Seeka announces its 31 December 2022 result

1SEEKA LIMITED | ANNUAL REPORT 2021
2022
ANNUAL REPORT

Select excellence
from orchard to market

1SEEKA LIMITED | ANNUAL REPORT 2022
Contents
Welcome to our FY22 Annual Report where we detail how Seeka organises its business
to supply the world with safe, high-quality, New Zealand and Australian fruit.
We report on our financial and operational performance as we work with our
communities to deliver services in a very challenging season. We also update you on
Seeka's environmental, social and corporate governance initiatives as we decarbonise
our business and strive towards our goal to be net zero carbon by 2050.
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 Sustainability
13 Health and safety
13 Strategy
14 Summary
15 ESG report 2022
27 Financial report
28 Statement of profit or loss
29 Statement of comprehensive income
30 Statement of financial position
31 Statement of changes in equity
32 Statement of cash flows
33 Notes to the financial statements
74 Independent auditor's report
81 Governance
102 Directory
Main contents
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Importing
tropical fruit
from Ecuador
Exporting
Australian kiwifruit
to Asia and Europe
ANNUAL REPORT 2022 | 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 focus on 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 strive to 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 2022
JANFEBMARAPRM AYJUNJULAUGSEPOCTNOVDEC
KIWIFRUIT PICKING AND PACKING
KIWIBERRY HARVEST AND SALES
AVOCADO HARVEST AND SALESAVOCADO
KIWIFRUIT COOLSTORAGE AND LOADOUT
AUSTRALIAN NASHI AND PEAR HARVEST AND SALES
AUSTRALIAN KIWIFRUIT HARVEST AND SALES
AUSTRALIAN PLUM HARVEST AND SALESPLUM
Our year at a glance
$
348m
Revenue
Up 13
%
on FY21 $310m
$
46.1m
EBITDA
Down 19
%
on FY21 $56.8m
$
548m
Assets
Up 14
%
on FY21 $482m
13cents
Dividends paid FY22
$
6.5m
Net profit after tax
Down 56
%
on FY21 $14.9m
$
19.1m
EBIT
Down 41
%
on FY21 $32.2m
$
147m
Net bank debt
Up
$
46m on FY21 $101m
$
18m
Acquisition of NZ Fruits
42m
Trays of NZ class 1 kiwifruit
packed at Seeka facilities
1600
Hectares of NZ kiwifruit grown
by the Seeka team
3years
of carbon footprint data
published in Seeka's first full
Sustainability Report
6500
People employed in NZ and
Australia to pick, pack and supply
premium Australasian fruit
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ANNUAL REPORT 2022 | SEEKA LIMITED4
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5SEEKA LIMITED | ANNUAL REPORT 2022
Dividend distributions were paused while Seeka assessed its
financial position and focussed on prudent financial ratios.
New Zealand national kiwifruit volumes were well down on
expectation from seasonal fluctuations and storm damage
in the Ōpōtiki region. The New Zealand kiwifruit harvest
was then impacted by unusual maturity and poor weather,
especially around the Gisborne catchment, and despite
operating a full harvest season at OPAC, along with the newly
acquired Orangewood and Seeka Gisborne sites, Seeka only
packed 42.0 million class 1 trays of New Zealand kiwifruit in
2022, just 7% more than the 39.2m trays packed in 2021.
Labour availability was very tight and impacted by the surge
in Omicron-related absences. The Group innovated by
redeploying people and using contractors where available.
Loyal personnel worked hard to ensure continuity of
operations.
At one point Seeka was 1,100 people short from having a
full New Zealand seasonal workforce with the shortages
unevenly dispersed across regions and sites. The harvest
was completed with an influx of RSE workers from the
Pacific which added new challenges to accommodate them
and formalise their employment documentation. The cost
of labour also rose significantly as Seeka competed to fully
resource operations. Additional allowances were paid to
seasonal workers in response to the labour shortage.
The new, highly-automated MAF Roda kiwifruit packing
machine commissioned at KKP packhouse was late due to
Covid-19 shipping disruptions. This forced the redirection of
kiwifruit to other packing sites.
Shipping delays disrupted the supply chain to market.
Fruit quality in 2022 was poor, creating pressure on quality
checking as Seeka and the industry strove to deliver excellent
fruit to the market. Kiwifruit is a premium product requiring
careful and deliberate handling through the supply chain.
Early-season industry supply was out of specification
reflecting intense harvest pressures. Lower fruit quality
impacted market returns, which was exacerbated when
Zespri experienced high off-shore fruit loss.
Seeka’s fruit loss at the Ōpōtiki site was significantly higher
than the industry. The company, on behalf of growers,
has lodged an insurance claim for the associated losses in
kiwifruit orchard returns. Acceptance of this claim by the
underwriters is under review.
