds for asset loss
On 4 March 2015 a fire at the Group's Oakside facility destroyed an ancillary packhouse and caused damage to an office space and a
number of coolstore buildings and associated plant, all part of post harvest operations. The Group was fully insured for loss on assets
and also business interruption. During the 2016 financial year the value of the property claim was finalised with the exception of some
aspects of the business interruption policy. In the current financial year $0.13m was received from insurance proceeds and recorded in
the statement of financial performance. In the 2016 financial year $0.50m was recorded in the statement of financial performance and
$5.46m recorded in the 2015 financial year. In addition to the property and business interruption insurance receipts recorded in the
2016 statement of financial performance, a further $3.63m receipt was recorded for the settlement of the loss suffered by growers and
Seeka due to extraordinary fruit softening and fruit loss as a result of the Oakside fire.
Accounting policies
Revenue comprises the fair value received for the sale of goods and services, net of goods and services tax (GST), rebates and
discounts and after eliminating sales within the Group.
Orchard revenue
Managed orchards - revenue is invoiced and recognised as earned for orcharding services provided to managed orchards supplying
the Group.
Leased orchards and leased land orchards - crop revenue is recognised in the statement of financial performance at the point of
harvest based on forecast orchard gate returns (OGRs) with a corresponding increase in the statement of financial position. The
proceeds are then received over the 12 month period following harvest. Revenue estimates are updated at balance date.
Post harvest revenue
From fruit packing, coolstorage and other supply-chain activities. Services peak from April to December with the bulk of revenues
collected by the end of November. Revenue is recognised as services are provided.
Retail service revenue
Ripening and delivery services, and fruit sales to key retail customers - revenue is recognised as services are provided on a
principal or agency basis depending on who bears the risks and rewards.
Fruit marketing and wholesale market sales programmes (domestic and international) where the Group acts as an agent and
collects a commission on sales - revenue recognised when the produce is sold.
Where the Group purchases fruit directly from suppliers for resale - revenue is recognised when the produce is sold.
Collaborative marketing programmes (the Group purchases fruit from Zespri International for sale in agreed international markets
under licence from Kiwifruit New Zealand) - revenue is recognised when the produce is sold.
Where the Group manufactures and sells products, including the Kiwi Crush, Kiwi Crushies and avocado oil range of products -
revenue is recognised when the products are sold.
Interest income
Interest income is recognised on a time-proportion basis using the effective interest method.
Dividend income
Dividend income is recognised when the right to receive payment is established.
20172016
New Zealand dollarsNotes$000s $000s
Note 4. Cost of sales and operating expenses
Operating materials and services110,052110,966
Direct employee benef its 36,65139,871
Operating lease expense5,4705,727
(Increase) / decrease in f air value of biological assets - crop
11
( 636)1,319
Total cost of sales151,537157,883
Total other employee benef its 6,7417,012
General administrative expenses5,1715,229
Audit f ees paid to principal auditors - (paid on a Group basis)281227
Tax f ees paid to principal auditors113145
Remuneration benchmarking f ees paid to principal auditors33-
Directors' f ees and expenses400396
Rent and lease expenses254257
(Gain) on sale of property plant and equipment and investments( 315)( 101)
Total other costs12,67813,165
Depreciation
9
8,2187,187
Am ortisation
10
484470
Im pairm ents and revaluations
(Gain) on revaluation of land and buildings
9
( 236)( 347)
(Gain) on revaluation of lease interest in land
9
( 1,160)-
Impairment of investments in associates
22
- 38
Impairment of investments in shares
20
- 340
Impairment of intangible assets
10
2,031-
Impairment of property, plant and equipment
9
102118
Total Im pairm ent and revaluation737149
Total expenses177,436182,200
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Seeka 2017 Annual Report
Accounting policies
Operating expenses are recognised in the statement of financial performance as incurred, except where future economic benefits
arise and they are recorded as a prepayment.
Operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the Group are classified as finance
leases. All other leases are classified as operating leases.
Operating leases include short term orchard leases. Payments made under operating leases (net of any incentives received from
the lessor) are charged to the statement of financial performance on a straight line basis over the period of the lease, except for
short term orchard leases where lease costs are recognised at the same time as other crop related income and expenses.
Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the
reporting date, are recognised in other payables in respect of employees' services up to the reporting date and are measured at the
amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the
leave is taken and measured at the rates paid or payable.
20172016
New Zealand dollars$000s $000s
Note 5. Reconciliation of net operating surplus after taxation w ith cash
flow s from operating activities
Net operating surplus after taxation5,83310,385
Add non cash items:
Depreciation8,2187,187
(Gain) on revaluation of land and buildings( 1,396)( 347)
Impairment of intangible assets2,031-
Impairment of property, plant and equipment102118
Impairment of investment in associates- 38
Impairment of investment in shares- 340
Revaluation of employee share scheme133-
Movement in def erred tax832( 1,426)
Movement in f air value of biological assets - crop( 636)1,319
Movement in onerous leases( 8)( 34)
Amortisation of intangible assets484470
9,7607,665
Add / (less) items not classified as an operating activity:
(Gain) / loss on sale of property, plant and equipment( 301)( 56)
Decrease in current w ater allocation account44146
(Gain) on sale of shares- ( 45)
(Income) f rom insurance proceeds - asset loss- ( 498)
( 257)( 453)
(Increase) / decrease in working capital:
Increase / (decrease) in accounts payable( 1,640)2,538
(Increase) / decrease in accounts receivable/prepayments2,742( 2,358)
(Increase) in inventory( 1,419)( 204)
Increase / (decrease) in taxes due( 961)3,679
( 1,278)3,655
Net cash flow from operating activities14,05821,252
20172016
New Zealand dollarsNotes$000s $000s
Note 4. Cost of sales and operating expenses
Operating materials and services110,052110,966
Direct employee benef its 36,65139,871
Operating lease expense5,4705,727
(Increase) / decrease in f air value of biological assets - crop
11
( 636)1,319
Total cost of sales151,537157,883
Total other employee benef its 6,7417,012
General administrative expenses5,1715,229
Audit f ees paid to principal auditors - (paid on a Group basis)281227
Tax f ees paid to principal auditors113145
Remuneration benchmarking f ees paid to principal auditors33-
Directors' f ees and expenses400396
Rent and lease expenses254257
(Gain) on sale of property plant and equipment and investments( 315)( 101)
Total other costs12,67813,165
Depreciation
9
8,2187,187
Am ortisation
10
484470
Im pairm ents and revaluations
(Gain) on revaluation of land and buildings
9
( 236)( 347)
(Gain) on revaluation of lease interest in land
9
( 1,160)-
Impairment of investments in associates
22
- 38
Impairment of investments in shares
20
- 340
Impairment of intangible assets
10
2,031-
Impairment of property, plant and equipment
9
102118
Total Im pairm ent and revaluation737149
Total expenses177,436182,200
25
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Seeka 2017 Annual Report
Accounting policies
Cash flows statements are prepared using the direct approach. Cash and cash equivalents are shown exclusive of GST.
20172016
New Zealand dollarsNotes$000s $000s
Note 6. Incom e tax expense
a. Current tax expense
Current year3,0024,202
Prior period adjustment( 142)123
Total current tax expense2,8604,325
Deferred tax expense
7
Origination and reversal of temporary dif f erences203( 481)
Prior period adjustment1,012( 617)
Total deferred tax expense1,215( 1,098)
Total incom e tax expense4,0753,227
b. Num erical reconciliation of incom e tax expense to prim a facie tax payable
Profit before incom e tax expense9,90813,612
Tax at the New Zealand tax rate of 28%2,7904,102
Tax at the Australian tax rate of 30%( 17)( 294)
Tax ef f ect of amounts w hich are not deductible (taxable) in calculating taxable
income
601170
Tax exempt income( 156)( 157)
Under / (over) provision in prior years - temporary dif f erences857( 594)
Incom e tax expense4,0753,227
c. Im putation credit account
Im putation credits available for use in subsequent reporting periods13,4679,352
The above amounts represent the balance of the imputation account as at the end of the reporting period, adjusted f or:
a. Imputation credits that w ill arise f rom the payment of the amount of the provision f or income tax
b. Imputation debits that w ill arise f rom the payment of dividends recognised as a liability at the reporting date; and
c. Imputation credits that w ill arise f rom the receipts of dividends recognised as receivables at the reporting date.
d. Current tax (liability) / receivable
Opening balance of current tax (liability) / receivable( 2,365)1,314
Adjustments f or prior periods142( 123)
Current year tax( 3,002)( 4,202)
Reclassif y income tax as def erred tax( 424)( 362)
Less tax paid4,217993
Exchange dif f erences2815
Current tax (liability)( 1,404)( 2,365)
20172016
New Zealand dollars$000s $000s
Note 5. Reconciliation of net operating surplus after taxation w ith cash
flow s from operating activities
Net operating surplus after taxation5,83310,385
Add non cash items:
Depreciation8,2187,187
(Gain) on revaluation of land and buildings( 1,396)( 347)
Impairment of intangible assets2,031-
Impairment of property, plant and equipment102118
Impairment of investment in associates- 38
Impairment of investment in shares- 340
Revaluation of employee share scheme133-
Movement in def erred tax832( 1,426)
Movement in f air value of biological assets - crop( 636)1,319
Movement in onerous leases( 8)( 34)
Amortisation of intangible assets484470
9,7607,665
Add / (less) items not classified as an operating activity:
(Gain) / loss on sale of property, plant and equipment( 301)( 56)
Decrease in current w ater allocation account44146
(Gain) on sale of shares- ( 45)
(Income) f rom insurance proceeds - asset loss- ( 498)
( 257)( 453)
(Increase) / decrease in working capital:
Increase / (decrease) in accounts payable( 1,640)2,538
(Increase) / decrease in accounts receivable/prepayments2,742( 2,358)
(Increase) in inventory( 1,419)( 204)
Increase / (decrease) in taxes due( 961)3,679
( 1,278)3,655
Net cash flow from operating activities14,05821,252
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Seeka 2017 Annual Report
Accounting policies
Income tax expense comprises both current and deferred tax and is recognised in the statement of financial performance.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the
reporting date, and any adjustment to the tax payable in respect of previous years.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the tax losses of assets
and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is not accounted for if it arises from
initial recognition of an asset or liability in a transaction other than a business combination and that affects neither accounting or
taxable profit. Differences relating to investments in subsidiaries and jointly controlled entities are not recognised to the extent that
they probably will not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on
the laws that have been enacted or substantively enacted at balance date.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the
temporary differences can be utilised.
20172016
New Zealand dollarsNotes$000s $000s
Note 6. Incom e tax expense
a. Current tax expense
Current year3,0024,202
Prior period adjustment( 142)123
Total current tax expense2,8604,325
Deferred tax expense
7
Origination and reversal of temporary dif f erences203( 481)
Prior period adjustment1,012( 617)
Total deferred tax expense1,215( 1,098)
Total incom e tax expense4,0753,227
b. Num erical reconciliation of incom e tax expense to prim a facie tax payable
Profit before incom e tax expense9,90813,612
Tax at the New Zealand tax rate of 28%2,7904,102
Tax at the Australian tax rate of 30%( 17)( 294)
Tax ef f ect of amounts w hich are not deductible (taxable) in calculating taxable
income
601170
Tax exempt income( 156)( 157)
Under / (over) provision in prior years - temporary dif f erences857( 594)
Incom e tax expense4,0753,227
c. Im putation credit account
Im putation credits available for use in subsequent reporting periods13,4679,352
The above amounts represent the balance of the imputation account as at the end of the reporting period, adjusted f or:
a. Imputation credits that w ill arise f rom the payment of the amount of the provision f or income tax
b. Imputation debits that w ill arise f rom the payment of dividends recognised as a liability at the reporting date; and
c. Imputation credits that w ill arise f rom the receipts of dividends recognised as receivables at the reporting date.
d. Current tax (liability) / receivable
Opening balance of current tax (liability) / receivable( 2,365)1,314
Adjustments f or prior periods142( 123)
Current year tax( 3,002)( 4,202)
Reclassif y income tax as def erred tax( 424)( 362)
Less tax paid4,217993
Exchange dif f erences2815
Current tax (liability)( 1,404)( 2,365)
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Seeka 2017 Annual Report
Note 7. Deferred tax
Deferred tax assets and liabilities are offset when there is a legally-enforceable right to offset current tax assets against current tax
liabilities and when the deferred income taxes relate to the same fiscal authority.
The following table details the offset amounts.
Deferred tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through the
future taxable profits is probable. No amounts were recognised at balance date and there were no unrecognised tax losses (Dec 2016 -
Nil).
The deferred tax liability recognised in the financial statements does not represent the tax that would be payable on the disposal of the
buildings; actual tax payable is limited to the reversal of tax depreciation claimed on that asset in prior period tax returns.
Note 8. Events occurring after balance date
There are no material events occurring subsequent to balance date requiring adjustment to or disclosure in the financial statements.
20172016
New Zealand dollars$000s $000s
Expected settlement:
Within 12 months( 1,772)( 1,076)
In excess of 12 months17,84714,221
Total deferred tax liability16,07513,145
Net deferred tax liabilities:
Opening balance13,14514,197
Reclassif y income tax as def erred tax( 424)( 362)
Exchange dif f erences185( 61)
Charged to the statement of f inancial perf ormance203( 481)
Prior period adjustment1,012( 617)
Charged to revaluation reserve1,897491
Debited / (credited) to hedge reserve57( 22)
Closing balance at end of year16,07513,145
The balance comprises temporary differences attributable to:
Temporary dif f erences on non-current assets17,84714,221
Current liabilities( 1,738)( 2,149)
Prepayments and accrued income1,7431,073
Current tax losses reclassif ied as def erred tax( 1,777)-
Total deferred tax liability16,07513,145
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Seeka 2017 Annual Report
Assets
This section focuses on the physical and intangible assets used by the Group to operate the business,
deliver benefits to stakeholders, add new income streams and generate revenues. Assets include post
harvest facilities, retail service facilities, and software. Assets also include Group-owned land, vines, trees
and crop on Group-owned and leased orchards, the Group's interest in water shares, along with goodwill
and supplier contracts arising from Group acquisitions.
Disclosures are made on additions, disposals, revaluations, depreciation, impairments and amortisation.
The assets under construction category was added for the 31 December 2017 financial statements to better reflect the assets in
progress. The 2016 figures were revised to reflect the opening balance of this category.
Land and
buildings
Plant and
equipment
Mot or
vehic lesBearer plant s
Asset s under
c onst ruc t ion
Total
New Zealand dollars $000s $000s $000s $000s $000s $000s
Note 9. Property, plant and equipm ent
At 1 January 2016
Cost or valuation68,60273,1621,2967,550- 150,610
Accumulated depreciation and impairment( 2,411)( 48,612)( 479)( 390)- ( 51,892)
Net book am ount66,19124,5508177,160- 98,718
Year ended 31 December 2016
Opening net book am ount66,19124,5508177,160- 98,718
Reclassif ication to intangible assets- ( 29)- - - ( 29)
Additions and transf ers30,73811,252241882- 43,113
Depreciation( 2,312)( 4,344)( 79)( 452)- ( 7,187)
Disposals( 1,452)( 329)( 24)( 689)- ( 2,494)
Impairment of property, plant and equipment- - - ( 118)- ( 118)
Revaluation2,881- - - - 2,881
Foreign Exchange( 212)( 62)( 3)( 118)- ( 395)
Reclass to w ork in progress( 12,458)( 840)( 765)14,063-
Closing net book am ount83,37630,1989525,90014,063134,489
At 1 January 2017
Cost or valuation88,09983,1541,5106,86014,063193,686
Accumulated depreciation and impairment( 4,723)( 52,956)( 558)( 960)- ( 59,197)
Net book am ount83,37630,1989525,90014,063134,489
Year ended 31 December 2017
Opening net book am ount83,37630,1989525,90014,063134,489
Reclassif ication of asset classes( 472)600( 436)243650
Additions and transf ers16,95213,447- 1,878( 10,861)21,416
Depreciation recovery- 57- - - 57
Depreciation( 3,022)( 4,653)( 92)( 451)- ( 8,218)
Disposals( 5)467( 12)- - 450
Impairment of property, plant and equipment- - - ( 70)( 32)( 102)
Revaluation6,000- - - - 6,000
Foreign exchange63624392751161,279
Closing net book am ount103,46540,3594217,7753,351155,371
At 31 December 2017
Cost or valuation106,32188,9098009,1883,351208,569
Accumulated depreciation and impairment( 2,856)( 48,550)( 379)( 1,413)- ( 53,198)
Net book am ount103,46540,3594217,7753,351155,371
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Seeka 2017 Annual Report
Land and buildings
Land and buildings are revalued to their estimated market value on a three-year rolling cycle (excluding assets under construction), plus
any subsequent additions at cost, less subsequent depreciation for buildings. In New Zealand valuations are undertaken by TelferYoung
Valuers, ANZIV, independent registered valuer. In Australia valuations are undertaken by Goulburn Valley Property Services,
independent valuers, Shepparton, Victoria, Australia. Australia land and buildings were revalued at 31 December 2017.
