SEEKA FY21 FULL YEAR RESULT
1SEEKA LIMITED | ANNUAL REPORT 2021
2021
ANNUAL REPORT
Select excellence
from orchard to market
1SEEKA LIMITED | ANNUAL REPORT 2021
Contents
Welcome to our FY21 Annual Report where we detail how Seeka organises its business to
deliver excellence along our full supply chain. We report on our financial and operational
performance, and update you on the latest environmental, social and corporate
governance initiatives.
In Seeka's integrated report we provide clear oversight on how we are working to be a
leader in sustainability, as we nurture our environment and work with our communities to
produce and supply the world with safe, high-quality, New Zealand and Australian fruit.
This integrated report links to videos and
other information stored on the internet.
Scan the QR codes with your smartphone
camera to view extra material.
2 Our produce business
5 Chair and Chief Executive's report
6 Review of operations
7 Group financial performance
8 Orcharding
9 Post harvest
10 SeekaFresh retail services
11 Australia
12 Automation, technology and capacity
13 Labour and safe-and-healthy workspaces
14 Outlook
15 Environmental, social and governance
23 Financial report
24 Statement of financial performance
25 Statement of comprehensive income
26 Statement of financial position
27 Statement of changes in equity
28 Statement of cash flows
29 Notes to the financial statements
70 Independent auditor's report
77 Governance
96 Directory
Main contents
This integrated report links to videos and
other information stored on the internet.
Click on the QR codes or scan with your
smartphone camera to view extra material.
The best way to view this integrated report is with Adobe Acrobat Reader.
To navigate, click the section headers listed above. You can also click
any light blue text for direct links to additional information. To return to a
contents page, click the navigation header at the top of each page.
Importing
tropical fruit
from Ecuador
Exporting
Australian kiwifruit
to Asia and Europe
ANNUAL REPORT 2021 | SEEKA LIMITED2
Our produce business
Select excellence from orchard to market
Seeka grows, processes and supplies premium, healthy fruit to domestic and international consumers. We are
founded on kiwifruit and have expanded to be New Zealand and Australia’s largest kiwifruit grower. We also
grow and supply New Zealand kiwiberry, avocados and citrus and Australian nashi, pears and other fruits.
We supply Zespri with premium New Zealand kiwifruit, while also servicing key retail customers in New Zealand, Australia and other
international markets. We also sell fresh produce from our Auckland wholesale market.
We are a large regional employer, operating packing and coolstore facilities in all major kiwifruit and avocado growing regions in New
Zealand’s North Island. Seeka also operates orchard and post harvest facilities in Victoria Australia, with Australians buying Seeka-
supplied fruit all year round.
We deliver excellence in supply chain management, and have extended our services to import and condition tropical fruits for New
Zealand retailers, plus we produce and sell avocado oil and the digestive aid Kiwi Crush.
At Seeka, we deliver excellence from orchard to market.
AsiaNew Zealand
Australia
Marketing Seeka avocado
Collaborative marketing
of NZ kiwifruit
Importing tropical fruit
Orcharding
Maturity testing
Post harvest
Export and
domestic
marketing
Ripening and retail
services
Wholesale market
Marketing Seeka NZ
kiwifruit, avocado and
kiwiberry
Growing, and selling
Australian kiwifruit,
nashi, pears and plums
Exporting Australian
kiwifruit to Asia and
Europe
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3SEEKA LIMITED | ANNUAL REPORT 2021
JANFEBMARAPRM AYJUNJULAUGSEPOCTNOVDEC
KIWIFRUIT PICKING AND PACKING
KIWIBERRY HARVEST AND SALES
AVOCADO HARVEST AND SALES 2021/22AVOCADO 2020/21
KIWIFRUIT COOLSTORAGE AND LOADOUT
AUSTRALIAN NASHI AND PEAR HARVEST AND SALES
AUSTRALIAN KIWIFRUIT HARVEST AND SALES
AUSTRALIAN PLUM HARVEST AND SALESPLUM
12 cents
dividend FY20
27 January
Kiwifruit
Claim settled
15 February
$7.6m received
from Kiwifruit Claim
15 December
Grower loyalty
share scheme
vests for $8.3m
September
OPAC acquired
for $60.6m
4 May
Orangewood
acquired for $6.8m
22 November
NZ Fruits
acquisition
announced
10 December
$20m capacity
build starts at
KKP & Transcool
August
Fruitometry agritech
investment of $2.6m
9 July
12 cents
dividend FY20
30 March
13 cents
dividend FY21
13 October
Our year at a glance
$
310m
Revenue
Up 23
%
on FY20 $251m
$
56.8m
EBITDA
Up 32
%
on FY20 $42.9m
$
482m
Assets
Up 28
%
on FY20 $375m
26cents
Dividends from FY21
1
Up 8
%
on FY20 24cents
$
23.5m
Net profit before tax
Up 44
%
on FY20 $16.3m
$
32.2m
EBIT
Up 32
%
on FY20 $24.3m
$
101m
Net interest bearing debt
Up
$
23m on FY20 $78m
$
70.0m
Acquisitions
2
OPAC, Orangewood & Fruitometry
3.3
Total recordable injury frequency
Down 27% on FY20
With no serious harm injuries
899
Seeka growers in
NZ and Australia
With all crops fully harvested
39.2m
Trays of NZ class 1 kiwifruit
Up 22% on FY20
With excellent in-market
performance
1.4m
Fruit maturity tested by
VLS for the kiwifruit industry
New service and revenue stream
1. FY20 dividends paid January and March 2021, FY21 dividends paid October 2021 and February 2022.
2. Enterprise value of OPAC and Orangewood includes assumed debt. Includes Fruitometry investment.
Main contents
ANNUAL REPORT 2021 | SEEKA LIMITED4
Seeka KKP post harvest facility and adjoining kiwifruit orchards near Maketu in the Bay of Plenty. KKP is one of 12 post harvest facilities
operated by the Seeka Group; 11 in New Zealand and one in Australia. KKP is currently being upgraded with a highly-automated packline
and new energy-efficient coolstores that use environmentally-friendly coolant are being built at neighbouring Transcool.
This $20 million investment is expected to deliver sufficient post harvest capacity through to 2024.
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5SEEKA LIMITED | ANNUAL REPORT 2021
These regional acquisitions increase Seeka’s market share
in our foundation kiwifruit business to approximately 26%.
Integration of the acquired companies is complete and steps
taken to deliver all forecast synergy gains. While increasing
Seeka's scale and regional presence, these acquisitions are
accretive to shareholders.
The Seeka Group generated a record $23.5 million net profit
before tax, compared to $16.3 million in FY20. Net profit
before tax includes a $7.6 million settlement received from
the Psa kiwifruit claim class action taken by a number of
growers following the significant losses experienced by the
industry from the 2010 Psa outbreak.
Seeka’s growth has led to a new funding structure, and an
enlarged syndicated facility was negotiated in November.
Lead by Westpac New Zealand, this five-bank syndicated
facility secures funding for all near-term post harvest
capacity upgrades and supports Seeka’s growth strategy.
Post harvest capacity plans are constantly reviewed, and a
decision on a greenfield development at Pukenga has been
deferred in favour of upgrading KKP’s capacity by installing a
new packing machine and building high efficiency cool stores
at Transcool.
Fully staffing the business remains a constant challenge for
management as Covid-19 continues to disrupt the market
and availability of labour, including restricting the availability
of recognised seasonal employer workers (RSEs). Labour
availability currently looks better for harvest 2022.
All of Seeka's diverse business operations performed well in
FY21 with Seeka Australia, SeekaFresh and VLS all performing
ahead of expectation, noting the challenging local market
environment for SeekaFresh with Covid-19.
Seeka continues its progress on sustainability and in addition
to the sustainability information included in this report, we will
publish a full sustainability report for 2021 by 30 June. We are
working to build a sustainable business in a changing climate.
Seeka's strategy
Our strategy is to deliver operational excellence by working to
a disciplined and professional plan with robust contingency
measures. We understand the demand dynamics for each
fruit we handle, and are implementing innovative solutions
and automation to improve productivity. Seeka is investing
across the value chain.
We are focussed on growth and making acquisitions that are
consistent with strategy and meet accretive thresholds, and
are working to lift financial performance and shareholder
returns as we build a bigger, more diverse produce company.
Seeka operates in a dynamic environment, we monitor new
developments and use commercial innovation to realise new
opportunities across our business.
We are fundamentally focussed on delivering an excellent
service to all growers and customers by operating a value
chain that delivers safe, sustainably-produced, high-quality
fruit. We strive to be a company where people want to work
and know they will be safe.
Strategic investments
The Seeka Group acquired two regional kiwifruit businesses
for $67.4 million in FY21 and secured a cornerstone investment
in the agritech start-up Fruitometry for $2.6 million.
In May, Seeka acquired OPAC for $60.6 million by issuing
$38.7 million of new Seeka shares and assuming $21.9 million
of debt. The OPAC acquisition secures 7.9 million kiwifruit
trays and new grower clients as it extends Seeka’s regional
presence eastward to Ōpōtiki, Te Kaha, East Coast and
Gisborne.
In November, Seeka acquired Orangewood for $6.8 million by
issuing $3.4 million of new Seeka shares, paying $1.3 million
in cash and assuming $2.1 million of debt. Now integrated,
Orangewood adds 2.2 million kiwifruit trays to Seeka’s
Northland operations along with contract avocado packing.
In July, Seeka invested $2.6 million for a 26% shareholding in
agritech start-up Fruitometry. Using smart orchard-scanning
technology, Fruitometry generates detailed maps to optimise
vine management on Seeka orchards, as well as refining
harvest and supply chain planning from orchard to market.
The current integration of orchard information into Seeka’s
systems will create a platform for efficiency gains.
In December, Seeka announced the acquisition of NZ Fruits
for $22.0 million by issuing $8.9 million new Seeka shares,
paying $8.9 million in cash and assuming $4.2 million of
debt. Completed February 2022, the NZ Fruits acquisition
consolidates Seeka’s presence in Gisborne, adds 2.2 million
kiwifruit trays and contract packing of citrus and persimmon.
Chair and Chief Executive's report
We are pleased to present Seeka’s results and commentary for the financial year to 31 December 2021.
2021 was a busy year. Seeka increased our regional services with the acquisition of Ōpōtiki Packing and
Coolstorage Limited (OPAC) and Kerikeri-based Orangewood Limited (Orangewood), and in December
announced the acquisition of Gisborne-based NZ Fruits Limited (NZ Fruits), with the acquisition
completed 2 February 2022.
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ANNUAL REPORT 2021 | SEEKA LIMITED6
Seeka's FY21 financial results are the result of a deliberate strategy to significantly improve Seeka’s
underlying operating earnings. Revenue is up 23% to $309.6 million (FY20 $251.5m) helped by a rebound
in Hayward volumes following a drought-impacted 2020, and the ongoing lift in SunGold production.
Review of operations
Lifting earnings from Seeka's core business
186.8
23.1
5.8
15.5
203.7
33.3
7. 4
10.0
236.9
34.5
6.9
10.5
251.5
42.9
15.226.6
309.6
56.8
14.9
26.4
Group revenue
NZD Millions
Group EBITDA
1
NZD Millions
Group net profit after tax
1
NZD Millions
Group comprehensive income
1
NZD Millions
EBITDA is up 32% to $56.8 million (FY20 $42.9m) as a tight
focus on costs improved Seeka’s operating margin, especially
following the one-off Covid-19 expenses incurred FY20.
FY21 EBITDA also benefited from a $7.6 million
compensation payment from the Crown’s settlement of the
kiwifruit class action. This class action relates to the 2010
Psa incursion which impacted industry revenues, production
costs and asset values of many growers.
Net profit before tax is up 44% to $23.5 million (FY20
$16.3m), with FY21 including $1.2 million of impairments for
the removal of the old KKP packline and Transcool coolstores
as the sites are prepared for 2022 capacity upgrades. It also
includes a $3.5 million lift in Group depreciation expense
largely associated with the acquired OPAC facility.
Net profit after tax is down 2% to $14.9 million (FY20
$15.2m), noting FY20 included a one-off $5.6 million
deferred tax benefit.
Net bank debt is up $22.8 million to $100.6 million (FY20
$77.9m) with the Group assuming $24.0 million of debt
and making $3.9 million in cash payments for the OPAC,
Orangewood and Fruitometry investments, as well as
absorbing acquisition and integration costs.
The two kiwifruit businesses are now fully integrated, and
along with the February 2022 acquisition of NZ Fruits are set
to significantly increase FY22 kiwifruit volumes and deliver
synergy gains across Seeka’s value chain.
Dividend
Having lifted underlying profitability and generated strong
cash flows, the Board approved a final dividend of 13 cents for
FY21 (fully imputed), to be paid 23 February 2022. Combined
with the 13 cents per share interim dividend paid 13 October,
this brings the total dividends paid to shareholder relating to
the FY21 year to 26 cents per share (FY20 24c).
Acquisitions
Millions of class 1 kiwifruit trays handled
Seeka FY21
total trays handled
Total trays handled
harvest 2021
Industry
market share
Seeka - excluding OPAC
35.735.720 %
O PAC
3.57.9 4 %
Orangewood
-2.21 %
NZ Fruits (February 2022)
-2.2 1 %
Total
39.248.0 26 %
FY17FY18FY19FY20FY21FY17FY18FY19FY20FY21FY17FY18FY19FY20FY21FY17FY18FY19FY20FY21
1. FY17 EBITDA, NPAT and comprehensive income are pre NZ IFRS 16 Leases, FY18 was restated for NZ IFRS 16.
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7SEEKA LIMITED | ANNUAL REPORT 2021
Group financial performance
Key indicators
New Zealand dollars ( millions )FY21FY20Change
Total revenue
$ 309.57$ 251.46
23%
EBITDA before impairments and revaluations
$ 56.79$ 42.95
32%
Depreciation expense
$ 15.19$ 11.65
30%
Lease depreciation expense
$ 7.94$ 6.67
19%
Revaluations, impairments and amortisation of intangibles
$ 1.48$ 0.30
393%
EBIT
$ 32.18$ 24.32
32%
Interest expense
$ 4.08$ 4.16
( 2%)
Lease interest expense
$ 4.61$ 3.88
19%
Net profit before tax
$ 23.49$ 16.28
44%
Income tax charge
$ 7.87$ 8.24
( 5%)
Deferred tax expense
$ 0.77$(1.55)
Tax benefit of reintroduction of depreciation on buildings
-$(5.56)
Net profit attributable to equity holders
$ 14.86$ 15.15
( 2%)
Basic earnings per share ( cents )
$0.43$0.52
( 18%)
Dividends per share for the financial year ( cents )
$0.26$0.24
8%
Cash flow from operating activities
$ 41.58$ 26.35
58%
Total assets
$ 482.27$ 375.43
28%
Property plant and equipment
$ 327.83$ 245.03
34%
Net assets
$ 246.49$ 176.29
40%
Net bank debt
$ 100.64$ 77.86
29%
Values may not always sum due to rounding.
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ANNUAL REPORT 2021 | SEEKA LIMITED8
Orcharding generated $77.1 million in revenue; up 2% on FY20.
EBITDA was $5.2 million, compared to $5.4 million FY20 due to
lower market returns for kiwifruit, higher production costs and the
addition of OPAC overheads post acquisition.
Seeka (excluding OPAC) grew 14.4 million trays of kiwifruit; up 11% on FY20.
Hayward production rebounded to 8.7 million trays on improved yields and
SunGold increased to 5.4 million trays driven by increases in productive hectares
and yields.
Orcharding also produced 220,000 trays of Hayward and SunGold organic
kiwifruit, along with 1,394 tonnes of avocado for the 2020/21 season, (2019/20:
1,614 tonnes) and 140 tonnes of kiwiberry for harvest 2021 (2020: 172 tonnes).
Eastern and Northland operations increased with the OPAC and Orangewood
acquisitions and are set to deliver significant volume growth in FY22. Seeka also
continues to invest in new kiwifruit and avocado developments, partnering with
landowners, iwi and the Kānoa - Regional Economic Development & Investment
Unit (previously the Provincial Growth Fund) to collectively develop 156 hectares of
kiwifruit on managed and leased land.
Orcharding
Producing quality fruit on 1500 hectares of New Zealand orchards
Revenue
–Leased and long term leased
orchards: costs plus profit share
–Managed orchards: costs plus
management fees
25%
of Group revenue
$
7 7.1m
Up 2% on
FY20 $75.7m
Assets
–Leased orchards: growing crops
–Long term leased orchards:
developing orchards and growing
crops
15%
of Group assets
$
73.7m
Up 16% on
FY20 $63.4m
Orchard operations span from Northland through to the Coromandel, Bay of Plenty and East Coast and cover the growing
of kiwifruit, avocado, kiwiberry and citrus on leased, long-term leased and Seeka-owned orchards. Seeka also provides
comprehensive on-orchard services, and works with landowners including iwi and hapū, to develop high-quality orchards,
create employment and generate wealth in rural New Zealand.
FY17FY18FY19FY20FY21FY17FY18FY19FY20FY21
8.5
6.4
10.7
4.2
11.4
5.0
13.0
5.4
14.4
5.2
Kiwifruit grown
Millions of class 1 kiwifruit trays
Orchard EBITDA
1
NZD Millions
Acquisitions
Millions of class 1 kiwifruit trays grown
FY21 total
trays grown
Grown prior
to acquisition
Total trays
grown 2021
Orcharding
volume growth
Seeka
14.414.4
O PAC
-3.73.7+ 26%
Orangewood
-2.22.2+ 15%
Total
14.45.920.3+ 41%
1. FY17 EBITDA is pre NZ IFRS 16 Leases, FY18 was restated for NZ IFRS 16.
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9SEEKA LIMITED | ANNUAL REPORT 2021
Post harvest
Stewarding 42 million trays of fruit from New Zealand orchards to the markets
1
Revenue
–Grading and packing service fee
per unit handled
–Coolstorage and loadout fees
Assets
–10 packing facilities with
14 graders (year end)
–Coolstores
–VLS laboratories
Post harvest operated eight facilities servicing the North Island’s major fruit growing regions, handling kiwifruit, avocado, citrus
and kiwiberries from our own orchard operations and for independent supplying growers. Post harvest also includes Seeka’s
VLS laboratory service.
Post harvest generated $195.9 million in revenue; up 40% on FY20.
EBITDA was $61.6 million, compared to $41.9 million FY20, on
volume growth, an improved operating margin following the one-
off Covid-19 costs incurred FY20, and the contribution from VLS
laboratory maturity testing service to the national kiwifruit industry.
Seeka's eight facilities packed 37.2 million trays of kiwifruit; up 10% on FY20.
OPAC, acquired in May 2021, packed a further 3.5 million trays post acquisition.
Post harvest also packed 295,000 trays of avocado at the end of the 2020/21
season, and 683,000 trays from the start of the 2021/22 season, along with 3,928
tonnes of citrus and 91 tonnes of berries.
Post harvest financial performance includes OPAC revenue and expenses post
acquisition. This includes packing 3.5 million trays, cool chain management of
5.4 million trays, and operating overheads until year end. Now fully integrated,
OPAC, Orangewood, and NZ Fruits acquired February 2022, are set to significantly
increase FY22 volumes and release synergies from a significantly enlarged post
harvest operation. With these three acquisitions, we enter harvest 2022 with 11
post harvest facilities and an expectation to increase earnings.
FY17FY18FY19FY20FY21FY17FY18FY19FY20FY21
25.7
22.0
31.4
3 7. 2
33.5
41.0
33.4
41.9
40.761.6
Kiwifruit packed
Millions of kiwifruit trays
Post harvest EBITDA
2
NZD Millions
Acquisitions
Millions of kiwifruit trays packed
3
FY21 total
trays packed
Packed prior
to acquisition
Total trays
packed 2021
Post harvest
volume growth
4
Seeka
37.237.2
O PAC
3.54.47.9+ 21%
Orangewood
-2.22.2+ 6%
NZ Fruits (2022)
-2.22.2+ 6%
Total
40.78.849.5+ 33%
63%
of Group revenue
$
195.9m
Up 40% on
FY20 $140.1m
66%
of Group assets
$
316.1m
Up 36% on
FY20 $232.7m
1. Includes kiwifruit, avocado and kiwiberry. 2. FY17 EBITDA is pre NZ IFRS 16 Leases, FY18 was restated for NZ NZ IFRS 16. 3. Class 1 and class 2 trays packed. 4. On Seeka FY21.
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ANNUAL REPORT 2021 | SEEKA LIMITED10
SeekaFresh generated $21.6 million in revenue; down 1% on FY20.
EBITDA was $2.3 million, compared to $3.0 million FY20.
SeekaFresh benefitted from an improved performance from our New Zealand
wholesale and retail service operations, including the import and ripening of
tropical fruits. This is despite the ongoing impact of lockdowns and other Covid-19
restrictions on New Zealand operations. Weak pricing from the Australian avocado
market for the 2021/22 season, however, significantly impacted SeekaFresh’s sales
commission.
Retailed by SeekaFresh and sold under the Seeka brand, the 2020/21 avocado
season benefited from a strong Australian market, with SeekaFresh able to sell a
high proportion direct to Australia's premium supermarket retailers. With a high
demand for summer avocado, SeekaFresh sold 33% of the 2020/21 crop in the
FY21 period. This generated good revenues from SeekaFresh's sales commission
and returned excellent value to Seeka's supplying growers.
The 2021/22 Australian avocado market, however, is weak and revenues down
with SeekaFresh selling more avocados into Asia and on the domestic market.
With the bulk of each season’s crop sold in the August to December period, this
impacted FY21 earnings from SeekaFresh’s sales commission.
SeekaFresh retail services
Promoting and selling premium NZ fruit to the export and domestic markets
SeekaFresh supplies, exports and sells avocado, kiwifruit and kiwiberry into Australia, and with collaborative programmes to
other international markets. SeekaFresh also imports tropical fruits which are sold and distributed alongside local produce
through our New Zealand wholesale market and retail supply service.
Revenue
–Sales commission
–Service fee for imported fruit
–Processing fees
Assets
–Auckland and Christchurch
service facilities
–Te Puke processing facility
FY17FY18FY19FY20FY21FY17FY18FY19FY20FY21
54.2
2.9
39.9
2.3
49.2
1.7
63.9
3.068.0
2.3
SeekaFresh retail services turnover
NZD Millions
SeekaFresh retail services EBITDA
1
NZD Millions
7%
of Group revenue
$
21.6m
Down 1% on
FY20 $21.8m
2%
of Group assets
$
11.7m
Down 6% on
FY20 $12.4m
1. FY17 EBITDA is pre NZ IFRS 16 Leases, FY18 was restated for NZ IFRS 16.
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11SEEKA LIMITED | ANNUAL REPORT 2021
10%
of Group assets
$
47. 7m
Up 1% on
FY20 $47.2m
4%
of Group revenue
$
13.9m
Up 6% on
FY20 $13.1m
Australia
Growing and selling Australian kiwifruit, nashi and pears
Seeka Australia (Pty) Limited, a 100% Seeka-owned company, owns, leases and operates kiwifruit orchards and owns and
operates nashi, pear and other fruit orchards in Victoria's main fruit-growing region of Shepparton, Australia. Seeka Australia
directly markets the fruit in Australia and exports to Asia and Europe.
Revenue
–Fruit sales
Assets
–160 hectares of owned orchards
and crop
–114 hectares of kiwifruit on long-
term leased orchards
–Packhouse and coolstores
Australian operations generated $13.9 million in revenue; up 6% on
FY20. EBITDA was $1.6 million, compared to $7.4 million FY20.
FY20 benefited from a one-off $6.2 million gain on sale of the producing kiwifruit
orchards, which the Group now leases. If removed, FY20 operating EBITDA would
be $1.2 million, showing a 33% growth in Australian operating earnings in FY21.
While impacted by Covid-19, local management produced an excellent result as
they dealt with labour shortages, ongoing market disruptions and lockdowns, and
delivered efficiency gains that outweighed the new orchard lease costs.
Seeka continues to invest in growing more produce in Australia with 63 hectares of
kiwifruit in development, 11 hectares of the red-blush Ricó pear and nine hectares of
new nashi varieties. We are also trialling new crops, including dates.
FY17FY18FY19FY20FY21FY17FY18FY19FY20FY21
5.8
2.3
5.6
(0.1)
4.2
(0.6)
4.4
7. 4
5.0
1.6
Seeka Australia volumes handled
Thousands of tonnes handled
Seeka Australia EBITDA
1
NZD Millions
1. FY17 EBITDA is pre NZ IFRS 16 Leases, FY18 was restated for NZ IFRS 16.
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ANNUAL REPORT 2021 | SEEKA LIMITED12
Seeka continues to test and then invest in automation and new technologies that are reliable, provide
the opportunity to redeploy labour, and generate a return on capital. Innovations are being implemented
across our full value chain in New Zealand and Australia.
Automation, technology and capacity
Implementing new technology along Seeka's full value chain
Watch video
See the One News report on
Fruitometry to watch kiwifruit
orchard scanning.
Seeka’s investment in Fruitometry provides direct access to smart-scanning
technology. By detailing fruit density and condition, the online Fruitometry maps
provide orchard owners with accurate information to optimise on-orchard work. It
also provides reliable information to Seeka’s post harvest team to plan supply chain
operations.
In post harvest, new automated tray-preparation, bag inserters and packing
machines for bulk boxes and single-layer trays have been implemented, along with
automated pallet strappers. A fully-automated packing and stacking option will be
trialled at Seeka’s NZ Fruits facility in 2023.
In Australia, Seeka has implemented new packing technologies, including a new
nashi machine to carefully grade and pack this delicate fruit. By removing hand
grading the new nashi machine has improved fruit quality and delivered efficiency
gains to our operations.
The Group continues to innovate its management systems, particularly labour
management on the orchard and in the packhouse. When our Australian
operations were impacted by on-going lockdowns and the Omicron outbreak, our
Australian business innovated, and these learnings are now being adopted across
our New Zealand business, including new touchless site entry and revised health
protocols.
Post harvest capacity is continuously reviewed, and the decision to build a
greenfield facility at Pukenga has been deferred until there is more certainty on
demand, pack configuration and shipping.
To meet near-term capacity demand, a $20 million build at KKP and Transcool
has been commissioned. KKP is being upgraded with a highly-automated MAF
Roda packline that will lift shed capacity and reduce the labour load. A new
650,000 tray static capacity cool store with environmentally-friendly coolant is
under construction at Transcool. These upgrades are expected to deliver sufficient
capacity through to 2024.
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13SEEKA LIMITED | ANNUAL REPORT 2021
Labour is an ongoing challenge for all producers, service providers and exporters across New Zealand
and Australia. Severe shortages at peak periods were experienced in 2020 and 2021. Seeka was short of
skilled orcharding and packhouse workers in both countries. The company has invested in on-site gyms,
provided transport and meals, and paid competitive remuneration, including working and paying public
holidays in the season to attract staff.
Labour and safe-and-healthy workspaces
Delivering a professional service and keeping our people safe
in a fast-paced environment
Watch video
See the HIT-NOT proximity
detection system in operation.
Additionally, our teams are collaborating with iwi and
government agencies and run induction programmes at our
facilities to train job seekers and prepare them for work.
Local workers are complemented by New Zealand’s RSE
programme. In 2021, at a cost of $1.9 million we recruited
300 RSE workers from the Government’s 2000 RSE quota.
Including RSE workers that remained in the country since
the Covid-19 outbreak, Seeka’s total RSE workforce at
peak demand was 480. For 2022, Seeka has approval for
approximately 1200 RSEs.
While labour shortages exacerbated the safety risk profile,
our safety focus continues to lift and Seeka has become a
safer company in 2021. Seeka continues to invest to keep
people safe, including adding more guarding and barriers
that remove opportunities for mobile plant and humans to
collide, and rolled out a new HIT-NOT proximity detection
system that detects and protects people from moving
forklifts. These actions have helped eliminate serious harm
forklift incidents in 2021.
On-orchard movements are tracked via the one-step
Seeka app sign-in process, which provides direct access to
accurate orchard maps that clearly mark all hazards. In FY21,
Seeka invested $1 million replacing its orchard tractor fleet to
ensure our workers use modern, fit-for-purpose equipment.
Seeka developed an infectious diseases manual and
operated to strict hygiene protocols throughout 2020
and 2021. While parts of the business experienced high
levels of lockdown, the processes secured the safety of the
Seeka team, including our stakeholder community, and
ensured business continuity so the business could deliver an
essential service in New Zealand and Australia.
There were no serious harm incidents in 2021 and fewer lost
time injuries.