Seeka Australia managed severe labour shortages and
market disruptions which impacted volumes and returns.
Labour supply has improved, and the business is looking to
lift earnings as Australian orcharding investments mature and
production increases.
Seeka is focussed on the immediate job of optimising its
operations, fully integrating recent acquisitions and improving
financial results in a volatile business environment. This
includes investing in packing automation and additional
coolstorage ahead of the increase in crop volumes, with
automation upgrades completed at Oakside packline 3 and at
Gisborne, and new coolstores built at Transcool.
In June 2022 the Group published its first Sustainability
Report, which alongside the publication of three years of
independently-verified emission measurements, set Seeka’s
target to achieve net zero emissions by 2050, with interim
steps to achieve a 30% reduction on baseline by 2025 and
50% by 2030.
The large Ōpōtiki and Bay of Plenty catchments suffered a
heavy spring frost on 6 October 2022, which significantly
affected some orchards and will lower 2023 crop volumes.
Since Cyclone Gabrielle, Seeka has been inspecting post
harvest sites and supplying orchards to assess the potential
impact on harvest 2023. While no significant damage was
detected at Seeka's facilities, the full impact on crops will
likely remain unknown until the fruit is harvested.
Seeka's core Bay of Plenty kiwifruit growing region was spared
the worst and was not materially impacted. The Hawke’s
Bay, Gisborne, Coromandel and Kerikeri regions had varying
degrees of impact, and approximately 5% of Seeka's kiwifruit
supply is grown in the Hawke's Bay which was worst hit. The
Group will continue to assess the situation and will update the
market if it identifies a material loss.
Harvest 2023 kiwifruit volumes are expected to be lower
than harvest 2022 due to the early season frost, variable bud
break and the cyclone. Seeka's response includes a reduction
to the 2023 capital expenditure programme and reducing
costs in line with the lower crop expectation, with Seeka in a
strong position to handle the 2023 crop.
Dividend
In this challenging environment the Board has determined
that no dividend is payable.
Chair and Chief Executive's report
Welcome to Seeka’s annual report and commentary for the year ended 31 December 2022.
Seeka and its supplying growers experienced a very difficult year. Covid-19, adverse weather events,
extreme labour shortages, packing machine commissioning delays, shipping disruption, lower fruit
yields and poor fruit quality were key challenges. Additionally, lower market returns also impacted
financial performance. Despite these challenges, Seeka delivered $6.5 million profit after tax (2021
$14.9m); lower than target and the prior year, reflecting a difficult season.
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ANNUAL REPORT 2022 | SEEKA LIMITED6
2022 revenue of $348.4 million was up 13% on the 2021’s $309.6 million. Consolidated earnings before
interest, tax, depreciation and amortisation (EBITDA) was $46.1 million (2021: $56.8m); down 19%.
Profit after tax of $6.5 million compares with $14.9 million in 2021 (down 56%).
Review of operations
Financial
203.7
33.3
6.7
10.0
236.9
34.5
6.9
10.5
251.5
42.9
15.226.6
309.6
348.4
56.8
46.1
14.9
6.5
26.4
19.2
Group revenue
NZD Millions
Group EBITDA
1
NZD Millions
Group net profit after tax
1
NZD Millions
Group comprehensive income
1
NZD Millions
Key financial components of 2022 include:
–$348.4 million revenue (2021: $309.6m); up 13%
–$46.1 million EBITDA (2021: $56.8m); down 19%
–$19.1 million EBIT (2021: $32.8m); down 41%
–$7.6 million profit before tax (2021: $23.5m); down 68%
–$6.5 million profit after tax (2021: $14.9m); down 56%
–$547.9 million of total assets; up 14%
–$147.4 million net bank debt; up 46%
–$150.9 million interest-bearing debt; an increase of
$37.9m from December 2021 after the purchase of
NZ Fruits
–Seeka’s banking syndicate supported Seeka’s strategy
through covenant relief as debt repayment slowed due
to 2022’s drop in profitability
Key operational components include:
–Harvested all kiwifruit, avocado, kiwiberry, nashi and pear
crops in New Zealand and Australia in a very challenging
environment.
–Integration of the new businesses into Seeka; while crop
volumes were below expectation, these businesses are
ready to deliver accretive earnings.
–Publication of Seeka’s first Sustainability Report.
–Excellent kiwiberry harvest and integrated packing
and selling programme in conjunction with Freshmax.
Fifth year of excellent orchard returns to growers which
averaged more than $200,000 per hectare.
–Successful integration of RSE workforce, aided by dealing
directly with the New Zealand Government and working
closely with WorkSafe.
–Forward planning to integrate more RSE workers,
including direct investment in purpose-built
accommodation facilities.