Valuations are undertaken by the independent valuers using inherently subjective techniques that include estimations.
The valuers consider four different approaches in concert to arrive at a fair value;
1. Direct replacement cost - adds the value of the land to the replacement cost of the buildings and other improvements based on the
current cost of construction less depreciation based on the age of the building with an allowance for physical depreciation. Specific
consideration is given to the 'optimised depreciated replacement cost' methodology.
2. Sales comparison - considers sales of other comparable properties.
3. Capitalisation of rentals - assumes a hypothetical lease of the property with a current market rental being established and
capitalising this at an appropriate rate of return (8.75% – 11.5%) that would be expected by a prudent investor.
4. Discounted cash flow - a variation of the investment method whereby it takes the current market rental calculated under the
investment method and forecasts net cash flows over a ten-year period. Cash flows are adjusted for expected growth in market rentals
and estimated costs incurred to maintain land and buildings in operational use. This method assumes land and buildings are sold in the
terminal year (year 11).
The following table details the gain on revaluation of land and buildings recognised in the revaluation reserve, net of tax of
$3.98m (2016: $1.94m).
As a consequence of the building revaluations conducted in December 2017, $3.04m (Dec 2016 - $1.63m) of accumulated depreciation
was offset directly against the assets' cost or valuation, prior to revaluation.
The following table details the depreciated value of land and buildings if they were to be stated on a historical cost basis.
Impairment
During the year the Group replaced some of its Australian bearer plants as part of a plant and crop renewal plan. This resulted in an
impairment and the write off of the carrying value of bearer plants replaced by $0.10m (Dec 2016 - $0.12m) which was recognised in the
statement of financial performance.
Accounting policies
Bearer plants
Bearer plants are the Group's investment in kiwifruit vines, pear, avocado and other fruiting trees on Group-owned and leased land.
Bearer plants are stated at historical cost less depreciation. Historical cost includes all costs incurred to purchase or establish the
asset.
Land and buildings
Land and buildings are shown at fair value, based on periodic, but at least triennial valuations by independent valuers, plus any
subsequent improvements at cost, less subsequent depreciation for buildings. At each annual balance date, approximately one third
of assets classified as land and buildings are revalued and those valuations are used to assess the appropriateness of the carrying
values of all land and building assets held by the Group, which effectively revalues all land and buildings annually. Revaluations are
performed more frequently if changing industry conditions may cause their carrying value to differ significantly from fair value. Any
accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is
restated to the revalued amount of the asset.
Changes in the carrying amounts arising on revaluation of land and buildings are accounted through comprehensive income and
other reserves, except where an asset's fair value is less than the original cost, in which case the change is recognised in the
statement of financial performance.
20172016
New Zealand dollars$000s $000s
Cost123,436106,489
Accumulated depreciation( 25,501)( 21,509)
Depreciated historical cost97,93584,980
Net book am ount103,46583,376
LandBuildingsTotal
New Zealand dollars $000s $000s $000s
Land and buildings revaluation reserve1,4822,4953,977
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Seeka 2017 Annual Report
Plant, equipment and vehicles
All other property, plant and equipment are stated at historical cost less depreciation. Historical cost includes all costs incurred to
purchase the asset.
Subsequent additions at cost are included in the asset’s carrying value or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the statement of financial performance during the financial period in which
they are incurred.
Impairment of assets are recognised in the statement of financial performance.
Depreciation
Land is not depreciated. Depreciation on other assets is calculated using the straight line or diminishing value method to allocate their
cost or revalued amounts, net of their residual values, over their estimated useful lives. The depreciation of bearer plants on leased
land orchards is aligned to the term of the lease.
The estimated useful lives of assets are as follows:
· Buildings: 20 - 50 years
· Machinery: 10 - 20 years
· Vehicles: 4 - 7 years
· Furniture, fittings and equipment: 3 - 10 years
· Bearer plants: 5 - 50 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at balance date.
An asset’s carrying amount is immediately written down to its recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount, and any gain or loss is included in
the statement of financial performance. When revalued assets are sold, the amounts included in the revaluation reserve in respect of
those assets is transferred to retained earnings.
Soft wareG oodwill
Wat er
Shares
Supplier
c ont rac t
Int erest in
leased land
O t her
int angibles
Total
$000s $000s $000s $000s $000s $000s $000s
Note 10. Intangible assets
At 1 January 2016
Cost2,2479,4403,9381,877768- 18,270
Accumulated amortisation ( 1,816)- - ( 537)( 391)- ( 2,744)
Net book am ount4319,4403,9381,340377- 15,526
Year ended 31 December 2016
Opening net book am ount4319,4403,9381,340377- 15,526
Additions77- - - - 105182
Additions through business combinations- 244- - - - 244
Sof tw are reclassif ied f rom property,
plant and equipment
29- - - - - 29
Exchange dif f erences( 1)( 142)( 92)- - - ( 235)
Amortisation( 134)- - ( 304)( 32)- ( 470)
Closing net book am ount4029,5423,8461,03634510515,276
At 1 January 2017
Cost2,3529,5423,8461,87776810518,490
Accumulated amortisation( 1,950)- - ( 841)( 423)- ( 3,214)
Net book am ount4029,5423,8461,03634510515,276
Year ended 31 December 2017
Opening net book am ount4029,5423,8461,03634510515,276
Additions164689- - - 853
Disposals- - - - - ( 105)( 105)
Revaluation- - 1,393- 1,262- 2,655
Impairment- ( 2,031)- - - - ( 2,031)
Exchange dif f erences1340222- - - 563
Amortisation( 147)- - ( 305)( 32)- ( 484)
Closing net book am ount4207,8516,1507311,575- 16,727
As at 31 December 2017
Cost2,5177,8516,1501,8772,030- 20,425
Accumulated amortisation( 2,097)- - ( 1,146)( 455)- ( 3,698)
Net book am ount4207,8516,1507311,575- 16,727
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Seeka 2017 Annual Report
The amortisation period of software is four to five years and the remaining amortisation period for the interest in leased land is from 33
to 91 years.
The Group's interest in leased land occupied, or held for future development, arose on the acquisition of Huka Pak and is the difference
in the value of the lease terms to relative market terms.
Water shares are an integral part of land and irrigation infrastructure required to grow pears, kiwifruit and other annual crops in Australia
and are carried at fair value based on the closing water share market price. This is the first year the water shares are being valued at
fair value. Previously they were recognised at cost; see the basis of consolidation section for the change in accounting policies.
Impairment tests for goodwill
The Board reviews business performance based on operating segments and monitors goodwill at the operating segment level in
accordance with the policy below. Goodwill represents the Group's retail services acquired with Glassfields, the acquisition of Seeka
Australia (Pty) Limited and the acquisition of the Kiwi Crush and Kiwi Crushies product ranges.
Following a major customer moving to their own direct supply of bananas, the Board reviewed and impaired the carrying value of the
goodwill associated with Glassfields' banana business by $2.03m.
Soft wareG oodwill
Wat er
Shares
Supplier
c ont rac t
Int erest in
leased land
O t her
int angibles
Total
$000s $000s $000s $000s $000s $000s $000s
Note 10. Intangible assets
At 1 January 2016
Cost2,2479,4403,9381,877768- 18,270
Accumulated amortisation ( 1,816)- - ( 537)( 391)- ( 2,744)
Net book am ount4319,4403,9381,340377- 15,526
Year ended 31 December 2016
Opening net book am ount4319,4403,9381,340377- 15,526
Additions77- - - - 105182
Additions through business combinations- 244- - - - 244
Sof tw are reclassif ied f rom property,
plant and equipment
29- - - - - 29
Exchange dif f erences( 1)( 142)( 92)- - - ( 235)
Amortisation( 134)- - ( 304)( 32)- ( 470)
Closing net book am ount4029,5423,8461,03634510515,276
At 1 January 2017
Cost2,3529,5423,8461,87776810518,490
Accumulated amortisation( 1,950)- - ( 841)( 423)- ( 3,214)
Net book am ount4029,5423,8461,03634510515,276
Year ended 31 December 2017
Opening net book am ount4029,5423,8461,03634510515,276
Additions164689- - - 853
Disposals- - - - - ( 105)( 105)
Revaluation- - 1,393- 1,262- 2,655
Impairment- ( 2,031)- - - - ( 2,031)
Exchange dif f erences1340222- - - 563
Amortisation( 147)- - ( 305)( 32)- ( 484)
Closing net book am ount4207,8516,1507311,575- 16,727
As at 31 December 2017
Cost2,5177,8516,1501,8772,030- 20,425
Accumulated amortisation( 2,097)- - ( 1,146)( 455)- ( 3,698)
Net book am ount4207,8516,1507311,575- 16,727
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Seeka 2017 Annual Report
The recoverable amount is based on the net present value of the five-year after-tax cash flow projection, with a terminal value beyond
five years. Cash flows beyond the five year period are extrapolated using estimated growth rates and discount rates stated below. The
assumptions used for the analysis of the net present value of forecast gross margin for the cash generating unit, is determined based on
past performance and the Board's expectations of future market development.
No other impairment arose in the current year.
The following table details the key assumptions used for value-in-use calculations and the recoverable amount in 2017.
The following table details how leased land would be stated on the historical cost basis.
Accounting policies
Intangible assets
Assets with a finite useful life are subject to depreciation and amortisation and reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be recoverable. Intangible assets that have an indefinite life are not
subject to amortisation and are tested at least annually for impairment, with impairment losses recognised when the carrying amount
exceeds the recoverable amount. When assessing impairment, assets are grouped at the lowest identifiable unit able to generate
cash flow.
Software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific
software. Internally developed computer software is capitalised when it enters the development phase per NZ IAS 38 on the basis of
costs incurred to develop and test the software for use. Intangible assets are amortised over their estimated useful life (typically three
to five years).
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of
the acquired business or associate at the date of acquisition. Goodwill on acquisition of a business is included in intangible assets.
Goodwill on acquisition of an associate is included in investments in associates. Goodwill acquired in business combinations is not
amortised. Instead, goodwill is tested for impairment annually, or more frequently if deemed prudent, with goodwill carried at cost less
accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to that
entity.
Supplier contracts
When an intangible asset is recognised on a supplier contract it is amortised over the life of the contract on a straight line basis. The
expense is charged to the statement of financial performance.
Lease interest in land
The Group’s interest in long term leased land occupied, or held for future development, is amortised over the life of the lease and
tested for impairment on a triennial basis along with land and buildings.
Water shares
The Group records permanent water shares at fair value based on the market price at balance date. The shares are fully tradeable
and have an indefinite life and are not depreciated.
Other intangibles
Other intangibles include a licence to grow G3 kiwifruit and is amortised over the life of the licence on a straight line basis. The
expense is charged to the statement of financial performance.
Cash generating unit w ithin
the business
Carrying
amount
$000s
Discount
rate
Grow th
rate 1-5
years
Terminal
grow th
rate
Goodwill
GlassfieldsRetail services segment1,383 10.4%1.0% - 2.0%2.0%
Kiw i CrushRetail services segment244 10.9%2.0% - 4.0%2.0%
Seeka Australia Pty LimitedAustralian operations5,884 10.4%2.3% - 3.0%2.0%
20172016
New Zealand dollars$000s $000s
Cost1,7351,735
Accumulated amortisation( 294)( 262)
Depreciated historical cost1,4411,473
Net book am ount1,575345
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Seeka 2017 Annual Report
Note 11. Biological assets - crop
Crops growing on bearer plants are classified as biological assets and measured at fair value.
Crop assets are kiwifruit, Nashi pears, Packham Pears, Corella Pears, other pears, cherries, avocado, apricot, and plum crops growing
on leased and owned orchards and yet to be harvested at balance date.
The following table reconciles beginning balances to end balances for biological assets crop measured at fair value defined
as level 3 in note 27.
Crop where cost is deemed fair value
Kiwifruit, Nashi, Packham and Corella pear crops are not considered to have achieved sufficient biological transformation at balance
date and as such cost is deemed fair value (note 27).
For each crop cost is tested for impairment at balance date using the Group budget for yields and market returns less costs yet to be
incurred on an orchard-by-orchard basis to establish a recoverable value for the crop on each of the Group's orchards.
Where the recoverable value is less than cost, the cost is impaired through the statement of financial performance.
Accounting policies
Biological assets are the crops growing on bearer plants in the Group’s leased and owned orchards. The method to determine fair
value depends on the degree of biological transformation (the maturity of the fruit) at balance date.
When insufficient biological transformation has occurred, the fair value is the costs incurred at balance date to grow the crops
(provided the costs are considered recoverable).
When sufficient biological transformation has occurred, fair value is the estimated net market return less selling cost and costs to
market.
The estimated market return less selling cost is established by reference to current and expected sales returns when available. When
market data is not available an assessment is made based on historical data.
20172016
New Zealand dollars$000s $000s
Carrying amount at beginning of period16,04617,365
Crop harvested during the period
Fair value movement f rom the beginning of the period to point of harvest20,90321,276
Fair value w hen harvested( 36,949)( 38,641)
Crop growing on bearer plants at end of period
Crop w here cost is deemed f air value16,47015,657
Crop at f air value212389
Carrying value at end of period16,68216,046
20172016
New Zealand dollars$000s $000s
Movement in carrying amount346( 1,152)
Exchange dif f erences290( 167)
Net fair value m ovem ent in crop636( 1,319)
The follow ing table details the classification of biological assets - crop.
20172016
New Zealand dollars$000s $000s
Australia - all varieties5,9184,678
New Zealand - kiw if ruit crop10,65611,134
New Zealand - avocado crop108234
Carrying value at end of period16,68216,046
The follow ing table reconciles fair value m ovem ent of biological assets - crop.
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Seeka 2017 Annual Report
Working Capital
This section focuses on how the Group manages inventories, accounts receivable and accounts payable to
ensure an appropriate level of working capital is available to operate the business, deliver benefits to
stakeholders and generate revenues.
Within current trade receivables, $1.10m are past due (Dec 2016 - $1.14m), of which 3.5% are more than 90 days (Dec 2016 - 5%).
Non-current trade receivables are considered recoverable and relate to debtors secured against crop supply commitments with
repayment terms of up to five years.
Accounting policies
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful
debts.
Collectability of trade receivables is reviewed on an ongoing basis including debts past due, but not considered impaired. Debts
which are known to be uncollectible are written off. A provision for doubtful receivables is established when there is objective
evidence that the Group will not be able to collect all amounts due and is recognised in the statement of financial performance.
In the current year, $21.98m (Dec 2016 - $25.76m) of packaging inventory costs were expensed to cost of sales in the statement of
financial performance.
Accounting policies
Raw materials, work in progress, finished goods and produce are stated at the lower of cost and net realisable value. Cost
comprises direct materials and direct labour, and are assigned to individual items of inventory on the basis of weighted average
cost. Net realisable value is the estimated selling price less estimated costs of completion and sales costs.
20172016
New Zealand dollars$000s $000s
Note 12. Trade and other receivables
Current trade receivables10,21711,009
Prepayments932706
GST refund due379-
Accrued fruit income and other sundry receivables5,8738,874
Current trade and other receivables17,40120,589
Non current trade receivables1,0663,350
Total receivables18,46723,939
20172016
New Zealand dollars$000s $000s
Note 13. Inventories
Total packaging at cost2,5491,783
Other inventories at cost2,2591,606
Total inventories4,8083,389
20172016
New Zealand dollars$000s $000s
Note 14. Trade and other payables
Trade payables3,4725,638
Accrued expenses12,36312,152
Employee expenses4,2123,613
GST payable- 280
Other payables23428
Total trade and other payables20,28121,711
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Seeka 2017 Annual Report
Accounting policies
Trade payables are recognised initially at fair value (the invoiced amount). If the Group has been provided with extended terms of
trade, they are then recognised at amortised cost using the effective interest method.