Seeka introduced a new lead measure to our safety
performance indicators that records safety meeting
frequency and attendance across the business. This is part
of our initiative to cement a company-wide safety culture.
FY21 health and safetyActualsTarget
Lead performance
Health and safety meetings
92%90%
Lag performance
Total recordable injury frequency
3.3
Below
4.5
Lag performance
Serious injuries
ZeroZero
Watch video
See Seeka's social media video
on working at Seeka.
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ANNUAL REPORT 2021 | SEEKA LIMITED14
The Board and management have enacted Seeka's strategy in 2021,
with the Group completing key investments that are positioned to
further improve shareholder returns in 2022.
Seeka is pursuing an active growth strategy through acquisitions to build shareholder
value and lift returns on capital employed. By becoming bigger and more diverse, Seeka
is building a robust, sustainable business to deliver performance to shareholders,
employees and our supply chain partners.
Throughout this growth process, the Board keeps a careful watch on Seeka's balance
sheet to ensure we have headroom to prioritise operations, manage risk, and invest
in opportunities that drive shareholder returns. With broad support from the banking
community, we have secured an enlarged syndicated banking facility that supports
near-term growth.
Key to our operational success is Seeka's dedicated team of employees in New Zealand
and Australia. Seeka’s people have excelled under the pressure of Covid-19 and labour
shortages across New Zealand and Australia. They have adapted, innovated and
strived to deliver an excellent service and returns to our growers, and excellent fruit
quality to our customers.
We invest in the safety of our people, and set remuneration structures, training and
career pathways that attract and promote the best people within our industry. Our
people continue to make Seeka an inspiring company to work for and are celebrated
and thanked for their efforts.
We continue to review our post harvest capacity and are investing in new technology
to manage volume growth through to 2024. We recognise that innovation and
automation are key to improving productivity and making the best use of a tight
seasonal labour market. At Seeka, we achieve operational excellence by having a
professional team execute a disciplined plan using the best technology.
Our strategy extends beyond operational and financial performance to ensure we have
a sustainable business which includes how we support our communities, care for our
environment and govern the company. We are progressing our carbon footprint plan to
reduce Seeka's environmental impact.
We are excited by the progress we have made in FY21, which has grown our fruit
supply base by more than 25%, and look forward to tangible benefits being generated
for stakeholders in FY22.
Fred Hutchings Michael Franks
Chair Chief executive
Outlook
Delivering performance to shareholders, employees
and supply chain partners
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15SEEKA LIMITED | ANNUAL REPORT 2021
Environmental, social and governance
ESG Report 2021
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ANNUAL REPORT 2021 | SEEKA LIMITED16
SEEKA SUSTAINABILITY REPORT
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Sustainability focuses on meeting present needs without compromising the ability of future generations to meet their needs. Seeka’s
ambition is to measure and incrementally improve our environmental and social performance and the associated governance processes
and to demonstrate that we are meeting our corporate responsibilities as a sustainable company.
Environmental sustainability lies at the heart of Seeka’s brand attribute Growing Futures; Seeka is focused on continually improving
operations to deliver healthy produce, use less resources, care for the environment, and deliver better outcomes to stakeholders.
Social responsibility lies at the heart of Seeka's brand attribute Founded on Relationships; Seeka wants to be the employer and service
provider of choice and values its connections to the communities with whom it works. It cares for the welfare of its growers, clients,
employees, investors and the communities in which it operates.
The sustainability committee is tasked with providing strategic guidance and feedback to the Board and management on Seeka's
sustainability framework, establishment of targets, measurement, and performance monitoring. Comprised of three directors, Seeka’s
sustainability committee is a forum that works with management to assess the potential impacts and opportunities of a changing climate.
Governance
Seeka's strategic direction is based on the sustainable production and supply of healthy produce to consumers.
Governance is specifically covered as a section in this annual report, see page 77.
Environmental report
Seeka's aim is to be an industry leader, transparently reporting on our environmental impact and the opportunities and risks associated
with climate change.
Seeka's Agile Sustainability Team (SAST) is representative of all of Seeka’s businesses connecting people from across the company.
They work to integrate sustainability into every aspect of our business, including delivering projects intended to reduce Seeka’s
environmental footprint.
Climate change is an active risk, impacting the yield, quality and marketability of the produce Seeka grows and handles. By disclosing
climate-related risks, stakeholders can see how Seeka is flexing business activities and operations to mitigate environmental risks and
embrace new opportunities.
Seeka is committed to advancing regenerative horticulture practices. Seeka's research and development team are conducting
environmental trials to better understand the impact to our environment of inputs such as sprays, fertilisers and irrigation. These trials
build knowledge that leads to more sustainable on orchard practices that are shared with our growers.
Seeka has analysed all business operations to identify and understand the production inputs, how they flow through the business, and
the waste outputs that impact the environment. Seeka is working to transition to a circular model whereby waste is circulated back into
operations, thereby reducing its environmental impact.
Watch video
See Seeka's video on reducing
our carbon footprint.
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17SEEKA LIMITED | ANNUAL REPORT 2021
Risk and opportunity analysis
The Ministry for the Environment studied how climate change may impact New Zealand. Based on its report, Seeka expects our
orcharding regions will be impacted by higher temperatures, changing moisture levels, changing weather patterns and rising sea levels.
Transition risks
Risks and opportunitiesImpactResponse
New national or international
policies that restrict chemical
inputs used for pest management
and maintaining crop yields.
Higher R&D costs to
find alternative growing
methods.
Active involvement in, or monitoring of, industry associations, including New
Zealand Kiwifruit Growers Incorporated (NZKGI), Kiwifruit Vine Health (KVH),
Industry Supply Group (ISG), and Industry Advisory Council (IAC).
Build closer relationships with regional councils and Government agencies and
regulators.
Invested in a worm farm pilot project to test circular waste recycling within our
orcharding business.
Transition to a low input orchard management system, while achieving
consistent yields.
Introduction of carbon costing or a
carbon tax that charges for carbon
usage.
Higher costs to offset
carbon emissions.
Measure the carbon footprint to understand and reduce the carbon impact.
Transition to lower Global Warming Potential (GWP) cool store gases.
Invest in lower carbon emission projects, see Carbon Reduction Initiatives.
Hedge against rising energy bills by investing in renewable energy technologies.
Introduction of orchard water
restrictions, with water vital for
crop growth over the summer
period.
Unable to irrigate to grow
an optimum crop.
Actively engage in orchard water management.
Work with councils to understand impacts on waterways.
Ensure new developments can access water and have on-site storage.
Improve soil health to increase water retention.
Physical risks
Risks and opportunitiesImpactResponse
Yield reduction or plant damage
from flooding, hail, drought,
storms, fire, or a sub-optimal
growing climate (temperature,
sunshine, drought, winter chill).
Lower yields and
unprofitable orchards.
Geographical spread of orchards.
Invest in crop protection measures (e.g. frost protection, irrigation, shelter).
Access to reliable weather and frost forecasts (extended and long range).
Favour developments with reliable water supply and free drainage.
Orchard loss from rising sea levels.Increase in non-viable
orchards.
Orchard reporting by altitude.
Minimum altitude for all new orchard developments.
Introduction of new pests and
diseases.
Reduced yields or
unsalable crops.
Geographic separation of orchards.
Genetic and variety diversification.
Orchard hygiene programme.
Independent pest monitoring programme.
Spray and pest control programme.
Bio-security controls on disease and disease vectors.
Introducing beneficial insects and plants to combat pests and disease.
Water availability and quality
concerns.
Water unavailable or
unsuitable for irrigation.
Actively engage in orchard water management.
Invest in efficient irrigation technologies.
Develop wetlands and support native wildlife sanctuaries.
Monitor waterways and encourage orchard environmental plans.
Capture rainwater from facility roofs to reduce regional water demand.
Elevated soil CO
2
levels alter fruit
sugar and nutrient levels.
Crops have a different
quality profile.
Understand how soil carbon levels impact fruit nutrient levels.
Establish orchard management practices that best capture fruit quality.
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ANNUAL REPORT 2021 | SEEKA LIMITED18
Opportunities
Risks and opportunitiesImpactResponse
Increased demand for Seeka
produce as a healthy eating option
with a low carbon impact.
Increased product
demand and new markets.
Ensure Seeka is an industry leader in carbon reporting.
Report Seeka's carbon footprint to stakeholders and commit to targets.
Green financing for low-carbon
developments.
Better funding at lower
interest rates.
Engage with bankers on green funding and green bonds.
Investigate low-carbon investments.
Higher soil CO
2
levels improve
water use efficiency.
Plants require less water
to produce a crop.
Understand soil carbon levels and water usage.
Establish orchard management practices that best capture carbon in the soil.
Seeka's 2022 environmental work programme
Scenario analysis – understanding how a changing climate impacts fruit production
Scenario analysis is underway to gauge how higher temperatures, varying water availability and rising sea levels may impact New
Zealand orchard production. By understanding how a changing climate may impact crop yields and quality, Seeka can prepare its
operations to provide an efficient, sustainable service to Seeka's growers and a reliable product supply to consumers.
Carbon footprint – measuring and setting targets
Seeka is committed to understanding and lowering its carbon footprint to support Government targets under the Paris Agreement
intended to limit global temperature increases to 1.5°C above preindustrial levels.
Seeka has established a baseline by calculating 2019 greenhouse gas emissions using ISO 14064-1: 2018 Greenhouse Gases and the
Greenhouse Gas Protocol, see ghgprotocol.org, with the calculations independently verified by Toitu Envirocare. Toitu Envirocare has also
been engaged to verify Seeka's 2020 and 2021 years. Seeka will then set ‘point in time’ carbon-reduction targets.
The 2020 and 2021 results will be reported in Seeka's sustainability report once verified.
2019 base year greenhouse gas results
CategorySourceTonnes CO
2
e
1Direct energy use5,193
2Indirect energy use3,634
3Transport4,867
4Indirect product use2,906
Total emissions16,600
2019 data has been independently verified and revised since the June 2021 Interim Report.
2019 CO
2
e key performance indicators
IndicatorMeasureTonnes CO
2
e
Time Seeka invests to grow, handle and sell fruitPer permanent fulltime equivalent38
Volume of fruit Seeka handles along its supply chainPer 100,000 trays handled48
Revenues from Seeka's orchard-to-consumer servicePer $1,000,000 of revenue70
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19SEEKA LIMITED | ANNUAL REPORT 2021
Hybrid vehicle fleet
Seeka is exploring hybrid electric vehicles
(HEV), plug-in hybrid electric vehicles (PHEV)
and battery electric vehicles (BEV). Seeka
has introduced hybrid options and is actively
encouraging their selection to reduce the
number of conventional ICE fleet vehicles.
2022 goal is to increase the proportion of
hybrid EV vehicles in Seeka's fleet
Worm farm
In full production, Seeka's continuous-flow
worm farm is expected to divert 50 tonnes of
packhouse organic waste from landfill. It will
produce quality vermicompost, delivering a
regenerative, fully circular approach to orchard
production.
2022 goal is to continue to increase throughput
and trial alternative waste streams
Solar energy
The solar panels at Seeka 360 head office
have generated 120 MWh of energy since
2018, which is approximately one third of the
building's energy demand. They also feed
batteries providing energy security in the event
of an outage. In 2021 Seeka installed a 238
kWh solar system at its Northland Kerikeri post
harvest facility.
2022 goal is to evaluate and install solar
systems on more of our post harvest facilities
LED lighting and sensors
Seeka is rolling out more than one million kWh
of savings by converting existing lighting to LED
with sensors. It is estimated this will reduce
Seeka's carbon emissions by 167 tonnes,
equivalent to the emissions from 239 houses.
2022 goal is to continue the roll out of LED
lighting and sensors
Waste audits
Seeka has developed a waste audit programme
to identify, measure and report the volume
and type of waste produced by our operating
business units. Waste reduction plans are
being developed at a business unit level. The
first waste audit was undertaken at head office
and a waste reduction plan is currently under
development.
2022 goal is to complete and monitor the head
office waste reduction plan and scope orchard
and post harvest operations
Regenerative horticulture
Seeka is researching practical ways to
incorporate regenerative horticulture practices.
This includes cover crops, new mowing and
spraying protocols that allow orchards to
naturally retain higher carbon and water levels.
2022 goal is to continue investigating
regenerative horticulture options and share
findings with our grower community
Refrigerants
With fugitive emissions from refrigeration units
identified as a significant contributor to Seeka's
emissions footprint, Seeka has aligned with the
government’s efforts to reduce ozone-depleting
gases by only installing new systems that run
on naturally-occurring refrigerant gases with no
global warming potential. Existing refrigerant
gasses are being assessed and will be phased
out.
Packaging and waste
Seeka is committed to moving the fresh
produce industry towards a circular economy
using low-impact packaging innovation, and is
working with packaging experts to introduce
new technology and materials to its logistics
processes.
LED
Sustainability projects 2021 and 2022
As we work to measure our emissions, Seeka has already embarked on a series of carbon-reduction initiatives.
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ANNUAL REPORT 2021 | SEEKA LIMITED20
Social report
Seeka’s responsibility to support healthy communities is central to what we do. With "Select Excellence", Seeka strives to continually
improve our performance for our stakeholders and to deliver an excellent service that supports healthy communities.
InitiativeDescriptionAchievements
Seeka cadet programmeThe Seeka cadet programme supports the
development of skills, growth and understanding
within orchards and provides a full overview of the
industry over a 3-year period.
Supported 13 new cadets into the workforce in 2021.
Seeka's 2021 cadets successfully gained horticulture level 3
certificates, with 7 fast tracked through Toi Ohomai Level 4.
Seeka's cadet programme has a clear progression towards
leadership, and many cadets are achieving their goals and
moving into supervisory roles.
Kiwi CrushSeeka's DNFC facility produces the Kiwi Crush
product which has a functional benefit for the
health of older community members and oncology
patients who suffer from bowel issues post
treatment.
Kiwi Crush products are also supplied to DHB
inpatient facilities to assist those admitted to acute
hospital care.
Supplying residential care units, oncology units, and all main
DHBs.
Consistent orders with positive feedback from clinicians and
patients.
Reducing pill burden through reduction of laxatives, whilst
providing a source of hydration, vitamins, and fibre.
Beneficial for those on high dose opioids, mental health
medication and maternity patients post birth.
Kiwi CrushiesSupply of Kiwi Crushies through school catering
services as a low-sugar option as part of healthy
eating in schools.
Supplied a low-sugar ice block option to comply with healthy
eating guidelines for school children. Low in sugar and free of
additives, preservatives, and artificial colours.
SeekaFresh food donationsDonate nutritious food from our wholesale market
and distribution business SeekaFresh to charitable
organisations and food banks to help feed those in
need.
Assisted the community during Covid-19 lockdowns by
supplying produce to BBM (Butterbean) and the Fiji Girmit
Foundation for distribution.
Donations to two Camp Quality events, and continuous
support in messaging of healthy eating through 5+ a day social
media and giveaways.
Food to schools donationsDonate nutritious healthy food to children and
families in need whenever possible from Seeka's
post-harvest facilities.
Donated fruit to schools, foodbanks and local charities.
Employee assistance
programme (EAP)
Seeka subscribes to EAP Services who provide a
free professional and confidential support line to
staff in need of assistance.
This service extends to various issues our people
or their families may face at home or at work.
In 2021, the EAP service was available to all Seeka staff.
Health insuranceAll permanent staff are provided with medical
insurance as a component of their remuneration
package.
Proudly provided health, life and trauma insurance to 656 full-
time employees in 2021 through AIA New Zealand. Discounted
health insurance rates are extended to family members.
Sponsorship of community
and sporting groups
Seeka supports our people and communities by:
1. Building skills and capabilities of young people
2. Community events, clubs, and services
3. Health and nutrition
4. Looking after our environment and driving
sustainable practices
5. Developing and supporting the fresh produce
industry
Provided $307,527 in donations in 2021, see page 21 for the
full list of organisations and events.
GRASP commitment to
worker health, safety and
welfare
GLOBALG.A.P.Seeka 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.
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21SEEKA LIMITED | ANNUAL REPORT 2021
InitiativeDescriptionAchievements
Producers and suppliers
of healthy fresh fruit and
vegetables
Seeka produces and supplies nutritious fruit and
vegetables which are high in vitamins, antioxidants,
minerals and fibre to help support the healthy
lifestyles of New Zealanders and our global
customers.
Seeka's New Zealand product lines include kiwifruit, kiwiberry
and Hass avocados, with the new Gem avocado variety in
development. In Australia, Seeka is that country’s largest
producer of Hayward kiwifruit and nashi, and produces a range
of pears, apricots, dates and plums.
Collaborative partnership
with whānau
Māori are a major grower of kiwifruit, and Seeka
recognises the important relationship our Māori
growers have with the land, and it strives to support
their role as kaitiaki.
Seeka fosters healthy communities and provides economic
opportunities to many Māori entities.
Seeka is investing in long term orchard development on Māori
land, with over 70 hectares in development.
Local employment initiatives
in collaboration with MSD,
MPI, Te Arawa and Ngāti
Hine
Seeka is engaged in a joint training initiative with
the Ministry of Social Development, the Ministry of
Primary Industries, Te Arawa and Ngāti Hine.
This training initiative comes with an offer of full
time employment. Training is focused on developing
fundamental skills required to fill current openings
in the horticulture industry.
In 2021, Seeka trained 20 people preparing them for kiwifruit
work. Eight secured jobs immediately and 12 are planning to
start work in the packhouse in 2022.
Seeka provides a range of incentives alongside Government
agencies to get people into work.
Seeka's training initiatives are proving successful at getting
people out of unemployment and back into the workforce.
Pastoral care for RSEsSeeka employs 6 specialist pastoral carers to
ensure that there are no cultural barriers to
maintaining RSE health and wellbeing during their
stay in New Zealand.
In 2021, Seeka's pastoral carers supported 781 RSEs.
Supporting RSEs and their
families
We highly value our RSE workers who join us each
year from the Pacific and Malaysia. Many RSEs
return year after year and have become an integral
part of the Seeka family.
In 2021, Seeka employed RSEs from Kiribati, Malaysia, Solomon
Islands, Samoa, Tonga and Vanuatu.
Sponsored organisations and events 2021
Auckland Rescue Helicopter Trust
Autism NZ
Blue Rovers Junior Football Club
BOP Presidents Group
BOP Rugby Union
BOP Symphonia
BOP Youth 7s
Daffodil Day
Eastern BOP Cricket Club
Eastern Districts Rugby and Sports
Emirates Team New Zealand
EPIC Te Puke
Fairview Charity Golf Tournament - Abbeyfield
Far North Science Fair
Fresh Produce Safety Centre
Funded research for hepatitis B in Vanuatu
Gisborne Tairawhiti Rugby League
Hannah Wells athlete
Hiranga Limited
Houhora Bowling Club
Katch Katikati
Katikati Croquet club
Katikati Fun Fest Charitable Trust
Katikati Primary School
Kerikeri High School
Kerikeri Netball Centre
Kerikeri Rugby Club
Lions Club of Katikati
Made in Te Puke Trust
Matakana Island Fishing Competition
Matakana Island Sport Club
Mike Young Motorsport
Motu Trails Trust
Mount Bridge Club
Mount Maunganui College
Multi Sport Ōpōtiki
Multicultural Tauranga
NZ Poppy Appeal
Omanu Golf Club
Omokoroa Golf Club
Ōpōtiki Bowling Club
Ōpōtiki Surf Life Saving Club
Otamarakau School
Pacific Fashion Fusion
Paengaroa School
Pongakawa School
Rangataua Sports & Cultural Club
Rotary Te Puke - Cycleway
Rotorua Tai Mitchell Rugby Team
Fresh Produce Safety Centre - Australia
Multi Sports Ōpōtiki
Queenstown Ice Hockey
Tauranga Airsoft Club
Tauranga Cricket Invitational
Tauranga Volunteer Coastguard
Tauranga Women's Refuge
Te Aranui Youth Trust
Te Hiringa Business
Te Kaha Community Transport
Te Kaha Group - Education Sponsorship
Te Puke A&P Society
Te Puke Bridge Club
Te Puke Golf Club
Te Puke High School
Te Puke Intermediate
Te Puke Memorial Pools
Te Puke Play Centre
Te Puke Primary School
Te Puke Small Bore Rifle Club
Te Puke Sports
Te Puke Tennis Club
Te Puke Tigers League Club
Te Puna 8Ball Club
Te Ranga School
Vanuatu Health Fund
Waihau Bay Sports Fishing Club
Waihi Lions
Western Bay Cricket Association
Western Bay Emergency Services
Western Bay Museum
Whakatane Roller Derby
Whangamata Golf Club
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ANNUAL REPORT 2021 | SEEKA LIMITED22
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23SEEKA LIMITED | ANNUAL REPORT 2021
24 Statement of financial performance
25 Statement of comprehensive income
26 Statement of financial position
27 Statement of changes in equity
28 Statement of cash flows
29 Notes to the financial statements
Financial report
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ANNUAL REPORT 2021 | SEEKA LIMITED24
Statement of financial performance
For the year ended 31 December 2021 - Audited
The accompanying notes form an integral part of these financial statements
New Zealand dollarsNotes
2021
$000s
2020
$000s
Revenue
3
309,569 251,457
Cost of sales
4
236,337 198,781
Gross profit
73,232 52,676
Other income
3
8,446 9,440
Share of profit of associates
24
236 -
Other costs
4
25,124 19,170
Earnings (EBITDA)
1
56,790 42,946
Depreciation expense
10
15,185 11,653
Lease depreciation expense
13
7,943 6,671
Gain on revaluation of land and buildings
4
- ( 32)
Impairment of property, plant and equipment
10
1,188 30
Impairment of intangible assets
11
- 102
Amortisation of intangible assets
11
294 204
Earnings (EBIT)
2
32,180 24,318
Interest expense
4,082 4,163
Lease interest expense
4,610 3,877
Net profit before tax
23,488 16,278
Income tax charge
6
7,865 8,239
Deferred tax (benefit)
7
763 ( 1,551)
Tax effect of reintroduction of tax on depreciation of buildings
6
- ( 5,561)
Total tax charge / (credit)
8,628 1,127
Net profit attributable to equity holders
14,860 15,151
Earnings per share for profit attributable to the ordinary
equity holders of the company during the year
Basic earnings per share
20
$0.43$0.52
Diluted earnings per share
20
$0.42$0.52
1. EBITDA, a non-GAAP measure, is earnings before interest, tax, depreciation, amortisation, impairments and revaluations.
2. EBIT, a non-GAAP measure, is earnings before interest and tax.
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25SEEKA LIMITED | ANNUAL REPORT 2021
Statement of comprehensive income
For the year ended 31 December 2021 - Audited
New Zealand dollarsNotes
2021
$000s
2020
$000s
Net profit for the year
14,860 15,151
Items that will not be reclassified to profit or loss, net of tax
Gain on revaluation of land and buildings
10
11,535 11,700
Loss on revaluation of water shares
11
- ( 725)
Net realised loss on revaluation of investment in shares
( 3) -
Total items that will not be reclassified to profit or loss
11,532 10,975
Items that may be reclassified subsequently to profit or loss, net of tax
Movement in cash flow hedge reserve
21
96 85
Movement in foreign currency translation reserve
21
( 38) ( 17)
Movement in foreign currency revaluation reserve
21
( 18) 399
Total items that may be reclassified subsequently to profit or loss
40 467
Total comprehensive income for the year attributable to equity holders
26,432 26,593
The accompanying notes form an integral part of these financial statements
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ANNUAL REPORT 2021 | SEEKA LIMITED26
Statement of financial position
As at 31 December 2021 - Audited
New Zealand dollarsNotes
2021
$000s
2020
$000s
Equity
Share capital
18
151,681 97,917
Reserves
21
43,246 32,438
Retained earnings
21
51,564 45,938
Total equity
246,491 176,293
Current assets
Cash and cash equivalents
12,361 5,164
Trade and other receivables
14
30,685 24,515
Biological assets - crop
12
18,443 19,890
Inventories
15
6,968 5,936
Irrigation water rights
294 343
Assets classified as held for sale
9
1,898 3,844
Total current assets
70,649 59,692
Non current assets
Trade and other receivables
14
814 672
Property, plant and equipment
10
327,830 245,032
Intangible assets
11
27,079 17,622
Right-of-use lease assets
13
49,885 50,831
Investment in subsidiaries, associates and joint arrangements
24
3,958 1,000
Investment in shares
23
2,054 577
Total non current assets
411,620 315,734
Total assets
482,269 375,426
Current liabilities
Tax liabilities
6
7,463 6,952
Trade and other payables
16
33,034 30,972
Lease liabilities
13
6,782 6,342
Interest bearing liabilities
17
5,246 9,157
Total current liabilities
52,525 53,423
Non current liabilities
Interest bearing liabilities
17
107,757 73,862
Lease liabilities
13
56,585 58,040
Derivative financial instruments
30
538 671
Deferred tax liabilities
7
18,373 13,137
Total non current liabilities
183,253 145,710
Total liabilities
235,778 199,133
Net assets
246,491 176,293
The accompanying notes form an integral part of these financial statements
On behalf of the Board.
F Hutchings A Waugh
Chairman Director
Dated: 18 February 2022
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27SEEKA LIMITED | ANNUAL REPORT 2021
Statement of changes in equity
For the year ended 31 December 2021 - Audited
New Zealand dollarsNotes
Share
capital
$000s
Cash
flow hedge
reserve
$000s
Foreign
currency
revaluation
reserve
$000s
Foreign
currency
translation
reserve
$000s
Share
reserve
$000s
Water
share
revaluation
reserve
$000s
Land and
buildings
revaluation
reserve
$000s
Retained
earnings
$000s
Total
$000s
2020
Equity at 1 January 2020
96,773 ( 569) ( 291) ( 153) 529 3,325 18,671 36,659 154,944
Net profit
- - - - - - - 15,151 15,151
Foreign exchange movement
- - 399 ( 17) - ( 3) - 3 382
Other comprehensive income / (loss)
- 85 - - - ( 725) 10,426 1,274 11,060
Total comprehensive income / (loss)
- 85 399 ( 17) - ( 728) 10,426 16,428 26,593
Transactions with owners
Shares issued
1
18
776 - - - - - - - 776
Employee share scheme receipts
18
368 - - - - - - - 368
Movement in employee share
entitlement reserve
21
- - - - 153 - - - 153
Movement in grower share
entitlement reserve
21
- - - - 608 - - - 608
Dividends declared and paid
1
22
- - - - - - - ( 7,149) ( 7,149)
Total transactions with owners
1,144 - - - 761 - - ( 7,149) ( 5,244)
2021
Equity at 31 December 2020
97,917 ( 484) 108 ( 170) 1,290 2,597 29,097 45,938 176,293
Net profit
- - - - - - - 14,860 14,860
Foreign exchange movement
- -( 18) ( 38) - - - - ( 56)
Other comprehensive income / (loss)
- 96 - - - ( 3) 11,535 - 11,628
Total comprehensive income / (loss)
- 96 ( 18) ( 38) - ( 3) 11,535 14,860 26,432
Transactions with owners
Shares issued
18
43,069 - - - - - - - 43,069
Employee share scheme receipts
18
550 - - - - - - - 550
Grower share scheme receipts
18
8,782 - - - - - - - 8,782
Movement in employee share
entitlement reserve
21
- - - - 153 - - - 153
Movement in grower share
entitlement reserve
21
1,363 - - - ( 917) - - - 446
Dividends declared and paid
22
- - - - - - - ( 9,234) ( 9,234)
Total transactions with owners
53,764 - - - ( 764) - - ( 9,234) 43,766
Equity at 31 December 2021
151,681 ( 388) 90 ( 208) 526 2,594 40,632 51,564 246,491
1. Shares issued during the year and dividends declared and paid have been restated to include shares issued under the dividend reinvestment plan in
relation to the dividend declared in December 2020 and paid in 27 January 2021.