FY18FY19FY20FY21FY22FY18FY19FY20FY21FY22FY18FY19FY20FY21FY22FY18FY19FY20FY21FY22
1. FY18 EBITDA, NPAT and comprehensive income was restated for NZ IFRS 16 Leases.
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7SEEKA LIMITED | ANNUAL REPORT 2022
Group financial performance
Key indicators
New Zealand dollars ( millions )FY22FY21Change
Total revenue
$ 348.39$ 309.57
13%
EBITDA before impairments and revaluations
$ 46.08$ 56.79
( 19%)
Depreciation expense
$ 16.06$ 15.19
6%
Lease depreciation expense
$ 9.52$ 7.94
20%
Impairments and amortisation of intangibles
$ 1.42$ 1.48
( 4%)
EBIT
$ 19.09$ 32.18
( 41%)
Interest expense
$ 7.20$ 4.08
76%
Lease interest expense
$ 4.29$ 4.61
( 7%)
Net profit before tax
$ 7.59$ 23.49
( 68%)
Income tax charge
$ 1.62$ 7.87
( 79%)
Deferred tax expense
$(0.54)$ 0.77
( 170%)
Net profit attributable to equity holders
$ 6.50$ 14.86
( 56%)
Basic earnings per share ( cents )
$0.16$0.43
( 63%)
Dividends per share paid in the financial year ( cents )
$0.13$0.26
( 50%)
Cash flow from operating activities
$ 12.13$ 41.58
( 71%)
Total assets
$ 547.87$ 482.27
14%
Property plant and equipment
$ 375.79$ 327.83
15%
Net assets
$ 270.94$ 246.49
10%
Net bank debt
$ 147.39$ 100.64
46%
Values may not always sum due to rounding.
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ANNUAL REPORT 2022 | SEEKA LIMITED8
Orcharding grew 17.0 million class 1 trays of kiwifruit compared to 14.4
million trays in 2021. The Ōpōtiki growing region was hit hard by high
winds and wild weather late in 2021 which reduced the volumes that
Seeka grew in this region by about 2 million trays.
Yields were much lower than expected. The average Hayward yield from Seeka’s
orcharding operations was 9,650 trays per hectare, down 22% on 2021. SunGold average
yield of 12,000 trays per hectare was down 16% on 2021.
Seeka also grew 1.7 million kilograms of avocado (2021: 1.4m kgs) and 116,400 kilograms
of kiwiberry (2021: 140,000 kgs), on orchards which it either owned or managed.
Labour shortages impacted the orchard business, including having to redeploy staff to
keep packhouses operating. Experienced RSE people were also repatriated after having
spent a prolonged stay in New Zealand. While sensible and fair, this resulted in untrained
personnel being deployed to prune orchards, which affected timing. This situation is now
resolved with an increase in the RSE quota alongside the normalisation of international
travel.
2022 orchard operations revenue of $80.5 million only rose $3.4 million on 2021, which
while disappointing, reflects lower yields and market returns. EBITDA was $4.6 million
compared to $5.2 million in 2021, due to lower market returns and higher costs.
Seeka's orchard operations were largely unaffected by the frost event in October 2022.
Seeka continues to actively co-invest in long term orchard developments, and currently
142 hectares of kiwifruit, two hectares of kiwiberry and 16 hectares of avocado are in
development. Fruit volumes from the orchard division are expected to increase as these
orchards mature. Seeka’s strategy is to continue to invest in long term leases to secure
fruit volumes.
Orcharding
Led by GM Orchards Barry Penellum
Revenue
–Leased and long term leased
orchards: costs plus profit share
–Managed orchards: costs plus
management fees
23%
of Group revenue
$
80.5m
Up 4% on
FY21 $77.1m
Assets
–Leased orchards: growing crops
–Long term leased orchards:
developing orchards and growing
crops
15%
of Group assets
$
84.9m
Up 15% on
FY21 $73.7m
Orchard operations span from Northland through the Coromandel, Bay of Plenty, Ōpōtiki and Te Kaha. Orchard operations
include all aspects of growing and harvesting kiwifruit, avocado and kiwiberry on leased, long term leased, and Seeka-owned
orchards. The orcharding business provides comprehensive orchard and vine management services to owners together with
contract work on an as-required basis. The business develops orchards for landowners on contract or under long term leases
and in partnership with iwi.