20172016
New Zealand dollars$000s $000s
Note 14. Trade and other payables
Trade payables3,4725,638
Accrued expenses12,36312,152
Employee expenses4,2123,613
GST payable- 280
Other payables23428
Total trade and other payables20,28121,711
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Seeka 2017 Annual Report
Funding
This section focuses on how the Group manages its capital structure to protect shareholder value while
funding operations that deliver benefits to stakeholders and grow shareholder returns.
Disclosures are made on the Group’s bank facilities, retained earnings, dividends paid to shareholders, and earnings per share.
Details on the Company’s share capital include shares issued under the dividend reinvestment plan, grower incentive and employee
share schemes.
The Group’s total facilities of $116.2m (Dec 2016 - $114.8m) comprise a multi-option credit facility of $31.0m (Dec 2016 - $31.2m) and
term loans of $85.2m (Dec 2016 - $83.6m).
The Board has assessed the fair value of the term loans as the outstanding balance at balance date.
The Group’s bank facilities are held with Westpac and it is expected that all facilities will be refinanced when they become due for
review in the normal course of business.
The following table details the amounts of the term loans drawn down at balance date and their maturities.
20172016
New Zealand dollars$000s $000s
Note 15. Interest bearing liabilities
Current secured
Bank borrow ings10,8275,716
Total current interest bearing liabilities10,8275,716
Non current secured
Bank borrow ings- -
Non current portion of term liabilities74,68368,729
Mandatory convertible notes- -
Total non-current interest bearing liabilities74,68368,729
Analysis of m ovem ents in borrow ings:
At 1 January 201774,445
Cash f low - additional borrow ings41,760
Cash f low - repayment of borrow ings( 32,600)
Exchange dif f erences1,905
At 31 Decem ber 201785,510
Balance
dueInterest
New Zealand dollars$000s
rateMaturity
Term loans as at 31 December 2017
AUD $17m18,690
3.46%
30 April 2019
AUD $10m10,993
3.59%
28 February 2019
NZD $16.5m16,500
3.19%
30 April 2019
NZD $10m10,000
3.59%
30 April 2019
NZD $20m9,500
3.28%
30 April 2019
NZD $9m9,000
3.59%
30 April 2019
Term loans as at 31 December 2016
AUD $17m17,668 3.44%28 February 2018
AUD $10m9,561 3.16%30 September 2018
NZD $16.5m16,500 3.25%28 February 2018
NZD $10m10,000 3.65%28 February 2018
NZD $9m9,000 3.65%28 February 2018
NZD $20m6,000 3.30%28 February 2018
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Seeka 2017 Annual Report
All of the Group’s term loans are on interest-only repayment terms.
Assets pledged as security
Bank loans and overdrafts are secured by first mortgages over the Group’s freehold land and buildings. The Group’s policy is to
protect the term portion of the loans from exposure to changing interest rates via the use of derivatives. See note 28.
Accounting policies
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost.
When it is probable that part or the entire loan will be drawn down, any loan facility establishment fee paid is recognised as a loan
transaction cost. When the loan will probably remain undrawn, any loan fee paid is capitalised as a pre-payment for liquidity
services and amortised over the period of the facility.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at
least 12 months after balance date.
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the
number of fully paid shares held.
Grower incentive scheme
On 7 September 2016, the Group issued 666,124 shares at a price of $4.40 each in respect of the 2016 kiwifruit supply season to
participating growers.
20172016
SharesShares Shares
Note 16. Share capital
Authorised and issued share capital
Ordinary shares - fully paid and no par value
Opening balance17,458,652 16,325,730
Shares issued under:
Dividend reinvestment programme62,627 68,698
Grow er incentive scheme- 666,124
Employee share scheme- 398,100
Total shares issued17,521,279 17,458,652
Ordinary shares - classified as follows
Held by ordinary shareholders17,085,479 16,715,052
Held by Seeka Employee Share Plan Trustees435,800 743,600
Total shares issued17,521,279 17,458,652
20172016
New Zealand dollars$000s $000s
Movements in ordinary paid up share capital
Opening balance of ordinary shares47,48242,730
Issues of ordinary shares during the year3294,752
Closing balance of ordinary share capital47,81147,482
Movements in treasury share capital
Opening balance of ordinary shares2,5322,079
Issue of shares under the employee share scheme- 1,545
Employee share scheme receipts( 916)( 1,092)
Closing balance of shares held as treasury capital1,6162,532
Net share capital46,19544,950
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Seeka 2017 Annual Report
Accounting policies
Ordinary shares are classified as equity.
Where any Group company purchases the Company's equity share capital (treasury shares), the consideration paid, including any
directly attributable incremental costs (net of income taxes), is deducted from equity attributable to the Company's equity holders
until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any
directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the
Company's equity holders.
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average
number of ordinary shares outstanding during the period, adjusted for bonus elements in ordinary shares issued during the period.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after
income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average
number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Net tangible asset per share
Net tangible asset per share is calculated by dividing the Group’s net assets less goodwill by the total shares on issue at the end of
the period.
New Zealand dollars20172016
Note 17. Earnings and net tangible assets per share
Basic earnings per share
Prof it attributable to equity holders of the Company (thousands)
5,833 10,385
Weighted average number of ordinary shares in issue (thousands)
16,575 16,067
Basic earnings per share
$0.35$0.65
Diluted earnings per share
Prof it attributable to equity holders of the Company (thousands)5,833 10,385
Weighted average number of ordinary shares in issue plus employee share scheme
(thousands)17,392 16,770
Diluted earnings per share
$0.34$0.62
Net tangible assets per share
Net tangible assets (thousands)90,774
75,769
Total ordinary shares issued at the end of the period (thousands)
17,521 17,459
Net tangible asset per share
$5.18$4.34
20172016
New Zealand dollars$000s $000s
Note 18. Retained earnings and reserves
Reserves
Cash flow hedge reserve( 94)( 241)
Investment in shares revaluation reserve7,0561,939
Land and buildings revaluation reserve14,35010,370
Foreign currency translation reserve( 220)620
Foreign currency revaluation reserve265( 476)
Share based payment reserve99284
Total reserves21,45612,496
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Seeka 2017 Annual Report
The cash flow hedge reserve is used to record increases and decreases on the revaluation of derivative financial instruments.
The investment in shares reserve is used to record increases and decreases on the revaluation of Seeka's investment in shares.
The land and buildings revaluation reserve is used to record increments and decrements on the revaluation of land and buildings.
The foreign currency translation reserve is used to record foreign currency translation differences on the translation of the Group
entities results and financial position. The amounts are accumulated in other comprehensive income and recognised in profit and loss
when the foreign operation is partially disposed of or sold.
The foreign currency revaluation reserve is used to record unrealised gains and losses on the Group's assets and liabilities held in
foreign currencies.
Retained earnings
The following table details movements in retained earnings.
Share based payment reserve
The Group operates an equity-settled, share-based compensation plan established in 2016.
The active scheme is managed by a trust established October 2014, and the directors of the trustee company (Seeka Employee
Share Plan Trustee Limited) are also directors of Seeka.
Under the employee share schemes shares are issued to an employee share trust, with certain employees eligible to subscribe to
shares held by the trust with this benefit recognised as a share-based payment expense and recorded as an expense over the vesting
period. At the end of the vesting period the employee has an option to settle any outstanding debt on the shares and have the shares
transferred to them, alternatively the employee can elect not to have the shares transferred to them and any outstanding debt will be
forgiven and the shares sold by the trustees.
The following table details movement in the employee share entitlement reserve.
At balance date, the number of shares in respect of which options have been granted to employees and remain outstanding under the
scheme was 435,800 (Dec 2016 - 743,600), representing 2.51% (Dec 2016 - 4.43%) of the shares of the Company on issue at that
date.
The shares are issued fully paid in exchange for a loan to the share scheme trust.
The shares held by the employee share scheme carry the same voting rights as other issued ordinary shares. While monies are owed
on the shares they remain with the trustee.
The options element of the scheme is valued using a Black Scholes pricing model. Because the Company has a small market
capitalisation with minimal trading, volatility is forecasted into the model.
During the year the shares issued in 2014 vested with employees, with all but 77,500 shares transferred to employees. The remaining
shares are held by the trust for payment over two years with interest charged on the outstanding loan balance.
20172016
New Zealand dollars$000s $000s
Balance at 1 January27,86520,750
Net profit for the year5,83310,385
Dividends paid( 3,519)( 3,398)
Release of share-based payments318-
Foreign exchange movement2-
Realisation of land and buildings reserve475128
Balance at 31 December30,97427,865
20172016
New Zealand dollars$000s $000s
Balance at 1 January284142
Movement in employee share entitlement reserve( 185)142
Balance 31 Decem ber99284
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Seeka 2017 Annual Report
The following table details inputs to the Black Scholes pricing model, used to value the cost of the share scheme to the
Group
The following table details movements of options granted under the current active scheme.
Accounting policies
The fair value of the employee services received in exchange for the grant of options is recognised as an expense in the statement
of financial performance with a corresponding increase in the share based payment reserve. The fair value is determined by
reference to the fair value of the options granted, calculated using the Black Scholes pricing model, excluding the impact of any non-
market vesting conditions (for example, profitability and sales growth targets).
When the shares vest, the amount of the reserve relating to those shares is transferred to retained earnings.
Shares may be issued at the Board’s discretion at a price set by the Board based on the Volume Weighted Average Price (VWAP)
calculation of the Company's shares during the period prior to issue. The Employee Share Scheme (ESS) cannot be issued with
further shares if that issue would result in the ESS having an interest of more than 5% of the Company’s issued capital. Shares are
issued fully paid in exchange for a loan to the share scheme trust. Dividends paid on the shares are applied towards repaying the
debt between the ESS and the Group on behalf of the employee.
Proceeds received along with any employee contributions are credited to share capital when the options are exercised.
ESS has a non-beneficial interest in all the shares allocated to employees. Annually the Group reviews the scheme and decides
upon the allocation of further shares and the price at which those shares will be issued to the ESS. Trustees of ESS are appointed
for an unspecified term and may be removed by the Company at any time.
Shares held by the ESS carry the same voting rights as other issued ordinary shares.
Inputs into the model20 May 2016
Shares issued398,100
Grant date share price$3.88
Exercise price$3.88
Expected lif e (interest f ree loan period)3 years
Maximum loan period5 years
Time to vest3 years
Employee exit rate pre-vesting (% per year)8.00%
Expected volatility (% per year)10.00%
Risk-f ree interest rate3.14%
Dividend yield6.83%
Value of option$0.47
G rant Dat e Expiry Dat e
Fair value at
grant dat e
Exerc ise
Pric e
1 January
sharesIssued shares
Relinquished
shares
Exerc ised
shares
31 Dec ember
shares
07 Oct 2014 07 Oct 2017$0.74$3.05367,200 - - (289,700)77,500
Weighted average exercise price$3.05$3.05
Weighted average contractual life (years) 3.00 3.00
20 May 201620 May 2019$0.47$3.88376,400 - -(18,100)358,300
Weighted average exercise price$3.88$3.88
Weighted average contractual life (years) 3.00 3.00
2017201720162016
Dividends paid$000sPer share $000s Per share
Note 19. Dividends
24 March 2016- $ - 1,644 $ 0.10
29 September 2016- $ - 1,754 $ 0.10
24 March 20171,758 $ 0.10 - $ -
22 September 20171,761 $ 0.10 - $ -
Total dividend paid3,519 3,398
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Seeka 2017 Annual Report
The dividends are imputed to the fullest extent allowable in the tax year. The total dividend paid includes the non-cash amounts for the
dividend reinvestment plan. Cash dividend payment was $3.19m (Dec 2016: $3.12m).
On 22 February 2018, the directors declared a fully-imputed dividend of $0.12 per share. The dividend will be paid 23 March, 2018 to
those shareholders on the register at 5pm on 19 March, 2018. The dividend reinvestment plan will apply to the dividend.
Accounting policies
Provision is made for the amount of any dividend declared on or before the end of the period but not distributed at balance date.
2017201720162016
Dividends paid$000sPer share $000s Per share
Note 19. Dividends
24 March 2016- $ - 1,644 $ 0.10
29 September 2016- $ - 1,754 $ 0.10
24 March 20171,758 $ 0.10 - $ -
22 September 20171,761 $ 0.10 - $ -
Total dividend paid3,519 3,398
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Seeka 2017 Annual Report
Investments
This section focuses on how the Group invests in businesses to support Seeka’s core kiwifruit operations,
realise synergies along the produce supply chain and grow Seeka’s product base and geographical reach.
The Board manages business investments to strengthen the benefits delivered to stakeholders and grow
shareholder returns.
Disclosures are made on the Group’s holdings in associates and subsidiaries, along with details on the Group’s holding of listed and
unlisted shares.
As required under NZ IAS 39, equity investments not otherwise held for trading are classified as available for sale.
The following table reconciles beginning balances to end balances for unlisted securities measured at fair value defined as
level 3 in note 27.
Purchase of shares in Rising Sun Orchards Limited
In October 2017 the Group purchased a 16.67% share in Rising Sun Orchards Limited; a company that purchased and operates a 28
canopy hectare avocado orchard in Houhora, Northland, New Zealand.
20172016
New Zealand dollars$000s $000s
Note 20. Investm ent in shares
Balance at the beginning of the year2,2871,689
(Repayment) of investment- ( 26)
Impairment of investment- ( 340)
Purchase of investment1,000100
Revaluation recognised in equity4,141864
Balance at end of year7,4282,287
Listed equity securities
Zespri Group Limited5,8421,701
Unlisted securities
Rising Sun Orchards Limited1,000-
Blackburn General Partner Limited100100
Ravensdow n Fertiliser Co-operative Limited238238
Ballance Agri Nutrients Limited225225
Other share holdings2323
Total unlisted securities1,586586
Total investm ent in shares7,4282,287
Unlisted
equity
securities
Level 3
New Zealand dollars$000s
Balance at 1 January 2017586
Purchases1,000
Balance at 31 Decem ber 20171,586
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Seeka 2017 Annual Report
Impairment of investment
The Group owns 32% of UPNZ Limited (UPNZ). During the 2016 financial year the Group fully impaired its $0.34m investment in
UPNZ. UPNZ imports plastic pocket packs from China and Chile and distributes them to the New Zealand kiwifruit industry. In late
March 2016, a visual inspection found grease deposits on several packs supplied by UPNZ. As a consequence Zespri Group Limited
(Zespri) placed all kiwifruit packed into UPNZ pocket packs sourced from China on hold until they could determine whether the grease
posed any potential food safety issues. UPNZ was forced to recall this product and as a result its customers, including Seeka, suffered
costs checking the packed kiwifruit inventory to remove all affected trays. The Board believes this will have a major impact on the
value of the Group's investment in UPNZ and it was recognised as an impairment in the statement of financial performance.
Accounting policies
The fair values of the listed securities are based on the securities' closing share price at balance date. Where pricing information is
available, unlisted securities are revalued at balance date. All other unlisted securities are currently held at cost less impairment as
it reasonably represents current fair value. The carrying amount of all unlisted securities have been reviewed at balance date and
any impairment is recognised through the statement of comprehensive income to the extent of any related reserve available and
then through the statement of financial performance.
Note 22. Investment in associates
The following table details the Group's principal associates.
Name of entity
Country of
incorporation
Class of
shares
Equity
holding 31
December
2017
Equity
holding 31
December
2016
Note 21. Principal subsidiaries
The consolidated f inancial statements incorporate the assets, liabilities and results of the f ollow ing subsidiaries.
Trading subsidiaries
Avof resh LimitedNew ZealandOrdinary100%100%
Delicious Nutritious Food Company LimitedNew ZealandOrdinary100%0%
Integrated Fruit Supply & Logistics LimitedNew ZealandOrdinary100%100%
Kiw i Coast Grow ers (Te Puke) LimitedNew ZealandOrdinary100%100%
Little Haven Holdings Pty LimitedAustraliaOrdinary100%0%
Seeka Australia (Pty) LimitedAustraliaOrdinary100%100%
Seeka Te Puke LimitedNew ZealandOrdinary100%100%
Not-trading subsidiaries
Eleos LimitedNew ZealandOrdinary100%100%
Enviro Gro LimitedNew ZealandOrdinary100%100%
Glassf ields (NZ) LimitedNew ZealandOrdinary100%100%
Guaranteed Sw eet New Zealand LimitedNew ZealandOrdinary100%100%
Nutritious Delicious Food Company LimitedNew ZealandOrdinary100%0%
Seeka Fresh LimitedNew ZealandOrdinary100%100%
Seeka Pollen Australia (Pty) LimitedAustraliaOrdinary100%100%
Country of
incorporation
Business
activity
Equity
holding 31
December
2017
Equity
holding 31
December
2016
Kiw ifruit Supply Research LimitedNew ZealandNot trading20%20%
Tauranga Kiw ifruit Logistics LimitedNew ZealandPort service20%20%
Kiw ifruit Vine Protection Company LimitedNew ZealandNot trading100%100%
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Seeka 2017 Annual Report
Accounting policies
Associates are entities over which the Group has significant influence, but not control, typically by holding between 20% to 50% of
the voting rights in the entity.