The accompanying notes form an integral part of these financial statements
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ANNUAL REPORT 2021 | SEEKA LIMITED28
Statement of cash flows
For the year ended 31 December 2021 - Audited
New Zealand dollarsNotes
2021
$000s
2020
$000s
Operating activities
Cash was provided from:
Receipts from customers
322,400 249,899
Interest and dividends received
405 35
Cash was disbursed to:
Payments to suppliers and employees
( 264,868)( 213,168)
Interest paid
( 4,082)( 4,163)
Lease interest paid
( 4,610)( 3,877)
Income taxes paid
( 7,661)( 2,373)
Net cash flows from operating activities
5
41,584 26,353
Investing activities
Cash was provided from:
Sale of property, plant and equipment
10
70 45
Cash acquired in acquisition of business
19
1,501 -
Distributions from investment in associates
24
762-
Proceeds from sale of assets classified as held for sale
9
2,310 43,041
Repayment of grower or grower entity advances
25,667 22,550
Cash was applied to:
Purchase of property, plant, equipment and intangibles
( 21,921)( 13,496)
Development of bearer plants
( 7,569)( 6,776)
Acquisition of business
19
( 1,302) -
Acquisition of associate
24
( 2,600)( 1,000)
Investment in shares
23
( 1,000) -
Purchase of, and development costs incurred on, property held for sale and SunGold licence
9
-( 1,069)
Advances to growers or grower entities
( 25,673)( 22,303)
Net cash flows from / (used in) investing activities
( 29,755) 20,992
Financing activities
Cash was provided from:
Proceeds of non-current bank borrowings
17
123,000 16,500
Proceeds of current bank borrowings
17
39,236 42,829
Proceeds from employee and grower loyalty share schemes
18
9,332 368
Cash was applied to:
Principal lease payments
13
(8,093)( 6,604)
Repayment of non-current bank borrowings
17
( 112,759)( 40,882)
Repayment of current bank borrowings
17
( 42,882)( 55,279)
Payment of dividend to and behalf of shareholders
22
( 11,717)( 2,733)
Net cash flows from financing activities
( 3,883)( 45,801)
Net increase in cash and cash equivalents
7,946 1,544
Effect of foreign exchange rates
( 749) 771
Opening cash and cash equivalents
5,164 2,849
Closing cash and cash equivalents
12,361 5,164
The accompanying notes form an integral part of these financial statements
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29SEEKA LIMITED | ANNUAL REPORT 2021
Notes to the financial statements
For the year ended 31 December 2021 - Audited
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.
NoteDetailsPage
Basis of preparation 30
Accounting policies that apply to Seeka's full set of financial statements
Performance 32
Where Seeka generates its revenues and their associated operating costs
1. Segment information 32
2. Turnover 34
3. Revenue and other income 34
4. Cost of sales and operating expenses 36
5. Reconciliation of net operating surplus after taxation with cash flows from operating activities 37
6. Income tax expense 38
7. Deferred tax 39
8. Events occurring after balance date 39
Assets 40
How Seeka allocates resources across its operations
9. Assets classified as held for sale 40
10. Property, plant and equipment 41
11. Intangible assets 43
12. Biological assets - crop 46
13. Right-of-use lease assets and lease liabilities 47
Working capital 49
How Seeka manages its operating cash flow
14. Trade and other receivables 49
15. Inventories 49
16. Trade and other payables 50
Funding 51
How Seeka organises its capital structure
17. Interest bearing liabilities 51
18. Share capital 52
19. Business combination 53
20. Earnings and net tangible assets per share 55
21. Retained earnings and reserves 55
22. Dividends 58
Investments 59
How Seeka manages its investments in shares, subsidiaries, associates and joint ventures
23. Investment in shares 59
24. Investment in subsidiaries, associates and joint arrangements 60
Other notes 62
All other note disclosures
25. Contingencies 62
26. Commitments 62
27. Related party transactions 62
28. Risk management 63
29. Determination of fair values of financial assets and liabilities 66
30. Derivative financial instruments 68
31. Financial instruments summary 69
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Reporting entity and statutory base
The financial statements presented are those of the consolidated
Seeka group. Seeka Limited is referred to as Seeka Limited or 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 orchard management, orchard
leasing, post harvest and retail services to New Zealand’s kiwifruit,
avocado, citrus, berry and kiwiberry industries. Seeka manufactures
and sells the Kiwi Crush and Kiwi Crushies product range 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, leases 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, including plums.
Summary of significant accounting policies
The accounting policies have been applied consistently throughout the
periods presented in the financial statements.
Statement of compliance and basis of preparation
The 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:
–assets classified as held for sale at fair value (note 9)
–land and buildings at fair value (note 10)
–water shares at fair value (note 11)
–biological assets - crop at fair value (note 12)
–right-of-use lease assets and lease liabilities at present value of
expected cash payments (note 13)
–financial assets and liabilities (including derivative instruments) at
fair value through comprehensive income (note 30 and note 31)
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 18 February 2022.
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 exchanged, equity instruments
issued and liabilities incurred or assumed at the date the acquisition is
settled. 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 (NZD) 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. The presentational currency is the New Zealand dollar
(NZD).
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.
Basis of preparation
Accounting policies that apply to Seeka's full set of financial statements
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.
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31SEEKA LIMITED | ANNUAL REPORT 2021
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.
NoteArea of estimation or judgement
9.Assets classified as held
for sale
Timing, valuation and recognition of
gain on sale
10.Property, plant and
equipment
Valuation and impairment
assessment
11.Intangible assetsImpairment assessment and CGU
allocation
12.Biological assets - cropValuation
13.LeasesDiscount rate and lease term
19.Business combinationValuation on acquisition
21.Retained earnings and
reserves
Valuation of share-based payments
and grower loyalty share scheme
Going concern assumption
The 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 have 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.
Impact of standards issued but not yet applied by the
entity
There are no new standards, amendments or interpretations that have
been issued and are effective that are expected to have a significant
impact on the Group.
Current economic environment
The economic environment has been impacted by the arrival of
Covid-19 in March 2020, and it continues to have an impact through
2021 and into 2022.
During the 2021 financial year Covid-19 presented a number
of challenges, including varying levels of national and localised
Government lockdowns in both New Zealand and Australia.
Throughout all of these challenges, Seeka continued to operate as
an essential business for fruit production, processing and wholesale
market operations.
While the impact on revenue was minimised, the increased health and
safety measures that were rolled out, including protective screens,
face masks, and other personal protective equipment, are an ongoing,
significant operating expense and contribute to reduced operating
efficiency during periods of lockdown.
There are no other material impacts from Covid-19 noted outside of
those in the listed notes below.
Statement of financial performance
Post harvest and orchard revenue was minimally impacted by the
effect of Covid-19.
Revenue in the retail services operations segment, which includes
Seeka’s wholesale market operations in Auckland, was impacted due
to reduced wholesale market demand from independent fresh produce
retailers who were closed during the extended level four and level
three Covid-19 lockdowns in Auckland. Demand for the Group's Kiwi
Crush, Crushies ice blocks and avocado oil which are sold in retail
stores and to schools was also down during the Covid-19 lockdown
periods. The reduction in revenue flowed through to reduced profit
levels for the retail services operations segment.
The Australian operational result improved as fruit returns remained
strong for the 2021 year.
Statement of financial position
The statement of financial position is healthy and Seeka operated
profitably throughout the year. The Group increased its bank facilities
through a new syndicated loan facility lead by Westpac New Zealand
Limited.
The upcoming 2022 harvest volumes are looking positive and the
future projections for Seeka remain strong subject to a major Covid-19
outbreak during the kiwifruit harvest period of March to June. While
labour availability will be an issue for the coming harvest, (see note
28), Seeka has a number of mechanisms in place to recruit local
workers and has secured some employees under the Recognised
Seasonal Employer (RSE) scheme.
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Performance
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, such as
EBITDA and EBIT, and are responsible for setting strategic direction.
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
other income from the sale of assets 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 also produces kiwifruit, avocado and kiwiberry crops from:
–Short term leased orchards (typically three-year rolling contracts)
whereby the Group recovers costs and shares any profits with the
orchard owners.
–Long term leased land 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 from crop proceeds.
–Owned orchards whereby the Group incurs growing and harvest
costs and receives all orchard income from crop sales.
Post harvest operations
The Group provides post harvest services to the kiwifruit, avocado,
citrus, berry, 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, and operates a wholesale market.
Retail service operations include the production and selling of Kiwi
Crush, Kiwi Crushies and avocado oil to the retail sector and hospitals,
along with post harvest services for kiwiberry.
All other segments - New Zealand
This represents the Group’s aggregated administration, grower
services and overhead sections recorded in the statement of financial
performance and impairment and revaluations of other assets not
attributed directly to any other segment. It also includes other non-
operating income, including the gain on sale from assets that had been
classified as held for sale, and the settlement of the Psa claim with the
Crown.
Australian operations
The Group grows, provides post harvest services, and retails all
produce from orchards the Group owns or leases in Australia. The
main products are kiwifruit, nashi pears and European pears, which are
primarily sold in Australia. Included in the 2020 result is a one-off gain
from the settlement of the sale and leaseback transaction, see note 9.
This section focuses on the Group’s financial performance and details the contributions made from the individual operating segments.
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.
Non-GAAP financial information does not have a standard meaning prescribed by GAAP and therefore may not be comparable to similar financial
information presented by other entities. The Board considers EBITDA and EBIT as useful measures of financial performance for both investors and
management as they are indicators of the Group's operating profitability that remove the impact of tax and the interest expense associated with
debt (EBIT), along with depreciation, amortisation and revaluation expenses associated with the Group's large investments in fixed and leased
assets (EBITDA).
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33SEEKA LIMITED | ANNUAL REPORT 2021
The following table details the operating segments at balance date.
New ZealandAustraliaGroup
New Zealand dollars
Orchard
operations
$000s
Post harvest
operations
$000s
Retail service
operations
$000s
All other
segments
$000s
Australian
operations
$000s
Total
$000s
2021
Income statement
Turnover
1
77,070 195,908 68,000 1,122 13,867 355,967
Gross segment revenue
77,157 199,667 21,602 1,122 13,867 313,415
Eliminations
( 87) ( 3,759) - - - ( 3,846)
Total segment revenue
77,070 195,908 21,602 1,122 13,867 309,569
EBITDA
2
5,248 61,557 2,318 ( 13,974) 1,641 56,790
Depreciation expense
4
( 773) ( 11,375) ( 356) ( 1,771) ( 910) ( 15,185)
Lease depreciation expense
5
( 1,468) ( 4,365) ( 600) ( 697) ( 813) ( 7,943)
Impairment of property, plant and equipment
- ( 1,188) - - - ( 1,188)
Amortisation of intangible assets
- ( 11) - ( 277) ( 6) ( 294)
EBIT
3
3,007 44,618 1,362 ( 16,719) ( 88) 32,180
Lease interest expense
5
( 741) ( 2,187) ( 324) ( 385) ( 973) ( 4,610)
Interest expense
6
- - - ( 3,382) ( 700) ( 4,082)
Tax charge on profit
- - - ( 9,334) 706( 8,628)
Profit / (loss) after tax
2,266 42,431 1,038 ( 29,820) ( 1,055) 14,860
Balance sheet
Segment assets
73,676 316,088 11,671 33,147 47,687 482,269
Total assets
73,676316,08811,67133,14747,687482,269
Segment liabilities
38,853108,41514,66530,64743,198235,778
Total liabilities
38,853108,41514,66530,64743,198235,778
2020
Income statement
Turnover
1
75,707 140,086 63,882 804 13,065 293,544
Gross segment revenue
75,920 143,132 21,795 804 13,065 254,716
Eliminations
( 213) ( 3,046) - - - ( 3,259)
Total segment revenue
75,707 140,086 21,795 804 13,065 251,457
EBITDA
2
5,439 41,868 3,004 ( 14,801) 7,436 42,946
Depreciation expense
4
( 659) ( 8,083) ( 346) ( 1,547) ( 1,018) ( 11,653)
Lease depreciation expense
5
( 1,259) ( 3,990) ( 465) ( 846) ( 111) ( 6,671)
Gain on revaluation of land and buildings
- 32 - - - 32
Impairment of property, plant and equipment
- - - - ( 30) ( 30)
Impairment of intangible assets
- - - ( 102) - ( 102)
Amortisation of intangible assets
- - - ( 200) ( 4) ( 204)
EBIT
3
3,521 29,827 2,193 ( 17,496) 6,273 24,318
Lease interest expense
5
( 718) ( 2,210) ( 468) ( 398) ( 83) ( 3,877)
Interest expense
6
( 2,606) ( 1,557) ( 4,163)
Tax charge on profit
2,050 ( 3,177) ( 1,127)
Profit / (loss) after tax
2,803 27,617 1,725 ( 18,450) 1,456 15,151
Balance sheet
Segment assets
63,437 232,742 12,357 19,675 47,215 375,426
Total assets
63,437 232,742 12,357 19,675 47,215 375,426
Segment liabilities
33,002 83,857 15,758 26,403 40,113 199,133
Total liabilities
33,002 83,857 15,758 26,403 40,113 199,133
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.
4. Depreciation includes the depreciation of fixed assets.
5. Lease interest and lease depreciation are as a result of NZ IFRS 16
Leases, see note 13.
6. Interest includes finance costs for borrowings.
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ANNUAL REPORT 2021 | SEEKA LIMITED34
The following table reconciles segment EBITDA before and after applying NZ IFRS 16.
New ZealandAustraliaGroup
New Zealand dollars
Orchard
operations
$000s
Post harvest
operations
$000s
Retail service
operations
$000s
All other
segments
$000s
Australian
operations
$000s
Total
$000s
2021 - EBITDA
EBITDA pre NZ IFRS 16
2,379 55,318 1,495 ( 14,912) ( 193) 44,087
Capitalised lease costs
2,869 6,239 823 938 1,834 12,703
EBITDA after applying NZ IFRS 16
5,248 61,557 2,318 ( 13,974) 1,641 56,790
2020 - EBITDA
EBITDA pre NZ IFRS 16
3,157 35,937 2,235 ( 15,813) 14,022 39,538
Capitalised lease costs
2,282 5,931 769 1,012 488 10,482
Gain on sale and leaseback
- - - - ( 7,074) ( 7,074)
EBITDA after applying NZ IFRS 16
5,439 41,868 3,004 ( 14,801) 7,436 42,946
2. Turnover
The following table reconciles turnover to revenue.
New Zealand dollars
2021
$000s
2020
$000s
Turnover
355,967 293,544
Value of sales made as agent
( 46,398) ( 42,087)
Revenue
309,569 251,457
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 supplier by the purchasing party. This includes all produce sales both local and export.
3. Revenue and other income
New Zealand dollarsNotes
2021
$000s
2020
$000s
Total revenue
309,569 251,457
Other income
Interest
67 242
Gain on sale of assets classified as held for sale
9
331 8,937
Grower share loyalty scheme
21
( 446) ( 608)
Dividends received
190 4
Net movement in fair value of irrigation water rights
173 293
Proceeds from settlement of Psa claim
7,644 -
Other income
487 572
Total other income
8,446 9,440
Total revenue and other income
318,015 260,897
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35SEEKA LIMITED | ANNUAL REPORT 2021
Accounting policies
The Group’s major revenue streams are post harvest operations,
orchard management, retail services and Australian operations in
accordance with NZ IFRS 15: Revenue from contracts with customers (NZ
IFRS 15).
Post harvest
The Group enters into two standardised post harvest contracts:
–The first has two performance obligations; to collect the supply
of fruit via picking and transportation, and maturity testing. The
charges are separated in the contract. All revenue is recognised
when the service is performed.
–The second has three performance obligations; to pack fruit, to cool
and dispatch fruit, and to sell class 2 fruit to authorised markets.
These are stand-alone services provided by the Group. Each
performance obligation has a separate transaction price detailed in
the contract and the obligations are recognised when services are
performed; packing revenue as fruit is packed, cooling revenue as
fruit is loaded out from cool storage, and class 2 as fruit is sold and
delivered.
Orchard management
The Group enters into two orchard management contracts that are
largely standardised:
–The first has one performance obligation; to manage fruit growing.
Revenue is recognised as the service is performed and calculated
at cost plus a margin per the contract or at a fixed per-hectare
charge. The management fee included in the contract is recognised
evenly over the contract's 12 month period. An incentive fee is only
recognised when agreed orchard gate return (OGR) targets are
achieved and an incentive would be receivable.
–The second has one performance obligation; to collect the supply
of fruit on short term and long term managed orchards. The
transaction price is determined using a forecasted OGR. Revenue
is recognised when crops are picked (in the June half year accounts
for kiwifruit).
Retail services
The Group enters into three retail service contracts which are
customised to the service being offered (such as ripening or fruit sales):
–The first has one performance obligation; to sell fruit on the owner’s
behalf. As the sales agent, the Group only collects a marketer’s
commission which is recognised when the fruit is sold and delivered.
–The second has one performance obligation; to either store or ripen
fruit. Revenue is recognised as the fruit is stored or ripened.
–The third has one performance obligation; to provide ordered
product. The transaction price is based on the agreed price (either
in writing or verbally) with revenue recognised when the fruit is sold
and delivered.
Australia
The Group has two types of contracts that are entered by the Australian
business; one is for the long-term leasing of kiwifruit orchards, and the
other is for the sale and supply of fruit.
–The orchard leasing contract is an obligation to make lease
payments as the Group manages leased orchards.
–The fruit sale and supply contacts are entered on a one-to-one basis
with the fruit purchaser and are largely standardised. They have one
performance obligation; to provide the fruit to the customer. The
transaction price is based on the agreed price (either in writing or
verbally) and recognised when the fruit is sold and delivered.
Contracts from acquired businesses
All revenue contracts acquired as part of the Ōpōtiki Packing and Cool
Storage Limited (OPAC) and Orangewood Limited (Orangewood)
acquisitions, (see note 19) are substantially similar in nature to Seeka’s
current revenue contracts, with the exception of the timing of the cool
storage revenue recognition related to OPAC, which is accounted for
as fruit is packed rather than loaded out. From the end of 2021, the
Group's standard service contracts will apply.
Principal versus agent relationship
A principal relationship is one where the Group has the performance
obligation to provide the good or service directly and has control of the
asset or has a right to direct the asset. An agency relationship is one
where the performance obligation is to arrange for the good or service
on behalf of the supplier. The Group currently has agent relationships
for the sale of some fruit and vegetables in the retail services segment.
Impact of seasonality
Group revenues are generated from seasonal horticultural operations,
with post harvest revenues recognised as services are provided and
orcharding 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 July to February, and
kiwiberry 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 60~70% of orchard
revenues are recognised in the first six months of the financial year.
Due to seasonal fluctuations, the timing of the provision of post
harvest services can vary from year to year, however normally 70~80%
is recognised in the first six months of the financial year, but can be
impacted by seasonal fluctuations.
Irrigation water rights
Water allocation rights are carried at fair value supported by the
value of the traded rights on a recognised exchange or market at
measurement date. Annual water allocation rights are recognised as
a current asset when they are allocated to the Group's permanent
water shares from the first of July each year by the Victorian Water
Register, and are subsequently expensed when the entitlement is
used to irrigate orchards. Any gain on revaluation is recognised in the
statement of financial performance.
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.
Gain on sale of assets classified as held for sale
The gain on sale of assets classified as held for sale is recognised when
a sale and purchase agreement is unconditional and the consideration
is paid or payable at that date.
Proceeds from settlement of kiwifruit Psa claim
The income relating to the proceeds from the settlement of the
kiwifruit Psa claim from the Crown is recognised when the claim is
settled and the amount is confirmed as received or receivable.
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ANNUAL REPORT 2021 | SEEKA LIMITED36
4. Cost of sales and operating expenses
New Zealand dollarsNotes
2021
$000s
2020
$000s
Operating materials and services
163,029 146,782
Direct employee benefits
71,861 53,260
Decrease / (Increase) in fair value of biological assets - crop
12
1,447 ( 1,261)
Total cost of sales
236,337 198,781
Total other employee benefits
12,491 10,005
General administrative expenses
9,559 8,264
Audit fees paid to principal auditors - paid on a Group basis
493 340
Tax compliance, consulting, planning, structuring and due diligence fees paid to principal auditors
242 106
Tax pooling services paid to principal auditors
13 5
Debt covenant compliance agreed upon procedures paid to principal auditors
6 -
Acquisition and restructuring costs
1,784 -
Directors' fees and expenses
536 450
Total other costs
25,124 19,170
Depreciation expense
10
15,185 11,653
Lease depreciation expense
13
7,943 6,671
Amortisation of intangible assets
11
294 204
Impairments and revaluations
Gain on revaluation of land and buildings
- ( 32)
Impairment of property, plant and equipment
10
1,188 30
Impairment of intangible assets
11
- 102
Total Impairment and revaluation
1,188 100
Interest expense
4,082 4,163
Lease interest expense
13
4,610 3,877
Total expenses
294,763 244,619
During the year the Group recognised $0.15m of costs relating to the measurement of the employee share schemes issued based on the Black
Scholes Model (Dec 2020 - $0.15m).
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.
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. The employee liabilities are measured at the amounts expected to be paid when settled. Liabilities for non-accumulating
sick leave are recognised when the leave is taken and measured at the rates paid or payable.
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37SEEKA LIMITED | ANNUAL REPORT 2021
5. Reconciliation of net operating surplus after taxation with cash flows from operating activities
New Zealand dollars
2021
$000s
2020
$000s
Net operating surplus after taxation
14,860 15,151
Add / (less) non cash items:
Depreciation
15,185 11,653
Lease depreciation
7,943 6,671
Other non-cash lease adjustments
- 425
Gain on revaluation of land and buildings
- ( 32)
Impairment of property, plant and equipment
1,188 30
Revaluation of employee share scheme
153 153
Revaluation of grower share scheme
446 608
Movement in deferred tax
5,236 ( 4,623)
Movement in fair value of biological assets - crop
1,447 ( 1,261)
Amortisation of intangible assets
294 204
31,892 13,828
Add / (less) items not classified as an operating activity:
Loss on sale of property, plant and equipment
12 164
Gain on sale of assets classified as held for sale
( 332)( 9,662)
Decrease in current water allocation account
( 319) ( 45)
( 639) ( 9,543)
(Increase) / decrease in working capital:
(Decrease) / Increase in accounts payable
( 7,042) 5,420
Decrease / (Increase) in accounts receivable/prepayments
6,167 ( 3,878)
Decrease in inventory
940 2,300
(Decrease) / Increase in taxes due
( 4,594) 3,075
( 4,529) 6,917
Net cash flow from operating activities
41,584 26,353
Accounting policies
Cash flows statements are prepared using the direct approach. Cash and cash equivalents are shown exclusive of GST.
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ANNUAL REPORT 2021 | SEEKA LIMITED38
6. Income tax expense
New Zealand dollarsNotes
2021
$000s
2020
$000s
a. Current tax expense
Current year
8,454 8,767
Prior period adjustment
( 589)( 528)
Total current tax expense
7,865 8,239
Deferred tax expense
7
Origination and reversal of temporary differences
( 1,566) ( 1,551)
Future tax benefit from the reintroduction of tax depreciation on buildings
-( 5,561)
Prior period adjustment
2,329-
Total deferred tax expense
763( 7,112)
Total income tax expense
8,628 1,127
b. Numerical reconciliation of income tax expense to prima facie tax payable
Profit before income tax expense
23,488 16,278
Tax at the New Zealand tax rate of 28%
6,577 3,268
Tax at the Australian tax rate of 30%
( 37) 1,290
Tax effect of amounts which are not deductible (taxable) in calculating taxable income
432 533
Future tax benefit from the reintroduction of tax depreciation on buildings
-( 5,561)
Tax exempt income
- 1,624
Benefit of tax credits
( 84)-
Under provision in prior years - temporary differences
1,740( 27)
Income tax expense
8,628 1,127
c. Imputation credit account
Imputation credits available for use in subsequent reporting periods
28,265 22,244
The above amounts represent the balance of the imputation account as at the end of the reporting
period, adjusted for:
a. Imputation credits that will arise from the payment of the amount of the provision for income tax
b. Imputation debits that will arise from the payment of dividends recognised as a liability at the
reporting date; and
c. Imputation credits that will arise from the receipts of dividends recognised as receivables at the
reporting date.
d. Current tax (liability) / receivable
Opening balance of current tax (liability)
( 6,952) ( 1,709)
Current tax liability acquired via acquisition
19
( 1,212) -
Adjustments for prior periods
589 528
Current year tax
( 8,454) ( 8,767)
Less tax paid
8,610 3,059
Exchange differences
( 44) ( 63)
Current tax (liability)
( 7,463) ( 6,952)
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39SEEKA LIMITED | ANNUAL REPORT 2021
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 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.
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.
New Zealand dollarsNotes
2021
$000s
2020
$000s
Net deferred tax liabilities:
Opening balance
13,137 17,760
Deffered tax liability acquired via acquisition
19
1,865 -
Adjustments for prior periods
2,329-
Exchange differences
18 ( 31)
Charged to the statement of financial performance
( 1,566) ( 7,059)
Charged to revaluation reserve
2,553 2,434
Debited to hedge reserve
37 33
Closing balance at end of year
18,373 13,137
The balance comprises temporary differences attributable to:
Temporary differences on non-current assets
21,574 17,825
Current liabilities
( 4,749) ( 4,712)
Prepayments and accrued income
1,548 24
Total deferred tax liability
18,373 13,137
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 2020 - 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.
Legislation enacted 25 March 2020 reinstated tax depreciation deductions on non-residential buildings. This resulted in a one-off $5.6m gain in
the income tax calculation for the 2020 financial year, see note 6.
8. Events occurring after balance date
On 10 December 2021, the Group announced the conditional acquisition of New Zealand Fruits Limited (NZ Fruits) by way of amalgamation with
Seeka East Limited, a wholly owned subsidiary of Seeka Limited, for an enterprise value assessed at $21.90m. As at 31 December 2021 balance date
the amalgamation was subject to a number of conditions including NZ Fruits shareholder approval, which was then subsequently obtained post
year end on 19 January 2022. The settlement and amalgamation was completed after balance date, on 2 February 2022 with the issue of 1,687,860
Seeka shares and a cash payment of $8.85m to NZ Fruits shareholders. As at this reporting date a detailed assessment of the fair value of acquired
net assets has not been performed due to limited time available between settlement date and the preparation of the financial statements.
On 20 January 2022, the Group declared a full year dividend of $0.13 per share in relation to the financial year ended 31 December 2021. The
dividend will be fully imputed, and the dividend reinvestment plan will apply. The dividend record date is 28 January 2022 and the dividend will be
paid on 23 February 2022.
On 2 February 2022 Seeka completed the acquisition of New Zealand Fruits Limited by way of amalgamation which included consideration of new
Seeka shares to be issued ex-dividend and cash. The full year dividend is normally paid in April each year, however this year the payment date for
the full year dividend has been varied to ensure the new shares relating to NZ Fruits are issued ex-dividend on their issue date.
There are no other material events occurring subsequent to balance date requiring adjustment to, or disclosure in, the financial statements.
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Assets
How Seeka allocates resources across its operations
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
also has interests in water shares, leases and goodwill arising from Group acquisitions.
Disclosures are made on additions, disposals, revaluations, depreciation, impairments and amortisation.
9. Assets classified as held for sale
New Zealand dollars
2021
$000s
2020
$000s
Opening balance at 1 January
3,844 27,083
Reclassification to property, plant and equipment
- ( 231)
Development costs incurred
33 1,069
Growing costs (recovered)
- ( 489)
Sales settled by third parties at carrying value
( 1,979) ( 23,588)
Total assets classified as held for sale
1,898 3,844
The following table details the assets classified as held for sale by asset class.
New Zealand dollars
2021
$000s
2020
$000s
Asset class
Land and buildings
734 1,379
Property, plant and equipment
319 599
Intangible assets
304 849
Bearer plants
541 1,017
Total assets classified as held for sale
1,898 3,844
Assets are classified as held for sale when their carrying amount will be recovered principally through a sale transaction rather than through
continuing use. This condition is met when the sale is highly probable and the assets are available for immediate sale in their present condition, and
the Group is committed to the sale and expects it to be completed within one year from the date of classification. The accounting standards allow
for the period to extend past 12 months if the circumstances causing the delay are out of Seeka's control. In limited cases it has taken more than
12 months to find a willing buyer, however Seeka remains committed to selling the properties and with the current interest in the properties sales
contracts are anticipated within the next 12 months. Assets held for sale are recorded at the lower of the carrying value or fair value less costs to sell.
At 31 December 2021, 13 hectares of orchards (Dec 2020 - 23 hectares) owned by Seeka were classified as held for sale. These properties were
part of the 2018 purchase of Kerikeri assets from T&G Global Limited.
Sale and leaseback transaction in Seeka Australia
Assets related to three kiwifruit orchards in Australia (Hayward, Austral and Lakes) were recognised as held for sale at 31 December 2019. On 15
December 2020, the Group sold the three orchards for AU$26.50m and leased them back for an initial term of 10.5 years, with rights of renewal out
to 25 years. The terms of the sale and leaseback are typical of those entered into for an orchard.