FY18FY19FY20FY21FY22FY18FY19FY20FY21FY22
10.7
4.2
11.4
5.0
13.0
5.4
14.4
1 7. 0
5.2
4.6
Kiwifruit grown
Millions of class 1 kiwifruit trays
Orchard EBITDA
1
NZD Millions
1. FY18 EBITDA was restated for NZ IFRS 16 Leases.
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9SEEKA LIMITED | ANNUAL REPORT 2022
Post harvest
Led by GM Post Harvest Paul Crone
Revenue
–Grading and packing service fee
per unit handled
–Coolstorage and loadout fees
Assets
–11 packing facilities with
15 graders
–Coolstores
–VLS laboratories
Post harvest operates eleven packhouse facilities along with a network of cool stores. These packhouse facilities pack, cool
and dispatch all produce from our orcharding operations and from our independent growers along with packing citrus and
persimmons on contract for external marketers.
Post harvest packed 42.0 million class 1 trays of kiwifruit, above
last year's combined 39.2 million trays (including 3.5m trays
OPAC). Hayward volumes were down 21% and SunGold volumes
up 36%, both significantly impacted by yield reductions despite
the additional fruit provided from the three acquisitions.
Fruit loss was higher across the kiwifruit industry, and the Seeka OPAC site
delivered very high fruit loss. This is under investigation and Seeka has lodged an
insurance claim on behalf of growers.
The cost of labour increased as the Group competed in a tight labour market
amid Covid-19 disruption. The compliance requirements to meet demanding
market requirements also added cost pressure. Packing operations peaked with
the Omicron wave, and post harvest had to manage severe shortages. Seeka
expects the labour market to improve in 2023 aided by the increase in RSEs and
normalisation of travel.
In addition to packing avocado and class 2 kiwifruit for the SeekaFresh marketing
programmes, Seeka also packed 14.9 million kilograms of citrus and 5.2 million
kilograms of persimmons on contract for third party marketers.
Post harvest revenue of $233.8 million was up from last season (2021: $195.9m)
reflecting the recent acquisitions and price increases. EBITDA for the twelve
months was $59.0 million compared to $61.6 million in 2021, reflecting higher
labour costs to ensure continuity of operations.
With the completion of the KKP and Transcool upgrades, along with automation
upgrades at NZ Fruits and Oakside, Seeka is well positioned to handle 2023
kiwifruit volumes, with the capacity to pack more fruit using significantly less
labour.
FY18FY19FY20FY21FY22FY18FY19FY20FY21FY22
30.0
3 7. 2
32.8
41.0
31.8
41.9
39.2
42.061.6
59.0
Kiwifruit packed
Millions of class 1 kiwifruit trays
Post harvest EBITDA
1
NZD Millions
67%
of Group revenue
$
233.8m
Up 19% on
FY21 $195.9m
66%
of Group assets
$
360.4m
Up 14% on
FY21 $316.1m
1. FY18 EBITDA was restated for NZ IFRS 16 Leases.
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ANNUAL REPORT 2022 | SEEKA LIMITED10
Revenue was down 12% to $19.1 million as seasonal variations in
fruit volumes and quality slowed sales. This flowed through to a
lower EBITDA of $0.8 million (2021: $2.3m) as Covid-19 continued
to disrupt supply logistics and added costs.
Weather disruptions slowed the 2022/23 avocado programme and impacted
yields along with the volume sold before year end. Export sales prior to Christmas
were also restrained by weak Australian pricing, with a higher percentage marketed
to New Zealand retail and wholesale.
Lower volumes and early-season quality issues also impacted revenue from the
SeekaFresh kiwifruit sales programme into New Zealand and Australia, and the
Group's collaborative marketing programme into Asia.
SeekaFresh tropical fruit import and ripening services, along with kiwiberry sales,
the Auckland wholesale market and Kiwi Crush operations, responded to the
challenges and opportunities of 2022, and continued to make a contribution to
Group earnings.
SeekaFresh retail services
Led by GM Supply and SeekaFresh Kate Bryant
SeekaFresh retail services includes the supply, export and sale of avocado, kiwiberry and class 2 New Zealand kiwifruit, sale
of New Zealand kiwifruit through collaborative programmes, operation of the New Zealand wholesale marketing business
including imported tropical fruits, and the manufacture and sale of Kiwi Crush and avocado oil.
Revenue
–Sales commission
–Service fee for imported fruit
–Processing fees
Assets
–Auckland and Christchurch
service facilities
–Te Puke processing facility
FY18FY19FY20FY21FY22FY18FY19FY20FY21FY22
39.9
2.3
49.2
1.7
63.9
3.068.0
54.4
2.3
0.8
SeekaFresh retail services turnover
NZD Millions
SeekaFresh retail services EBITDA
1
NZD Millions
5%
of Group revenue
$
19.1m
Down 12% on
FY21 $21.6m
2%
of Group assets
$
11.5m
Down 2% on
FY21 $11.7m
1. FY18 EBITDA was restated for NZ IFRS 16 Leases.
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11SEEKA LIMITED | ANNUAL REPORT 2022
10%
of Group assets
$
54.5m
Up 14% on
FY21 $47.7m
4%
of Group revenue
$
14.0m
Up 1% on
FY21 $13.9m
Australia
Led by GM Australian Operations Jonathan van Popering
Seeka Australia Pty Limited, a 100% Seeka-owned company, leases and operates kiwifruit orchards, and owns and operates
nashi and pear orchards along with associated post harvest facilities in Victoria, directly marketing Seeka’s Australian produce
domestically and to export customers.