Investments in associates are accounted for using the equity method after initially being recognised at cost.
The Group's share of associates' profits or losses are recognised in the statement of financial performance and the carrying amount
of the investment in the statement of financial position.
Dividends received from associates are applied to reduce the carrying amount of the investment in the statement of financial
position.
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Seeka 2017 Annual Report
Other Notes
This section contains all other note disclosures about the Group.
Note 23. Contingencies
There are no contingent liabilities as at 31 December 2017 (Dec 2016 - Nil).
Note 24. Commitments
a. Capital commitments
At year end the Group was committed to incur capital expenditure of $6.7m (Dec 2016: $21.31m). Commitments include $1.8m for
plastic bins in New Zealand and Australia, and $1.2m for a kiwiberry grader in New Zealand.
b. Lease commitments
Operating leases
Under operating leases the Group has the following commitments.
1. Orchard leases - land and bearer plants
At balance date, 102 orchards (Dec 2016 - 118) are leased by the Group with terms ranging from one to three years. Orchard leases
are non-cancellable with lease payments typically determined by total orchard gate returns.
Some orchards also have a fixed lease element to their lease payment.
The following table details minimum, non-cancellable operating lease commitments for land and bearer plants on leased
orchards.
In addition to the above fixed lease commitments the Group is committed to pay variable lease payments on orchard leases which are
contingent on the number of trays harvested, and revenue earned less costs incurred in each year of the lease.
2. Orchard land leases - land only
The Group leases 84 hectares (2016: 82 hectares) of bare land on which it has developed kiwifruit and avocado orchards. Leases are
for periods up to 20 years at the end of which the land, structures and vines revert back to the lessor.
The following table details minimum, non-cancellable operating lease commitments for leased land orchards.
3. Land and buildings
The Group leases land and buildings for a number of its post harvest facilities. Lease terms are typically from three to six years, but
can be up to 99 year terms.
The following table details minimum, non-cancellable operating lease commitments for land and buildings used in post
harvest operations.
20172016
New Zealand dollars$000s $000s
Within one year181 172
Later than one year but not later than five years504 366
Later than five years557 27
1,242 565
20172016
New Zealand dollars$000s $000s
Within one year89 199
Later than one year but not later than five years90 170
179 369
20172016
New Zealand dollars$000s $000s
Within one year3,518 2,815
Later than one year but not later than five years10,714 7,847
Later than five years69,059 64,044
83,291 74,706
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4. Equipment and vehicles
The Group leases office equipment and vehicles on terms up to three years.
The following table details minimum, non-cancellable operating lease commitments for equipment and vehicles.
Note 25. Related party transactions
Seeka Growers Limited
The Group undertakes transactions with Seeka Growers Limited (SGL), a related party which administers all kiwifruit revenues
received for the New Zealand business on behalf of supplying growers.
In the current period the Group received $88.77m (Dec 2016 - $103.22m) for the provision of services to SGL.
Directors
Directors of the Company at any time during the period were: F Hutchings, M J Cartwright (retired 27 April 2017), A Waugh, A Diaz, N
Te Kani, J Burke, M Brick, P R Cross, C Tarrant (appointed 27 April 2017).
Key management and compensation
Key management personnel are all Company directors or executives with the greatest authority for the Group’s strategic direction and
management.
The following table details key management personnel compensation.
Transactions
Excluding transactions outlined and disclosed above, the following transactions were entered with related parties for post harvest and
orchard management services.
Outstanding balances
The following table details outstanding balances at balance date.
20172016
New Zealand dollars$000s $000s
Within one year1,348 1,421
Later than one year but not later than five years1,111 1,631
2,459 3,052
20172016
New Zealand dollars$000s $000s
Current receivables (operating)
Directors, management and other personnel119 520
Current payables (operating)
Directors, management and other personnel4 12
20172016
New Zealand dollars$000s $000s
Director fees400 396
Executive salaries2,475 2,489
Short term benefits495 725
Total3,370 3,610
20172016
New Zealand dollars$000s $000s
Sales of services
Directors, management and other personnel1,330 1,841
Purchase of services
Directors, management and other personnel200 61
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Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Outstanding balances are unsecured and repayable in cash.
Note 26. Risk management
The Group’s activities expose it to a variety of risks specific to producing and selling horticultural crops, along with corporate financial
risks related to credit, liquidity and capital risk. The Group operates a comprehensive risk assessment and mitigation programme via
its audit and risk committee.
The Group's policy is to ensure that the Group creates value and maximises returns to its shareholders and benefits for other
stakeholders, as well as ensuring that adequate financial resources are available for the development of the Group’s business whilst
managing its financial risks.
a. Risk management strategies related to orchard and retail operations
Horticultural operations expose the Group to risks to production and market returns. The main production risks are climatic events,
diseases and pests. These impact on volumes produced from the Group's orchards, volumes to post harvest (both from Group
operations and independent growers) and volumes available for retail.
Market risks of pricing and exchange rates impact on orchard operations (the amount the Group is paid for growing crops) and impact
on retail revenues where the Group imports and sells fruit produce, mainly bananas. The exchange rate risk on imports is managed
through the use of foreign exchange contracts to match known and planned purchases. Market risks do not directly impact on post
harvest operations, as charges are normally set prior to harvest and deducted before sales revenues are paid to supplying growers.
The Group operates in four regions spread over two countries; New Zealand's Northland, Coromandel and the Bay of Plenty, and in
Australia's Mundoona region of Victoria. Main produce lines are kiwifruit, nashi pears, European pears and avocados, with small
production of other temperate-climate fruits. Group retail activities are in New Zealand (including imported tropical produce), Australia
and Asia. The Group's geographical, product and market spread limits the impact on Group operations from an adverse event
occurring in a specific region, produce or market. To further mitigate risks, the Board uses the following strategies.
Production risks - climatic events, disease and pests
The Group follows industry best practice to mitigate production risks. This includes orchard management practices to optimise
production from Group orchards, and extensive planning to ensure post harvest and retail services are suitably resourced to manage
each season's crop volumes.
In New Zealand, the major climatic risks are hail, frost and storm damage.
· hail events are typically highly localised, and for kiwifruit the Group has access to industry hail insurance for its orchard
operations, plus top-up payments from a Seeka Growers Limited hail insurance programme.
· frost events are typically regional, and the Group advocates best-practice crop protection, including active frost management
on kiwifruit orchards operated by the Group and other growers supplying the Group's post harvest operations.
· storm events are typically regional, and the Group advocates best-practice crop protection, including shelter belts on all
orchards operated by the Group and other growers supplying the Group's post harvest operations.
In Australia, the major climatic risks are drought, hail and fire. As the owner and operator of all orchards supplying its Australian
operations, the Group actively manages climatic risks of its total production base. The orchards are located on three sites in the
Mundoona region.
· drought events are typically regional, and to secure adequate irrigation, the Group has purchased extensive, long-term water
shares from a reliable irrigation programme.
· hail events are typically localised, and the Group currently has hail cloth protecting one orchard.
· fire risk is typically from serious grass wild-fire occuring during periods of extreme weather, with the Country Fire Authority
responsible for risk assessment and management of fire events. The Group takes all practical steps to internally manage fire risk
including removing excess vegetation from Group properties.
All horticultural undertakings are susceptible to disease and pest incursions. The kiwifruit vine disease Pseudomonas syringae pv.
actinidiae (Psa) is widespread throughout New Zealand, and is being actively managed. To date Psa has not been detected in
Australia. The brown marmorated stink bug is also a potential threat to the horticulture industry. To minimise the risk of crop loss the
Group monitors its orchards and undertakes recognised spray programmes to protect crops to the fullest extent possible. Seeka also
relies on the Ministry for Primary Industries to protect New Zealand's borders from introduced diseases.
Market returns
New Zealand kiwifruit
The Group has no direct market risk from the sale of kiwifruit harvested from lease operations, as all export marketing activities are
undertaken by Zespri Group Limited (Zespri) under statutory regulations. The Group, however, is impacted by the level of Zespri's
market returns which impact on the Group's orchard profitability. The Group monitors Zespri returns and uses modelling techniques to
analyse current and projected orchard income. This information is used when setting Group budgets and orchard lease terms.
New Zealand avocados and kiwiberries
The Group has a direct market risk from the sale of avocados and kiwiberries, with half of kiwiberry sales and all avocado sales
managed by the Group's retail operations. The Group forecasts seasonal supply, monitors market conditions, develops a sales
programme around the needs of key retailers and controls product quality and supply to optimise market access and returns. This
information is used when setting Group budgets and orchard lease terms.
The Group has no direct currency risk from export sales as it does not own the products but acts as the growers’ agent.
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Imported tropical produce
The Group has a direct market, price and currency risk from imported fruit produce (banana, pineapple and papaya) where the Group
imports fruit produce for sale as the principal through its supply and sale contracts. The Group may hedge up to the total known and
projected cash flows to manage exchange risk. The Group has no material direct price and currency risk from imported fruit produce
where the supply agreement enables the Group to amend its purchase price according to trading conditions.
Australian produce
The Group has a direct market and price risk from the sale of all Australian product which is managed by the Group's Australian
operations. As the largest single grower and supplier of Australian kiwifruit and nashi pears, the Group has developed strong
relationships with key retailers. The Group forecasts seasonal supply, monitors market conditions, develops a sales programme
around the needs of key retailers and controls product quality and supply to optimise market access and returns.
Seeka Australia is the Group’s single major international operation, exposing the Group to the Australian dollar. Foreign exchange risk
includes future commercial transactions, assets, liabilities and net investments. Currency exposure from net assets is managed
through borrowings in Australian dollars.
b. Credit risk
Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to
customers, including outstanding receivables, derivative financial instruments and committed transactions.
The maximum credit risk is the financial loss to the Group if counterparties fail to discharge a contractual obligation. The Group's
maximum exposure is:
· the carrying amount of the respective recognised financial assets as stated in the consolidated statement of financial position,
and
· the amount of contingent liabilities, if any, in relation to the financial guarantees provided by the Group.
For banks and financial institutions, only registered banks or their subsidiaries are accepted. The Group does not generally require any
collateral or security to support financial instruments due to the quality of the financial institutions.
For customers, including outstanding receivables, the Group deals predominantly with growers for which it receives payment for post
harvest services directly from Seeka Growers Limited. Credit risk is therefore not considered significant.
Other than concentration of credit risk on liquid funds deposited with one bank with a high credit rating, the Group does not have any
other significant concentration of credit risk as trade receivables are spread over approximately 400 customers.
The following table details cash balances at balance date.
c. Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities.
The Group’s policy is to regularly monitor its expected cash flows, liquidity requirements and its compliance with lending covenants, to
ensure that it maintains sufficient reserves of cash and adequate committed lines of funding from major financial institutions to meet
its liquidity requirements in the short and longer term. Cash flow forecasting allows for the seasonal nature of Group operations.
When cash flow exceeds working capital management, funds are invested in interest bearing current accounts.
At balance date, the Group had $116.2m (2016 - $114.8m) of available credit of which $85.5m (2016 - $74.4m) was drawn. All credit
lines are currently provided by one finance provider.
20172016
New Zealand dollars$000s $000s
Counter party
Westpac bank deposits2,389 1,688
2,389 1,688
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The following table details the remaining contractual maturities at balance date of the Group’s financial liabilities.
d. Capital risk
Capital risk management focuses on ensuring the Group continues to operate as a going concern and maintains an optimal capital
structure to support its business, maximise shareholder value, and the benefits delivered to other stakeholders.
The Group may maintain or adjust its capital structure by adjusting dividends, returning capital to shareholders, issuing new shares or
selling assets.
The Group monitors capital on the basis of shareholder equity ratio, as calculated by total shareholder funds divided by total assets.
The following table details the Group’s shareholder equity ratio at balance date.
The Group is subject to, and monitors, financial covenants imposed by its lenders, including maintenance of equity ratios and earnings
times interest cover. At no stage during the year did the Group breach any of its lending covenants. Refer to note 15.
e. Price risk - equity securities
The Group has minor exposure to equity securities price risk through incidental investments classified on the statement of financial
position either as investment in shares and water shares within intangible assets at fair value. The majority of these investments are in
industry-related entities, only some of which are publicly traded.
A 10% increase or decrease in equity investments with all other variables held constant, has minimal impact on the Group's profit and
equity reserves.
The Board periodically reviews the performance and strategic benefits of these investments. No other formal risk management
procedures are deemed necessary.
The decision to change the fair value of an investment is recorded through other comprehensive income or the statement of financial
performance whenever a previous revaluation reserve balance was available. When no such reserve existed, any related loss is
processed directly in the statement of financial performance, otherwise available reserves are utilised to offset the loss.
f. Cash flow interest rate risk
The Group's cash flow interest rate risk arises primarily from short and long-term variable rate borrowings from financial institutions.
The Board continuously reviews term borrowings and uses interest rate swaps to hold a portion of borrowings at fixed rates; these are
designated as effective hedging instruments and hedge accounting is applied.
Less than
1 year
Betw een
1 and 2
years
Betw een
2 and 5
years
Over 5
years
New Zealand dollars$000s$000s$000s$000s
Group as at 31 Decem ber 2017
Trade payables20,281 - - -
Derivatives128 - - -
Bank borrow ings and current portion of term liabilities10,827 - - -
Term liabilities- 74,683 - -
Total31,236 74,683 - -
Group as at 31 Decem ber 2016
Trade payables21,703 - - -
Derivative liability332
Bank borrow ings and current portion of term liabilities5,716 - - -
Term liabilities- 68,729 - -
Total27,751 68,729 - -
20172016
New Zealand dollars$000s $000s
Total shareholder funds98,625 85,311
Total assets222,023 197,309
Shareholder equity ratio44.42%43.24%
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The following table details interest rate and price sensitivity of the Group’s financial assets and liabilities and their impact on
the statement of financial performance or equity. Cash and advance balances do not attract interest and are not subject to
pricing risk, and are therefore excluded from this analysis.
The following tables outline the expected undiscounted cash flows relating to the Group's outstanding term and current debt
at balance date.
Prof itEquityProf itEquityProf itEquityProf itEquity
New Zealand dollars$000s$000s$000s$000s$000s$000s$000s$000s$000s
At 31 Decem ber 2017
Financial Assets
Accounts receivable17,530 - - - - ( 1,753) ( 1,753)1,7531,753
Investment in shares7,428 - - - - ( 11)( 732)- 743
Water shares6,150 - - - - - ( 615)- 615
Financial Liabilities
Derivative liabilities128 - ( 430)- 789- - - -
Trade payables20,278 - - - - - - - -
Term liabilities74,683 538538( 1,075) ( 1,075)- - - -
Bank borrow ings and current portion
of term liabilities
10,827 7878( 156)( 156)- - - -
Total increase / (decrease)616186( 1,231)( 442) ( 1,764) ( 3,100)1,7533,111
At 31 Decem ber 2016
Financial assets
Accounts receivable23,233 - - - - ( 1,488) ( 1,488)1,4881,488
Investment in shares2,287 - - - - ( 11)( 218)- 229
Financial liabilities
Derivative liabilities332- ( 916)- 1,975- - - -
Trade payables21,711 - - - - - - - -
Term liabilities68,729 495495( 990)( 990)- - - -
Bank borrow ings and current portion
of term liabilities
5,716 4141( 82)( 82)- - - -
Total increase / (decrease)536( 380) ( 1,072)903( 1,499) ( 1,706)1,4881,717
Carrying
amount
+10%
Interest Rate RiskPrice Risk
-1%+2%-10%
Betw een
0 and 3
months
Betw een
3 and 6
months
Betw een
6 and 12
months
Betw een
1 and 2
years
Betw een
2 and 5
years
Over 5
years
New Zealand dollars$000s$000s$000s$000s$000s$000s
At 31 Decem ber 2017
Expected undiscounted cash f low s
based on current market interest rates
916 970 1,790 86,113 - -
Floating rate3.40%
Average term rate4.23%
At 31 Decem ber 2016
Expected undiscounted cash f low s
based on current market interest rates
1,056 955 1,752 74,970 - -
Floating rate3.46%
Average term rate4.23%
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Note 27. Determination of fair values of financial assets and liabilities
The following table analyses assets and liabilities carried at fair value.