The definition of a sale under NZ IFRS 15 was met and the transaction was carried out at fair value. Sales proceeds received were judged to reflect
the fair value of the underlying assets. The quarterly rental was deemed to be a fair market rent.
The transaction was accounted for in accordance with paragraphs 98 to 103 of NZ IFRS 16 and the Group estimated the present value of the rental
obligations in respect of the leaseback to be AUD$14.08m (NZD$15.01m), based on the initial term of the leaseback of 10.5 years, discounted at an
incremental borrowing rate of 6.79% per annum, with the transaction giving rise to the following:
–Right of use asset of AUD$7.47m (NZD$7.97m)
–Net proceeds from sale and leaseback of AUD$26.50m (NZD$28.24m)
–Lease liability assumed of AUD$14.08m (NZD$15.01m)
–Net gain on sale and leaseback of AUD$5.83m (NZD$6.18m)
All goodwill from the Australia cash generating unit was allocated in 2019 to the disposal group, based on the Group's assessment of relative fair
values of the assets held for sale and Australia assets being retained.
Critical accounting estimates and judgements
The Group used estimates to judgementally recognise the remaining Northland orchards as held for sale, despite being classified as held for sale for
greater than 12 months. For the year ended 31 December 2020 the Group used judgement to classify the Australian sale and leaseback as an asset held
for sale and estimates to calculate and judgementally recognise the gain on sale. This included judging the right-of-use lease asset, lease liability, lease
term and estimated discount rate.
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41SEEKA LIMITED | ANNUAL REPORT 2021
10. Property, plant and equipment
New Zealand dollars
Land and
buildings
$000s
Plant and
equipment
$000s
Motor
vehicles
$000s
Bearer
plants
$000s
Assets under
construction
$000s
Total
$000s
At 1 January 2020
Cost or valuation
165,374 106,949 1,062 11,012 9,214 293,611
Accumulated depreciation and impairment
( 10,861) ( 59,019) ( 602) ( 2,488) ( 219) ( 73,189)
Net book amount
154,513 47,930 460 8,524 8,995 220,422
Year ended 31 December 2020
Opening net book amount
154,513 47,930 460 8,524 8,995 220,422
Additions and transfers
6,258 6,086 271 14,318 ( 5,477) 21,456
Depreciation
( 5,131) ( 6,147) ( 134) ( 241) - ( 11,653)
Disposals
( 32) ( 429) ( 27) 64 - ( 424)
Impairment of property, plant and equipment
- - - ( 30) - ( 30)
Revaluation
14,474 - - - - 14,474
Reclassification from held for sale
231 - - - - 231
Foreign exchange
263 104 3 58 128 556
Closing net book amount
170,576 47,544 573 22,693 3,646 245,032
At 1 January 2021
Cost or valuation
186,565 112,652 1,281 25,453 3,864 329,815
Accumulated depreciation and impairment
( 15,989) ( 65,108) ( 708) ( 2,760) ( 218) ( 84,783)
Net book amount
170,576 47,544 573 22,693 3,646 245,032
Year ended 31 December 2021
Opening net book amount
170,576 47,544 573 22,693 3,646 245,032
Additions from business combination
43,960 11,926 476 632 262 57,256
Additions and transfers - net
6,916 7,260 537 7,234 6,410 28,357
Depreciation
( 6,791) ( 7,618) ( 246) ( 530) - ( 15,185)
Disposals
( 191) ( 192) ( 47) - - ( 430)
Impairment of property, plant and equipment
- ( 1,013) - - ( 175) ( 1,188)
Revaluation
14,088 - - - - 14,088
Foreign exchange
( 41) ( 17) ( 1) ( 40) ( 1) ( 100)
Closing net book amount
228,517 57,890 1,292 29,989 10,142 327,830
At 31 December 2021
Cost or valuation
251,297 131,630 2,247 33,278 10,537 428,989
Accumulated depreciation and impairment
( 22,780) ( 73,740) ( 955) ( 3,289) ( 395) ( 101,159)
Net book amount
228,517 57,890 1,292 29,989 10,142 327,830
Assets under construction are assets that are yet to be capitalised and
are not depreciated. When the asset is ready for use it is transferred
to the appropriate asset class. At 31 December 2021 the assets
under construction relate to the extension of the packhouse, and the
purchase and installation of a MAF Roda Grader at KKP, stage two of
the Transcool coolstore construction, and further investment relating
to automation in multiple packhouses.
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 Preston Rowe Paterson
Shepparton (previously known as Goulburn Valley Property Services),
independent valuers, Shepparton, Victoria, Australia. All Australian
land and buildings were revalued at 31 December 2019.
The valuers consider up to 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 (2021 valuations:
6.50% – 8.75%) that would be expected by a prudent investor. The
2021 year saw capitalisation rates decrease between 1.75% - 2.25%
since the previous valuations of the same properties.
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ANNUAL REPORT 2021 | SEEKA LIMITED42
The following table details the gain on revaluation of land and buildings recognised in the revaluation reserve, net of tax, of $11.54m (Dec 2020 -
$10.43m).
New Zealand dollars
Land
$000s
Buildings
$000s
Total
$000s
Land and buildings revaluation reserve
4,935 6,600 11,535
As a consequence of the building revaluations conducted December 2021, $3.45m (Dec 2020 - $5.90m) 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.
New Zealand dollars
2021
$000s
2020
$000s
Cost
234,937 184,251
Accumulated depreciation
( 49,227) ( 41,556)
Depreciated historical cost
185,710 142,695
Net book amount
228,517 170,576
Impairment of bearer plants
For the year ended 31 December 2020, $0.03m of cherries were at the end of their useful life and removed with the remaining costs impaired.
There was no significant impairment relating to bearer plants in the year ended 31 December 2021.
Impairment of property, plant and equipment
For the year ended 31 December 2021, the Group impaired the following fixed assets:
–Coolstore facilities at Transcool in preparation for the construction of a new five-high, semi-automated, coolstore facility
–An existing canopy at KKP packhouse in preparation for the construction of the packhouse extension
–Decommissioning of the existing 10 lane grader at KKP to be replaced by a new MAF Roda grader
There was no significant impairment relating to property, plant and equipment in the year ended 31 December 2020.
Accounting policies
Bearer plants
Bearer plants are the Group's investment in kiwifruit vines, pear,
avocado and other fruiting vines and 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 depreciation. At each annual balance date,
no less than 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 revalue 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 for through comprehensive income and other
reserves, except where an asset's assessed fair value is less than the
original cost, in which case the change is recognised in the statement of
financial performance.
Property, plant and equipment
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.
Asset impairments 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
Asset residual values and useful lives are reviewed, and adjusted
if appropriate, at balance date and 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
are transferred to retained earnings.
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 net book value of land is $36.87m (Dec 2020 - $23.43m) and buildings is $191.65m (Dec 2020 - $147.14m), see note 29.
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43SEEKA LIMITED | ANNUAL REPORT 2021
11. Intangible assets
New Zealand dollarsNotes
Software
$000s
Goodwill
$000s
Water shares
$000s
Other
intangibles
$000s
Total
$000s
At 1 January 2020
Cost
3,195 10,963 9,122 - 23,280
Accumulated amortisation and impairment
( 2,563) ( 2,031) - - ( 4,594)
Net book amount
632 8,932 9,122 - 18,686
Year ended 31 December 2020
Opening net book amount
632 8,932 9,122 - 18,686
Additions
67 - - - 67
Disposals
( 13) - - - ( 13)
Revaluation
- - ( 1,039) - ( 1,039)
Impairment
( 102) - - - ( 102)
Exchange differences
- - 227 - 227
Amortisation
( 204) - - - ( 204)
Closing net book amount
380 8,932 8,310 - 17,622
At 1 January 2021
Cost
3,147 10,963 8,310 - 22,420
Accumulated amortisation and impairment
( 2,767) ( 2,031) - - ( 4,798)
Net book amount
380 8,932 8,310 - 17,622
Year ended 31 December 2021
Opening net book amount
380 8,932 8,310 - 17,622
Additions
761 - 184 - 945
Additions from business combination
19
82 8,249 - 555 8,886
Disposals
( 7) - - - ( 7)
Exchange differences
- - ( 73) - ( 73)
Amortisation
( 261) - - ( 33) ( 294)
Closing net book amount
955 17,181 8,421 522 27,079
At 31 December 2021
Cost
3,983 19,212 8,421 555 32,171
Accumulated amortisation and impairment
( 3,028) ( 2,031) - ( 33) ( 5,092)
Net book amount
955 17,181 8,421 522 27,079
Other intangibles are related to SunGold kiwifruit licences that were acquired in the acquisition of OPAC, see note 19.
The amortisation period of software is four to five years.
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. The movement in the fair value is recognised in the statement of other
comprehensive income. There was no movement in the fair value of water shares in the year ended 31 December 2021 (Dec 2020: $0.73m).
Critical accounting estimates and judgements
At 31 December 2021, 44% of Seeka's New Zealand land and building portfolio was revalued in line with policy. The change in property values in the
current year is consistent with the valuations completed in the year ended 31 December 2020 and results in 91% of Seeka's New Zealand property
portfolio being revalued over a two year period. Seeka operates in the food production industry, which remained stable with a high demand for healthy
foods during the Covid-19 pandemic. Properties situated in the Bay of Plenty are also expected to be less affected than other regions given the ongoing
strength of horticulture and agriculture businesses.
Seeka’s Australian properties are in the food production region of Victoria. The sale and leaseback transaction completed on 15 December 2020
supports the carrying values of the remaining properties.
Sensitivity analysis suggests the remaining properties that were not revalued this year could cause an increase in land and buildings of a further 3-5%.
This is not considered a material movement in land and building values.
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The following table details the key assumptions used for value-in-use calculations and the recoverable amount.
Group cash generating unitsOperating segment
Goodwill
carrying
amount
$000s
Post tax
discount rate
1
EBITDA
7
growth rate
1-5 years
Terminal
growth rate
2
2021
Bay of Plenty post harvest Post harvest operations
14,663 8.0%2% - 8%
3
1.0%
Northland post harvest Post harvest operations
1,841 9.0%3% - 18%
4
1.0%
SeekaFresh Retail services operations
433 9.0%4 - 10%
5
2.0%
Kiwi Crush Retail services operations
244 9.0%2%
6
2.0%
2020
Bay of Plenty post harvest Post harvest operations
7,035 8.0%3% - 5%
3
1.0%
Northland post harvest Post harvest operations
1,220 8.0%(4%) - 7%
4
1.0%
SeekaFresh Retail services operations
433 8.0%2%
5
2.0%
Kiwi Crush Retail services operations
244 8.0%
2%
6
1.0%
The following table details how water shares would be stated on the historical cost basis.
New Zealand dollars
2021
$000s
2020
$000s
Cost
4,719 4,535
Amortised cost
4,719 4,535
Net book amount
8,421 8,310
Impairment tests for goodwill
The Board reviews business performance based on operating segments and monitors goodwill at the operating segment level. Goodwill
represents the 2021 acquisitions of Ōpōtiki Packing and Cool Storage Limited and Orangewood Limited, the 2019 acquisition of Aongatete
Coolstores Limited, the 2018 acquisition of the Northland business, the previously-acquired Glassfields business (now named SeekaFresh) and
the Kiwi Crush and Kiwi Crushies product ranges.
The recoverable amount is based on the net present value of the five-year after-tax cash flow projection (value in use), with a terminal value
beyond five years. Cash flows beyond the five year period are extrapolated using estimated growth rates and discount rates stated in this note.
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 dynamics, plus the Group's five year financial plans. The Group's market capitalisation
compared to net assets is also considered as part of the impairment review.
All amounts recognised as goodwill at 31 December 2021 were tested for impairment at balance date and no impairment arose in the current year.
Additions to goodwill
$8.25m of goodwill was recognised during the year; $7.63m from the OPAC acquisition, and $0.62m from the Orangewood acquisition. No
goodwill was recognised for the year ended 31 December 2020, see note 19.
Cash generating units (CGUs)
During the year ended 31 December 2021, the scope of the post harvest CGUs were reviewed. Previously the CGUs were defined as each packhouse
but following the review it was determined that with a number of recent acquisitions and growth in the business it was more appropriate that the post
harvest CGUs represented the group of packhouses in a region that operated as a collective group, with fruit allocated to sites within the region.
This reflects the operational coordination of packhouses in each region to maximise efficiency and flexibility by packing fruit at the optimum maturity
by allocating it to the next available facility. Fruit in Northland is not generally directed to the Bay of Plenty region, so this segment remains on its own
for consideration of goodwill. It was determined that there are two regional CGUs for the post harvest operations, being Northland and Bay of Plenty
(including Coromandel).
The goodwill that had been previously allocated to the Northland business is now part of the Northland postharvest CGU, along with the recent
Orangewood acquisition. The Aongatete Coolstores Limited goodwill is now part of the Bay of Plenty post harvest CGU which now includes the
goodwill recognised for the OPAC acquisition in 2021.
1. The discount rate is calculated based on the specific circumstances of the cash generating unit and its operations, and is derived from its
weighted average cost of capital. The discount rate for Seeka's Bay of Plenty CGU is set at 8% as this represents the Board's assessment of the
Group's weighted average cost of capital with an additional 1% added to recognise the higher risk of a smaller division.
2. The long term growth rate is based on growth in GDP, market conditions and opportunities for growth within the industry. The Group has set its
terminal growth rates between 1% - 2% to ensure a long term conservative growth estimate has been applied in the impairment tests.
3. If the EBITDA growth rates reduced to 2%, there is no impairment.
4. The EBITDA growth rates used for the Northland packhouse reflect the expected increase in SunGold kiwifruit volumes as plantings come into
production during the period being assessed, with 18% revenue growth expected in the second year, falling to 3% by year five. If the revenue
growth rates reduced to 2% in years 2 to 5, there would be no impairment.
5. The EBITDA growth used for the SeekaFresh business reflects the expected performance of the business over the period being assessed. A 10%
revenue growth rate is expected in the first year as the business recovers from Covid-19 lockdowns in Auckland.
6. The EBITDA and terminal growth rates used for Kiwi Crush reflects expected performance over the next 5 years as the business continues to
commercialise new product lines and explore new markets.
7. EBITDA, a non-GAAP measure, is earnings before interest, tax, depreciation, amortisation, impairments and revaluations.
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45SEEKA LIMITED | ANNUAL REPORT 2021
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 and includes costs incurred to develop and test the software
for use. Intangible assets are amortised over their estimated useful life (typically three to five years).
Costs relating to software deemed to be classified as software as a service (S.A.A.S.) have been expensed during the year and included in the
statement of financial performance.
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 at the date of
acquisition. Goodwill on a business acquisition is included in intangible assets, and on acquisition of an associate is included in investments in
associates. When acquired in business combinations, the goodwill is annually tested for impairment (or more frequently if deemed prudent)
and carried at cost less accumulated impairment losses. Gains and losses on the disposal of a business include the carrying amount of goodwill
relating to that business.
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 amortised.
Other intangibles
Other intangibles subject to amortisation are amortised over the life of the asset on a straight line basis. The expense is charged to the statement
of financial performance.
Critical accounting estimates and judgements
The intangible assets impairment tests require judgement to determine the appropriate forecast cash flows and inputs into the calculations. The primary
estimates relate to the forecast EBITDA growth rates, discount rates and terminal growth rates.
At 31 December 2021, all goodwill balances were reviewed for indicators of impairment.
The goodwill relating to the Bay of Plenty Post Harvest and Northland Post Harvest cash generating units are supported by 2021 operational
outcomes. 2021 kiwifruit harvest volumes increased on the prior year and packing volumes are expected to increase further in future years. Whilst
Covid-19 impacted 2021 costs and labour supply, the post harvest segment operated profitably throughout the year, and throughout national
and localised lockdowns. For these reasons, there are no indications of impairment of the goodwill relating to the Bay of Plenty Post Harvest or
Northland Post Harvest cash generating units.
The goodwill relating to the Kiwi Crush business is supported by current trading performance. There are no indications of impairment of the
goodwill relating to the Kiwi Crush business.
SeekaFresh started the year well, until sales were impacted by Covid-19. The business continued to operate as an essential service, but was
affected by the temporary closure of hospitality and independent retail based customers during the lockdown. Following completion of the
restructuring period for SeekaFresh in 2020, the commission business (which includes the domestic and export sales of Seeka-grown avocado,
kiwiberry, and class two, class three, and collaboratively marketed kiwifruit), is integrated with the original Glassfields business to a degree where
it is indistinguishable from the original cash generating unit, and has therefore been included in the forecasted EBITDA assumptions. The terminal
growth rate has remained consistent, but sensitivity was performed to ensure a 1% terminal growth rate would not result in an impairment.
No other reasonable changes to key assumptions would require an impairment of goodwill.
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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 costs are not considered recoverable they are expensed in the statement of financial performance.
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.
Critical accounting estimates and judgements
The valuation of biological assets uses estimates of market returns to determine value.
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, see note 29.
During the year $1.4m of biological assets within the 1 January 2021 opening balance relating to the Groups long-term orchard developments were
reclassified as bearer plants assets under construction (Dec 2020 - nil)
12. 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 29.
New Zealand dollars
2021
$000s
2020
$000s
Carrying amount at beginning of period
19,890 18,629
Crop harvested during the period
Fair value movement from the beginning of the period to point of harvest
18,504 23,599
Fair value when harvested
( 38,394) ( 42,228)
Crop growing on bearer plants at end of period
Crop where cost is deemed fair value
18,324 19,597
Crop at fair value
119 293
Carrying value at end of period
18,443 19,890
The following table reconciles fair value movement of biological assets - crop.
New Zealand dollars
2021
$000s
2020
$000s
Movement in carrying amount
( 1,431) 1,159
Exchange differences
( 16) 102
Net fair value movement in crop
( 1,447) 1,261
The following table details the classification of biological assets - crop.
New Zealand dollars
2021
$000s
2020
$000s
Australia - all varieties
4,127 4,201
New Zealand - kiwifruit crop
13,673 14,863
New Zealand - avocado crop
643 826
Carrying value at end of period
18,443 19,890
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13. Right-of-use lease assets and lease liabilities
The Group reports all leases on the balance sheet where it has the right to obtain substantially all of the economic benefits from the use of the asset
throughout the period of the lease, with the exception of low value leases or leases less than 12 months.
The following table details leases where the Group is a lessee.
New Zealand dollars
2021
$000s
2020
$000s
Right-of-use lease assets
Land and buildings
27,171 26,663
Orchard leases
18,250 19,644
Equipment
1,516 2,403
Motor vehicles
2,948 2,121
Total right-of-use lease assets
49,885 50,831
The movements for the year are as follows:
Right-of-use lease asset movements
Opening balance
50,831 44,724
Additions and renewals
7,412 12,778
Disposals and early terminations
( 460)-
Exchange rate differences
45-
Depreciation
( 7,943) ( 6,671)
Closing balance
49,885 50,831
New Zealand dollars
2021
$000s
2020
$000s
Lease liabilities
Current
6,782 6,342
Non-current
56,585 58,040
Total lease liabilities
63,367 64,382
The liabilities are classified as follows:
Lease liabilities
Land and buildings
29,319 31,119
Orchard leases
26,718 28,707
Equipment
1,766 2,390
Motor vehicles
5,564 2,166
Total lease liabilities
63,367 64,382
The movements for the year are as follows:
Lease liability movements
Opening balance
64,382 50,478
Additions and renewals
7,412 20,508
Finance lease additions
80-
Disposals and early terminations
( 432)-
Exchange rate differences
18-
Principal lease payments
( 8,093) ( 6,604)
Closing balance
63,367 64,382
Additions
On 15 December 2020, the Group completed a sale and leaseback transaction for three kiwifruit orchards totalling 199 hectares in Australia. The
completion of this sale created a right-of-use lease asset and a lease liability, with the difference between the two recognised as a gain on sale
through the statement of financial performance.
On 4 May 2021, the Group acquired OPAC, which included $0.55m of right-of-use lease assets and lease liabilities, see note 19.
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Accounting policies
Lease liabilities are measured as the present value of the remaining lease payments, including any renewal periods that are likely to be exercised,
discounted using the Group’s incremental borrowing rate which ranges between 3% and 11%. The discount rate is based on the Group's
incremental borrowing rate, being the rate the Group would borrow the funds required to purchase the asset. When determining the discount rate,
Seeka considers that the value of the right-of-use lease asset should not be greater than the fair value of the underlying asset being leased.
The Group’s right-of-use lease asset is equal to the lease liability on the day of lease inception, with the exception of sale and leaseback
transactions where the asset is measured as the proportion of the carrying value of the asset sold of which the benefit is retained by the Group.
The right-of-use lease asset is depreciated on a straight line basis over the period of the lease. Costs incurred with a lease that are not part of the
cost of the right-of-use lease asset are expensed.
All leases have been classified into one of the following asset classes:
–Land and building - leases for rental of all properties, including packhouses and coolstores
–Orchard - leases held for the development of productive orchards
–Equipment - leases for equipment, including plant equipment and forklifts
–Motor vehicles - three year leases for motor vehicles
The Group leases various properties for the packing and cooling of kiwifruit, leases orchards to grow kiwifruit and avocados, and leases equipment
and vehicles. The terms of the leases vary, with land and building leases ranging from 10 - 15 years, with one 99 year lease. Orchard leases range
from 3 - 25 years, and equipment and vehicle leases range from 1 - 3 years.
Contracts may contain both lease and non-lease components. In the case of orchard leases, only the fixed rental is recognised as a lease liability.
Any variable consideration relating to profit share on the orchard leases is not accounted for as the profit share is only determined after a crop has
been harvested and is not identifiable at the commencement of the lease. Lease terms are negotiated on an individual basis and contain a wide
range of different terms and conditions. The lease agreements do not impose any covenants other than the security interest in the leased assets
that are held by the lessor. Leased assets may not be used as security for borrowing purposes.
The Group is exposed to potential future increases in land and building lease payments based on contractual market rent reviews that are not
included in the lease liability until the rent review takes place.
Lease payments are allocated between principal and lease interest. The lease interest is charged to the statement of financial performance over
the term of the lease.
Critical accounting estimates and judgements
The valuation of right-of-use lease assets and lease liabilities uses judgement to determine the incremental borrowing rate and the likelihood of
exercising any rights of renewal to extend the lease term.
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Working capital
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 based on the expected default rates over the balance of trade
receivables. See note 28 for calculation details.
15. Inventories
New Zealand dollars
2021
$000s
2020
$000s
Total packaging at cost
5,032 3,884
Other inventories at cost
1,936 2,052
Total inventories
6,968 5,936
In the current year, $30.25m (Dec 2020 - $27.48m) 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 or 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.
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.
14. Trade and other receivables
New Zealand dollars
2021
$000s
2020
$000s
Current trade receivables (net of provision for doubtful debts)
17,148 13,796
Prepayments
2,188 1,758
Prepaid deposits
1,146 1,470
GST refund due
- 620
Accrued income and other sundry receivables
10,203 6,871
Current trade and other receivables
30,685 24,515
Non current trade receivables
814 672
Non current trade and other receivables
814 672
Total trade and other receivables
31,499 25,187
At December 2021, prepaid deposits includes $1.15m for avocado trees not yet received (Dec 2020 - $1.47m).
Accrued income and other sundry receivables includes income to be received from orcharding operations over leased and owned orchards
relating to 399 hectares (Dec 2020 - 484 hectares).
$2.26m of accrued income relates to funds still be received in relation to the settlement of the Psa claim.
Within current trade receivables, $2.49m are past due (Dec 2020 - $1.97m), of which 1.81% are more than 90 days (Dec 2020 - 1.6%). Non-
current trade receivables are considered recoverable and relate to debtors secured against crop supply commitments with repayment terms of up
to five years.
A $0.25m provision for doubtful debts is recognised in the accounts (Dec 2020 - $0.16m).
Critical accounting estimates and judgements
The Group reviewed trade and other receivables for any debtor impairment, credit risk, or any other such risks that may result in non-payment.
The Group did not identify any circumstances that required further provisioning or impairment of financial instruments.
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16. Trade and other payables
New Zealand dollars
2021
$000s
2020
$000s
Trade payables
6,166 5,909
Accrued expenses
17,372 16,034
Employee expenses
8,300 5,354
Accrued dividend payable
- 3,231
GST payable
1,069 -
Other payables
127 444
Total trade and other payables
33,034 30,972
Trade payables include $1.77m for capital works in progress (Dec 2020 - $0.65m).
Accrued expenses include costs to be incurred from orcharding operations on 399 hectares (Dec 2020 - 484 hectares) of leased and owned
orchards. Accrued expenses also include costs relating to the retail services segment and the export and domestic sales of avocado.
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.
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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.
17. Interest bearing liabilities
New Zealand dollars
2021
$000s
2020
$000s
Current secured
Interest bearing liabilities
5,466 9,157
Capitalised loan fees to be amortised in the next 12 months
( 220) -
Total current interest bearing liabilities
5,246 9,157
Non current secured
Interest bearing liabilities
108,045 73,862
Remaining capitalised loan fees to be amortised
( 288) -
Total non-current interest bearing liabilities
107,757 73,862
Total interest bearing liabilities
113,003 83,019
Analysis of movements in borrowings:
At 1 January
83,019 119,632
Cash flow - additional borrowings
162,236 59,329
Cash flow - repayment of borrowings
( 155,641) ( 96,161)
Loans acquired via acquisition
19
24,013 -
Capitalised loan fees - amortised over the life of the loan
( 508) -
Exchange differences
( 116) 219
At 31 December
113,003 83,019
Analysis of total facilities:
Drawn
113,003 83,019
Available
77,411 39,281
Total facilities at 31 December
190,414 122,300
The Board has assessed the fair value of the term loans as the outstanding balance at balance date.
On 10 November 2021, Seeka's banking facilities were refinanced via a Syndicated Facilities Agreement (Bank Syndicate) with Westpac New
Zealand Limited acting as the Agent and Security Trustee. Lenders to the Banking Syndicate include ASB Bank Limited, Bank of New Zealand,
Rabobank New Zealand Limited (Rabobank), Westpac Banking Corporation of Australia, and Westpac New Zealand Limited. It is expected that all
facilities will be refinanced when they become due for review as set out below.
The following table details the amounts of the term loans drawn down at balance date and their maturities.
Balance due
$000sInterest rateMaturity
Term loans as at 31 December 2021
AUD $17m
18,045 2.68%31 January 2025
NZD $40m
40,000 3.40%31 January 2024
NZD $50m
50,000 3.60%28 January 2025
Term loans as at 31 December 2020
AUD $17m
18,116 2.36%31 December 2022
NZD $34.5m
28,500 2.15%31 December 2022
NZD $12m
12,000 2.72%31 December 2023
NZD $9m
9,000 2.72%31 December 2023
NZD $6.3m
6,246 2.33%22 December 2022
At 31 December 2021 all terms loans are from the Bank Syndicate. At 30 December 2020 all NZD term loans were from Westpac New Zealand
Limited and AUD term loans from Westpac Banking Corporation of Australia with the exception of the NZD $6.25m loan which was with
Rabobank New Zealand Limited.
From 10 November 2021, all the Group’s term loans are on interest-only repayment terms. Prior to this date, the Rabobank loan had a scheduled
$1.02m annual repayment of principal.
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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.
18. Share capital
Shares
2021
Shares
2020
Shares
Authorised and issued share capital
Ordinary shares - fully paid and no par value:
Opening balance
32,204,039 32,115,799
Shares issued under:
Ōpōtiki Packing and Cool Storage Limited amalgamation
19
7,042,574 -
Orangewood Limited amalgamation
19
639,302 -
Dividend reinvestment programme
290,245 88,240
Total shares issued
40,176,160 32,204,039
Ordinary shares - classified as follows:
Held by ordinary shareholders
39,437,524 29,455,162
Held by Seeka Share Trustee Limited
738,636 2,748,877
Total shares issued
40,176,160 32,204,039
New Zealand dollars
2021
$000s
2020
$000s
Movements in ordinary paid up share capital:
Opening balance of ordinary shares
110,210 109,434
Transfer from grower share entitlement reserve
1,363-
Issues of ordinary shares during the year
1
43,069 776
Closing balance of ordinary share capital
154,642 110,210
Movements in treasury share capital:
Opening balance of ordinary shares
12,293 12,661
Employee share scheme receipts - 2016 issue
( 54) ( 124)
Grower loyalty share scheme receipts - 2019 issue
( 8,782) ( 192)
Employee share scheme receipts - 2019 issue
( 496) ( 52)
Closing balance of shares held as treasury capital
2,961 12,293
Net share capital
151,681 97,917
1. Issues of ordinary shares during the year have been restated to include shares issued under the dividend reinvestment plan in relation to the
dividend declared in December 2020 and paid on 22 January 2021.