Revenue
–Fruit sales
Assets
–160 hectares of owned orchards
and crop
–114 hectares of kiwifruit on long-
term leased orchards
–Packhouse and coolstores
Seeka’s Australian business was affected by Covid-19. The
business adapted well under local management and delivered
satisfactory results in challenging conditions.
Labour was very short, and there was continuing market disruption through
lockdown events in Australia. The Australian team innovated to complete 2022
on-orchard work and used post harvest automation to deliver customers excellent
service and produce, despite supply chain disruptions.
Australian kiwifruit yields were 15% lower, mainly due to 2021 labour shortages
which contributed to the late completion of orchard work. This has been rectified
and the orchards are well prepared for harvest 2023, which will include the first
crops from new developments.
Markets were strong in 2022 for Seeka's Australian-grown produce with good
pricing and demand across all categories.
Total revenue of $14.0 million is in line with 2021. EBITDA of $1.0 million is down on
2021’s $1.6 million.
FY18FY19FY20FY21FY22FY18FY19FY20FY21FY22
5.6
(0.1)
4.2
(0.6)
4.4
7. 4
5.0
4.9
1.6
1.0
Seeka Australia volumes handled
Thousands of tonnes handled
Seeka Australia EBITDA
1
NZD Millions
1. FY18 EBITDA was restated for NZ IFRS 16 Leases.
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ANNUAL REPORT 2022 | SEEKA LIMITED12
Automation, technology and capacity
Seeka has undertaken numerous automation trials and assembled the best and latest
packing equipment in the KKP packhouse.
The eight-lane MAF Roda includes fully automated delivery of packaging and automated packing stations,
resulting in a very low labour demand. While it missed the 2022 commissioning date due to supply chain
disruptions, the packline is now installed and fully commissioned for harvest 2023.
Seeka has invested in further automation enhancements at Oakside in the Bay of Plenty, and at Seeka Gisborne.
The Oakside investment includes Spectrim grading and pre-sizing on machine 3, which will substantially reduce
labour demand and lift machine throughput. The Gisborne investment includes automation of the placement and
stacking of fruit post-packing on pallets. It removes labour and a processing bottleneck. Throughputs and operating
hours at Gisborne are set to increase with automation reducing the associated labour demand.
Seeka continues to consider forward capacity, balancing likely crop volumes against the post harvest capacity. The
efficient packing and coolstorage of kiwifruit as close as possible to its optimal maturity, sets the base to deliver
high-quality fruit to the markets.
The industry is anticipating a large increase in SunGold volumes in the coming seasons. There is also a growing
sentiment among the growers that the harvest must be completed earlier in the season. Both factors require
continuing consideration of investment in packing automation and storage capacity.
Seeka, with the investments outlined, has sufficient capacity to handle the forecast crop volumes for 2023 and
is considering the volumes and options for 2024 and beyond. The company has reviewed its five year capacity
plan, and as a result has adopted a staged automation pathway and understands the options to address capacity
pinch-points.
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13SEEKA LIMITED | ANNUAL REPORT 2022
Seeka has released its first Sustainability Report; an important milestone in Seeka’s
sustainability journey. It details the founding of the sustainability team through to
the verification of three years of carbon emissions data and the establishment of our
commitment to reduce our impact on the environment.
As a result of these initiatives, Seeka has held its level of carbon emissions reasonably constant even though the
Group has grown. It is our commitment to reduce our carbon emissions from our 2019 base year by 30% by
2025, 50% by 2030 and to be net carbon zero by 2050.
Achieving these goals will include removing harmful refrigerants by limiting equipment leaks, switching to
low emission vehicles and an increasing investment in solar power. The Group has made good progress in
understanding sustainability and our impact on the environments we operate in.
Health and safety
The continuing shortage of labour heightens the safety risk as
the Group strives to deliver service to its grower customers.
Seeka people have worked hard, in stressful circumstances, with the added
anxiety of Covid-19. Seeka took all efforts to ensure that we kept our people
safe and have continued to invest in their safety. Sites were effectively locked
down to minimise the chance of spreading illness between operations. Support
staff were required to work from home and the business pivoted to remove
face-to-face meetings.