The different levels are defined as:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement
date. Instruments in level 1 are comprised of equity holdings in Zespri Group Limited and water shares.
Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: unobservable inputs for the asset or liability that have to be developed to reflect the assumptions that a market participant
would use when determining an appropriate price.
The reconciliations for level 3 fair value requirements are shown.
· Land and buildings (note 9)
· Interest in leased land (note 10)
· Biological assets - crop (note 11)
· Unlisted equity securities (note 20)
Level 1Level 2Level 3Total
New Zealand dollars$000s$000s$000s$000s
Biological assets - crop at cost - - 16,470 16,470
Biological assets - crop at f air value - - 212 212
Intangible assets - interest in leased land - - 1,575 1,575
Water shares 6,150 - - 6,150
Land - - 17,804 17,804
Buildings - - 85,661 85,661
Listed equity securities 5,842 5,842
Unlisted equity securities - - 1,586 1,586
Derivatives used f or hedging (liability) - 128 - 128
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The following table shows the valuation techniques used in the determination of fair values within level 3 of the hierarchy, as
well as the key unobservable inputs used in the valuation models.
Accounting policies
Financial assets, liabilities and instruments
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure
purposes. Fair value measurements are categorised into a three-level hierarchy, based on the types of inputs to the valuation
techniques used.
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and investment in
shares) is based on quoted market prices at balance date (level 1 inputs). The quoted market price used for financial assets held by
the Group is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price.
TypeFair valueMethodKey unobservable inputs
How unobservables impact
estimated f air value
Biological assets -
crop at cost
$ 16.47 m
Cost.
Biological assets -
crop at fair value
$ 0.21 m
Forecast yields.Increases w ith yields.
Market sales price.Increases w ith price.
Costs to harvest.Decreases w ith higher
costs.
Land and buildings,
and interest in leased
land
$ 105.04 m
Comparative market rents
and applicable discount
rate.
Increases w ith market rental,
and low er discount rates.
Comparative market sales.Increases w ith market sales.
Current level of building
costs.
Increases w ith building
costs.
Unlisted equity
securities
$ 1.59 m
Based on latest
inf ormation f rom
securities management.
Tested f or impairment
w ith carrying amount
assesed at balance date.
Securities management
inf ormation on share price.
Increases w ith share price
inf ormation.
Reduces if cost is impaired
at balance date.
An annual revaluation is
used to estimate f air
value, w hich is perf ormed
on approximately one
third of land and buildings
on a rolling 3-year cycle
by an independent valuer
using f our dif f erent
approaches; replacement
cost approach, sales
approach, investment
approach and discounted
cash f low approach. See
accounting policies below
and notes 9 and 10 f or
f urther details.
Reduces if cost is impaired
at balance date.
Includes New Zealand
kiw if ruit and Australian
kiw if ruit, nashi, packham
and corella pears.
Cost is used as a proxy
f or f air value, as the crop
has yet to achieve
suf f icient biological
transf ormation. Cost is
tested f or impairment at
balance date using the
Group's budgets on an
orchard-by-orchard
basis.
Includes New Zealand
avocados and Australian
plums and speciality
pears.
Estimated market value
less selling costs and
costs to market (have
achieved suf f icient
biological transf ormation).
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The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is
determined using valuation techniques (level 2 inputs). The Group uses the appropriate method and makes assumptions that are
based on market conditions at each balance date. Quoted market prices or dealer quotes for similar instruments are used for long-
term debt instruments held. The fair value of interest rate swaps are calculated as the present value of the estimated future cash
flows. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial
instruments.
Trade receivable and payables
The carrying value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair
values due to their short term nature. The fair value of financial assets and liabilities with unobservable (level 3 inputs) reflect the
assumptions that market participants would use when determining an appropriate price; additional disclosure is provided for the
inputs and assumptions used in such cases.
Land and buildings and interest in leased land
Fair value is based on an annual revaluation, which is performed on land and buildings based on a rolling three-year cycle by an
independent valuer, with approximately one third of land and buildings assets valued each year using four different approaches as
described in note 9.
Group bank loans currently bear an average variable interest rate of 3.7% (Dec 2016 – 3.5%), with the Group using interest rate
swaps to protect the term portion of the loans.
Swaps cover 58% (Dec 2016 - 64%) of the term liabilities at balance date and are classified as held for trading or as cash flow
hedges.
Cash flow hedges
The following table details the interest rate swaps.
The following table details the forward exchange contracts.
The fair values of the interest rate swaps and forward exchange contracts are determined by Westpac and reviewed by the Board.
The gains and losses recognised in other comprehensive income appear in the statement of financial performance.
20172016
New Zealand dollars$000s $000s
Note 28. Derivative financial instrum ents
Liabilities
Interest rate sw ap contracts and forw ard exchange contracts - cash flow
hedge
128 332
Amount
$000sSpot rateHedge fixed rate
Last hedge
expiry date
Euro hedges (multiple)
2,399 0.5910.6253
18 April 2019
Term loan
Amount
$000s
Variable
RateLoan maturity
Hedge fixed rate
excluding bank
marginHedge expiry
NZD $10m 10,000 3.59%30 April 20192.79%30 December 2018
NZD $4m 4,000 3.59%30 April 20192.60%30 December 2018
NZD $16.5m 16,500 3.19%30 April 20192.60%30 December 2018
AUD $17m 18,764 3.46%30 April 20192.08%30 December 2018
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Accounting policies
Derivative financial instruments and hedging
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently re-measured to
their fair value at each balance date. The resulting gain or loss is recognised as a financing cost in profit or loss immediately unless
the derivative is designated and effective as a hedge instrument, in which event the timing of the recognition in profit or loss
depends on the nature of the hedge relationship. Derivatives are classified as current or non-current based on the effective date.
Hedge accounting
The Group designates certain derivatives as cash flow hedges. At the inception of the hedge relationship the Group documents the
relationship between the hedging instrument and hedged item, along with its risk management objectives and its strategy for
undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents
whether the hedging instrument that is used in a hedging relationship is highly effective in offsetting changes in cash flows of the
hedged item.
Cash flow hedge
Hedge accounting is discontinued when the Group revokes the hedge relationship, the hedging instrument expires or is sold,
terminated, exercised or no longer qualifies for hedge accounting. When a hedging instrument expires, is sold, or no longer meets
the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in other comprehensive income
and is recognised when the forecast transaction is ultimately recognised in the statement of financial performance. When a forecast
transaction is no longer expected to occur, the cumulative gain or loss that was reported in other comprehensive income is
immediately transferred to the statement of financial performance within other gains / (losses).
Derivatives and financial instruments
The Board uses their judgement in selecting an appropriate valuation technique for financial instruments not quoted in an active
market. Valuation techniques commonly used by market practitioners are applied. For derivative financial instruments, assumptions
are based on quoted market rates and reliance placed on quotes provided by Westpac.
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Note 29. Financial instruments summary
The following tables summarise the categories of the Group's financial assets and liabilities.
Loans and
rec eivables
Asset s at fair
value t hrough
reserves
Available for
sale
Total
New Zealand dollars
$000s$000s$000s$000s
Financial assets as at 31 Decem ber 2017
Cash and cash equivalents2,389- - 2,389
Trade and other receivables excluding prepayments16,467- - 16,467
Non current trade and other receivables1,066- - 1,066
Investment in shares- - 7,4287,428
Total financial assets19,922- 7,42827,350
Liabilit ies at
fair value
t hrough
reserves
O t her
financ ial
liabilit ies
Total
New Zealand dollars
$000s$000s$000s
Financial liabilities as at 31 Decem ber 2017
Trade and other payables- 20,28120,281
Bank borrow ings- 10,82710,827
Derivative f inancial instruments128- 128
Term liabilities- 74,68374,683
Total financial liabilities128105,791105,919
Loans and
rec eivables
Asset s at fair
value t hrough
reserves
Available for
sale
Total
New Zealand dollars
$000s$000s$000s$000s
Financial assets as at 31 Decem ber 2016
Cash and cash equivalents1,688- - 1,688
Trade and other receivables excluding prepayments19,883- - 19,883
Non current trade and other receivables3,350- - 3,350
Investment in shares- - 2,2872,287
Total financial assets24,921- 2,28727,208
Liabilit ies at
fair value
t hrough
reserves
O t her
financ ial
liabilit ies
Total
New Zealand dollars
$000s$000s$000s
Financial liabilities as at 31 Decem ber 2016
Trade and other payables- 21,70321,703
Bank borrow ings- 5,7165,716
Derivative f inancial instruments332- 332
Term liabilities- 68,72968,729
Total financial liabilities33296,14896,480
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Accounting policies
The Group classifies its investments in the following categories: loans and receivables, assets at fair value through reserves, and
available for sale financial assets. Classification depends on the purpose for which the investments were acquired. The Group
determines the classification of its investments at initial recognition and re-evaluates this designation at each balance date.
Regular purchases and sales of financial assets are recognised when the Group commits to purchase or sell the asset. Investments
are initially recognised at cost plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial
assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the
statement of financial performance. Financial assets are derecognised when the rights to receive cash flows from the investments
have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available for
sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the receivable.
Loans and receivables are included in receivables in the statement of financial position.
Assets at fair value through reserves
Assets at fair value through reserves are financial assets which are quoted in an active market. Increases in the fair value of the
asset are recognised through reserves in the statement of equity. Any decreases in the fair value will first reduce from the amount
held in the reserve account and further decreases will then be recognised in the statement of financial performance. They are
included in non-current assets unless the Group intends to sell the asset within 12 months of balance date.
Available for sale financial assets
Available for sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated
in this category or not classified in any of the other categories. They are included in non-current assets unless the Group intends to
dispose of the investment within 12 months of balance date.
Available for sale financial assets are recognised on trade date or the date on which the Group commits to purchase or sell the
asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through
profit or loss. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or
have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
Available for sale financial assets are valued at fair value through profit and loss are subsequently carried at fair value. Loans and
receivables and held to maturity investments are carried at amortised cost using the effective interest method. Realised and
unrealised gains and losses arising from changes in the fair value of the financial assets at fair value through profit or loss category
are included in the statement of financial performance in the period in which they arise. Unrealised gains and losses arising from
changes in the fair value of non-monetary securities classified as available for sale are recognised in other comprehensive income
in the available for sale investments revaluation reserve. However, if the loss is deemed to represent objective evidence of an
impairment, any additional loss over and above previous gains recognised in reserves will be recognised in the statement of
financial performance. When securities classified as available for sale are sold, the accumulated fair value adjustments are included
in the statement of financial performance as gains and losses from investment securities.
The fair values of quoted investments are based on current bid prices. If the market for a financial asset or unlisted security is not
active, the Group establishes fair value by using valuation techniques. These include reference to the fair values of recent arm’s
length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow
analysis, and option pricing models refined to reflect the issuer’s specific circumstances.
Impairment of financial assets
At balance date the Group assesses whether there is objective evidence that a financial asset or group of financial assets is
impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of a
security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available for
sale financial assets, the cumulative loss, as measured as the difference between the acquisition cost and the current fair value less
any impairment loss on that financial asset previously recognised in profit and loss, is removed from equity and recognised in the
statement of financial performance. Impairment losses on equity instruments recognised in the statement of financial performance
are not reversed through other comprehensive income.
57
8:07 a.m. 23/02/2018
Seeka 2017 Annual Report
Note 30. Application of new and revised New Zealand International Financial Reporting Standards
Standards, amendments and interpretations to existing standards that are not yet effective
The Group has not early adopted the following new and revised standards, amendments or interpretations that have been issued but
are not yet effective. The Group is assessing the impacts of the new standards as below:
NZ IFRS 15 'Revenue from contracts with customers' (effective for annual periods beginning on or after 1 January 2018). NZ IFRS
15 addresses recognition of revenue from contracts with customers. It replaces the current revenue recognition guidance in NZ IAS 18
Revenue and NZ IAS 11 Construction contracts and is applicable to all entities with revenue. It sets out a five-step model for revenue
recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or services. The Group has established a process to review its sources of
revenue, but has yet to assess the full impact of NZ IFRS 15.
The vast majority of the Group’s revenue is represented by transactions that have been settled in cash within the financial year, and
for this reason the recognition guidance within NZ IFRS 15 is not anticipated to have a significant impact on the Group’s annual
financial statements. The Group is considering the impacts on their interim reporting where due to the seasonal nature of the Group’s
business there is anticipated to be a larger impact upon adoption of NZ IFRS 15. The Group will apply this standard from 1 January
2018.
NZ IFRS 9 ‘Financial instruments’instruments’ (effective for annual periods beginning on or after 1 January 2018). NZ IFRS 9 is to
replace IAS 39 and will simplify the mixed measurement model as well as establish three primary measurement categories for
financial assets: amortised cost, fair value through OCI and fair value through profit and loss. Basis of classification depends on the
entity's business model and contractual cash flow characteristics of the asset. IAS 39 guidance on impairment and hedge accounting
will continue to apply. The Group has updated the existing hedge documentation to ensure that hedge accounting will continue to be
applicable when applying NZ IFRS 9. The Group is in the process of assessing other impacts of the adoption of NZ IFRS 9 including
the application of the expected credit losses model to trade and other receivables.
NZ IFRS 16 'Leases' 'Leases' (effective for annual periods beginning on or after 1 January 2019). NZ IFRS 16 replaces the current
guidance in NZ IAS 17. Under NZ IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration. Under NZ IAS 17, a lessee was required to make a distinction
between a finance lease (on balance sheet) and an operating lease (off balance sheet). NZ IFRS 16 now requires a lessee to
recognise a lease liability reflecting future lease payments and a ‘right-of-use asset’ for virtually all lease contracts. Included is an
optional exemption for certain short-term leases and leases of low-value assets; however, this exemption can only be applied by
lessees.
For lessors, the accounting for leases under NZ IFRS 16 is almost the same as NZ IAS 17. However, because the guidance on the
definition of a lease has been updated (as well as the guidance on the combination and separation of contracts), lessors will also be
affected by the new standard.
The standard is effective for accounting periods beginning on or after 1 January 2019. Early adoption is permitted but only in
conjunction with NZ IFRS 15, ‘Revenue from Contracts with Customers'. The Group intends to adopt NZ IFRS 16 on its effective date
and has begun a process to review its operating leases; the Group’s existing lease commitments are set out in note 24. The Group is
in the process of gathering all required information in order to calculate the lease liability and right-of-use assets. The Group’s
expectation is that the variable lease payments on orchard leases which are contingent on the number of trays harvested will not be
included in the calculation of the Group’s lease liability upon adoption of NZ IFRS 16.
58
8:07 a.m. 23/02/2018
PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand
T: +64 9 355 8000, F: +64 9 355 8001, pwc.co.nz
To the shareholders of Seeka Limited
The consolidated financial statements comprise:
the statement of financial position as at 31 December 2017;
the statement of financial performance for the year then ended;
the statement of comprehensive income for the year then ended;
the statement of changes in equity for the year then ended;
the statement of cash flows for the year then ended; and
the notes to the financial statements, which include significant accounting policies.
Our opinion
In our opinion, the consolidated financial statements of Seeka Limited (the Company), including its
subsidiaries (the Group), present fairly, in all material respects, the financial position of the Group as
at 31 December 2017, its financial performance and its cash flows for the year then ended in
accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS)
and International Financial Reporting Standards (IFRS).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
NZ) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the consolidated financial
statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised)
Code of Ethics for Assurance Practitioners (PES 1) issued by the New Zealand Auditing and Assurance
Standards Board and the International Ethics Standards Board for Accountants’ Code of Ethics for
Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
Our firm carries out other services for the Group in the areas of tax services and remuneration
benchmarking. The provision of these other services has not impaired our independence as auditor of
the Group.
Independent auditor’s report
PwC 60
Our audit approach
Overview
An audit is designed to obtain reasonable assurance whether the
financial statements are free from material misstatement.
Overall group materiality: $1.9 million, which approximates 1% of
Group revenue.