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.
Assets pledged as security
Bank loans and overdrafts are secured by first mortgages over the freehold
land and buildings, and a General Security Agreement over all the assets
of the following trading entities within the Group, as either borrowers or
guarantors. These entities make up the bank Charging Group.
The value of the Group’s assets that are not part of the Charging
Group is $11.83m, being less than 2.45% of the total Group assets.
The Charging Group comprises the following entities:
Borrowers and guarantors:
–Seeka Limited
–Seeka Australia (Pty) Limited
Guarantors:
–Aongatete Coolstores Limited
–Kiwi Coast Growers (Te Puke) Limited
–Northland Horticulture Limited
–OPAC Properties Limited
–Seeka East Limited
–Seeka OPAC Limited
–Seeka Te Puke Limited
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 30.
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19. Business combination
Acquisition through amalgamation of Ōpōtiki Packing and Cool Storage Limited (OPAC)
During the year the Group acquired OPAC, a kiwifruit post harvest and orcharding business based in Ōpōtiki, the Bay of Plenty, New Zealand, into a
newly-formed 100% owned subsidiary of Seeka Limited, being Seeka OPAC Limited. OPAC shares were cancelled with each share being exchanged
for 1.4833 shares in Seeka Limited, based on a price of $4.82 per Seeka share (equal to the VWAP of shares traded over 10 business days, finishing
on 24 March 2021, with all fractions of Seeka shares rounded up to the next whole number). The purchase was settled 4 May 2021 for a recorded
consideration of $38.73m when Seeka issued 7,042,574 ordinary shares at $5.50, being the share market price on the acquisition date as per NZ
IFRS 3. The change in share price between the VWAP and the share price on acquisition date had the impact of increasing goodwill by $4.80m.
On acquisition, the Group drew down a $27m loan to repay the acquired interest bearing liabilities of $21.86m, with the remainder used to service
OPAC's working capital requirements for the remainder of the season.
OPAC contributed $29.46m of revenue and $1.07m of net profit before tax to the Group for the period from 4 May to 31 December 2021. If the
acquisition had occurred on 1 January 2021, OPAC would have contributed $36.06m of revenue and $2.87m of net profit before tax for the 12
months ended 31 December 2021. These calculations are not significantly impacted by differences in accounting policies between the Group
and the acquired subsidiary, and no significant additional depreciation would have been charged if fair value adjustments to property, plant and
equipment had applied from 1 January 2021, including consequential tax effects.
The following table details the fair values of assets and liabilities recognised at acquisition.
New Zealand dollars
2021
$000s
Purchase consideration for shares
38,734
Land and buildings
39,460
Property, plant and equipment (excluding land and buildings)
11,819
Intangible assets (excluding goodwill)
637
Inventories
1,421
Right of use lease assets
554
Investment in shares
477
Investment in associates
883
Cash and cash equivalents
460
Trade and other receivables
12,018
Trade and other payables
( 11,483)
Interest-bearing liabilities
( 21,863)
Current tax liability
( 1,111)
Deferred tax liability
( 1,612)
Lease liabilities
( 554)
Fair value of new assets and liabilities
31,106
Goodwill
7,628
Net purchase consideration
38,734
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.
Grower loyalty share scheme
On 15 March 2019, the Group invited eligible growers of kiwifruit,
avocado and kiwiberry to participate in a three-year grower loyalty share
scheme, whereby each participant would be allocated a parcel of shares
based on their orchard's current or forecast production. This issue of up
to 2.6m shares was approved by shareholders on 14 February 2019.
In April 2019, 2,061,803 shares were issued to the scheme's trustees on
behalf of 405 participating growers. The issue price of $4.76 per share
was funded by the Group making a $9.8m non-interest-bearing loan
to the trustees. Upon meeting the terms of the scheme by supplying
all product from the participating orchards for three consecutive
seasons the shares vest and participating growers can elect to pay the
outstanding balance of their loans, less any dividend payments made
on the shares, and have the shares transferred to them.
During 2021, 1,917,165 shares issued to kiwifruit growers vested, leaving
144,638 shares issued to avocado growers due to vest in 2022, see note 21.
Employee share scheme
On 15 March 2019, the Group invited eligible employees to participate
in a five-year employee share scheme, whereby each participant would
be allocated a parcel of shares based on their role in the business. In
April 2019, 568,000 shares were issued to the scheme's trustees on
behalf of 319 participating employees. The issue price of $4.76 per share
was funded by the Group making a $2.7m non-interest-bearing loan
to the trustees. Upon meeting the terms of the scheme by continuing
employment for three consecutive years, participating employees can
elect to pay the outstanding balance of their loans, less any dividend
payments made on the shares, and have the shares transferred to them.
Shares issued under this scheme vest in 2022, see note 21.
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Critical accounting estimates and judgements
The fair values of assets are subject to estimates and judgement. Seeka engaged Telfer Young to complete an independent valuation of the land and
buildings at the acquisition dates. The remaining property, plant and equipment was assessed on a depreciated historical cost basis, as well as a
physical stocktake and a comparison to similar Seeka-owned assets. The Group assessed that any intangible asset that exists for grower relationships
and contracts would be immaterial for financial reporting using the multi-period excess earnings method of calculating intangible assets on contracts.
OPAC fair value of assets and liabilities, goodwill and acquisition-related costs
The fair value of acquired trade receivables, within trade and other receivables, is $0.40m. There was no loss allowance recognised on acquisition.
The goodwill of $7.63m is allocated to the Bay of Plenty post harvest cash generating unit as the primary purpose of the amalgamation was to
obtain the post harvest facility and associated grower relationships. The goodwill is attributable to the operation’s strong market position in the
Ōpōtiki, East Cape and Gisborne regions, and synergies expected to arise from adding an extra post harvest facility to the Seeka Group. The
goodwill is not expected to be deductible for tax purposes.
Acquisition-related costs of $0.47m are included in administrative expenses. Deferred tax of $1.61m was provided in relation to differences between
tax written down values and the fair value of certain assets. Seeka has 12 months from the acquisition date to reassess the disclosed fair values of
assets and liabilities. In particular, any liabilities are expected to be crystallised and quantified within the 12 months from the acquisition date.
Seeka has identified and updated the fair values of assets and liabilities for the crystallisation of expense provisions made in the initial fair values as
disclosed in June 2021 and the tax implications arising as a result. The net impact was a reduction of initially disclosed goodwill by $2.11m.
Acquisition through amalgamation of Orangewood Limited (Orangewood)
During the year the Group amalgamated Orangewood, an integrated kiwifruit and avocado post harvest and orchard management business based
in Kerikeri, Far North District, New Zealand, into a newly formed 100% owned subsidiary of Seeka Limited, being Northland Horticulture Limited.
Orangewood shares were cancelled with each share being exchanged for 0.663 shares in Seeka and $1.35 cash. Seeka shares were issued based
on a price of $5.33 per Seeka share (equal to the VWAP of shares traded over 10 business days, finishing on 13 September 2021, with all fractions
of Seeka shares rounded up to the next whole number).
The purchase was settled on 22 November 2021 for a purchase consideration of $4.66m by the issue of 639,302 ordinary shares in Seeka Limited
at a market price of $5.25 on the settlement date of 22 November 2021, being the market price on the acquisition date as per NZ IFRS 3, and a
cash consideration of $1.30m. The change in the share price on acquisition date had the impact of decreasing goodwill by $0.05m.
Orangewood has contributed $0.33m of revenue and $0.21m of net loss before tax to the Group for the period 22 November to 31 December
2021. If the acquisition had occurred on 1 January 2021, Orangewood would have contributed $17.99m of revenue and $0.16m of net profit before
tax for the 12 months ended 31 December 2021. These calculations are not significantly impacted by differences in accounting policies between
the Group and the acquired subsidiary, and no significant additional depreciation would have been charged if fair value adjustments to property,
plant and equipment had applied from 1 January 2021, including consequential tax effects.
The following table details the fair values of assets and liabilities recognised at acquisition.
New Zealand dollars
2021
$000s
Cash consideration paid to shareholders
1,302
Shares issued in consideration
3,356
Total purchase consideration
4,658
Land and buildings
4,500
Property, plant and equipment (excluding land and buildings)
1,477
Inventories
272
Investment in shares
17
Cash and cash equivalents
1,041
Trade and other receivables
1,780
Trade and other payables
( 2,466)
Current tax liability
( 101)
Interest-bearing liabilities
( 2,150)
Deferred tax liability
( 253)
Lease liabilities
( 80)
Fair value of new assets and liabilities
4,037
Goodwill
621
Total purchase consideration for shares
4,658
The fair value of acquired current trade receivables, within trade and other receivables, is $1.55m. There is no loss allowance recognised on
acquisition. The goodwill of $0.62m is allocated to the Northland post harvest cash generating unit as the primary purpose of the amalgamation
was to obtain the packhouse facility and increase the Group's presence in the desirable Far North District. The goodwill is attributable to the
operation’s market position in the region and synergies expected to arise after adding the business into the corporate structure of the larger Seeka
Group. The goodwill is not expected to be impaired in the foreseeable future and is not expected to be deductible for tax purposes.
Acquisition-related costs of $0.37m are included in overhead expenses. Deferred tax of $0.25m has been provided in relation to differences
between tax written down values and the fair value of certain assets.
Seeka has 12 months from the acquisition date to reassess the fair values of the assets and liabilities disclosed above if more information comes
to light that suggests the values differ. In particular, any liabilities are expected to be crystallised and quantified within the 12 months from the
acquisition date.
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55SEEKA LIMITED | ANNUAL REPORT 2021
20. Earnings and net tangible assets per share
20212020
Basic earnings per share
Profit attributable to equity holders of the Company ($000s)
14,860 15,151
Weighted average number of ordinary shares in issue (thousands)
34,829 29,416
Basic earnings per share
$0.43 $0.52
Diluted earnings per share
Profit attributable to equity holders of the Company ($000s)
14,860 15,151
Weighted average number of ordinary shares in issue plus dilutive employee share scheme (thousands)
35,199 29,437
Diluted earnings per share
$0.42 $0.52
Net tangible assets per share
Net tangible assets ($000s)
229,310 167,360
Total ordinary shares issued at the end of the period (thousands)
40,176 32,204
Net tangible assets per share
$5.71 $5.20
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 and outstanding 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.
21. Retained earnings and reserves
Retained earnings
The following table details movements in retained earnings.
New Zealand dollars
2021
$000s
2020
$000s
At 1 January
45,938 36,659
Net profit for the year
14,860 15,151
Dividends paid or declared
1
( 9,234) ( 7,149)
Realisation of permanent gain on sale
- 1,274
Foreign exchange movement
- 3
At 31 December
51,564 45,938
1. Dividends paid or declared during the year have been restated to include shares issued under the dividend reinvestment plan in relation to the
dividend declared in December 2020 and paid on 22 January 2021.
Reserves
The following table details the closing balances of reserve accounts.
New Zealand dollars
2021
$000s
2020
$000s
Reserves
Cash flow hedge reserve
( 388) ( 484)
Water share revaluation reserve
2,594 2,597
Land and buildings revaluation reserve
40,632 29,097
Foreign currency translation reserve
( 208) ( 170)
Foreign currency revaluation reserve
90 108
Share entitlement reserve
526 1,290
Total reserves
43,246 32,438
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ANNUAL REPORT 2021 | SEEKA LIMITED56
The cash flow hedge reserve records increases and decreases on the revaluation of derivative financial instruments.
The water share revaluation reserve records increases and decreases on the revaluation of Seeka's owned permanent water shares in Victoria Australia.
The land and buildings revaluation reserve records increments and decrements on the revaluation of land and buildings.
The foreign currency translation reserve records foreign currency translation differences of Group entity results and financial position. The amounts
are accumulated in other comprehensive income and recognised in profit or loss when the foreign operation is partially disposed of or sold.
The foreign currency revaluation reserve records unrealised gains and losses on Group assets and liabilities held in foreign currencies.
The share reserve records the value of option benefits recognised on the Group's grower loyalty and employee share schemes as detailed in this note.
The Group operates two equity-settled, share-based incentive plans:
–An equity-settled, share-based compensation plan for employees. Shares are periodically issued under this plan.
–An equity-settled, grower loyalty share scheme approved by shareholders on 14 February 2019.
The employee share scheme is managed by a trust deed established September 2014. The grower loyalty share scheme is managed by a trust
deed established 15 March 2019. The trustee for both trusts is 'Seeka Share Trustee Limited', whose directors are also directors of Seeka.
Employee share scheme
Under the employee share scheme, shares are issued to an employee share trust in return for a debt back to the Company. Qualifying employees
are eligible to subscribe to shares held by the trust under the terms of the scheme with the shares to vest at the end of three years. The option
benefit is 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 their shares and have the shares transferred to them.
At the date the shares vest the employee can elect to extend the repayment period by two years with interest charged and the shares held by the
trust as security and only transferred when the debt is fully repaid. Alternatively at the date the shares vest the employee can elect that the shares
do not vest to them and any outstanding debt will be forgiven and the shares sold by the trustees. The proceeds from the sale of shares are used
to repay the debt owed to the Company.
The following table details movement in the share reserve relating to the employee share scheme.
New Zealand dollars
2021
$000s
2020
$000s
At 1 January
270 117
Movement in employee share entitlement reserve
153 153
At 31 December
423 270
At balance date the number of shares in respect of which options have been granted to employees and remain outstanding under the scheme was
593,998 (Dec 2020 - 689,008), representing 1.48% (Dec 2020 - 2.14%) of the shares of the Company on issue at that date.
Grower loyalty share scheme
Under the grower loyalty share schemes, shares are issued to a share trust in return for a debt owned back to the Company. Qualifying supplying
growers were eligible to subscribe to shares held by the trust under the terms of the offer agreements dated 15 March 2019 and 22 March 2019.
Shares vest after the grower supplies the Company their kiwifruit and avocado crops for the three harvest seasons, with the final harvest season
being the avocado harvest season ending 31 March 2022. The option benefit is recognised as a discount against revenue over the vesting period.
At the end of the vesting period the grower has an option to either settle any outstanding debt on the shares and have the shares transferred
to them, or to not have the shares transferred to them, whereby any outstanding debt will be forgiven and the shares sold by the trustee. The
proceeds from the shares that vest or from the sale of shares is used to repay the debt owed to the Company.
In September 2021, the three-season supply commitment period for kiwifruit and kiwiberry growers ended, and 1,917,165 shares vested. 144,638
shares issued to avocado growers remain in the scheme and vest at the completion of the 2021/22 avocado harvest.
The following table details the movement in the grower loyalty share scheme.
New Zealand dollarsShares
Loan balance
$000s
At 1 January 2021
Shares issued
2,061,803 9,391
Dividends received January and March 2021
( 519)
Vested September 2021 - Kiwifruit and kiwiberry
Entitlement accepted by growers
1,583,268 6,858
Entitlement not accepted
333,897 1,405
Total vested September 2021
1,917,165 8,263
Vesting in 2022 - Avocado
144,638 609
At 31 December 2021
144,638 609
From the September 2021 vesting, 333,897 shares that were either ineligible for entitlement, or not accepted by growers, were sold on market for
a total net consideration of $1.41m.
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57SEEKA LIMITED | ANNUAL REPORT 2021
The following table details movement in the share reserve relating to the grower loyalty share scheme.
New Zealand dollars
2021
$000s
2020
$000s
At 1 January
1,020 412
Transfer to share capital
( 1,363)-
Movement in grower share entitlement reserve
446 608
At 31 December
103 1,020
At balance date the number of shares in respect of which options have been granted to growers and remain outstanding under the scheme was
144,638 (Dec 2020 - 2,061,803), representing 0.36% (Dec 2020 - 6.40%) of the shares of the Company on issue at that date.
The following table details the closing value of the share reserve in the grower loyalty share scheme Black Scholes calculation, see policy on page 58.
New Zealand dollars
2021
$000s
2020
$000s
Balance related to employee share entitlement reserve
423 270
Balance related to grower share entitlement reserve
103 1,020
Balance 31 December
526 1,290
For both schemes the shares are issued fully paid in exchange for a loan to the share scheme trust on behalf of scheme members.
The shares held by the trustee on behalf of employees and growers carry the same voting rights as other issued ordinary shares with votes only
able to be made via the trustees. The trustees are not able to vote, other than at the direction of the individual member employees and growers.
While monies are owed on the shares they remain with the trustee.
The options element of the schemes are valued using the Black Scholes pricing model on the grant date, which is the date the shares are first
issued to the trust. Volatility is forecasted into the model.
The following table details inputs to the Black Scholes pricing model, used to value the cost of the share schemes to the Group.
Inputs into the model
Issue date4 April 201910 April 201920 May 2016
Shares issued
Grower loyalty share scheme
1,923,550138,253-
Employee share scheme
505,00063,000398,100
Total shares issued
2,428,550201,253398,100
Grant date share price
$4.78$5.05$3.88
Exercise price
$4.76$4.76$3.88
Expected life (interest free loan period)
2.5 - 3 years2.5 - 3 years
3 years
Maximum loan period - Grower loyalty share scheme
3 years3 years
5 years
Maximum loan period - Employee share scheme
5 years
1
5 years
1
Time to vest
2.5 - 3 years2.5 - 3 years
3 years
Expected volatility (% per year)
19.33%19.33%10.00%
Risk-free interest rate
2.18%2.18%3.14%
Value of option
$0.71 - $0.79$0.71 - $0.97$0.47
1. Interest charged after three years.
The following table details movements of options granted under the current active scheme for the year ended 31 December 2021.
Grant dateExpiry date
Fair value at
grant dateExercise priceIssued shares
Relinquished
shares
Exercised
shares
31 December
shares
April 2019September 2021
$0.79$4.761,917,165(333,897)(1,583,268)-
April 2019May 2022
$0.97$4.76712,638-(35,500)677,138
Weighted average exercise price at balance date
$3.93
Weighted average contractual life (years)
0.42
20 May 201620 May 2019
$0.47$3.88398,100(61,498)(336,602)-
Weighted average exercise price at balance date
$2.44-
Weighted average contractual life (years)
0.25 -
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ANNUAL REPORT 2021 | SEEKA LIMITED58
22. Dividends
Dividends paid Per share$000s
2020
September 2020
$0.10 3,260
December 2020 - declared, paid 27 January 2021
$0.12 3,889
Total dividend 2020
$0.22 7,149
2021
March 2021
$0.12 3,944
October 2021
$0.13 5,209
Amendment to September 2020 and December 2020 dividends
81
Total dividend 2021
$0.25 9,234
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 payments made to and on behalf of shareholders during the year were $11.72m (Dec 2020 - $2.73m), including
the dividend declared in December 2020 and paid in January 2021.
On 16 December 2020, the directors declared a fully-imputed special dividend of $0.12 per share. The dividend was paid 27 January 2021 to those
shareholders on the register at 5pm on 24 December 2020. The dividend reinvestment plan applied with a 2% discount to the strike price. The
Board declared the special dividend following the stronger than expected earnings in 2020 due to tight financial management and the settled sale
and lease back of part of the Australian kiwifruit orchard portfolio.
During the year, the dividends declared and paid in 2020 were reviewed and amended for the NRWT on dividends paid to international
shareholders, resulting in an adjustment of $0.08m.
On 25 February 2021, the directors declared a fully-imputed dividend of $0.12 per share. The dividend was paid 30 March 2021 to those
shareholders on the register at 5pm on 5 March 2021. The dividend reinvestment plan applied with a 2% discount to the strike price.
On 18 August 2021, the directors declared a fully-imputed dividend of $0.13 per share. The dividend was paid 13 October 2021 to those
shareholders on the register at 5pm on 20 September 2021. The dividend reinvestment plan applied with a 2% discount to the strike price.
On 20 January 2022, the directors declared a fully-imputed dividend of $0.13 per share. The dividend will be paid 23 February 2022 to those
shareholders on the register at 5pm on 28 January 2022. The dividend reinvestment plan will apply with a 2% discount to the strike price.
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.
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 reserve. For the Grower Loyalty Share Scheme (GLSS), the fair value of the grower loyalty
received in exchange for the grant of the option is recognised as a discount against revenue in the statement of financial performance with a
corresponding increase in share 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.
Employee share scheme 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 ESS and GLSS and the Group on behalf of the employee of the grower.
Proceeds received along with any employee contributions are credited to share capital when payment for the shares is received.
The ESS and GLSS have a non-beneficial interest in all the shares allocated to employees and growers. Annually the Group reviews the ESS 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 and GLSS are appointed for
an unspecified term and may be removed by the Company at any time.
Critical accounting estimates and judgements
The initial fair values of the employee share scheme and grower loyalty share scheme require estimates to be made of expected price volatility and
the risk free rate as detailed in this note.
The 61,498 relinquished shares under the May 2016 share scheme, held by the Share Trustee, still remain outstanding as the share trustee has yet
to release these on the market.
During the year no shares were issued under a rights issue for shares held in the employee share scheme (Dec 2020 - Nil) .
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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.
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.
23. Investment in shares
New Zealand dollars
2021
$000s
2020
$000s
At 1 January
577 586
Sale of investment
( 17) ( 9)
Acquisition from business combination
19
494 -
Purchase of investment
1,000 -
At 31 December
2,054 577
Unlisted securities designated at fair value through profit or loss
Blackburn General Partner Limited
91 91
Ravensdown Fertiliser Co-operative Limited
261 238
Ballance Agri Nutrients Limited
335 225
OTK Orchards Limited
326 -
Ngati Pukenga
1,000 -
Other share holdings
41 23
Total financial assets at fair value through profit or loss
2,054 577
Total investment in shares
2,054 577
All unlisted securities measured at fair value are defined as level 3, see note 29.
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ANNUAL REPORT 2021 | SEEKA LIMITED60
24. Investment in subsidiaries, associates and joint arrangements
a. Investment in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries.
Name of entity
Country of
incorporationClass of shares
Equity holding 31
December 2021
Equity holding 31
December 2020
Trading subsidiaries
Aongatete Coolstores LimitedNew ZealandOrdinary
100%100%
AvoFresh LimitedNew ZealandOrdinary
100%100%
Delicious Nutritious Food Company LimitedNew ZealandOrdinary
100%100%
Integrated Fruit Supply & Logistics LimitedNew ZealandOrdinary
100%100%
Kiwi Coast Growers (Te Puke) LimitedNew ZealandOrdinary
100%100%
Little Haven Holdings Pty LimitedAustraliaOrdinary
100%100%
Northland Horticulture Limited (formally non-trading subsidiary:
Northland Horticulture GP Limited)
New ZealandOrdinary
100%100%
OPAC Properties LimitedNew ZealandOrdinary
100%-
OPAC Growers Supply LimitedNew ZealandOrdinary
100%-
Seeka Australia (Pty) LimitedAustraliaOrdinary
100%100%
Seeka OPAC LimitedNew ZealandOrdinary
100%-
Seeka Share Trustee LimitedNew ZealandOrdinary
100%100%
Seeka Te Puke LimitedNew ZealandOrdinary
100%100%
Not-trading subsidiaries
CMS Logistics LimitedNew ZealandOrdinary
100%100%
Eleos LimitedNew ZealandOrdinary
100%100%
Enviro Gro LimitedNew ZealandOrdinary
100%100%
Glassfields (NZ) LimitedNew ZealandOrdinary
100%100%
Guaranteed Sweet New Zealand LimitedNew ZealandOrdinary
100%100%
Kiwifruit Vine Protection Company LimitedNew ZealandOrdinary
100%100%
Nutritious Delicious Food Company LimitedNew ZealandOrdinary
100%100%
Seeka East Limited (formally: Seeka Dairy Ventures Limited)
1
New ZealandOrdinary
100%100%
Seeka Fresh LimitedNew ZealandOrdinary
100%100%
Seeka Kiwifruit Industries LimitedNew ZealandOrdinary
100%100%
Seeka Pollen Australia (Pty) LimitedAustraliaOrdinary
100%100%
Verified Lab Services LimitedNew ZealandOrdinary
100%100%
1. Seeka East Limited began trading on 2 February 2022.
b. Investment in associates
Name of entity
Country of
incorporationBusiness activity
Equity holding 31
December 2021
Equity holding 31
December 2020
Kiwifruit Supply Research LimitedNew ZealandNot trading
20%20%
TKL Logistics LimitedNew ZealandPort service
20%20%
Wai O Kaha Gold Landowners Limited PartnershipNew ZealandOrcharding
11%11%
Te Kaha Gold Investment PartnershipNew ZealandOrcharding
33%-
Fruitometry LimitedNew ZealandAgritech
26%-
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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 or exercising significant influence via directors on the Board.
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 or distributions received from associates are applied to reduce the carrying amount of the investment in the statement of financial position.
Accounting policies
Investment in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and
obligations of each investor, rather than the legal structure of the joint arrangement.
Joint operations
The Group recognises its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or incurred
assets, liabilities, revenues and expenses. These have been incorporated in the financial statements under the appropriate headings.
Joint ventures
Interests in joint ventures are accounted for using the equity method, after initially being recognised at cost in the statement of financial position.
The following table details purchase of investments in associates.
New Zealand dollars
2021
$000s
2020
$000s
At 1 January
1,000 -
Purchase of investment(s)
2,600 1,000
Acquisitions from business combination
883 -
Share of profit
236 -
Capital distributions received
( 761) -
Balance at end of year
3,958 1,000
Investments are made in the following associates:
Wai O Kaha Gold Landowners Limited Partnership
1,000 1,000
Fruitometry Limited
2,600 -
Te Kaha Gold Investment Partnership
358 -
Total investment in associates
3,958 1,000
In July 2021, the Group acquired a 26% stake in the agritech startup Fruitometry Limited (Fruitometry) for $2.60m. Using artificial intelligence,
Fruitometry provides on-orchard digital crop estimation to improve orchard production and post harvest efficiency. The Group's investment values
Fruitometry at $10.00m.
In May 2021, as part of the acquisition of OPAC and OPAC's investments in OPAC Properties Limited, the Group acquired a 33% interest in Te
Kaha Gold Investment Partnership, which is a kiwifruit investment joint venture which owns producing orchards in the eastern Bay of Plenty region
of Te Kaha which supply kiwifruit to the Group. The value of the Group's investment at acquisition date was $0.88m. During the period from
acquiring the investment and balance date, the Group has received $0.76m of distributions.
c. Investment in joint arrangements
Name of entity
Country of
incorporationBusiness activity
Equity holding 31
December 2021
Equity holding 31
December 2020
Apanui Road Orchards Joint VentureNew ZealandOrcharding
42.9%-
The Apanui Road Joint Venture investment is considered a joint operation based on the following:
–There is equal voting rights and influence;
–There is no investment vehicle that separates it from the parties to the arrangement; and,
–The legal form and contractual arrangements through which the investee operates give the parties rights to the individual assets and liabilities
of the investee (rather than the net assets as a whole).
The orchards of Apanui Road Orchards Joint Venture have a finite life, are carried at their fair value and are included in the consolidated financial
statements.
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Other notes
This section contains all other note disclosures about the Group.
25. Contingencies
There are no contingent liabilities as at 31 December 2021 (Dec 2020 - Nil).
26. Commitments
Capital commitments
At year end the Group was committed to incur capital expenditure of $12.73m (Dec 2020 - $1.74m), including planned expenditure for the KKP MAF Roda
grader and packhouse extension, and the Transcool coolstore upgrade.
Operating lease commitments
The Group recognises right-of-use lease assets for all operating leases, except for short-term and low value leases, in accordance with NZ IFRS 16,
see note 13.
27. Related party transactions
Directors
Directors during the period were: F Hutchings, M Brick, J Burke, P R Cross, A Diaz, R Farron, C Tarrant and A Waugh.
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.
New Zealand dollars
2021
$000s
2020
$000s
Director fees
536 450
Executive salaries
3,014 2,335
Short term benefits
1,259 549
Total
4,809 3,334
During the year the Group provided compensation totalling $0.12m to close family members of key management personnel. All transactions were
related to employee remuneration and made on normal employment contract terms and conditions.
Transactions
The following table details the transactions entered with related parties for post harvest and orchard management services (excluding
transactions outlined and disclosed above).
New Zealand dollars
2021
$000s
2020
$000s
Sales of services
Directors, key management and other personnel
3,349 3,988
Purchase of services
Directors, key management and other personnel
84 343
Outstanding balances
The following table details outstanding balances at balance date.