The focus continues on physical safety with ongoing emphasis on barriers
and guarding. Disappointingly Seeka had one serious harm injury at the
Orangewood site. In that incident a person fractured their arm when their clothing got caught in a drive shaft
while repacking fruit after the completion of harvest. It is disappointing given the significant effort and focus on
safety throughout the Group and particularly through the heavy pressure of harvest.
Strategy
The Group continued to enact its strategy and concentrated on operational excellence. Seeka
undertakes disciplined planning to ensure each harvest and all operations are well executed,
and that we have the necessary capacity and that we pay attention to keeping people safe,
while considering the financial attributes and contingency plans.
The Group continues to implement and trial automation technologies to improve efficiency, remove labour and
improve fruit quality. Seeka also concentrates on supply chain efficiency wherever it operates an integrated supply
service to the market or customer.
Seeka has focussed on integrating and optimising the newly-acquired operations from its growth strategy. Seeka
predominantly operates in the horticultural industry and therefore operates in a seasonal environment. While
2022 yields were below normal and fruit quality was challenging, we expect these fluctuations to normalise
following what will be a weather-impacted 2023 harvest.
Seeka has progressed its people and capability initiatives, made pleasing progress with its drive to understand
and be more sustainable as a business, and maintained financial capability to invest and to deliver future earnings
growth. The Group continues to concentrate on its foundation through disciplined planning.
Sustainability
FY22 health and safetyActualsTarget
Lead performance
Health and safety meetings
93%90%
Lag performance
Total recordable injury frequency
2.75
Below
4.5
Lag performance
Serious injuries
1Zero
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ANNUAL REPORT 2022 | SEEKA LIMITED14
Seeka's people have excelled in a difficult harvest across Australia and New
Zealand. They have adapted, innovated and strived through a challenging year.
Dedicated key staff across the Group worked hard to deliver a continuous service to growers and
Seeka's market partners. Our people continue to make Seeka an inspiring produce company to
work for and are celebrated for their efforts.
Harvest 2022 kiwifruit yields were down across the industry, impacting the potential revenues
from the Group's core post harvest business. Kiwifruit storage performance, both onshore and
offshore, further impacted returns to New Zealand orchard operations.
The Group has reviewed its supply chain operations from the orchard to loadout, and is focussed
on achieving excellence in fruit handling in 2023. Seeka is anticipating an improved labour supply
with a large increase in RSE workers from the Pacific, and a normalisation of public health both in
New Zealand and Australia.
The completion of automation projects at KKP and Oakside in the Bay of Plenty, and at Seeka
Gisborne, will both lift post harvest capacity and improve fruit handling, while significantly
reducing the demand for packhouse labour.
Seeka has the capacity, systems and personnel to deliver an excellent operational performance in
2023, and is considering options to build capacity as New Zealand kiwifruit volumes continue to
grow. The range of complementary fruits grown, handled and marketed by the Group continues to
grow, and will deliver incremental returns to shareholders.
As Seeka expands its operations, we continue to focus on delivering a sustainable business, and
are implementing a range of carbon-reduction initiatives as we work towards becoming net zero
carbon by 2050.
We value the communities we operate in, and thank our loyal growers, workforce and shareholders
for their ongoing support.
Fred Hutchings Michael Franks
Chair Chief executive
Summary
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15SEEKA LIMITED | ANNUAL REPORT 2022
Seeka is creating a sustainable future for the environment, employees, suppliers,
customers, and shareholders as we work to grow, pack, store and supply fresh and
healthy produce to the people of the world.
From eastern Tairāwhiti Gisborne to the north in Kerikeri, and across to Shepparton,
in Victoria Australia, Seeka works with the land and its people to produce high-
value nutritional fruit. By focussing on regenerative horticulture, Seeka is working to
enhance biodiversity and create long-term wealth and employment.
As well as stewarding the land, Seeka adds to the social capital of rural communities. In 2022, Seeka
employed 804 permanent and more than 5,700 seasonal workers, 1,200 of which were RSEs from the
Pacific. Working with landowners, Seeka is converting land into profitable and sustainable orchards. As
productivity grows and new horticultural regions are created, Seeka is instrumental in stimulating local
economies and creating new employment opportunities.
Since 2019, Seeka has been measuring and verifying its carbon footprint, and in 2022 set its target to
be net zero carbon by 2050. To progress its strategy, Seeka is reducing its carbon-intensive operations
and collaborating with supply chain partners to achieve a stepped set of interim reduction targets. Gains
include improved energy efficiency, new solar power installations, switching to low emission vehicles, and
the diversion of organic waste to Seeka’s own worm farm.