We selected 1% of revenue as the benchmark for our materiality as we
consider this is an appropriate measure of performance of the Group.
The Group operates in a high volume low margin industry where net
profit is not representative of the scale of the Group.
Key Audit Matters
Valuation of Biological Assets – crop
Valuation of Land and Buildings
Materiality
The scope of our audit was influenced by our application of materiality.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall Group materiality for the consolidated financial statements as a whole as set out
above. These, together with qualitative considerations, helped us to determine the scope of our audit,
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both
individually and in aggregate on the consolidated financial statements as a whole.
Audit scope
We designed our audit by assessing the risks of material misstatement in the consolidated financial
statements and our application of materiality. As in all of our audits, we also addressed the risk of
management override of internal controls including among other matters, consideration of whether
there was evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an
opinion on the consolidated financial statements as a whole, taking into account the structure of the
Group, the accounting processes and controls, and the industry in which the Group operates.
We audited both the New Zealand and Australian operations of the Group at a materiality level
calculated by reference to a proportion of Group materiality appropriate to the relative scale of the
business concerned or based on materiality calculated for statutory reporting purposes where the
statutory materiality was lower than that allocated in the Group calculation.
PwC 61
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the consolidated financial statements of the current year. These matters were addressed in
the context of our audit of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter How our audit addressed the key audit
matter
Valuation of Biological Assets - crop
The total value of biological assets at balance date was
$16.7 million. Biological assets are disclosed in note 11 of
the financial statements and comprise the crops on the
vines and trees in the Group’s leased and owned orchards.
Biological assets are recorded at fair value. The method to
determine fair value depends on the degree of biological
transformation (the maturity of the fruit) at balance date.
As at 31 December 2017, a total of $16.5 million (99%) of
biological assets used cost as a proxy for fair value.
In determining the fair value of the biological assets,
management exercises judgement utilising industry
knowledge and internal experts in determining the level of
biological transformation at balance date. When
insufficient biological transformation has occurred, the fair
value is the costs incurred at balance date to grow the
crops (provided the costs are considered recoverable).
For those biological assets where cost has been used as a
proxy for fair value, management assessed the
recoverability of capitalised costs by comparing the
carrying amount to budgeted costs at year end and
ensuring that actual costs incurred plus costs to be
incurred in order to get the crop to market did not exceed
budgeted revenues from the sale of the crops. Management
uses historical results and anticipated crop levels as a basis
for budgeted revenues. An impairment is recognised when
the actual costs incurred plus costs to be incurred in order
to get the crop to market exceed budgeted revenues.
Our audit focused on the biological assets valued at cost, being
the most significant component of the balance. We have
evaluated judgements applied by management to determine
the crop value including the degree of biological
transformation, the attribution of costs capitalised to the
following year’s crop and the recoverability of capitalised costs.
Our audit procedures included:
- Gaining an understanding of the crop life cycle and
growth periods with reference to relevant
independent horticultural industry information to
determine the appropriateness of management’s
assessment of biological transformation.
- Selecting a sample of expenses that were capitalised
to determine whether capitalisation was valid and
directly related to the unharvested crop at 31
December 2017.
- Testing the mathematical accuracy of the models
used by management in their calculation of the fair
value of the crops.
- Reviewing management’s assessment of the
recoverability of capitalised costs. Our procedures
included comparing the expected crop yield
determined by management to the historical
production yield and expected number of trays that
can be produced per hectare based on the land that
is currently owned and leased. We assessed whether
any variances in historical or expected volumes are
consistent with our understanding of planned
changes in the Group’s operations. Additionally we
compared the future selling price used by
management in their model to available industry
information.
- Evaluating the historical accuracy of management’s
forecasted information through comparing prior
year forecast to actual results.
We had no matters to report as a result of our procedures.
Valuation of Land and Buildings
As reflected in note 9 of the financial statements, the
Group has a policy of revaluing their land and buildings on
a three year rolling cycle (excluding assets under
construction). At each balance date approximately one
third of the Group’s assets are revalued by an independent
external valuer. The Group then utilises their internal
valuation expertise to evaluate whether, based on the
results of the third party valuations, the remaining asset
Our audit of the land and buildings of the Group focused on
the judgements inherent in the valuation of those assets.
Our procedures included:
- Assessing the objectivity and competence of
management’s internal valuation experts and third
party valuers, in addition to assessing the
independence of the third party valuers utilised by
management.
PwC 62
Key audit matter How our audit addressed the key audit
matter
values remain appropriate and materially reflect fair value.
Because the Group does not possess the internal valuation
capability to assess the appropriateness of the carrying
value of the Australian land and buildings relative to the
estimated fair value, management engaged an independent
third party valuer based in Australia to revalue all land and
buildings owned in Australia as at 31 December 2017.
The total value of Group’s land and buildings at year end is
$103.5 million.
- Utilising our PwC valuation expert, we have assessed
key assumptions used in the external valuations by
comparing the valuation assumptions and inputs
used, such as capitalisation and discount rates, to
externally available data. Where external data was
not available, our internal valuation expert has
utilised his experience and knowledge to determine
whether the assumptions used by the third party
valuer were reasonable and appropriate in the
circumstances.
- Reviewing and challenging management’s
assessment of the carrying values of the land and
buildings not independently revalued during 2017 by
comparing our own independent assessment of
valuation ranges using our PwC valuation expert.
We had no matters to report as a result of our procedures.
Information other than the financial statements and auditor’s report
The Directors are responsible for the annual report. Our opinion on the consolidated financial
statements does not cover the other information included in the annual report and we do not and will
not express any form of assurance conclusion on the other information.
In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit, or otherwise
appears to be materially misstated. If, based on the work we have performed on the other information
that we obtained prior to the date of this auditor’s report, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report
in this regard.
Responsibilities of the Directors for the consolidated financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of
the consolidated financial statements in accordance with NZ IFRS and IFRS, and for such internal
control as the Directors determine is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Directors either intend to liquidate
the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements, as a whole, are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
PwC 63
but is not a guarantee that an audit conducted in accordance with ISAs NZ and ISAs will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the financial statements is located at the
External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-
report-1/
This description forms part of our auditor’s report.
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been
undertaken so that we might state those matters which we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s shareholders, as a body, for our
audit work, for this report or for the opinions we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Pip Cameron.
For and on behalf of:
Chartered Accountants Auckland
23 February 2018
Annual report 201764
CORPORATE GOvERNANCE
Corporate governance statement 65
Director profiles 74
Interests register 76
Directors’ interests in seeka Limited securities 77
subsidiary companies 78
employee remuneration 79
other disclosures 80
operating assets statistics 81
securities statistics 82
Directory 83
65
CorPorAte GovernAnCe stAtement
As at 31 December 2017
At seeka, we conduct our business sustainably, safely and ethically, within the legal and regulatory framework, so we can deliver the best
outcomes for our growers, clients, employees, shareholders, customers and the communities we operate in
seeka supports the nZx Corporate Governance Code 2017 (the Code), and seeka’s Board has reviewed and refined the company’s
corporate governance policies against the eight principles of the Code
seeka’s corporate governance statement and governance policies are available on seeka’s website seeka co nz/corporate-governance
the following is a summary of seeka’s governance actions and performance against each of the Code’s eight principles during the reporting
period seeka’s governance complies with the Code, with exceptions to any principle noted in this governance statement, and listed on
page 73 of this annual report
the Board approved this governance statement on 23 February 2018
Principle 1 Code of ethical behaviour
“Directors should set high standards of ethical behaviour, model this behaviour and hold management accountable for these standards
being followed throughout the organisation.”
seeka commits to high ethical standards in all dealings undertaken by the Group’s directors, employees and suppliers We are a produce
business that connects growers with customers our business spans, cultural, regulatory and country boundaries, and our directors
and management understand that high ethical standards deliver the best outcomes for our growers, clients, employees, shareholders,
customers and communities
our commitment to ethical dealings is captured by seeka’s published core brand attribute “founded on relationships ”
seeka’s Code of ethics is included in employee induction packs and available on seeka’s intranet the code outlines how directors and
management are to consistently act with honesty and integrity, and model high ethical standards to all employees and stakeholders,
adhering to the principle “we do what we say and are accountable for what we do ”
the Code of ethics provides clear guidance on:
• Conflicts of interest
• use of seeka information, assets and property
• Dealing with gifts or gratuities
• respecting all stakeholders
• Whistle blowing for safe reporting of potential wrong doing
• Compliance with laws and seeka policies
• managing any breaches of seeka’s Code of ethics
seeka also has a strict Insider trading Policy prohibiting the direct or indirect dealing of seeka securities when holding inside information,
plus a duty of confidentiality that protects the dissemination and use of confidential company information
Principle 2 Board composition and performance
“To ensure an effective board, there should be a balance of independence, skills, knowledge, experience and perspective.”
seeka’s Board commits to acting in the best interest of the company, deliver benefits to stakeholders and grow shareholder returns
Board charter and responsibilities
the Board’s charter sets out the Board’s structure, appointments, remuneration, committees and process for performance review, along
with the duties and responsibilities of the Board and chief executive officer seeka’s Board is responsible for:
• robust and effective health and safety systems and standards
• establishing corporate objectives and strategies
• monitoring management’s implementation of seeka’s strategies
• Approving budgets and monitoring financial performance
• managing risk to seeka’s business
• ensuring timely and transparent stakeholder and market communication
Annual report 201766
the Board delegates the chief executive officer to lead and manage seeka’s operations, including being the company’s principal
representative the chief executive officer is not a Board member
the Board Charter was established December 2017 Prior to the charter, the Board operated to the same set of principles defined in the
charter
Board composition
seeka’s Company Constitution specifies that the Board has a minimum of three and a maximum of seven directors, with provision for
an eighth to be appointed between annual shareholder meetings Directors are to contribute a mix of complementary skills that support
seeka’s objectives and strategies, with at least two being independent, and at least two ordinarily residing in new Zealand to maintain
proper separation between governance and management, all directors are non-executive and the constitution has no provision for a
managing director
seeka’s Board currently has seven directors, led by the Independent Chairman Fred hutchings, who joined the board in september 2012
non-independent director Amiel Diaz is the only director residing overseas
the following table summarises director qualifications, skills and experience
qualificationexecutive leadershipFinancialLegalKiwifruit industryGovernanceCulturalInternational marketsBrand managementtechnology
Fred hutchingsBBs, FCA
martyn BrickBAgCom
John BurkeBAgsc
ratahi Cross
Amiel DiazBA, Bsc, CPA, CIsA
Cecilia tarrantBA/LLB hons, LLm
Ashley WaughBBs
Director independence
the Board’s Charter follows nZx Listing rules to determine the independence of a director Directors must inform the Board of all relevant
information and the Board confirms director independence at least annually
two directors are appointees of large shareholders and deemed non independent;
• Amiel Diaz, representative of seeka’s largest shareholder Farmind Corporation of Japan, and
• ratahi Cross, representative of seeka’s largest new Zealand shareholder te Awanui huka Pak Limited and is the chairman of the ngai
tukairangi trust, a large kiwifruit grower supplying seeka
As seeka’s foundation business is kiwifruit, the Board considers experience in the kiwifruit industry a core competency three directors
have extensive experience in kiwifruit production and handling, and through their interests in kiwifruit orchards that supply seeka are
considered non-independent directors;
• martyn Brick
• John Burke, and
• ratahi Cross
the Board has three independent directors;
• Fred hutchings, Chairman
• Ashley Waugh, audit and risk committee chairman, and
• Cecilia tarrant
Director appointments and induction
As required the Chairman establishes a nominations committee to review the Board’s composition and performance, and recommend
people with complementary skills to join the Board nominees can be appointed by the Board, with the appointment to be approved by
shareholders at the next annual shareholder meeting, or nominated and elected to the Board by shareholders at the annual shareholder
meeting the Board provides guidance to shareholders on a candidate’s suitability before any vote
67
In 2017, following 15 years of service malcolm Cartwright retired as a director A nominations committee was formed to identify a replacement,
with Cecilia tarrant recommended to shareholders and subsequently elected by shareholders at the 27 April 2017 annual shareholder meeting
Directors enter a written agreement covering the term of their appointment and are provided with detailed information about seeka, the company’s
strategies, policies and procedures, and any other training or other support that will help the director become a fully-functioning member of the Board
Director tenure
0-3 years 3-9 years 9+ years
2
5
0
the Chairman undertakes an annual assessment of Board, director and committee performance, seeking assistance, as required, from the
nominations committee
Director profiles
Director profiles are listed on seeka’s website (see seeka co nz/investors), and are included on page 74 of this annual report Full disclosure of
director interests according to section 140 (2) of the Companies Act 1993 are listed on page 76 of this annual report
Diversity
Diversity is the range of attributes held by members of a group seeka’s Board believes diversity within the Board and the company provides a
deeper understanding of stakeholders, broadens the range of skills available to seeka, and will lead to improved business performance
the Board works to optimise diversity across director members, while managing an efficient governance process the Board’s focus is on diversity
in culture and ethnicity, business skills and innovative thinking as these attributes are key to understanding the operating environment of our key
clients, creating unique solutions, and improving stakeholder outcomes and shareholder returns
With seeka’s key client groups diversely spread from rural new Zealand to large urban centres in Asia, seeka’s Board has encompassed cultural,
ethnical and gender diversity to strengthen business governance:
• ratahi Cross of ngai tukairangi is also a lecturer in maori history
• Amiel Diaz is a Filipino businessman based in Asia
• martyn Brick, John Burke, Cecilia tarrant and Ashley Waugh have rural backgrounds
the following table reports gender composition of the Board and senior management team as at 31 December 2017
FY17FY16
FemalemaleFemalemale
Directors1607
senior managers2727
total313214
Diversity Policy
seeka is committed to providing an inclusive environment that supports a diversity of thinking and skills this policy formalises the existing
conduct of the Board and management Aspects of diversity include gender, ethnic background, religion, marital status, culture, disability, economic
background, education, language, physical appearance and sexual orientation
During the year ended 31 December 2017, seeka performed in adherence to its diversity policy
Principle 3 Board committees
“The board should use committees where this will enhance its effectiveness in key areas, while still retaining board responsibility.”
the Board has established permanent committees and will form ad-hoc committees to efficiently and effectively carry out key governance
functions, while retaining ultimate responsibility for all decisions and actions
Annual report 201768
All committees operate under written charters which define the role, authority and operations of the committee All seeka directors and
committee members are non-executive, and seeka management and other employees may only attend committee meetings when invited
by the committee Committee charters are reviewed annually by the Board
Committee membership and workload management
seeka is governed by a seven-member Board with three independent directors to provide effective and transparent committee
governance, while managing workload across Board members, seeka’s committee charters ensure each committee is chaired by an
independent director, with committee members drawn from both independent and non-independent directors that furnish the best skill
set
the current standing committees are:
Audit and risk
Compositionrolemembers
Independent chair with a minimum of
two other directors the chair may not
be the Board Chairman
examines financial reporting, compliance,
external and internal auditing, risk management
and risk insurance
Ashley Waugh, chair
martyn Brick
John Burke
ex-officio – Fred hutchings
While audit and risk committee members Ashley Waugh, martyn Brick and John Burke do not have an accounting background, specialist
accounting and financial expertise is available from ex-officio member Fred hutchings who is a Fellow Chartered Accountant
Remuneration
Compositionrolemembers
Independent chair with a minimum of
two other directors
examines the performance, remuneration and
succession planning of the chief executive officer,
the remuneration of senior managers, company-
wide employee remuneration policy and human
resource plans and policies
Fred hutchings, chair
ratahi Cross
Cecilia tarrant
In addition, the Chairman periodically establishes an ad-hoc nominations committee
Nominations
Compositionrolemembers
Independent chair with a minimum of
two other directors
examines the directors’ terms of engagement,
Board succession planning, seeks and evaluates
nominees, and advises the Board on director
appointments
Appointed by the Board
the nominations Committee Charter was established December 2017 Prior to the charter, the Chairman established ad-hoc Board
meetings to examine Board succession plans, evaluate nominees and assess director performance
In the event of a takeover offer, the Board Charter provides for the formation of an ad-hoc takeovers committee to operate under a written
charter
Takeovers
Compositionrolemembers
Limited to independent directors seek appropriate advice and act in the interests
of all shareholders
Independent directors appointed by the
Board
A formal charter for the takeovers committee has not been established, and to date there has been no need to form a takeovers
committee
While the Board considers the current range of committees comprehensively manages the governance of seeka’s business, and provides
the best outcomes for shareholders and other stakeholders, the Board Charter allows ad-hoc committees to be formed as required to aid
Board decision making
69
the following table reports Board and committee meeting attendance in 2017
BoardAudit and riskremuneration
meetingsAttendedmeetingsAttendedmeetingsAttended
Fred hutchings11118
1
722
martyn Brick111087--
John Burke111086--
malcolm Cartwright
2
22--11
ratahi Cross119--22
Amiel Diaz1111----
Cecilia tarrant
3
97--11
Ashley Waugh11987--
1 Fred hutchings is an ex-officio member of the audit and risk committee
2 malcolm Cartwright retired 24 April 2017
3 Cecilia tarrant was appointed 24 April 2017
Principle 4 reporting and disclosure
“The board should demand integrity in financial and non-financial reporting, and in the timeliness and balance of corporate disclosures.”