New Zealand dollars
2021
$000s
2020
$000s
Current receivables (operating)
Directors, key management and other personnel
721 863
Seeka Growers Limited and OPAC 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 $150.94m (Dec 2020 - $123.90m) for the provision of services to SGL.
As part of the acquisition of OPAC in May 2021, the Group also acquired the related entity of OPAC Growers Limited (OGL). The Group
undertakes transactions with OGL, a related party which administers all kiwifruit revenues received for the New Zealand business on behalf of
supplying growers.
For the period beginning 4 May 2021 to 31 December 2021, the Group received $15.27m for the provision of services to OGL.
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Investments in associates
The Group undertakes transactions with it's associates as described in note 24, in the regular course of business and with normal commercial
terms and conditions. In the current period the Group received $0.65m (Dec 2020 - nil) from these transactions with associates, for the sale of
goods and services. $0.18m (Dec 2020 - Nil) was outstanding and owed to the Group at 31 December 2021.
In the current period the Group paid $0.10m (Dec 2020 - Nil) to associates for the purchase or provision of goods and services. $0.01m
(Dec 2020 - Nil) was outstanding and due to them at 31 December 2021.
Entities controlled or jointly controlled by key management personnel
The Group undertakes transactions with entities where it's key management personnel are deemed to either control or have joint control over
their operations. In the current period the Group paid $1.81m (Dec 2020 - $1.23m) to these entities, for the purchase or provision of goods and
services, with $0.01m (Dec 2020 - $0.17m) outstanding and due to them at 31 December 2021.
Terms and conditions
All related party transactions were made on normal commercial terms and conditions and at market rates. Outstanding balances are unsecured
and are repayable in cash.
28. 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 orcharding,
post harvest and retail operations
Horticultural operations expose the Group to risks to production and
market returns. The main short-term production risks are weather
events, diseases, and pests. These impact on volume and quality
of produce from the Group's orchards, volumes to post harvest
(both from Group orchard operations and independent growers)
and volumes available to the retail business. The primary risk to the
completion of the coming harvest is the limited availability of labour
and the risk of a Covid-19 lockdown. The Group is also impacted by the
long-term effects of climate change.
Market risks include price and exchange rate impact on orchard
operations (the amount the Group is paid for crops grown by the
Group) and impact on retail revenues where the Group imports and
sells 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 five regions spread over two countries; New
Zealand's Northland, Coromandel, Gisborne 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 - weather 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, storm damage
and drought.
–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.
–Drought events are typically regional, and the Group has invested
in irrigation in many of its orchards. The Group is also investing in
localised weather measurement on its orchards.
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 occurring 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. In 2018 Psa was detected on the Group's kiwifruit
orchards in Australia. Seeka has moved to contain the outbreak and
works to proactively monitor the orchards. The Queensland fruit
fly and brown marmorated stink bug are potential threats 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.
Labour availability and Covid-19
Border closures due to Covid-19 have reduced the workforce that
Seeka relies on through the Recognised Seasonal Employer (RSE)
scheme and from backpackers. To assist the horticulture industry
the New Zealand Government made a provision for an additional
2,000 seasonal workers to enter the country in 2021, of which Seeka
accessed its share of 217 employees. Seeka has an extensive local
recruitment process underway, including working with the Ministry
for Social Development (MSD) and iwi on methods of recruiting
unemployed people into the Seeka workforce.
For 2022, the New Zealand Government has opened access to
seasonal workers from Tonga, Samoa and Vanuatu, from which Seeka
has the ability to employ up to 1200 seasonal employees.
Long-term climate change
As a horticultural based business, Seeka is exposed to the long-term
impact of climate change through potential reduced production crop
yields. In addition to responding to weather events, future regulatory
change may impact Seeka through revised policies that limit the use
of chemical inputs on orchards, require soil monitoring and reporting,
introduce carbon taxes, and implement water restrictions.
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To respond to this Seeka is;
–Working closely with regional councils and regulators to assist in
regulation change;
–Actively engaged in developing orchard management practices to
measure the environmental impact on orchards;
–Measuring the carbon footprint of Seeka's operations, with a
number of carbon-reduction initiatives underway;
–Ensuring new developments undertaken by Seeka include water
accessibility as part of the development design, whether via stream
access, onsite storage, or developing wetlands; and
–Reporting orchards by altitude to assess the risk of rising sea levels.
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
beyond Australia 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 avocado and kiwiberry
The Group has a direct market risk from the sale of avocado and
kiwiberry, 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.
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, see note 30.
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 statement of financial position.
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.
Trade receivables
The Group applies the NZ IFRS 9 Financial Instruments (NZ IFRS 9)
simplified approach to measuring expected credit losses which uses a
lifetime expected loss allowance for all trade receivables.
To measure the expected credit losses, trade receivables have been
grouped based on days past due. The expected loss rates are based on
the payment profiles of sales over a 12 month period before 31 December
2021 and the corresponding historical credit losses during this period,
adjusted for any significant known amounts that are not recoverable.
On that basis, the following table details the provision for doubtful debts.
31 December 202131 December 2020
More than
30 days
past due
More than
60 days
past due
More than
120 days
past due
2021
Total
More than
30 days
past due
More than
60 days
past due
More than
120 days
past due
2020
Total
Expected loss rate
0.1%0.2%2.4%0.0%0.1%2.9%
Gross carrying amount -
trade receivables ( $000s)
735 462 1,522 2,719 933 360 1,031 2,323
Loss allowance ( $000s)
-13637--3131
New Zealand dollars
2021
$000s
2020
$000s
At 1 January
157 129
Movement in the current year
90 28
At 31 December
247 157
Calculation for loss allowance
Loss allowance per NZ IFRS 9
37 31
Specific debtor provision(s)
210 127
At 31 December
247 158
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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 $190.41m (Dec 2020 - $122.26m) of
available credit of which $113.00m (Dec 2020 - $83.02m) was drawn.
All credit lines are currently provided by a bank syndicate comprised
of five lenders across New Zealand and Australia, where Westpac New
Zealand Limited acts as the syndicate agent lender, security trustee
and lead lender.
The following table details the remaining contractual maturities at balance date of the Group’s financial liabilities.
New Zealand dollars
Less than
1 year
$000s
Between
1 and 2
years
$000s
Between
2 and 5 years
$000s
Over
5 years
$000s
At 31 December 2021
Trade and other payables
33,034 - - -
Derivative liability
538 - - -
Lease liabilities
6,782 6,415 15,381 34,789
Interest bearing liabilities
5,246 39,780 67,977 -
Total contractual maturities
45,600 46,195 83,358 34,789
At 31 December 2020
Trade and other payables
30,972 - - -
Derivative liability
671 - - -
Lease liabilities
6,342 5,31313,522 39,205
Interest bearing liabilities
9,157 52,862 21,000 -
Total contractual maturities
47,142 58,175 34,522 39,205
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.
New Zealand dollars
2021
$000s
2020
$000s
Total shareholder funds
246,491 176,293
Total assets
482,269 375,426
Shareholder equity ratio
51.11%46.96%
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.
e. Price risk - equity securities
The Group has minor exposure to equity securities price risk through incidental investments classified in the statement of financial position 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 change in the fair value of an investment is recorded through other comprehensive income or the statement of financial performance
whenever a previous revaluation reserve balance is available. When no such reserve exists, 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.
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The following table outlines the expected undiscounted cash flows relating to the Group's outstanding term and current debt at balance date.
New Zealand dollars
Between
0 and 3
months
Between
3 and 6
months
Between
6 and 12
months
Between
1 and 2
years
Between
2 and 5
years
Over
5
years
At 31 December 2021
Expected undiscounted cash flows based
on current market interest rates ($000s)
943 943 1,886 3,772 2,595 -
Floating rate
2.44%
Average term rate
3.37%
At 31 December 2020
Expected undiscounted cash flows based
on current market interest rates ($000s)
508 574 1,124 2,206 2,835 -
Floating rate
2.05%
Average term rate
2.49%
29. Determination of fair values of financial assets and liabilities
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.
Interest rate riskPrice risk
Carrying
amount
$000s
-1 %+ 2%- 10%+ 10%
New Zealand dollars
Profit
$000s
Equity
$000s
Profit
$000s
Equity
$000s
Profit
$000s
Equity
$000s
Profit
$000s
Equity
$000s
At 31 December 2021
Financial assets
Current and non current trade
and other receivables
31,499 - - - - ( 3,150) ( 3,150) 3,150 3,150
Investment in shares
2,054 - - - - ( 205) ( 205) 205 205
Water shares
8,421 - - - - - ( 842) - 842
Financial liabilities
Derivative liabilities
538 - ( 190) - 379 - - - -
Trade and other payables
33,034 - - - - - - - -
Term liabilities
107,757 1,078 1,078 ( 2,155) ( 2,155) - - - -
Interest bearing liabilities
5,246 52 52 ( 105) ( 105) - - - -
Total increase / (decrease)
1,130 940 ( 2,260) ( 1,881) ( 3,355) ( 4,197) 3,355 4,197
At 31 December 2020
Financial assets
Current and non current trade
and other receivables
25,187 - - - - ( 2,519) ( 2,519) 2,519 2,519
Investment in shares
577 - - - - ( 10) ( 48) - 58
Water shares
8,310 - - - - - ( 831) - 831
Financial liabilities
Derivative liabilities
671 - ( 283) - 565 - - - -
Trade and other payables
30,972 - - - - - - - -
Term liabilities
73,862 739 739 ( 1,477) ( 1,477) - - - -
Interest bearing liabilities
9,157 92 92 ( 183) ( 183) - - - -
Total increase / (decrease)
831 548 ( 1,660) ( 1,095) ( 2,529) ( 3,398) 2,519 3,408
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 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.
New Zealand dollars
Level 1
$000s
Level 2
$000s
Level 3
$000s
Total
$000s
Biological assets - crop at cost
- - 18,324 18,324
Biological assets - crop at fair value
- - 119 119
Water shares
8,421 - - 8,421
Irrigation water rights
294 - - 294
Land
- - 36,866 36,866
Buildings
- - 191,650 191,650
Unlisted equity securities
- - 2,054 2,054
Derivatives used for hedging (liability)
- 538 - 538
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The reconciliations for level 3 fair value requirements are shown.
–Land and buildings (note 10)
–Biological assets - crop (note 12)
–Unlisted equity securities (note 23)
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.
TypeFair valueMethodKey unobservable inputs
How unobservables
impact estimated fair
value
Biological assets -
crop at cost
Includes New Zealand
kiwifruit and Australian
kiwifruit, nashi, Packham
and Corella pears.
$ 18.33 mCost is used as a proxy for fair
value, as the crop has yet to achieve
sufficient biological transformation.
Cost is tested for impairment at
balance date using the Group's
budgets on an orchard-by-orchard
basis. See note 12.
Cost.Reduces if cost is
impaired at balance date.
Biological assets -
crop at fair value
Includes New Zealand
avocados and Australian
plums and speciality pears.
$ 0.12 mEstimated market value less selling
costs and costs to market (have
achieved sufficient biological
transformation). See note 12.
Forecast yields.
Market sales price.
Costs to harvest.
Increases with yields.
Increases with price.
Decreases with higher
costs.
Land and buildings$ 228.52 mAn annual revaluation is used
to estimate fair value, which is
performed on approximately
one third of land and buildings
on a rolling 3-year cycle by an
independent valuer using four
different approaches; replacement
cost approach, sales approach,
capitalisation of rents approach and
discounted cash flow approach. See
accounting policies below and note
10 for further details.
Comparative market
rents and applicable
discount rate.
Comparative market
sales.
Current level of building
costs.
Increases with market
rental, and lower
discount rates.
Increases with market
sales.
Increases with building
costs.
Unlisted equity securities$ 2.05 mBased on latest information from
securities management. Tested for
impairment with carrying amount
assessed at balance date.
Securities management
information on share
price.
Increases with share
price information.
Reduces if cost is
impaired at balance date.
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.
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), reflects 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
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 10.
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30. Derivative financial instruments
New Zealand dollars
2021
$000s
2020
$000s
Liabilities
Interest rate swap contracts and forward exchange contracts - cash flow hedge
538 671
Group bank loans currently bear an average variable interest rate of 3.0% (Dec 2020 – 2.3%), with the Group using interest rate swaps to protect
the term portion of the loans.
Swaps cover 83% (Dec 2020 - 46%) 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.
Term loan
Amount
$000sVariable rateLoan maturity
Hedge fixed rate
excluding bank
margin
Hedge
effective dateHedge expiry
NZD $12m
12,000 3.52%
31 January 2024
2.43%
31 December 201831 December 2022
NZD $28m
28,000 3.52%
31 January 2024
2.70%
10 May 202231 January 2024
NZD $50m
50,000 3.40%
28 January 2025
2.89%
10 May 202231 January 2025
Total (NZD)
90,000
All interest rate swaps are on a hedge ratio of 1:1 basis with the associated term loan value.
The following table details the forward exchange contracts.
Term loan
Amount LCY
$000sSpot rateHedge fixed rateHedge expiry
2021
NZD - AUD hedges
583 0.9421 0.9599
28 February 2022
EUR - NZD hedges
157 0.6032 0.6164
4 February 2022
2020
AUD - NZD hedges
473
0.9384 0.5900
30 March 2021
NZD - USD hedges
71
0.7227 0.7071
6 January 2021
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 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 New Zealand Limited.
The fair values of the interest rate swaps and forward exchange
contracts are determined by Westpac New Zealand Limited and
reviewed by the Board.
The gains and losses recognised in other comprehensive income
appear in the statement of financial performance.
Hedge effectiveness
Hedge effectiveness is determined at the inception of the hedge
relationship and through annual prospective effectiveness
assessments to ensure that an economic relationship exists between
the hedged item and hedging instrument.
The Group enters into interest rate swaps that have similar critical terms
as the hedged item, such as reference rate, reset dates, payment dates,
maturities and notional amount. The Group does not hedge 100% of
its loans, therefore the hedged item is identified as a proportion of the
outstanding loans up to the notional amount of the swaps.
Hedge ineffectiveness may occur due to:
–the credit value/debit value adjustment on the interest rate swaps
which is not matched by the loan, and
–differences in critical terms between the interest rate swaps and loans.
There was no material ineffectiveness during 2021 or 2020 in relation
to the interest rate swaps.
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31. Financial instruments summary
The following table categorises the Group's financial assets.
New Zealand dollars
Financial assets
at amortised
cost
$000s
Financial assets
at fair value
through profit
or loss
$000s
Total
$000s
At 31 December 2021
Cash and cash equivalents
12,361 - 12,361
Trade and other receivables excluding prepayments
28,497 - 28,497
Non current trade and other receivables excluding prepayments
814 - 814
Investment in shares
- 2,054 2,054
Total financial assets at 31 December 2021
41,672 2,054 43,726
At 31 December 2020
Cash and cash equivalents
5,164 - 5,164
Trade and other receivables excluding prepayments
22,757 - 22,757
Non current trade and other receivables excluding prepayments
672 - 672
Investment in shares
- 577 577
Total financial assets at 31 December 2020
28,593 577 29,170
The following table categorises the Group's financial liabilities.
New Zealand dollars
Derivative
financial
instruments
used for
hedging
$000s
Financial
liabilities at
amortised cost
$000s
Total
$000s
At 31 December 2021
Trade and other payables
- 33,034 33,034
Current interest bearing liabilities
- 5,246 5,246
Derivative financial instruments
538 - 538
Non current interest bearing liabilities
- 107,757 107,757
Total financial liabilities at 31 December 2021
538 146,037 146,575
Financial liabilities as at 31 December 2020
Trade and other payables
- 30,972 30,972
Current interest bearing liabilities
- 9,157 9,157
Derivative financial instruments
671 - 671
Non current interest bearing liabilities
- 73,862 73,862
Total financial liabilities at 31 December 2020
671 113,991 114,662
Accounting policies
The Group classifies its financial instruments in the following
categories in accordance with NZ IFRS 9:
–amortised cost for financial assets and liabilities,
–assets at fair value through other comprehensive income (FVOCI),
–assets at fair value through profit or loss (FVTPL),
–liabilities at fair value through profit or loss, and
–other financial liabilities.
The classification of financial assets and liabilities under NZ IFRS
9 is generally based on the business model in which the financial
instrument is managed and its contractual cash flows characteristics.
On initial recognition, a financial instrument is classified as measured
at amortised cost, FVOCI and FVTPL.
Financial instruments are not reclassified subsequent to their initial
recognition unless the Group changes its business model in which case
all affected financial instruments are reclassified on the first day of the
first reporting period following the change in the business model.
A financial instrument is measured at amortised cost if it meets both
of the following conditions and is not designated at FVTPL:
–it is held with the objective to collect contractual cash flows; and
–its contractual terms give rise on specified dates to cash flows that
are solely for the payments of principal and interest on the principal
amount outstanding.
On initial recognition of an equity investment that is not held for
trading, the Group may irrevocably elect to present subsequent
changes in the investment’s fair value in other comprehensive income.
The election is made on an investment by investment basis.
All financial instruments not classified as measured at amortised cost
or FVOCI as described above are measured at FVTPL.
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PricewaterhouseCoopers, PwC Tower, 15 Customs Street West, Private Bag 92162, Auckland 1142 New Zealand
T: +64 9 355 8000, www.pwc.co.nz
Independent auditor’s report
To the shareholders of Seeka Limited
Our opinion
In our opinion, the accompanying 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 2021, 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).
What we have audited
The Group's financial statements comprise:
● the statement of financial position as at 31 December 2021;
● 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 and other
explanatory information.
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 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.
Independence
We are independent of the Group in accordance with Professional and Ethical Standard 1
International Code of Ethics for Assurance Practitioners (including International Independence
Standards) (New Zealand) (PES 1) issued by the New Zealand Auditing and Assurance Standards
Board and the International Code of Ethics for Professional Accountants (including International
Independence Standards) issued by the International Ethics Standards Board for 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 compliance, consulting, planning,
structuring and due diligence, tax pooling and agreed upon procedures in respect to the half year
financial statements and debt covenant compliance certificate. The provision of these other services
has not impaired our independence as auditor of the Group.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial statements of the current year. These matters were addressed in the context
of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
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Description of the key audit matter How our audit addressed the key audit matter
Accounting for the acquisition of
Ōpōtiki Packaging and Cool Storage
Limited (OPAC)
On 4 May 2021 the Group acquired the
OPAC business. Seeka issued shares
worth $38.7 million as the consideration to
OPAC’s shareholders, as disclosed in
note 19.
Management have applied judgement in
estimating acquisition fair values for the
following material assets:
● land and buildings of $39.5 million
(based on their independent property
valuation expert’s report); and
● property, plant and equipment
(excluding land and buildings) of
$11.8 million.
In accounting for the transaction
management also applied judgement in
determining whether to recognise
any identifiable intangibles on acquisition,
including grower relationships and
contracts, and, where applicable, the fair
value of intangibles identified.
Following the measurement of the
consideration and identifiable assets and
liabilities, goodwill of $7.6 million was
recognised from the acquisition.
This was determined to be a key audit
matter due to the financial significance
and complexity of the transaction,
including management judgement in
determining the fair value of assets and
liabilities and whether there were any
identifiable intangible assets that should
be recognised on acquisition.
Our audit focused on the significant management
estimates and judgements used in establishing the fair
values of acquired assets and liabilities. Our
procedures included:
● Obtaining an understanding of the acquisition,
including the key terms and conditions and assets
and liabilities acquired, by reading relevant
agreements and documents;
● Reviewing relevant information such as vendor
financial statements, the acquisition due diligence
reports, the property valuation report from
management’s expert, Group Board minutes and
significant contracts (including grower contracts)
to assess the completeness of the acquired assets
and liabilities;
● Gaining an understanding of the valuation
approach and methodology undertaken by
management to identify separately identifiable
intangible assets and to determine the fair value of
the assets and liabilities acquired;
● Considering whether the recognition and
measurement of acquired tangible and intangible
assets and liabilities was consistent with the
requirements of the accounting standards;
● Testing the completeness, accuracy, relevance
and mathematical accuracy of the source data
used within the valuations;
● Engaging our auditor’s valuation expert to:
‒ assess the valuation approach and
methodology undertaken by management’s
expert in relation to the acquired land and
buildings;
‒ evaluate management’s approach to valuing
plant and equipment at fair value;
‒ evaluate the completeness of and valuation
approaches for the identified intangible assets;
● Considering the independence and competence of
management’s property valuation expert; and
● Considering the sufficiency of disclosures in the
financial statements.
As a result of our procedures we have no matters to
report.
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PwC
Description of the key audit matter How our audit addressed the key audit matter
Valuation of land and buildings
As reflected in note 10 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
properties are revalued by an independent
external valuer using a combination of
four different approaches to arrive at a fair
value.
The Group then utilises their internal
valuation expertise to evaluate whether,
based on the results of the third party
valuations and other recent market data,
the remaining New Zealand and Australia
asset values remain appropriate and
materially reflect fair value.
The total value of the Group’s land and
buildings at year end is $228.5 million.
We included the valuation of land and
buildings as a key audit matter because of
the level of judgement inherent in the
valuations.
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 independence, objectivity and
competence of the third party valuers;
● Engaging our in-house valuation expert to
challenge the work performed by the third party
valuers and assess the reasonableness of the
assumptions used, such as capitalisation and
discount rates, based on their knowledge gained
from reviewing valuations of similar properties,
known transactions and available market data;
● Reviewing and challenging management’s
assessment of the carrying values of the Group’s
land and buildings not independently revalued
during 2021 by comparing our own independent
assessment of valuation ranges using our PwC
valuation expert; and
● Reviewing the adequacy of the disclosures in the
financial statements.
As a result of our procedures we have no matters to
report.
Goodwill impairment tests
As at 31 December 2021, the carrying
amount of the Group’s goodwill amounted
to $17.2 million as disclosed in note 11, of
which $14.7 million and $1.8 million
related to the Bay of Plenty post harvest
and Northland post harvest cash
generating units (CGUs) respectively.
Management has performed impairment
testing for each CGU on a value-in-use
basis, using a discounted cash flow model
based on forecast future performance to
determine the recoverable amount. No
impairment was identified.
Our audit focused on assessing and challenging the
significant estimates and assumptions used by
management in the impairment tests for the Bay of
Plenty and Northland post harvest CGUs, being the
largest CGUs, along with evaluating the overall Group
impairment test.
Our procedures included:
● Evaluating the appropriateness of the CGUs,
including the changes made to the definition of the
Group’s CGUs during the year;
● Agreeing the cash flows included in
management’s impairment model for each CGU to
the latest board approved five year plan and
budget for the year ending 31 December 2022;
● Assessing the Group’s forecasting accuracy by
comparing historical forecasts to actual results;
● Evaluating the key cash flow assumptions by
obtaining from management a detailed analysis of
the forecast supply of trays to the packhouses,
revenue and earnings per tray, and overheads.
We compared this information to historical
outcomes and our assessment of the feasibility of
management’s plans;
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Description of the key audit matter How our audit addressed the key audit matter
The impairment testing of goodwill is
considered a key audit matter due to the
significant level of management
judgement applied in estimating the future
performance and cash flows for the Group
and material CGUs, along with the
discount rate and terminal growth rate
used in estimating the recoverable
amounts.
● Using our in-house valuation expert we reviewed
whether the discount rate used by management
for each CGU was reasonable. We also compared
it to relevant industry comparators. Our expert
also assessed the terminal growth rates used;
● Testing the accuracy of the calculations in
management’s impairment model for each CGU,
and checking the carrying amount of the CGU’s
net assets was correct;
● Performing a sensitivity analysis across a range of
reasonably possible changes in the discount rate,
cash flow assumptions and terminal growth rate;
and
● Reviewing the adequacy of the disclosures in the
financial statements.
As a result of our procedures we have no matters to
report.
Our audit approach
Overview
Overall group materiality: $2,630,000, which represents
approximately 0.85% of revenue.
We chose revenue as the benchmark because, in our view, it is the
benchmark against which the performance of the Group is most
commonly measured by users, and is a generally accepted
benchmark. The Group operates in a high-volume low margin
industry where net profit is not representative of the scale of the
Group.
Following our assessment of the risk of material misstatement, we:
● Selected two entities for full scope audits
● Performed specified audit procedures and analytical review
procedures on the remaining entities
As reported above, we have three key audit matters, being:
● Accounting for the acquisition of Ōpōtiki Packaging and Cool
Storage Limited (OPAC)
● Valuation of land and buildings
● Goodwill impairment tests
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PwC
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the financial statements. In particular, we considered where management made
subjective judgements; for example, in respect of significant accounting estimates that involved
making assumptions and considering future events that are inherently uncertain. 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.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain
reasonable assurance about whether the financial statements are free from material misstatement.
Misstatements may arise due to fraud or error. They are considered material if, individually or in
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall Group materiality for the 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 financial statements as a whole.
How we tailored our group audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion
on the 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.
The materiality levels applied in the full scope audits of the New Zealand and Australian businesses
were calculated by reference to a portion of Group materiality appropriate to the relative scale of the
business concerned (New Zealand), or based on materiality calculated for statutory reporting purposes
where the statutory materiality was lower than that allocated in the Group calculation (Australia).
Other information
The Directors are responsible for the other information. The other information comprises the
information included in the Annual Report, but does not include the financial statements and our
auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express
any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
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 financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of
the 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 financial statements that are free from
material misstatement, whether due to fraud or error.
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In preparing the 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 financial statements
Our objectives are to obtain reasonable assurance about whether the 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, 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 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/assurance-standards/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 Troy Florence.
For and on behalf of:
Chartered Accountants Auckland
18 February 2022
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Governance
78 Corporate governance statement
87 Board of directors
89 Interests register
90 Directors’ interests in Seeka Limited securities
91 Subsidiary companies
92 Employee remuneration
93 Other disclosures
94 Securities statistics
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Corporate governance statement
As at 31 December 2021
At Seeka, we conduct our business 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’s Board and management are committed to best practice governance and Seeka has adopted the recommendations in the NZX Corporate
Governance Code, 10 December 2020 (the Code). Our practices are set out in this corporate governance statement. The Board regularly reviews
Seeka's corporate governance structures against the eight principle recommendations in the Code, and considers Seeka's practices and procedures
substantially meet Code recommendations. Any exceptions are noted in this governance statement, and listed on page 86 of this annual report.
Seeka's governance policies are available on Seeka's website, see Seeka.co.nz/corporate-governance.
The Board approved this governance statement on 18 February 2022.
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 core brand attribute “founded on relationships.”
Seeka’s Code of Ethics is included in employee induction packs, is available on Seeka’s intranet, and the code's principles and objectives are promoted
to staff each year including at staff meetings. 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
• Proper use of Seeka information, assets and property
• Conduct, valuing individuals' differences and respecting all stakeholders
• Dealing with gifts or gratuities
• Whistle blowing for safe reporting of potential wrong doing
• Compliance with laws and Seeka policies
• Managing breaches of Seeka’s Code of Ethics
Seeka also has a strict Insider Trading Policy that applies to the Seeka team of directors, officers, senior managers and all employees, that prohibits
team members from direct or indirect dealing in Seeka financial products when holding inside information, plus a duty of confidentiality that protects
the dissemination and use of confidential company information.
The Insider Trading Policy defines black-out periods during which restricted persons (defined below) are prohibited from trading in Seeka shares
unless provided with a specific exemption by the Board. Each black-out period starts 30 days prior to, and finishes the first trading day after, key
events; being the half-year and full-year balance dates, and the release to the NZX of any announcement relating to an offer in Seeka shares.
Restricted persons includes all directors, executive officers, members of the management executive team and their administrative staff, any trusts
and companies controlled by such persons, and advisors. The policy also specifies that Seeka team members should not engage in short-term trading.
Prior to trading in Seeka shares, directors must notify the chair of the Board, and the chair must notify the chair of the audit and risk committee.
No breaches of the Code of Ethics or Insider Trading Policy were reported in the year.
Principle 2. Board composition and performance
“To ensure an effective board, there should be a balance of independence, skills, knowledge, experience and perspectives.”
Seeka’s Board commits to acting in the best interests of the company, to deliver benefits to stakeholders and grow shareholder returns.
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Board charter and responsibilities
The Board 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 primarily responsible for:
• Robust and effective health and safety systems and standards
• Establishing corporate objectives and strategies
• Monitoring management’s implementation of Seeka’s strategies
• Overseeing high standards of ethical behaviour
• Approving budgets and monitoring financial performance
• Managing risk to Seeka’s business
• Ensuring timely and transparent stakeholder and market communication
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.