As operations are exposed to weather and the effect of climate change, in 2022 Seeka reassessed climate
risks and adopted the XRB Climate Related Disclosure Framework to help build resilience and improve
Seeka’s adaptability,
ESG report 2022
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ANNUAL REPORT 2022 | SEEKA LIMITED16
Climate-related disclosures
Governance
Seeka’s Board is responsible for ensuring Seeka meets its obligations under environmental, social
and governance principles. The Board has delegated oversight of these activities to its Sustainability
Committee.
The Sustainability Committee, comprised of three Board members, provides strategic guidance and
feedback on Seeka's sustainability framework. The Committee oversees the establishment of reduction
targets, footprint measurements, performance monitoring, and the assessment of the potential impacts
and opportunities of a changing climate.
The Sustainability Committee has reviewed Seeka’s climate-related risks and opportunities, and oversees
Seeka’s carbon reduction strategies and projects, including climate risk mitigation and adaptation
planning.
Environmental report
Seeka's aim is to be an industry leader, transparently reporting its environmental impact along with the
opportunities and risks associated with climate change.
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 with Seeka's research and
development team conducting environmental trials to better understand the impact of orchard inputs
such as sprays, fertilisers, and irrigation. The resulting knowledge 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 regenerative model whereby waste is circulated back into operations, to reduce Seeka’s
environmental impact.
Sustainability reporting
In June 2022, Seeka released its first comprehensive Sustainability Report which outlines its journey to
be a leader in sustainable horticulture practices and build long-term employment in rural communities.
Sustainability is central to Seeka’s business and lies at the heart of the brand value Growing Futures.
Seeka has measured, validated, and reported its carbon footprint since 2019, and in June 2022 Seeka set
its goal to be net carbon zero by 2050. Seeka’s annual Sustainability Reports will update stakeholders
on Seeka’s progress towards its environmental, social and governance goals, including climate risks and
opportunities, along with potential impacts, mitigation, and adaptation strategies. Seeka's reports will
align with the XRB’s climate related disclosure requirements.
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17SEEKA LIMITED | ANNUAL REPORT 2022
Climate change risk and opportunity analysis
New Zealand and Australia are expected to experience more extreme weather events, including high-intensity rainfall, higher sea levels,
less winter chilling, higher average temperatures, and more extreme-heat days. To build resilience, Seeka has identified its climate
change risk, impact, and adaptability, and is working to develop an adaptation plan to manage risk.
Transitional risks
Risks and opportunitiesImpactResponse
Regulatory changes
restrict chemical
applications for pest
control and crop
maintenance.
By controlling pests and disease, chemical inputs
improve fruit quality and yield.
The chemical Hi-Cane improves kiwifruit yields
by promoting uniform budbreak and flowering.
Removing Hi-Cane without finding a viable
alternative would disrupt the uniformity of fruit
maturity resulting in lower yields, quality issues
and subsequently increased food waste.
High R&D cost to find alternative chemicals.
Active involvement in industry associations, including KGI, ISG and
KSG, regional councils, government and regulators.
Research and development focused on sustainable chemical
alternatives and reduced chemical input, while achieving consistent
quality and yields. It is anticipated that Hi-Cane will be phased out
over the next ten years as viable alternatives are developed and
deployed.
Adopt regenerative horticulture practices, improve biodiversity, and
encourage beneficial insects and planting.
Changing consumer
preferences and new
market restrictions.
Consumer concerns including carbon outputs,
chemical inputs, pests, and diseases may impact
orcharding practices, chemical use and carbon
footprints.
Decarbonise our supply chains through collaboration, innovation,
and smart purchasing decisions.
Progress integrated pest management strategies and develop smart
spray plans.
Adopt regenerative horticulture practices to reduce synthetic
chemical inputs.
Respond to market trends.
Research and development into sustainable chemical alternatives
Regulations restrict
orchard water
availability.
Temperature increases may increase demand
for irrigation, which coupled with tighter water
restrictions could stress orchards, impacting
plant health and yields.
Develop farm environmental plans that encourage location-specific
management practices.
Improve irrigation infrastructure to ensure water resources are
applied when and where needed without waste.
New developments must be able to access water or have on-site
water storage.
Harvest rainwater.
Utilise regenerative horticulture practices to improve soil health and
water retention.
Research and development focused on drought resilience.
Introduction of market
mechanisms add
new costs for carbon
and environmental
externalities.
The cost of carbon being priced into commodities
such as fuel and fertiliser. Seeka is exposed to
price increases until low-carbon alternatives are
available.
Rising demand for carbon neutrality is increasing
the cost of carbon offsets.
Seeka has set 5, 10 and 30 year targets to progressively reduce its
carbon footprint.
Understand scope-3 emissions and work with suppliers to measure
and reduce their carbon footprints.
Develop a procurement strategy that values low carbon products
and services.