seeka’s Board is committed to keeping investors and the wider market fully informed of all material information concerning the company’s
operating environment and business performance In addition to all information required by law and nZx Listing rules, seeka provides
stakeholders with a mid-year performance update, along with regular operational updates to supplying clients
seeka follows nZx continuous disclosure guidelines for the classification, timing and release of material information to investors and other
stakeholders the Chairman, chief executive and chief financial officer are responsible for identifying material information between Board
meetings, with continuous disclosure covered at every Board meeting seeka’s Code of ethics, Board and committee charters and policies
as recommended in the Code are available on seeka’s website, see seeka co nz/corporate-governance
As stewards of more than 230 orchards in new Zealand and Australia, seeka is committed to applying industry best practices and
international guidelines for all asset management, backed up by rigorous auditing this includes following the international GLoBALG A P
standard for good agricultural practice that focuses production and supply management on the consumer’s demand for safe food
seeka as an employer is focused on sustainable land management that supports long-term employment and wealth creation in our rural
communities, and has formally implemented the GLoBALG A P GrAsP module with its extended social standards for worker health, safety
and welfare
In new Zealand, seeka has partnered with all supplying growers to form independent, grower-controlled entities that manage grower fruit
value; kiwifruit growers appoint seeka Growers Limited as their agent for the supply of kiwifruit to seeka, with avocado growers appointing
AvoFresh Limited
seeka Growers Limited and AvoFresh Limited manage market returns in independent bank accounts, approve all service distributions
and grower payments, and publish independently-audited annual statements seeka is represented on the entities’ controlling councils,
provides management support, and ensures grower representatives are kept informed on market conditions, industry issues and seeka’s
operational performance for their fruit
seeka complies with the financial reporting requirements prescribed by the Companies Act 1993, Financial markets Conduct Act 2013
and the nZx Listing rules seeka also supports environmental, social and governance concerns, and discloses to the markets any
environmental factors that may materially affect operations
Principle 5 remuneration
“The remuneration of directors and executives should be transparent, fair and reasonable.”
Director remuneration
In accordance with the Board Charter, the Chairman uses professional advice and market information to review director remuneration
within a two year period, with shareholders having to approve any increase to the pool available to pay directors’ fees Approval was last
sought in April 2015, when the pool limit was set at $400,000 per annum Directors are remunerated by fixed fees that are set according
to expected time commitments and responsibilities as determined by the Board Directors receive no equity-based remuneration, and
receive no performance or retirement benefits Directors are not required to own seeka shares
Annual report 201770
the following table reports the allocation of the pool at the date of this report, and directors’ fees paid during the financial year no other
benefits were remunerated to directors during the year
PositionBase
director feeChairman fee
Audit and risk
committee
chair fee
Director fees
paid during the
year
Fred hutchingsChairman
$50,000$40,000$90,000
Ashley WaughDirector, Audit and risk committee chair
$50,000$10,000$60,000
martyn BrickDirector
$50,000$50,000
John BurkeDirector
$50,000$50,000
ratahi CrossDirector
$50,000$50,000
Amiel DiazDirector
$50,000$50,000
Cecilia tarrantDirector – elected April 17
$50,000$33,333
malcolm CartwrightDirector – retired April 17
$16,667
total
$350,000$40,000$10,000$400,000
the base director fee includes remuneration for committee membership
Chief executive officer remuneration
the review of the chief executive’s remuneration is undertaken by the remunerations committee with the remuneration package the
responsibility of the Board
michael Franks was appointed chief executive in 2006 his remuneration package comprises a fixed annual remuneration that covers base
salary, vehicle, Kiwisaver contributions, medical and life insurance, and an at-risk annual performance incentive
the following table reports chief executive remuneration in 2017
Base salaryBenefits
1
Annual performance
incentive
2
total remuneration
michael Franks
$519,952$50,374$182,500$752,826
1 Benefits are delivered through vehicle, Kiwisaver contributions, medical and life insurance
2 Performance incentive earned from FY16 and paid in 2017
Performance incentive
the chief executive officer’s performance incentive has a maximum value of 40% of fixed remuneration for achieving annual targets set
by the Board, including financial performance, strategic goals, health and safety, and risk management For the 2016 financial year, chief
executive officer michael Franks earned an $182,500 performance incentive this payment was made in 2017
For the 2017 financial year, the chief executive officer earned a $156,800 performance incentive this payment will be made in 2018
Employee share scheme
Chief executive michael Franks was allocated 15,000 shares at $3 05 per share under the 2014 employee share scheme In 2017, these
shares vested, were taken up and issued to the chief executive at $2 372 per share
At balance date, the chief executive had 8,000 shares allocated at $3 88 per share under the 2016 employee share scheme these shares
vest in 2019
Principle 6 risk management
“Directors should have a sound understanding of the material risks faced by the issuer and how to manage them. The board should
regularly verify that the issuer has appropriate processes that identify and manage potential and material risks.”
the Board consider risk management a major governance function that protects all stakeholders, builds long-term wealth in our
communities and optimises shareholder value the Board retains ultimate control of risk management, with the audit and risk committee
providing a specific focus on material risks as defined in the Audit and risk Committee Charter
71
Business risks are identified, recorded on a risk register, assessed, managed through risk mitigation strategies and reviewed at least
annually
Financial statements and key operational measures are prepared monthly and reviewed by the Board throughout the year to assess
business performance against budget and forecasts
the Board composition includes directors with long-term experience in new Zealand’s kiwifruit industry, and Australian and Asian produce
handling and marketing Board meetings include periodic site visits in new Zealand and Australia to ensure all directors understand the
Group’s operating environments when assessing material risk
the Board’s complementary skill set and understanding of the core business have allowed it to implement strategies to mitigate risk
associated with being a new Zealand kiwifruit handler by diversifying operations across multiple products, expanding into the Australian
market and sourcing revenue from more points along the value chain since the incursion of the kiwifruit vine-killing disease Psa in 2010,
seeka has transformed from being a new Zealand kiwifruit handler to become an Australasian produce business involved in the growing,
handling, supply and marketing of multiple products
health and safety
operating in a seasonal industry, in 2017 seeka employed more than 3,900 people working in multiple complex environments this
includes 24-hour operations over the harvest period Group salary and wages equate to 1,175 full time equivalents
the Board is responsible for health and safety across Group operations, with the chief executive appointing a health and safety manager
to ensure seeka complies with legislation and operates industry best practice across the Group, while also supporting the management of
health and safety risks by clients and suppliers the Board reviews performance against set targets at each meeting
the following table reports key health and safety measures in 2017 and 2018 targets
2018 Annual threshold2017 Actuals
total recordable injury frequency rate
1
< 4.65.8
notifiable incidents
00
notifiable event
01
medical treatment
53
severity rate
2
2.91
1 total recordable injury frequency rate (trIFr) is a key measure that compares total lost time injuries and medical treatments against the total number of
hours worked trIFr = (number of recordable lost time and medical treatment injuries) x 200,000 / (number of employee hours worked)
2 severity rate = (number of lost time injuries) / (number of days lost)
Principle 7 Auditors
“The board should ensure the quality and independence of the external audit process.”
seeka’s Audit and risk Committee Charter outlines seeka’s commitment to an independent audit process that provides shareholders and
the markets with objective, clear and timely financial reporting
the audit and risk committee in consultation with management and the external auditor reviews the efficiency and effectiveness of the
external audit process, and provides a formal channel of communication between the Board, senior management and the external auditor
the audit and risk committee:
• oversees the independence of the auditor and ensures they conduct their operations free from any actual or perceived impairments,
and
• monitors the provision of any services beyond the auditor’s statutory audit services
For financial year 2017, PricewaterhouseCoopers (PwC) was the external auditor for seeka Limited, having been reappointed seeka’s
auditor under the Companies Act 1993 at the 2017 annual shareholder meeting PwC have confirmed their independence to the audit and
risk committee, and their independence was not compromised during the reporting period the last audit partner rotation was in FY16
PwC auditors attend the annual shareholder meeting to answer any shareholder questions about the audit
Annual report 201772
Internal audit
seeka has a number of internal controls overseen by the audit and risk committee to ensure the integrity of key financial and operational
data this includes data access, internal financial controls, adequate resourcing, targeted internal audit programmes and monitoring
management’s response to external audit findings
Due to the size of Group operations, rather than operating a dedicated audit function, seeka uses its compliance team to conduct internal
audit processes and monitor operational compliance, along with independent providers to regularly test the integrity of the Group’s
financial systems
Principle 8 shareholder rights and relations
“The board should respect the rights of shareholders and foster constructive relationships with shareholders that encourage them to
engage with the issuer.”
seeka’s shareholders include a significant number of grower clients, employees, suppliers and people living in our rural communities seeka
maintains open channels of communication with a diverse range of groups to uphold our key brand attribute of delivering excellence to all
stakeholders
the Board is motivated and committed to transparent and regular reporting and engagement with shareholders including:
• Annual and interim reports
• market announcements
• Annual shareholder meeting
• mid-year stakeholder meeting
• Ad-hoc investor presentations
• Attendance of directors at seasonal grower roadshows held throughout the catchment for each produce type
• quarterly all staff updates
• Clear access to investor information on the company’s website, see seeka co nz/investors
• open access to senior managers via phone and email, see seeka co nz/senior-management-team
shareholders are actively encouraged to attend the annual shareholder meeting and mid-year stakeholder update, where they can raise
matters for discussion by directors and senior management shareholders vote on major decisions which affect seeka at the annual
shareholder meeting voting is by poll, conducted by the Company’s registrar Link market services and overseen by the company’s auditor
PwC, on a one share, one vote principle
shareholders are provided with copies of the annual and interim report, and are encouraged to receive electronic communication by
contacting our registrar Link market services, see Linkmarketservices co nz the annual shareholders notice of meeting is posted on the
nZx website and sent to shareholders at least 20 working days prior to the meeting A link to seeka’s announcements can be directly
accessed from seeka’s website, see seeka co nz/nzx-announcements
seeka’s current and historical share price is located on the nZx website, see nzx com/instruments/seK
Corporate calendar
In the normal course of business, the Board reports to the following schedule
end of year market announcementLate February
Dividend paymentLate march
Annual shareholder meetingLate April
Dividend paymentLate september
stakeholder updatemid october
73
Differences in practice to nZx Code
the following table summarises the material differences between seeka’s corporate governance and the Code during the year Where there
are differences, these have been approved by the Board
PrincipleParagraphConcerningKey difference
2 Board Charter2 1Board should operate under a
written charter
the Board adopted a written charter December 2017 Prior
to this, the Board operated to the same set of principles
defined in the Board Charter
3 Board Committees3 1Audit committee should have a
majority of independent directors
to manage work load across the Board and best utilise
skills, the audit and risk committee has an independent
chair and two non-independent members
3 1Audit committee should have a
director with an accounting or
financial background
Audit and risk committee members do not have an
accounting background Accounting expertise, however,
is provided by ex-officio member Fred hutchings who is
a Fellow Chartered Accountant, with two members of the
committee having valuation and banking experience
3 3remuneration committee should
have a majority of independent
directors
to manage workload across the Board, the charter only
specifies an independent chair the current remuneration
committee, however, fulfils the code with an independent
chair, and independent director and a non-independent
director
3 4standing nominations committee nominations Committee Charter allows for the formation
of an ad-hoc committee as required
3 4nominations Committee Charter nominations Committee Charter established December
2017 Prior to the charter, the Chairman established ad-
hoc Board meetings to examine the Board’s succession
plan, evaluate director nominees and assess director
performance
3 6takeover offer committee Board Charter provides for the formation of an ad-hoc
takeovers committee, comprised of independent directors,
to oversee the Board’s response to any takeover offer
4 reporting and
Disclosure
4 1Written continuous disclosure
policy
Currently follow nZx Listing rules and guidelines for
continuous disclosure, with a continuous disclosure policy
to be adopted in 2018
4 3
Non-financial disclosures,
including environmental,
economic and social
sustainability risks.
Currently provide extensive reports on non-financial
information to shareholders and other stakeholders.
A formal sustainability report will be developed by
December 2018.
8 shareholder rights
and relations
8 5
Posting annual shareholder
notice at least 28 days prior to
the meeting.
Current practice is a minimum of 20 working days prior to
the meeting. However, as this period includes three public
holidays, this meets the 28-day minimum.