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 for Board succession planning. On 1 September 2021, an eighth director Robert Farron was
appointed to the Board. Robert Farron will offer himself for election at the 2022 annual shareholders meeting and John Burke and Amiel Diaz will
retire, at which point the Board will have six directors.
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 is led by the independent chair Fred Hutchings. Non-independent director Amiel Diaz is the only director residing overseas.
The following table summarises director qualifications, skills and experience.
QualificationExecutive leadershipFinancialLegalSustainabilityKiwifruit industryGovernanceCulturalInternational marketsBrand managementTechnologyProperty valuation
Fred HutchingsBBS, FCA
Martyn BrickBAgCom
John BurkeBAgSc
Ratahi Cross
Amiel DiazBA, BSc, CPA, CISA
Robert FarronBBS, CA
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 (retiring April 2022), representative of Seeka’s shareholder Sumifru Singapore Pte Limited, and
• Ratahi Cross, representative of Seeka shareholder Te Awanui Huka Pak Limited and is the chair 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 extensive interests in kiwifruit orchards that supply Seeka are considered non-
independent directors;
• Martyn Brick
• John Burke (retiring April 2022), and
• Ratahi Cross
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The Board has four independent directors;
• Fred Hutchings, Board chair and remuneration committee chair
• Ashley Waugh, audit and risk committee chair,
• Cecilia Tarrant, sustainability committee chair, and
• Robert Farron (appointed 1 September 2021)
Director appointments and induction
As required, the chair 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 for appointment or reappointment.
Directors enter a written agreement covering the term of their appointment and are provided with detailed information about Seeka, the Group’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.
The chair undertakes an annual assessment of Board, director and committee performance, seeking assistance, as required, from the nominations
committee and external advisors.
Director tenure
0 to 3 years3 to 6 years6 to 9 years9 to 12 years12 or more years
1
1
1
1
2
1
1
2
1
1
2
1
1
Non-independent directors
Independent directors
While there is no maximum term, the Board annually reviews director length of service and any potential impact on director independence. When the
Board recommends the re-election of a director whom has served longer than 12 years, they will explain to shareholders their rationale for supporting
re-election.
At the April 2022 annual shareholders meeting, Amiel Diaz having served 12 years as a director, will retire by rotation and has not offered himself for
re-election, and John Burke, having served ten years as a director, will retire.
Director profiles
Director profiles are listed on Seeka’s website (see Seeka.co.nz/investors), and are included on page 87 of this annual report. Full disclosure of
director interests according to section 140 (2) of the Companies Act 1993 are listed on page 89 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 directors, 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. Notably Ratahi Cross of Ngai Tukairangi is a lecturer
in Māori history, Amiel Diaz is a Filipino businessman based in Asia, and 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 2021.
FY21FY20
FemaleMaleFemaleMale
Directors1716
Senior managers2725
Total314311
Diversity policy
Seeka is committed to providing an inclusive environment that supports a diversity of thinking and skills. 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 2021, Seeka performed in adherence to the principles of our Diversity Policy.
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Professional development
Directors are supported to undertake professional development through individual training and by attending relevant courses.
Evaluation of board, committee and director performance
The Board Charter specifies that the chair undertakes an annual review of Board, committee and director performance. The chair's 2021 review found
that the Board, committees and directors have fulfilled all their duties and responsibilities for sound corporate governance as specified by the Board
Charter.
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 three 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.
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. The
Board reviews the sustainability, remuneration and nominations committee charters biennially and the audit and risk committee charter annually.
Committee membership and workload management
Seeka is governed by a seven-member non-executive Board, except during succession planning when an eighth director may be appointed until the
next annual shareholders meeting, at which point the Board reverts to seven 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 audit and risk committee
charter specifies a majority of independent directors.
The current standing committees are:
Audit and risk
CompositionRoleMembersCharter
Independent chair with a minimum of two
other directors. The committee must have
a majority of independent directors, with at
least one having an accounting or financial
background. The chair may not be the
Board chair.
Examines financial reporting, compliance, external
and internal auditing, risk management and risk
insurance.
Ashley Waugh, chair
John Burke
Fred Hutchings (up to
30 September)
Robert Farron (since 1
October)
Audit and risk
committee charter
Sustainability
CompositionRoleMembersCharter
A minimum of two directors appointed
by the Board. No management members,
but the chief executive or delegate to be
invited to meetings.
Ensures Seeka uses an appropriate reporting
framework, provide strategic guidance on targets,
measures and performance, and examines the
strategic implications of climate change.
Cecilia Tarrant, chair
John Burke
Fred Hutchings
Sustainability
committee charter
Remuneration
CompositionRoleMembersCharter
Independent chair with a minimum of two
other directors. When not an appointed
member, the Board chair will be an ex-
officio member.
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
Remuneration
committee charter
In addition, the chair periodically establishes an ad-hoc nominations committee.
Nominations
CompositionRoleMembersCharter
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.
FY21 members
Fred Hutchings, chair
Ratahi Cross
Cecilia Tarrant
Nominations
committee charter
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In the event of a takeover offer, the Board Charter provides for the formation of an ad-hoc initial response committee and an independent takeover
response committee to enact the procedures and protocols of the Board's Takeover Response Manual.
Initial response committee
CompositionRoleMembers
Independent directors.Manage the initial response to an unexpected takeover notice.Fred Hutchings
Cecilia Tarrant
Ashley Waugh
Independent takeover response committee
CompositionRoleMembers
Directors that are independent of the
bidder and of the bid.
Manage the takeover response and act in the interests of all
shareholders.
Appointed by the Board.
To date there has been no need to convene an initial response committee meeting or form an independent takeover response 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.
The following table reports Board and committee meeting attendance in 2021.
BoardAudit and riskSustainabilityRemunerationNominations
MeetingsAttendedMeetingsAttendedMeetingsAttendedMeetingsAttendedMeetingsAttended
Fred Hutchings
1
14141513335533
Martyn Brick1413--------
John Burke1414191732----
Ratahi Cross1414----5433
Amiel Diaz1412--------
Robert Farron
2
4444------
Cecilia Tarrant1412--335533
Ashley Waugh14131919------
1. Fred Hutchings retired from the audit and risk committee on 30 September 2021, and attended a further 4 meetings after this date in an ex officio capacity.
2. Robert Farron was appointed to the Board on 1 September 2021, and to the audit and risk committee on 1 October 2021.
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 growers.
Seeka's Continuous Disclosure Policy covers the classification, timing and release of material information to investors and other stakeholders. The
chair of the Board, chair of the audit and risk committee, chief executive and chief financial officer (the disclosure committee) are responsible for
identifying material information between Board meetings. At every Board meeting the Board considers whether its deliberations and decisions trigger
a need for a disclosure to the NZX.
As stewards of more than 400 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 certification to the international GLOBALG.A.P standard for good
agricultural practice that focuses production and supply management on the consumer’s demand for safe food. See www.globalgap.org.
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. See www.globalgap.org/uk_en/for-producers/globalg.a.p.-add-on/grasp/.
In New Zealand, Seeka has partnered with all supplying growers to form independent, grower-controlled entities that manage grower fruit returns;
kiwifruit growers appoint Seeka Growers Limited as their agent for the supply of kiwifruit to Seeka, with avocado growers appointing AvoFresh
Limited. See www.seeka.co.nz/seeka-grower-council and www.seeka.co.nz/avofresh.
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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 financial 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 considers environmental, social and governance concerns, and discloses to the markets any environmental factors that may
materially affect operations.
Seeka has a sustainability committee to provide strategic guidance on Seeka's sustainability framework, targets, measures and performance. Seeka
is working to measure and improve our environmental performance and in our 2021 interim report we published the Group's carbon footprint for
2019. We know our orcharding and supply chain operations influence our environment, and we are actively addressing the risks and opportunities
of climate change. The sustainability committee provides guidance to the Seeka Agile Sustainability Team (SAST). Drawing together staff who
are passionate about sustainability from all areas of our operations, and working with external advisors, Seeka's sustainability team is working
to integrate sustainability into the hearts and minds of our employees and deliver projects that reduce Seeka’s environmental footprint. Seeka is
committed to annually reporting our sustainability initiatives and have engaged Toitu Envirocare to independently verify our environmental footprint
calculations. Seeka's third annual Sustainability report is included in this document.
Principle 5. Remuneration
“The remuneration of directors and executives should be transparent, fair and reasonable.”
Director remuneration
In accordance with the Board Charter, the chair uses independent 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 2021, when the pool limit was set at $530,000 per annum. During the year, R Farron was appointed to the Board and due to the increase in the
number of directors the total fees paid exceeded the pool limit by $5,833, as permitted under NZX Rule 2.11
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 encouraged but not required to
own Seeka shares. Director shareholdings are disclosed on page 90.
The following table reports the annual allocation of the pool at the date of this report, and directors’ fees paid during the financial year. No other
benefits were provided to directors during the year.
Position
Annual base
director feeChair fee
Audit and risk
committee chair
fee
Director fees
paid during the
year
Fred HutchingsChair
$62,500$62,500$125,000
Ashley WaughDirector, Audit and risk committee chair
$62,500$15,000$77,500
Martyn BrickDirector
$62,500$62,500
John BurkeDirector
$62,500$62,500
Ratahi CrossDirector
$62,500$62,500
Amiel DiazDirector
$62,500$62,500
Robert FarronDirector
$62,500$20,833
Cecilia TarrantDirector
$62,500$62,500
Total
$500,000$62,500$15,000$535,833
The base director fee includes committee membership, with the Board chair and chair of the audit and risk committee receiving a chair's fee.
Additional fees for chairing the sustainability, remuneration or nominations committees are not currently paid.
Chief executive officer remuneration
The review of the chief executive’s remuneration is undertaken by the remuneration 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 for 2021.
Base salaryBenefits
1
FY21 annual
performance incentive
Total remuneration
Michael Franks
$662,446$60,009$470,063$1,192,518
1. Benefits are delivered through vehicle, Kiwisaver contributions, medical and life insurance.
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Performance incentive
The chief executive officer’s performance incentive has a maximum value of 73% of fixed remuneration for achieving annual targets set by the Board,
including financial performance, strategic goals, health and safety, and risk management. For FY21, the chief executive officer earned a $470,063
performance incentive (94% of the possible payable incentive.) This incentive was paid in December 2021 (FY20 - $388,988, paid early 2021).
Employee share scheme
At balance date, the chief executive had 8,000 shares allocated April 2019 at $4.76 per share under the 2019 employee share scheme. These shares
vest 2022.
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 considers risk management an important governance function to protect stakeholders, build long-term wealth in our communities and
optimise shareholder value. The Board retains ultimate responsibility for risk management, with the audit and risk committee providing a specific
focus on material risks as defined in the Audit and Risk Committee Charter.
While no risk management system can completely remove business and financial risks, our goal is to ensure material risks are appropriately identified
and managed within acceptable levels. We accomplish this through a strategic focus, active management, contingency planning and a sensible
balance between costs and anticipated benefits. Wherever appropriate, the processes are consistent with AS/NZS 31000:2009 Risk Management
Principles and Guidelines.
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 (when practicable with regard to Covid-19 travel restrictions)
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.
Seeka has appropriate insurance cover, as available, for property damage to its offices, post harvest processing and fruit handling facilities.
The Brown Marmorated Stink Bug (BMSB; Halyomorpha halys) remains one of the top pests of concern for New Zealand's horticultural industry. A
native to China, Japan, Korea and Taiwan, and accidentally introduced in the United States in the mid-1990s, adult BMSB feed on fruit and make them
unmarketable. The Ministry of Primary Industries is working with industry groups along with the public to prevent the unintended import of BMSB,
including eradication protocols if BMSB are detected in New Zealand. Seeka personnel and supplying growers are informed on how to identify BMSB
and the immediate actions to be undertaken if the pest is found.
Communicable diseases are a risk to labour availability, food safety and market access. Seeka works with industry bodies, the Government,
community agencies and international groups to secure reliable labour. Risk to food safety and market access is managed through Seeka's full
orchard-to-market track and trace service, which includes a register of all orchard visits and finger-scanner access to post harvest facilities. Tracing
from point of origin to point of sale allows Seeka to manage risk from contagion and ensures our markets can have confidence in the safety of our
supply chain and our products. Seeka's response to the communicable disease Covid-19 is detailed in the following health and safety section.
Health and safety
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.
Seeka has a Covid-19 response committee to protect our people and prepare our business. We have worked with health professionals, secured
personal protective equipment, and used social distancing protocols to mitigate risk and keep our people safe as we deliver an essential service. This
includes using operational “bubbles”, onsite personnel temperature logging, touchless signing in, the provision of personal protective equipment, two-
metre screening, enlarged break areas, 24-hour cleaning and remote management.
Seeka is part of a community effort that kept our whānau safe as collectively we worked to harvest our growers' crops and supply the world with safe,
healthy food. This included operating an essential service from Auckland New Zealand and Victoria Australia, during prolonged periods of community
lockdown in FY21.
Our people work in multiple, complex environments, and we focus on building safety into everything we do. This included instilling Seeka's safety
culture as we amalgamated OPAC and Orangewood in FY21. Over the full year, the Group employed more than 4700 people, with Group salary and
wages equating to 1915 full time equivalents.
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The following table reports Seeka's health and safety lead and lag measures for FY21.
IndicatorFY21 annual thresholdFY21 actuals
Inspirational people; monthly H&S meetings heldLead90%
92%
Total recordable injury frequency rate
1
Lag
Less than 4.5
3.3
Serious injuries
2
LagZeroZero
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. Permanently disabled or requiring immediate in-patient hospitalisation.
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, robust, 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 FY21, Troy Florence of PricewaterhouseCoopers (PwC) was the external auditor for the Group. Troy replaced Pip Cameron of PwC who completed
her five-year term as Seeka’s Auditor at the end of FY20.
PwC has confirmed its independence to the audit and risk committee, and that its independence was not compromised during the reporting period.
PwC auditors attend the annual shareholder meeting to answer any shareholder questions about the audit.
In FY21, PwC was paid $493,000 for audit fees and expenses, and $261,000 for tax compliance, consulting, planning, structuring and due diligence,
tax pooling and debt covenant compliance certificate agreed upon procedures.
To further increase auditor independence, in FY21, Seeka appointed BDO as its tax compliance agent.
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 financial 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.
Directors also pay attention to matters raised by PwC, the external auditor.
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
• 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 via the online portal, or where
practicable in person, 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.
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Shareholders are provided with copies of the annual report, and are encouraged to receive electronic communication by contacting our registrar
Link Market Services, see Linkmarketservices.co.nz. Notices of shareholder meetings are posted on the NZX website and Seeka's website. Where
circumstances allow, Seeka sends notices of shareholder meetings 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.
When raising new capital, when practical the Board will offer a scheme that allows existing shareholders to further invest in the Company on a pro
rata basis so they can maintain their relative proportion of Seeka's issued shares.
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 payment - full yearApril
1
Annual shareholder meetingApril
Dividend payment - half yearOctober
Stakeholder updateOctober
1. In 2022, payment of the full year dividend was moved to 23 February due to the issue of new shares ex-dividend as part of the acquisition of NZ Fruits in February 2022.
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.
PrincipleConcerningKey difference
Period of non
compliance
2. Board
Composition
and
Performance
2.8A majority of the board
should be independent
directors.
The Constitution and Board Charter specify a minimum of two independent directors.
As Seeka's foundation business is kiwifruit, the Board considers it appropriate to have
a mix of directors with extensive experience in kiwifruit production and handling, who
in the normal course of business would supply Seeka with produce from their ongoing
orcharding interests. The Board must also appropriately represent large shareholders.
The specified minimum of two independent directors provides the flexibility to meet
these two criteria, while also ensuring Board decisions reflect the best interests of
Seeka and its security holders.
From 1 January to 1 September 2021, only three out of seven directors (a minority)
were deemed independent and four non-independent; two for their extensive interests
in orchards that supply Seeka (industry expertise), one an appointee of a large
shareholder (market expertise), and one that has extensive interests in orchards that
supply Seeka as well as being an appointee of a large shareholder (industry expertise).
Since the appointment of an independent director on 1 September 2021, four out of
eight directors were deemed non-independent (even split).
At all relevant
times
3. Board
Committees
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 does comply with the code by having an
independent chair, an independent director and a non-independent director.
At all relevant
times
3.4Standing nominations
committee with
a majority of
independent directors.
Nominations Committee Charter allows for the formation of an ad-hoc committee
as required. To manage workload across the Board, the charter only specifies an
independent chair.
At all relevant
times
8. Shareholder
Rights and
Relations
8.4If seeking additional
equity capital, issuers
should offer further
equity securities to
existing equity security
holders on a pro rata
basis.
On 4 May 2021, Seeka issued 7,042,574 new ordinary shares (with shareholder
approval) which were exchanged for OPAC shares, and on 22 November a further
639,302 shares which were exchanged with cash for Orangewood shares. The Board
considered these issues were an effective method to secure the amalgamation of
these two businesses, would benefit all shareholders from the enlarged Seeka business
and, as most OPAC and Orangewood shareholders are also growers, supports their
supply of kiwifruit and further strengthens Seeka's alignment with growers.
4 May 2021
and
22 November
2021
8.5Notices of shareholder
meetings given at least
20 working days prior
to meeting
On 30 March 2021, Seeka issued a notice for the annual shareholders meeting for
16 April 2021. The notice was less than 20 working days prior to the ASM. It was
issued later than customary so Seeka could include a resolution relating to the
proposed OPAC acquisition and share issue that was announced five days prior.
Seeka intends to provide shareholders with at least 20 working days' notice of
shareholder meetings where practicable.
30 March 2021
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Board of directors
The following directors held office on 31 December 2021.
Fred Hutchings BBS, FCA
Independent, non-executive Chairman
Member Sustainability Committee, chair Remuneration Committee, and member Audit and Risk Committee to 30 September 2021.
Chartered Member of the Institute of Directors NZ
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 a director of Speirs Group Limited and Speirs Food Limited, and retired as chairman of Tui Products Limited in 2018 when the business was
sold. He is a past president of Chartered Accountants Australia and New Zealand.
Fred holds an interest in a kiwifruit orchard supplying Seeka.
Martyn (Marty) Brick BAgCom
Non-executive Director
Appointed 23 April 2013
Marty has experience in agribusiness having worked in 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 and avocado orchards supplying Seeka, and is a trustee of Seeka Growers Limited.
John Burke BAgSc
Non-executive Director
Member Audit and Risk Committee and Sustainability Committee
Appointed 24 April 2012, will retire at the 2022 ASM
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 Cross
Non-executive Director
Member Remuneration Committee
Chartered Member of the Institute of Directors NZ
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 Māori kiwifruit grower in New Zealand. The trust operates orchards on the Matapihi Peninsula at Mount Maunganui, and
in the Hawke’s Bay, which supply Seeka.
Ratahi has a background in natural science specialising in native flora and fauna. He also lectures in Māori history for several tribes he belongs to.
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Amiel (Mel) Diaz
BA, BSc, CPA, CISA
Non-executive Director
Appointed 19 October 2009, will retire at the 2022 ASM
Mel is the head of the Philippines subsidiaries of Farmind Corporation. He has knowledge of the Asian fresh produce business, with an emphasis on
Japan and the Philippines, and is currently establishing a 250 hectare highland banana plantation in the Philippines for Farmind Corporation.
Mel has executive management experience in technology, telecommunications, manufacturing, finance, service, business consultancy and the fresh
produce industry, having worked for more than 35 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.
Robert Farron BBS, CA
Independent, non-executive Director
Member Audit and Risk Committee since 1 October 2021
Chartered Member of the Institute of Directors NZ
Appointed 1 September 2021
Robert is a Chartered Accountant (CAANZ) and has had a 30-year executive career in professional services, corporate and institutional banking,
renewable energy development and electricity generation and retailing. Robert has held senior leadership roles in listed companies including chief
financial officer and company secretary of Bay-of-Plenty-based Trustpower and chief executive of Australian-based Tilt Renewables. He has also held
governance and advisory roles for private companies. Robert is based in the Bay of Plenty.
Cecilia Tarrant BA/LLB Hons, LLM
Independent, non-executive Director
Chair Sustainability Committee and member Remuneration Committee
Chartered Member of the Institute of Directors NZ
Appointed 27 April 2017
Cecilia has more than 25-years experience in law and finance, having worked as a lawyer in Auckland and San Francisco before becoming an
investment banker in New York and London. She is now a professional director. Cecilia is the chair of New Zealand Green Investment Finance Limited,
a director of Payments NZ, and Chancellor of Waipapa Taumata Rau - The University of Auckland. She is also involved in start-up investing and is the
chair of the ArcAngels network.
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 has 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 chairs the board of Colonial Motor Company and chaired Moa, New Zealand’s largest craft brewer, until retiring in 2017, and was a
director of Fonterra Co-operative Group Limited until retiring in November 2018.
Changes in Board membership
On 1 September 2021, Robert Farron was appointed as an independent, non-executive director as part of Board succession planning, and member of
the Audit and Risk Committee on 1 October 2021.
On 30 September 2021, Fred Hutchings retired from the Audit and Risk Committee.
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89SEEKA LIMITED | ANNUAL REPORT 2021
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 2020 are italicised.
Fred Hutchings Amwell Holdings Limited Director / Shareholder
Walker Nominees Limited Director
Speirs Group Limited and subsidiaries Director
AvoFresh Limited Director
Seeka Share Trustee Limited Director
Martyn Brick Strathboss Kiwifruit Limited Director / Shareholder
Seeka Growers Limited Director / Trustee
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
Pukekauri Farming Limited Director / Shareholder
Peter Ratahi Cross Ngai Tukairangi No2 Trust Trustee / Chair
Te Awanui Huka Pak Limited Director
Seeka Share Trustee Limited Director
Wai O Kaha Gold Landowners General Partner Limited Chair
Wai O Kaha Gold JV General Partner Limited Chair
Amiel Diaz Farmind Corporation Officer
Farmind Philippines Inc. President / Director
Farmind Asia Banana Corporation President / Director
Cecilia Tarrant Payments NZ Limited Director
ArcAngels Angel Investment Network Chair
The University of Auckland Chancellor
New Zealand Green Investment Finance Limited Chair
Seeka Share Trustee Limited Director
Ashley Waugh Primrose Hill Farm (Puke-Roha Limited) - Te Awamutu Director / Shareholder
The Colonial Motor Group Limited Chair / Shareholder
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ANNUAL REPORT 2021 | SEEKA LIMITED90
Directors’ interests in Seeka Limited securities
The following table details director interests in shares at 31 December 2021.
InterestShares
Martyn BrickBeneficial
1
1,423,361
John BurkeBeneficial
2
101,506
Non beneficial
3
83,000
Peter Ratahi CrossBeneficial
4
2,300,040
Fred Hutchings Beneficial
5
51,552
Cecilia TarrantBeneficial
6,974
Ashley WaughBeneficial
13,166
1. Held by Omega Kiwifruit Limited (1,145,895), Strathboss Kiwifruit Limited (185,807), Martyn Brick, Christopher Mcfadden and John Burke as trustees of the Rokeby
Trust (83,000) and Seeka Share Trustee Limited for and on behalf of Martyn Brick (8,659).
2. Held by J&D Burke Holdings Limited.
3. Held by Martyn Brick, Christopher Mcfadden and John Burke as trustees of the Rokeby Trust.
4. Held by the trustees of the Ngai Tukairangi No. 2 Trust (459,551) and Te Awanui Huka Pak Limited (1,714,410). P R Cross is a trustee of the Ngai Tukairangi No. 2 Trust
and a beneficiary, and interests associated with P R Cross are beneficiaries, of the Ngai Tukairangi No. 2 Trust. Te Awanui Huka Pak Limited holds Ordinary Shares in
Seeka Limited. P R Cross is a director of Te Awanui Huka Pak Limited. The trustees of the Ngai Tukairangi No. 2 Trust are shareholders in Te Awanui Huka Pak Limited.
5. Held by Walker Nominees Limited (46,588), Amwell Holdings Limited (2,463) and by Sharesies Nominee Limited on behalf of F A Hutchings (2,501).
The following table details director dealings in Seeka shares during the year.
TransactionDateNumberTotal consideration
Marty BrickTransfer
3
6 September 2021
123,185
4
$533,391
John Burke
1
Purchase
2
27 January 2021
2,143 $10,099
Purchase
2
30 March 2021
2,187 $10,338
Transfer
3
16 September 2021
4,365
5
$18,900
Purchase
2
13 October 2021
2,370 $11,991
Peter Ratahi Cross
6
Transfer
3
16 September 2021
126,079 $545,922
Fred HutchingsPurchase
2
27 January 2021
1,029 $4,849
Purchase
2
30 March 2021
1,050 $4,963
Transfer
3
16 September 2021
2,463
7
$10,670
Purchase
2
13 October 2021
1,088 $5,505
Cecilia TarrantPurchase
2
27 January 2021
154 $726
Purchase
2
30 March 2021
157 $742
Purchase
2
13 October 2021
163 $825
1. Acquired by Rokeby Trust trustees.
2. Acquired under the Seeka dividend reinvestment plan.
3. Transfer of shares previously held by Seeka Share Trustee Limited for and on behalf of the director following satisfaction of vesting criteria and payment under the Seeka
Limited Grower Loyalty Share Scheme. Grower Loyalty Share Scheme shares were first disclosed 31 December 2019, and relate to the issue of scheme shares to Seeka
Share Trustee Limited on 9 April 2019 for $4.76.
4. 47,572 shares transferred to Omega Kiwifruit Limited, 66,954 shares transferred to Strathboss Kiwifruit Limited, and 8,659 shares transferred to Martyn Brick.
5. Transferred to J&D Burke Holding Limited.
6. Transferred to Ngai Tukairangi No. 2 Trust.
7. Transferred to Amwell Holdings Limited.
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91SEEKA LIMITED | ANNUAL REPORT 2021
Subsidiary companies
The following table details directors of Seeka Limited subsidiary companies as at 31 December 2021.
Subsidiaries added since 31 December 2020 are italicised.
Michael Franks and Stuart McKinstry are officers of Seeka Limited. Robert Towgood was a senior manager at Seeka Limited until 20 December 2021.
Anthony Motion is an independent director for the Group’s Australian subsidiaries.
New Zealand incorporated companies
Trading subsidiaries
Aongatete Coolstores Limited Michael Franks, Stuart McKinstry
AvoFresh Limited Michael Franks
Delicious Nutritious Food Company Limited Michael Franks, Stuart McKinstry
Integrated Fruit Supply & Logistics Limited Michael Franks
Kiwi Coast Growers (Te Puke) Limited Michael Franks, Stuart McKinstry
OPAC Properties Limited Michael Franks, Stuart McKinstry
OPAC Growers Supply Limited Michael Franks, Stuart McKinstry
Northland Horticulture Limited (Formerly Northland Horticulture GP Limited) Michael Franks, Stuart McKinstry
1
Seeka East Limited (Formerly Seeka Dairy Ventures Limited) Michael Franks, Stuart McKinstry
Seeka OPAC Limited Michael Franks, Stuart McKinstry
Seeka Share Trustee Limited Fred Hutchings, Cecilia Tarrant, Peter Ratahi Cross
Seeka Te Puke Limited Michael Franks, Stuart McKinstry
Not-trading subsidiaries
CMS Logistics Limited Robert Towgood
Eleos Limited Michael Franks, Stuart McKinstry
Enviro Gro Limited Michael Franks
Glassfields (NZ) Limited Michael Franks, Stuart McKinstry
Guaranteed Sweet New Zealand Limited Michael Franks, Stuart McKinstry
Kiwifruit Vine Protection Company Limited Michael Franks
Nutritious Delicious Food Company Limited Michael Franks, Stuart McKinstry
OPAC Growers Limited Michael Franks, Stuart McKinstry
Seeka Fresh Limited Michael Franks, Stuart McKinstry
Seeka Kiwifruit Industries Limited Michael Franks, Stuart McKinstry
Verified Lab Services Limited Michael Franks, Stuart McKinstry
1. Robert Towgood was a director until December 2021
Australian incorporated companies
Little Haven Holdings Pty Limited Michael Franks, Stuart McKinstry, Anthony Motion
Seeka Australia Pty Limited Michael Franks, Stuart McKinstry, Anthony Motion
Seeka Pollen Australia Pty Limited (not trading) 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. No new
disclosures have been advised since 31 December 2020.
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.