Annual report 201774
DIreCtor ProFILes
the following directors held office on 31 December 2017
Fred Hutchings BBS, FCA
Independent, non-executive Chairman
ex-officio member Audit and risk Committee, Chair remuneration Committee
Appointed 10 september 2012
Fred has commercial and business experience having been a partner at PricewaterhouseCoopers for 27 years where he specialised in
assurance and advisory services, particularly for agribusiness he also held leadership roles in the partnership including Wellington and
south Island managing partner and for three years was a member of the firm's executive board
Fred is chairman of tui Products Limited a director of speirs Group Limited and speirs Food Limited he is a past president of Chartered
Accountants Australia and new Zealand
martyn (marty) Brick BAgCom
non-executive Director
member Audit and risk Committee
Appointed 23 April 2013
marty has experience in agribusiness having worked in a rural banking, finance, and horticulture he established kiwifruit orchards in
the Bay of Plenty, and a post harvest operation which was later sold to huka Pak marty became a director of te Awanui huka Pak and
chairman of te Awanui Grower Council up until huka Pak’s merger with seeka in 2009
marty holds interests in kiwifruit orchards supplying seeka
John Burke BAgSc
non-executive Director
member Audit and risk Committee
Appointed 24 April 2012
John has an agribusiness background and qualifications, having worked for the rural Bank and operated a rural valuation and consultancy
practice he has knowledge of kiwifruit operations from the orchard to the market having been the chief executive of te Awanui huka Pak
where he helped establish collaborative programmes into Asia and north America, before becoming the general manager Kiwifruit vine
health
John is a kiwifruit orchardist supplying seeka, and a farmer
Peter Ratahi (Ratahi) Cross
non-executive Director
member remuneration Committee
Appointed 1 march 2016
ratahi is the chairman of several trust boards throughout the eastern areas of the north Island he chairs te Awanui huka Pak Limited and
ngai tukairangi trust, the largest maori kiwifruit grower in new Zealand the trust operates orchards on the matapihi Peninsula at mount
maunganui, and in 2017 purchased 60 hectares of sunGold orchards in the hawke’s Bay
ratahi has a background in natural science specialising in native flora and fauna he also lectures in maori history for several tribes he
belongs to
75
Amiel (mel) Diaz BA, BSc, CPA, CISA
non-executive Director
Appointed 19 october 2009
mel is the head of the Philippine subsidiaries of Farmind Corporation he has knowledge of the Asian fresh produce business, with an
emphasis on Japan and the Philippines, having previously been the head of new business ventures and the chief information technology
officer at Dole Asia
mel has executive management experience in technology, telecommunications, manufacturing, finance, service, business consultancy and
the fresh produce industry, having worked for more than 30 years’ in various executive positions, board memberships and advisory roles
mel is a certified public accountant (CPA) in the Philippines and a certified information systems auditor (CIsA) in the usA and the
Philippines
Cecilia Tarrant BA/LLB Hons, LLm
Independent, non-executive Director
member remuneration Committee
Appointed 27 April 2017
Cecilia is a professional company director she is a director of Fletcher Building Limited and Payments nZ, chair of the Government
superannuation Fund Authority, a trustee of the university of Auckland Foundation and a member of the university of Auckland Council
she has more than 25-years’ experience in law and banking, having firstly worked as a lawyer in Auckland and san Francisco before
becoming an investment banker in new York and London
Cecilia is involved in both the beef and dairy industries through her family’s ownership of a dry stock farm in the Waitomo area and
partnership in a dairy farm in the otorohanga district her family have lived in the Waitomo area for more than 100 years
Ashley Waugh BBS
Independent, non-executive Director
Chair Audit and risk Committee
Appointed 21 may 2014
Ashley has experience in the fresh food industry having worked within the Australasian Fast moving Consumer Goods (FmCG) markets
for more than 30 years he also holds global experience in the FmCG, foodservice and ingredients markets
Ashley was the chief executive officer of Australian dairy foods and juice giant national Foods until its merger with Lion nathan in 2009
his prior business experience was with the new Zealand Dairy Board and Ford motor Company
he currently serves on the board of Colonial motor Company, and Fonterra Group as a farmer elected director, and chaired moa, new
Zealand’s largest craft brewer, until retiring in December 2017
Ashley chairs seeka’s Audit and risk Committee
Changes in Board membership
In 2017, following 15 years of service malcolm Cartwright retired as a director A nominations committee was formed to identify a
replacement, with Cecilia tarrant recommended to shareholders and subsequently elected by shareholders at the 27 April 2017 annual
shareholder meeting
Annual report 201776
Interests reGIster
During the year the Group undertook related party transactions with directors in the ordinary course of the Company’s business and on
usual terms and conditions
Directors have made general disclosures of interests in accordance with s140 (2) of the Companies Act 1993 new disclosures advised
since 31 December 2016 are italicised
Fred hutchings Amwell holdings Limited Director / shareholder
Walker nominees Limited Director
seeka employee share Plan trustees Limited Director
speirs Group Limited and subsidiaries Director
tui Products Limited Director
AvoFresh Limited Director
martyn Brick strathboss Kiwifruit Limited Director / shareholder
seeka Growers Limited Director
omega Kiwifruit Limited Director / shareholder
Katoa Partnership Partner
Zespri International Limited shareholder
rokeby trust Beneficiary
Rising Sun Orchards Limited Shareholder
John Burke J & D Burke holdings Limited Director / shareholder
rokeby trust trustee
Zespri International Limited shareholder
malcolm Cartwright
1
seeka Growers Limited Director
seeka employee share Plan trustees Limited Director
AvoFresh Limited Director
Zespri International Limited shareholder
mJ & hC Cartwright trust Beneficiary / trustee
Peter Cross ngai tukairangi trust trustee / Chairman
te Awanui huka Pak Limited Director
Amiel Diaz Farmind Philippines Inc Director / officer
Farmind Corporation of Japan officer
Cecilia tarrant
2
Fletcher Building Limited Director
Payments NZ Limited Director
Government Superannuation Fund Authority Chair
University of Auckland Foundation Trustee
ArcAngels Angel Investment Network Chair
University of Auckland Council Member
Ashley Waugh Primrose hill Farm (Puke-roha Limited) - te Awamutu Director / shareholder
Moa Group Limited (retired 31 December 2017) Director / Shareholder
the Colonial motor Group Limited Director / shareholder
Fonterra Co-operative Group Limited Director / shareholder
1 malcolm Cartwright retired 27 April 2017
2 Cecilia tarrant was appointed 27 April 2017
77
DIreCtors’ Interests In seeKA LImIteD
seCurItIes
the following table details director interests in shares at 31 December 2017
Interestshares
martyn Brick
1
Beneficial
412,306
John Burke
2
Beneficial
34,954
Peter CrossBeneficial
54,780
Peter Cross
3
non beneficial
1,267,410
Fred hutchings
4
Beneficial
10,000
Ashley WaughBeneficial
4,300
1 held by omega Kiwifruit Limited and strathboss Kiwifruit Limited
2 held by J&D Burke holdings Limited
3 held by ngai tukairangi trust and te Awanui huka Pak Limited
4 held by Walker nominees Limited
the following table details director dealings in seeka shares during the year
transactionDatenumbertotal consideration
martyn Brick
1
Purchase29 march 2017
20,000$91,000
Purchase16 november 2017
600$3,300
John Burke
2
Purchase
3
11 April 2017
12 $64
Purchase
3
11 october 2017
619 $3,194
malcolm Cartwright
4
Purchase
3
11 April 2017
1,310$7,009
Peter Cross
5
Purchase
3
11 April 2017
920 $4,922
Purchase
3
11 october 2017
970 $5,006
1 held by omega Kiwifruit Limited and strathboss Kiwifruit Limited
2 held by J&D Burke holdings Limited
3 Acquired under seeka’s dividend reinvestment plan
4 malcolm Cartwright retired 27 April 2017
5 held by ngai tukairangi trust and te Awanui huka Pak Limited
Annual report 201778
suBsIDIArY ComPAnIes
the following table details directors of seeka Limited subsidiary companies in the financial year to 31 December 2017
michael Franks and stuart mcKinstry are officers of seeka Limited robert towgood is a senior manager at seeka Limited Anthony motion
is an independent director for the Group’s Australian subsidiaries new subsidiaries formed since 31 December 2016 are italicised
new Zealand incorporated companies
AvoFresh Limited michael Franks
Delicious Nutritious Food Company Limited (Registered 4 May 2017) Michael Franks, Stuart McKinstry
eleos Limited michael Franks, stuart mcKinstry
enviro Gro Limited michael Franks
Glassfields (nZ) Limited michael Franks, stuart mcKinstry
Guaranteed sweet Limited michael Franks, stuart mcKinstry
Integrated Fruit supply & Logistics Limited michael Franks
Kiwi Coast Growers (te Puke) Limited michael Franks, stuart mcKinstry
Nutritious Delicious Food Company Limited (Registered 4 May 2017) Michael Franks, Stuart McKinstry
Rising Sun Orchards Limited (Registered 20 October 2017) Michael Franks
seeka Dairy ventures Limited michael Franks, robert towgood
seeka Fresh Limited michael Franks, stuart mcKinstry
seeka Growers Limited michael Franks
seeka te Puke Limited michael Franks, stuart mcKinstry
Australian incorporated companies
Little Haven Holdings Pty Limited (Registered 2 November 2017) Michael Franks, Stuart McKinstry,
Anthony Motion
seeka Australia Pty Limited michael Franks, stuart mcKinstry,
Anthony motion
seeka Pollen Australia Pty Limited michael Franks, stuart mcKinstry,
Anthony motion
Directors of Group subsidiary companies did not undertake any share dealings in those companies
subsidiary directors’ interests register
Directors of seeka subsidiaries have made general disclosures of interests in accordance with s140 (2) of the Companies Act 1993 new
disclosures advised since 31 December 2016 are italicised
michael Franks Rising Star Orchards Limited Director / Shareholder
stuart mcKinstry rivas orchards Limited Director / shareholder
r&m orchards Limited Director / shareholder
Anthony motion has not made any general interest disclosures in new Zealand incorporated companies
subsidiary company director remuneration
seeka Limited officers michael Franks and stuart mcKinstry, and senior manager robert towgood received no beneficial director’s fees or
other benefits except as employees
the following table details the remuneration of Anthony motion, the independent director for the Group’s Australian subsidiary companies
Director feesAuDnZD @ $1 08
Anthony motion
$ 20,000$ 21,600
79
emPLoYee remunerAtIon
In 2017, the Group employed 237 permanent and more than 3,700 seasonal employees
the Group had 95 employees (December 2016 - 76), including 6 employees (December 2016 – 3) employed by subsidiaries, that are not
directors whose annual cash remuneration and benefits (including motor vehicles and termination costs) exceed $100,000 in the financial
year
remuneration20172016
$100,000 - $109,999
2514
$110,000 - $119,999
1816
$120,000 - $129,999
149
$130,000 - $139,999
129
$140,000 - $149,999
26
$150,000 - $159,999
23
$160,000 - $169,999
14
$170,000 - $179,999
62
$180,000 - $189,999
11
$190,000 - $199,999
22
$200,000 - $209,999
12
$210,000 - $219,999
1-
$230,000 - $239,999
2-
$250,000 - $259,999
-2
$260,000 - $269,999
-1
$270,000 - $279,000
1-
$280,000 - $289,000
3-
$290,000 - $299,999
11
$300,000 - $309,999
-1
$330,000 - $339,999
1-
$350,000 - $359,999
11
$380,000 - $389,999
-1
$610,000 - $620,000
--
$720,000 - $729,999
-1
$750,000 - $759,999
1-
total
9576
remuneration includes key performance indicator payments remuneration by the Group’s Australian subsidiary seeka Australia in
Australian dollars was converted to new Zealand dollars using the average exchange rate for the year the impact of movements in
exchange rates from 2016 to 2017 was reviewed and would not have significantly changed the employee remuneration disclosure
employee share scheme
As part of their employment benefits, eligible permanent employees are invited to participate in seeka’s employee share schemes the
2014 employee share scheme allocated 343,000 shares to permanent employees at $3 05 per share In 2017, these shares vested and
were taken up by permanent employees at $2 372 per share
Annual report 201780
other DIsCLosures
Indemnities and insurance
Clause 9 7 of the Constitution allows the Company to indemnify and insure directors to the extent permitted by the Companies Act 1993
the Company has provided insurance for all directors and officers, including directors of subsidiaries
summary of waivers granted by nZx
no waivers were granted, published or relied on by seeka in the financial year ended 31 December 2017
Donations
no donations were made by the company or its subsidiaries in the year ended 31 December 2017
Divided reinvestment plan
under the company's dividend reinvestment plan, holders of ordinary shares may elect to reinvest the net proceeds of cash dividends
payable or credited to acquire fully paid ordinary shares in the company
substantial product holders
the following table details information in compliance with s293 of the Financial markets Act 2013 and is stated as at 31 December 2017
the total number of ordinary listed shares of seeka Limited at that date was 17,521,279
sharesPercentage of shareholding
te Awanui huka Pak Limited
1,267,4107.23
sumifru singapore Pte Limited
2,093,55811.95
Farmind Corporation of Japan
2,800,56715.98
81
oPerAtInG Assets stAtIstICs
Post harvest facilities
CommissionedLanesAutomation
Oakside
Compac oakside 119986
Compac oakside 220068
Compac oakside 320098
Transpack
Compac20046
kkP
Lynx200010
Huka Pak
mAF roda20116
Compac20056
main Road
Compac20176
Peninsula
Lynx2017*4
keripack
CompacLeased4
Australia
Compac20164
Orchards
Owned orchards - Seeka Australia
In production: 9 orchards, 228 hectares
In development: 63 hectares
Land available for development: 151 hectares
Long term lease - New Zealand
orchards developed on leased land
In production: 10 orchards, 84 hectares
In development: 8 hectares
Leased orchards - New Zealand
orchards leased from owners
In production: 102 orchards, 412 hectares
In development: 2 hectares
managed orchards - New Zealand
orchards managed for owners
In production: 101 orchards, 418 hectares
In development: 9 hectares
Retail services
Glassfields Auckland
Imported produce, ripening services,
wholesale market
Glassfields Christchurch
Imported produce, ripening services
Delicious Nutritious Food Company
Food manufacturing; Kiwi Crush, Kiwi Crushies,
Kiwiberry handling, Avocado oil
Laboratory services
vLS
maturity and coolstore testing
Head Office
Seeka360
Grower centre
228
412
418
82
63
8
2
9
151
1
2
3
4
5
6
7
8
14
9
10
11
12
13
1, 2, 3, 4, 5, 11, 12, 13
6
7
10
9
8, 14
Computerised camera grading
near infrared grading
Pre sizer
relocated and upgraded from
main road
*
Annual report 201782
seCurItIes stAtIstICs
top 50 shareholders, as at 10 January 2018
shareholders
number of
ordinary shares
Percent
Farmind Corporation of Japan
2,800,56715.98
sumifru singapore Pte Limited
2,093,55811.95
te Awanui huka Pak Limited
1,267,4107.23
Christopher William Flood & mark schlagel
477,1302.72
seeka employee share Plan trustees Limited
435,8002.49
national nominees new Zealand Limited
378,0002.16
omega Kiwifruit Limited
340,9941.95
Jack Law & Patricia Colleen Law
310,2401.77
Anne Louise Bayliss & Christopher James mcfadden
234,4571.34
Burts orchards (1997) Ltd
195,9221.12
Gregory Alan Cole
195,6121.12
Lloyd James Christie
150,0000.86
stewart moss
148,0160.84
Custodial services Limited
145,4470.83
John slater & robyn Adere slater
122,2910.70
Grant Keith oakley & Deborah Jane oakley & Brg trustees 2013 Limited
113,9450.65
murray Charles salt & heather Florrence salt
103,7700.59
hsBC nominees (new Zealand) Limited
103,6070.59
David Grindell
99,4410.57
John slater & robyn Adair slater
98,0890.56
Brian John Cotton stapleton & Lois eileen Cotton stapleton
91,0980.52
matthew Ian tremain & Beth moreen tremain
86,9630.50
Ian Dunbar Greaves & nicola Anne Greaves & Craig murray thompson
84,3950.48
Bryan Francis Grafas
79,7710.46
malcolm John Cartwright & helen Catherine Cartwright & Graeme Ingham trustee Co Limited
78,0170.45
Custodial services Limited
77,6380.44
Birdwood Farms Limited
76,5620.44
Andrew James northcote hill & Janice margaret hill & Brg trustees Limited
73,8900.42
heather olive Wright
71,3620.41
strathboss Kiwifruit Limited
71,3120.41
new Zealand Permanent trustees Limited
70,0000.40
michael Gilbert Franks
65,8750.38
Bowyer orchards Limited
63,6830.36
John Peter Jensen & Patricia Joan Jensen
62,8670.36
Penmaen Limited
58,5350.33
Christopher robert malcolm & helen Ann malcolm
56,8330.32
Peter ratahi Cross & neil te Kani
54,7800.31
Bnp Paribas nominees nZ Limited
54,7220.31
Forsyth Barr Custodians Limited
53,8620.31
terence morrow hawthorne & Gloria nancy hawthorne & Wood Walton trustees (2007) Limited
53,0760.30
Custodial services Limited
51,1550.29
roger Daryl Clark & Colleen Beth Clark
49,5290.28
David W hay
46,0850.26
David murray reid & Beverley Ann reid & John Alexander stewart
45,5660.26
John edwin Bourke & raewyn Joyce Bourke
44,8370.26
Christopher William Flood
44,5200.25
helen margaret Bowyer
42,2550.24
Ian Gerald Arnot
42,0000.24
Lynne marie marx sheather & Walter Brent sheather & Patricia vera sheather & simon middleton Palmer
41,4380.24
Judith Ann Fisher
40,6620.23
maketu estates Limited
38,3230.22
total
11,685,90766.70
shareholder statistics, as at 10 January 2018
Investors
Percentage
of investors
shares
Percentage of
shares
up to 1,000 shares
42929.02216,7821.23
1,001 to 5,000 shares
64543.641,605,3379.16
5,001 to 10,000 shares
21414.481,536,3228.77
10,001 to 50,000 shares
14910.082,912,14616.62
50,001 to 100,000
231.561,633,9269.33
more than 100,000
181.229,616,76654.89
total
1,478100.0017,521,279100.00
83
DIreCtorY
Board of directors
Fred hutchings - Chairman
martyn Brick
John Burke
Peter ratahi Cross
Amiel Diaz
Cecilia tarrant
Ashley Waugh
Audit and risk committee
Ashley Waugh – Chair
martyn Brick
John Burke
Fred hutchings - ex-officio
remuneration committee
Fred hutchings – Chair
ratahi Cross
Cecilia tarrant
Company officers
michael Franks
Chief Executive Officer
stuart mcKinstry
Chief Financial Officer and Company Secretary
senior management team
michael Franks
Chief Executive
Kate BryantKevin hallidayray hookAnnmarie Lee
GM SupplyGM Post Harvest ServicesGM Retail ServicesGM Growers
stuart mcKinstryJason swainrob towgoodsimon Wells
Chief Financial OfficerGM Information ServicesCommercial ManagerGM Orchards
Annual report 201784
registered office
Seeka Limited
47 Young road, Paengaroa 3186
Po Box 47, te Puke 3153
seeka co nz
Auditor
PricewaterhouseCoopers
Auckland
Bankers
Westpac Banking Corporation
Auckland
share register
Link market Services Limited
Auckland
nZx
www nzx com
Legal advisors
Harmos Horton Lusk Limited
Auckland
mackenzie Elvin
tauranga
34 Young road, rD 9
te Puke 3189
P o Box 47
te Puke 3153
new Zealand
+64 7 573 0303
info@seeka co nz
seeka co nz
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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