Subsidiary company director remuneration
Seeka Limited officers Michael Franks and Stuart McKinstry, and senior manager Robert Towgood (until 20 December 2021) 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 @ $1.06
Anthony Motion
$ 20,000$ 21,200
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ANNUAL REPORT 2021 | SEEKA LIMITED92
Employee remuneration
In FY21, the Group employed 663 permanent and more than 4000 seasonal employees.
The Group had 177 employees (December 2020 - 148), including 3 employees (December 2020 – 8) 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.
RemunerationFY21FY20
$100,000 - $109,99947 35
$110,000 - $119,99937 38
$120,000 - $129,99927 21
$130,000 - $139,99916 10
$140,000 - $149,9996 12
$150,000 - $159,9995 7
$160,000 - $169,9995 3
$170,000 - $179,99988
$180,000 - $189,9995 2
$190,000 - $199,9991 4
$200,000 - $209,9995 1
$210,000 - $219,9991 1
$220,000 - $229,9992 1
$230,000 - $239,9991 -
$240,000 - $249,9992 1
$250,000 - $259,999- 1
$260,000 - $269,000--
$270,000 - $279,0001-
$280,000 - $289,0001-
$290,000 - $299,999-1
$300,000 - $309,99911
$310,000 - $319,999--
$320,000 - $329,999-1
$330,000 - $339,999--
$340,000 - $349,999-1
$350,000 - $359,9991-
$390,000 - $399,999-1
$400,000 - $409,99912
$450,000 - $459,9991-
$460,000 - $469,9991-
$480,000 - $489,9991-
$830,000 - $839,999-1
$1,190,000 - $1,199,9991-
Total
177153
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 FY20 to FY21
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 ownership scheme.
In March 2019, offers under Seeka's employee share ownership scheme were made and 568,000 shares were allocated to permanent employees at
$4.76 per share on 10 April 2019. The shares vest FY22.
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93SEEKA LIMITED | ANNUAL REPORT 2021
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 year ended 31 December 2021.
Donations
In the year ended 31 December 2021, the Group donated $270,403 to support New Zealand youth development, community, cultural and sports
groups, and Pacific health initiatives. The Group also donated fresh produce valued at $37,124 to community groups and as an official contributor to
Emirates Team New Zealand. See the 2021 sustainability report for the full list of sponsored organisations and events.
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
In compliance with s293 of the Financial Markets Act 2013, the following table details the disclosed numbers of ordinary listed shares as at
31 December 2021.
Date of NoticeShares disclosed
Tomlinson Group Investments Limited21 December 2020
2,899,930
Sumifru Singapore Pte Limited15 September 2015
2,093,558
Te Awanui Huka Pak Limited11 September 2015
1,267,410
1
Seeka Limited ordinary listed shares at 31 December 2021
40,176,160
1. According to Seeka's records, Te Awanui Huka Pak Limited held 1,714,410 shares at 31 December 2021.
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ANNUAL REPORT 2021 | SEEKA LIMITED94
Securities statistics
As at 19 January 2022
Top 50 shareholders
Number of
ordinary shares
Percent
Tomlinson Group Investments Limited
3,233,8278.05
Custodial Services Limited
2,379,6795.92
Sumifru Singapore Pte Limited
2,093,5585.21
Te Awanui Huka Pak Limited
1,714,4104.27
Omega Kiwifruit Limited
1,145,8952.85
Masfen Securities Limited
1,138,1002.83
New Zealand Central Securities Depository Limited
994,4162.48
Seeka Share Trustee Limited
1
738,6361.84
The Maori Trustee
711,2991.77
David John Emslie & Deborah Jocelyn Emslie & Sharp & Cookson Trustee Limited
709,0181.76
Riri Ellis & Helen Te Kani & Joshua Gear & Carlo Ellis
585,6301.46
FNZ Custodians Limited
511,8711.27
New Zealand Depository Nominee
509,8111.27
Christopher William Flood & Mark Schlagel
477,1301.19
Cole Family Trust Limited
474,2891.18
Ann Davidson
350,1870.87
Jack Law & Patricia Colleen Law
310,2400.77
Jared Agri Limited
300,0000.75
Anne Louise Bayliss & Christopher James Mcfadden
293,2800.73
Burts Orchards (1997) Limited
272,6060.68
Craig Thompson
272,2720.68
Lloyd James Christie
250,0000.62
Grant Keith Oakley & Deborah Jane Oakley & Brg Trustees 2013 Limited
228,0710.57
Development Enterprises Limited
218,7710.54
Sally Gibbons Spencer
203,4410.51
Strathboss Kiwifruit Limited
185,8070.46
Judith Ann Fisher
183,0590.46
Robin Moss
179,9610.45
Stewart Moss
178,2510.44
Michael Gilbert Franks
170,4710.42
Roger Daryl Clark & Colleen Beth Clark
160,4730.4
Matthew Ian Tremain
146,7860.37
Mary Anne Barton
145,7320.36
Malcolm John Cartwright & Helen Catherine Cartwright & Graeme Ingham Trustee Co Limited
144,6830.36
Seeka Share Trustee Limited
144,6380.36
Iconic Investments Limited
140,0000.35
Brian John Cotton Stapleton & Lois Eileen Cotton Stapleton
125,9030.31
Jean Paul Henri Mathias Thull & Lyon Trustees 2014 Limited
124,7410.31
Bowyer Orchards Limited
116,9060.29
P&M Anstis Trustee Limited
116,7360.29
Christopher Robert Malcolm & Helen Ann Malcolm
116,1850.29
Jc Orchards Limited
110,3900.27
Bryan Francis Grafas
109,7800.27
Delwyn Bell
108,7830.27
I Hort Limited
108,2220.27
John Connor
106,2050.26
Murray Charles Salt & Heather Florrence Salt
103,7700.26
J and D Burke Holdings Limited
101,5060.25
Robyn Adair Slater
100,5890.25
Michelle Thompson
99,2040.25
Total
23,445,21858.36
1. Shares held as a bare trustee in multiple parcels for members of the grower loyalty share scheme (144,638) and employee share ownership scheme (593,998).
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95SEEKA LIMITED | ANNUAL REPORT 2021
Shareholder analysis
Investors
Percent of
investors
Shares
Percent
of shares
By shareholding size
Up to 1,000 shares
43216.63341,4640.85
1,001 to 5,000 shares
1,28449.423,454,1708.60
5,001 to 10,000 shares
42916.513,189,7577.94
10,001 to 50,000 shares
36614.097,390,19318.39
50,001 to 100,000
381.462,689,6986.69
100,001 to 500,000
361.396,879,86417.12
More than 500,000
130.5016,231,01440.40
Total
2,598100.0040,176,160100.00
By residency
New Zealand shareholders
2,52897.3137,370,18893.02
Overseas shareholders
702.692,805,9726.98
Total
2,598100.0040,176,160100.00
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Governance
ANNUAL REPORT 2021 | SEEKA LIMITED96
Directory
Board of directors
Fred Hutchings - Chair
Martyn Brick
John Burke
Peter Ratahi Cross
Amiel Diaz
Robert Farron
Cecilia Tarrant
Ashley Waugh
Audit and risk committee
Ashley Waugh – Chair
John Burke
Robert Farron
Sustainability committee
Cecilia Tarrant – Chair
John Burke
Fred Hutchings
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
Stuart McKinstry
Chief ExecutiveChief Financial Officer
Kate BryantPaul CroneVerena CunninghamKevin Halliday
GM Corporate ServicesGM Post HarvestGM SeekaFresh and StrategyGM Operations
Barry PenellumJonathan van PoperingJim Smith
GM OrchardsGM Australian OperationsGM Growers and Marketing
Main contents
Governance
Registered office
Seeka Limited
34 Young Road, RD9, Paengaroa 3189
PO Box 47, Te Puke 3153
Seeka.co.nz
Auditor
PricewaterhouseCoopers
Auckland
www.pwc.co.nz
Bankers
1
Westpac New Zealand Limited
Auckland
www.westpac.co.nz
Westpac Banking Corporation
Melbourne
www.westpac.com.au
ASB Bank Limited
Auckland
www.asb.co.nz
Bank of New Zealand
Auckland
www.bnz.co.nz
Coöperatieve Rabobank U.A. (Rabobank)
Wellington
www.rabobank.co.nz
Share register
Link Market Services Limited
Auckland
www.linkmarketservices.co.nz
NZX
www.nzx.com
Legal advisors
Harmos Horton Lusk Limited
Auckland
www.hhl.co.nz
MacKenzie Elvin
Tauranga
mackenzie-elvin.com
1. All banks are lenders under a syndicated facilities
agreement with Westpac New Zealand as the agent.
seeka.co.nz
34 Young Road, RD 9, Te Puke 3189
PO Box 47, Te Puke 3153, New Zealand
+64 7 573 0303, info@seeka.co.nz
---
Analyst Briefing Pack
Annual results presentation
Year ended 31 December 2021 - Audited
Agenda
2
6
Contact
5
Outlook
4
Operating segments performance
3
Capital management
2
Financials
1
FY21 highlights
FY21 Highlights
Focus on achieving excellence
Delivered excellent performance for stakeholders despite Covid disruptions
Commitment and leadership got the job done | Orchards, Post harvest, Seeka Australia, SeekaFresh and VLS laboratory all performed ahead of expectation
Generated record profits and increased operating earnings
$310m Revenue | $56.8m EBITDA | $23.5m NPBT | $0.43 EPS | $0.26 dividend per share | $7.6m received from Psa kiwifruit class action
Three major kiwifruit acquisitions strengthen Seeka’s regional presence
OPAC (Ōpōtiki) and Orangewood (Kerikeri) in 2021 | NZ Fruits (Gisborne, Feb 2022) | Businesses integrated | Accretive to shareholders
Agritech investment in digital orchard scanning operator Fruitometry
26% shareholding | Accurate crop data aids orchard management and supply chain planning | Platform for efficiency gains
New banking syndicate secures additional funding for capacity and Seeka’s growth strategy
Westpac NZ led syndicate with Westpac AUS, ASB, BNZ and Rabobank
Capacity considered early | $20m KKP and Transcool upgrades for 2022 | Pukenga deferred
1
2
3
4
5
4
6
Financials
1. ROCE excludes $8.0m of other income (FY20 $8.9m). See appendix for ROCE calculation.
These financials should be read in conjunction with Seeka’s Annual Report 2021 and the attached appendix.
Group financial performance
$309.6m revenue
Up 23% on FY20
$56.8m EBITDA
Up 32% on FY20
− $7.6m from Crown’s settlement of Kiwifruit Claim
$23.5m Net profit before tax
Up 44% on FY20
− Guidance range $22m ~ $24m, included Psa settlement
$14.9m Net profit after tax
Down 2% on FY20, which included $5.6m deferred tax benefit
All results and comparatives consistent with NZ IFRS 16 Leases
6
NZD $millionsFY21FY20Growth
Revenue309.6 251.5 23%
Cost of sales236.3 198.8 19%
Gross profit73.2 52.7 39%
EBITDA56.842.932%
EBIT32.224.332%
Net profit before tax23.516.344%
Net profit14.915.2( 2%)
Return on capital employed
1
7.4%4.6%61%
Net tangible asset backing per share$ 5.71 $ 5.20 10%
$5.8m
$6.7m
$6.9m
$15.2m
$14.9m
$9.6m
FY17FY18FY19FY20FY21
NPAT
$5.6m
tax
benefit
$23.1m
$33.3m
$34.5m
$42.9m
$56.8m
FY17FY18FY19FY20FY21
EBITDA
Trends in financial performance
EBITDA and NPAT
1. FY17 EBITDA and NPAT comparatives are prior to the implementation of NZ IFRS16 Leases, FY18 to FY21 comply with NZ IFRS16 Leases.
NZ IFRS 16 Leases mainly affects EBITDA, as lease costs are converted to lease depreciation and lease interest.
25% CAGR
using pre NZ IFRS16
EBITDA for FY17
7
26% CAGR
NZ IFRS16NZ IFRS16
$6.4m
$4.2m
$5.0m
$5.4m
$5.2m
FY17FY18FY19FY20FY21
Orcharding EBITDA
$74m assets
$2.9m
$2.3m
$1.7m
$3.0m
$2.3m
FY17FY18FY19FY20FY21
SeekaFresh retail services EBITDA
$12m assets
Trends in operating segment performance
EBITDA –reported under NZ IFRS16 FY18 to FY21
1. FY17 EBITDA comparatives are prior to the implementation of NZ IFRS16 Leases, FY18 to FY21 comply with NZ IFRS16 Leases.
8
NZ IFRS16NZ IFRS16
NZ IFRS16NZ IFRS16
$22.0m
$37.2m
$41.0m
$41.9m
$61.6m
FY17FY18FY19FY20FY21
Post harvest EBITDA
$316m assets
$2.3m
($0.1)m
($0.6)m
$7.4m
$1.6m
$1.2m
FY17FY18FY19FY20FY21
Australia EBITDA
$48m assets
$6.2m
gain
on sale
Capital management
NZD $millionsFY21FY20Growth
Current assets - excludes cash
Trade and other receivables30.7 24.5 25%
Biological assets - crop18.4 19.9
Assets held for sale1.9 3.8
Inventories and water rights7.3 6.3
58.3 54.5 7%
Current liabilities - excludes debt
Trade and other payables(33.0)(31.0)7%
Tax liabilities(7.5)(7.0)
(40.5)(37.9)7%
Net working capital17.8 16.68%
Non current assets
Property, plant and equipment327.8 245.0 34%
Lease assets49.9 50.8
Investments in associates and shares6.0 1.6 281%
Intangibles and other27.9 18.3 52%
411.6 315.7 30%
Capital employed429.4 332.3 29%
All results and comparatives comply with NZ IFRS 16 Leases. Values may not always sum due to rounding.
Balance sheet
$97.1m increase in capital employed in FY21
$82.8m increase in PP&E
−OPAC and Orangewood acquisitions
$4.4m increase in investments
−$2.6m for 26% shareholding in Fruitometry
−$1.7m co-invested in orchard enterprises
$9.6m increase in intangibles and other
−$8.2m of goodwill from OPAC and Orangewood
acquisitions
Capital employed 31 December
10
All results and comparatives comply with NZ IFRS 16 Leases. Values may not always sum due to rounding.
1. Adjusted for $1.9m of assets held for sale (FY20: $3.8m)
2. Excludes full benefit of EBITDA from OPAC and Orangewood operations prior to their acquisition.
Balance sheet
$100.6m net bank debt at December 2021
− $22.8m increase on December 2020 (29% increase)
−$27.9m of debt and cash for the OPAC, Orangewood and
Fruitometry investments
New syndicated five-bank funding
− Lead by Westpac NZ with Westpac Corporation,
ASB, BNZ and Rabobank
−$190.4m debt line
$20.0m upgrade at KKP and Transcool
−Provides short-term capacity
−Decision on Pukenga deferred
$1.9m of orchard assets held for sale
Net bank debt 31 December
11
NZD $millionsFY21FY20Growth
Non current liabilities - excludes debt
Lease liabilities (current and non current )(63.4)(64.4)( 2%)
Deffered tax(18.4)(13.1)
Derivatives(0.5)(0.7)
(82.3)(78.2)5%
Cash(12.4)(5.2)
Borrowings113.0 83.0 36%
Net bank debt100.6 77.9 29%
Total equity246.5176.340%
Total borrowings100.677.9
Net bank debt excluding assets held for sale
1
98.774.0
EBITDA multiple1.74x 1.72x
EBITDA multiple pre NZ IFRS 16 Leases
2
2.24x 1.87x
1. As required by NZ IAS 33, 738,636 shares held by Seeka Trustee Limited for the Grower Loyalty and Employee Share Schemes are excluded from EPS calculations. If included, the weighted average EPS would be $0.42 (FY20: $0.47).
Earnings per share and dividends
43 cents earnings per share
1
13 cents per share final dividend for FY21
−To be paid 23 February 2020
−Record date 28 January 2022
− Brought forward so shares issued for NZ Fruits
acquisition are ex-dividend (normally paid in April)
−Fully imputed
−Dividend reinvestment plan with 2% discount
26 cents per share dividends from FY21
−13 cents paid October 2021
$5.71 net tangible assets per share –up 10%
12
FY21FY20
Net profit ($m)$ 14.9 m $ 15.2 m
Weighted shares on issue (m)34.8 m 29.4 m
Earnings per share
1
($)$ 0.43 $ 0.52
Net tangible assets ($m)$229 m $167 m
Shares at year end (m)40.2 m 32.2 m
Net tangible assets per share ($)$ 5.71 $ 5.20
Operating segment performance
Orchard operations
Orchard revenue of $77.1m – up 2% on FY20
Revenue growth from lift in kiwifruit volumes
$5.2m EBITDA – down from $5.4m in FY20
−Lower market returns, higher production costs and
OPAC overheads post acquisition
Eastern and Northland operations increase with
OPAC and Orangewood acquisitions
−Significant volume growth in 2022
Developing 156 hectares of kiwifruit in partnership
with landowners, iwi and the Kānoa - Regional
Economic Development & Investment Unit (previously
the Provincial Growth Fund)
Growing kiwifruit, avocado and kiwiberry for New Zealand orchard owners
14
NZD $millionsFY21FY20Growth
Revenue77.1 75.7 2%
EBITDA5.2 5.4 ( 4%)
EBIT3.0 3.5 ( 14%)
Segment assets73.7 63.4 16%
EBITDA pre NZ IFRS 162.4 3.2 ( 25%)
Assets pre NZ IFRS 1661.6 50.9 21%
Crop grown-class 1 trays (millions)
Total kiwifruit trays grown - all varieties14.4 13.0 11%
Hayward trays (millions)8.7 7.7 13%
Hayward yields - average per hectare12,300 10,200 21%
SunGold trays (millions)5.4 5.0 8%
SunGold yields - average per hectare14,370 14,000 3%
Organic and other trays0.3 0.3
In FY21 prior to acquisition, OPAC packed 4.4m trays of kiwifruit and Orangewood 2.2m trays of kiwifruit.
Post harvest operations
Record post harvest revenue of $195.9m - up 40%
$61.6m EBITDA – up 47%
−Volume growth
−Improved operating margin
3.5m trays kiwifruit packed at OPAC post acquisition
OPAC, Orangewood and NZ Fruits will lift volumes
−Synergies set to deliver benefits from a larger business
in 2022
Packing, coolstoring and shipping kiwifruit, avocado and kiwiberry for New Zealand orchard owners
15
NZD $millionsFY21FY20Growth
Revenue195.9 140.1 40%
EBITDA61.6 41.9 47%
EBIT44.6 29.8 50%
Segment assets316.1 232.7 36%
EBITDA pre NZ IFRS 1655.3 35.9 54%
Assets pre NZ IFRS 16293.3 210.9 39%
Trays packed (millions)
Hayward -Seeka (conventional and organic)17.715.713%
SunGold -Seeka (conventional and organic)17.916.111%
Other fruit -includes class 21.61.6
Seeka OPAC3.5-
Total packed40.733.422%
SeekaFresh retail services operations
SeekaFresh revenue of $21.6m – level with FY20
EBITDA of $2.3m –down 23%
Strong performance from NZ operations despite
lockdowns and Covid restrictions
− New Zealand wholesale and retail services
−Import and ripening of tropical fruits
Avocado sales commissions impacted by weak
Australian market for 2021/22 season
−Focus on exporting more avocado to Asia
Marketing fruit from post harvest operations, retail and ripening imported fruit, and Kiwi Crush production
16
NZD $millionsFY21FY20Growth
Revenue21.6 21.8 (1%)
EBITDA2.3 3.0 (23%)
EBIT1.4 2.2 (36%)
Segment assets11.7 12.4 ( 6%)
EBITDA pre NZ IFRS 161.5 2.2 ( 32%)
Assets pre NZ IFRS 167.6 8.0 ( 5%)
Australian operations
Revenue of $13.9m – up 6% on FY20
$1.6m EBITDA compared to $7.4m in FY20
−FY20 included $6.2m gain on sale of the kiwifruit orchards
which Seeka now leases
−$1.2m EBITDA excluding the gain on sale of orchards
Business improvement beyond the lease cost
−FY21 operating EBITDA is up 33% on FY20’s $1.2m
−Excellent job managing lockdowns and labour shortages
Developing new orchards
−63 hectares of kiwifruit
−New variety pears
−New nashi varieties and dates
Growing, packing and retailing kiwifruit and other Australian produce on owned and leased orchards
17
NZD $millionsFY21FY20Growth
Revenue13.9 13.1 6%
EBITDA1.6 7.4
EBIT(0.1)6.3
Segment assets47.7 47.2 1%
EBITDA pre NZ IFRS 16(0.2)14.0
Assets pre NZ IFRS 1640.5 39.3 3%
Kiwifruit (tonnes)2,106 2,153 ( 2%)
Nashi (tonnes)976 747 31%
Pears (tonnes)1,751 1,340 31%
Other fruit (tonnes)121118 3%
Total tonnesgrown, packed and sold4,954 4,358 14%
Contact
Michael Franks
Chief executive
+64 21 356 516
18
For more information see www.seeka.co.nzor please call
Stuart McKinstry
Chief financial officer
+64 21 221 5583
Appendix
19
EBITDA
20
EBITDA before revaluations and impairments is considered by Seeka's Board
to be a key measure of performance and reflection of cash flow generation.
NZD ( $000s )FY21FY20
Net profit before tax23,48816,278
Interest expense4,0824,163
Lease interest expense4,6103,877
EBIT32,18024,318
Impairment charges and revaluations
Gain on revaluation of land and buildings-( 32)
Impairment of property, plant and equipment1,18830
Impairment of intangible assets-102
Depreciation expense15,18511,653
Lease depreciation expense7,9436,671
Amortisation of intangible assets294204
EBITDA before impairments and revaluations56,79042,946
1. Lease liability less the right-of-use lease asset. 2. Notes to Seeka’s 2021 financial statements.
ROCE calculation
21
Return on capital employed is calculated as below
NZD $millions
Notes
2
FY19FY20FY21
EBIT24,31832,180
Adjust for non-recurring items
Other income
3
( 8,937)( 7,975)
Lease interest expense( 3,877)( 4,610)
Other expenses
4
-1,784
Impairments
10
301,188
EBIT - operating activities11,53422,567
Capital employed
Shareholder funds154,944176,293246,490
NZ IFRS 16 adjustment
1
13
5,75413,55113,482
Bank debt
17
119,63283,019113,003
Cash( 2,849)( 5,164)( 12,361)
Assets under construction
10
( 8,995)( 3,646)( 10,142)
Assets classified as held for sale
9
( 27,083)( 3,844)( 1,898)
Total capital employed241,403260,209348,574
Average capital employed250,806304,392
Return on capital employed4.6%7.4%
seeka.co.nz
---
Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Results for announcement to the market
Name of issuer Seeka Limited
Reporting Period 12 months to 31 December 2021
Previous Reporting Period 12 months to 31 December 2020
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$309,569 23.1%
Total Revenue $309,569 23.1%
Net profit/(loss) from
continuing operations
$14,860 (1.9%)
Total net profit/(loss) $14,860 (1.9%)
Interim/Final Dividend
Amount per Quoted Equity
Security
$ 0.13 cash dividend (As announced 20 January 2022)
Imputed amount per Quoted
Equity Security
$0.05055556
Record Date 28 January 2022
Dividend Payment Date 23 February 2022
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$5.71 $5.20
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
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.
Authority for this announcement
Name of person
authorised
to make this announcement
Stuart McKinstry
Contact person for this
announcement
Stuart McKinstry
Contact phone number +64 21 221 5583
Contact email address Stuart.Mckinstry@seeka.co.nz
Date of release through MAP
18/02/22
Audited financial statements accompany this announcement.
---
FULL YEAR RESULTS ANNOUNCEMENT FY21 | SEEKA LIMITED1
SEEKA FY21 FULL YEAR RESULT
Audited results for year ended 31 December 2021 (FY21)
Listed New Zealand produce handler Seeka Limited, with operations in New Zealand and Australia, has today reported its
audited results for the year ended 31 December 2021.
$23.5 million net profit before tax — up 44% on FY20
$0.13 per share dividend payable 23 February 2022
"Seeka's 2021 financial performance comes from a deliberate strategy to significantly improve Seeka’s underlying operating
earnings," says Seeka chief executive Michael Franks.
"Revenue is up 23% to a record $310 million helped by a rebound in Hayward kiwifruit volumes and the ongoing lift in
SunGold kiwifruit production. EBITDA is up 32% to $56.8 million as a tight focus on costs improved Seeka’s operating
margin, especially following the one-off Covid-19 expenses incurred in FY20. FY21 EBITDA also benefited from a $7.6
million compensation payment from the Crown’s settlement of the Psa kiwifruit class action.
"As we lifted our financial performance, Seeka has also increased its regional service with three major kiwifruit acquisitions.
Ōpōtiki Packing and Coolstorage Limited and Kerikeri-based Orangewood Limited were acquired in 2021, and on 2 February
2022 we completed the acquisition of Gisborne-based NZ Fruits Limited. These acquisitions have grown Seeka's market
share, and we are planning on handling 26% of the national kiwifruit crop in 2022. The businesses are now fully integrated
and are set to deliver significant synergy gains in FY22.
"Post harvest capacity was reviewed and a decision on a greenfield development at Pukenga was deferred in favour of a
$20 million capacity upgrade in the Bay of Plenty. A highly-automated MAF Roda packline is being installed at KKP and
new coolstores with environmentally-friendly coolant are under construction at Transcool. These upgrades are expected to
deliver sufficient capacity through to 2024.
"Seeka’s growth has led to an enlarged, five-bank syndicated facility to fund near-term capacity upgrades. It also provides
headroom to continue Seeka's growth strategy.
"As we deliver operational and financial performance, Seeka is also progressing our sustainability initiatives, including how
we support our communities and care for our environment. We are measuring and reporting our emissions, and rolling out
carbon-reduction initiatives and regenerative horticulture practices to reduce our environmental footprint as we work to
provide the world with safe, healthy food."
Dividend
Having lifted underlying profitability and generated strong cash flows, the Board approved a final dividend of 13 cents
for FY21 (fully imputed), to be paid 23 February 2022. Combined with the 13 cents per share interim dividend paid 13
October, this brings the total dividends paid to shareholder relating to the FY21 year to 26 cents per share (FY20 24c).
Outlook
"The Board and management have enacted Seeka's strategy in 2021, with the Group completing key investments that are
positioned to further improve shareholder returns in 2022.
"Seeka is pursuing an active growth strategy through acquisitions to build shareholder value and lift returns on capital
employed. By becoming bigger and more diverse, Seeka is building a robust, sustainable business to deliver performance to
shareholders, employees and our supply chain partners.
"We are excited by the progress we have made in FY21, which has grown our fruit supply base by more than 25%, and look
forward to tangible benefits being generated for stakeholders in FY22."
18 February 2022
Company announcement
FULL YEAR RESULTS ANNOUNCEMENT FY21 | SEEKA LIMITED2
Operational performance
The following table outlines Seeka’s performance FY21.
New Zealand dollarsFY21FY20Change
Total revenue ($m)
$ 309.6 $ 251.5 23%
EBITDA before impairments and revaluations ($m)
$ 56.8 $ 42.9 32%
EBIT ($m)
$ 32.2 $ 24.3 32%
NPBT ($m)
$ 23.5 $ 16.3 44%
NPAT ($m)
$ 14.9 $ 15.2 ( 2%)
Net bank debt ($m)
$ 100.6 $ 77.9 29%
Basic earnings per share
$ 0.43 $ 0.52 ( 17%)
Diluted earnings per share
$ 0.42 $ 0.52 ( 19%)
Net tangible assets per share
$ 5.71 $ 5.20 10%
This announcement should be read in conjunction with Seeka Limited's 2021 annual report (audited). A copy of the 2021
annual report can be found on Seeka's website www.seeka.co.nz/reports.
EBITDA
EBITDA before revaluations and impairments is considered by Seeka's Board to be a key measure of performance and
reflection of cash flow generation.
New Zealand dollars ($000s)FY21FY20
Net profit before tax
23,48816,278
Interest expense
4,0824,163
Lease interest expense
4,6103,877
EBIT
32,18024,318
Impairment charges and revaluations
Gain on revaluation of land and buildings
-( 32)
Impairment of property, plant and equipment
1,18830
Impairment of intangible assets
-102
Depreciation expense
15,18511,653
Lease depreciation expense
7,9436,671
Amortisation of intangible assets
294204
EBITDA before impairments and revaluations
56,79042,946
ENDS
For more information, visit www.seeka.co.nz or please call:
Michael FranksStuart McKinstry
Chief executive
+ 64 21 356 516
Chief financial officer
+ 64 21 221 5583
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.