Invest in lower carbon technology, such as solar energy, LED lighting,
and low-emission vehicles.
Transition to refrigerant gases with zero global warming potential.
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ANNUAL REPORT 2022 | SEEKA LIMITED18
Physical risks
Risks and opportunitiesImpactResponse
Risk to fruit yields and
quality from extreme
weather events.
Heavy rain, flooding, frost, hail, high winds, heat
waves and fire can physically damage plants and
fruit, and impact fruit quality and storability.
Extreme weather events such as high winds and
flooding could damage post harvest facilities.
Geographic spread of orchards distributes the risk from extreme
weather events.
Invest in crop protection measures, such as irrigation, fans,
protection, shelter belts, and hail netting.
Improve biodiversity and natural resilience through regenerative
horticulture practices.
Avoid orchard development on land vulnerable to climatic impacts
such as steep slopes and low-lying coastal areas.
Consider flood plains, water supply and free drainage when
developing new orchards and post harvest facilities.
Improve weather forecasting and response planning.
Develop innovative crop protection solutions.
Genetic and variety diversification.
Risk to fruit yields and
quality from higher
average temperatures.
Warmer winters reduce kiwifruit bud break and
yields, and increase the reliance on chemical bud
enhancers.
Warmer winters increase pest pressure.
Higher temperatures impact water quality and
availability, raise drought conditions, and degrade
soil quality and biodiversity.
Warmer temperatures may increase energy
demand to cool fruit. Cooling warm fruit can
damage fruit cell structures and impact storage
quality.
Increase the geographical spread of orchards.
Develop farm environmental plans to provide locally relevant
adaptation strategies.
Improved weather forecasting and response planning.
New developments must have access to water or on-site water
storage.
Actively engage in orchard water management and invest in efficient
irrigation and fertigation technologies.
Monitor and improve waterways, biodiversity, and natural ecosystem
services.
Investigate rainwater harvesting for irrigation.
Industry collaboration to develop resilient orcharding practices and
crops.
Unseasonal weather
events impact crops and
disrupt harvests.
Plants use the cycle of seasons to time growth,
flowering and fruit development, with the
industry matching on-orchard work and the
fruit supply chain to best fit historical seasonal
weather patterns.
Climate change may impact plant health plus
crop quality, yield and timing.
Adapt orchard and post harvest practices to changing seasons.
Improve seasonal weather forecasting and response planning.
Improve weather-event protection measures, such as irrigation and
frost fans.
Diversify crop types and variety.
Risk to fruit yields
and quality from new
pests and diseases or
increased presence
of existing pests and
diseases.
Higher temperatures may support the
introduction of new pests and diseases.
Warmer, wetter conditions may support higher
populations of existing pest species.
Adapt orcharding practices to monitor and control pests and
diseases.
Geographic spread of orchards distributes the risk and allows for
targeted responses.
Improve orchard shelter protection.
Diversify crop types and variety.
Monitor bio-security controls on disease and disease vectors.
Introduce beneficial insects and plants to combat pests and
disease.
Research and develop better biological and chemical controls.
Rising sea levels.Higher sea levels may raise the water table,
reduce drainage, and increase ground water
salinity.
Unprotected coastal orchards may have a higher
risk of coastal erosion.
Establish a minimum altitude for new orchard developments.
Supply freshwater for orchards close to sea level.
Create orchard transition plans.
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19SEEKA LIMITED | ANNUAL REPORT 2022
Opportunities
Risks and opportunitiesImpactResponse
Consumer demand for
sustainably produced,
healthy foods increases
demand for Seeka-
handled fruit.
Stronger product demand and new markets.Ensure Seeka is an industry leader in carbon reporting.
Achieve carbon reduction targets.
Work with industry and suppliers to reduce the supply chain carbon
footprint.
Green financing for low-
carbon developments.
Lower economic cost of carbon reduction and
sustainability programmes.
Engage with lenders of sustainability-linked loans.
Investigate grants for carbon reduction and low-carbon technology.
Higher soil CO2 levels
improve plant water
use.
Orchards require less water.Understand soil carbon and water storage capacity.
Establish orchard management practices that best capture carbon in
the soil.
Climate change opens
new growing regions.
Global warming may allow productive orcharding
in colder regions.
Track and forecast new orcharding regions and match suitable fruit
varieties.
Leverage experience in handling multiple varieties in different
regions.
Adapt orchard practices.
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ANNUAL REPORT 2022 | SEEKA LIMITED20
Seeka's absolute carbon footprint
Seeka's carbon footprint is calculated using ISO 14064-1: 2018 - Greenhouse gases and independently verified by Toitū Envirocare.
Annual CO2e footprint, 2019 to 2021
Absolute carbon footprint in tonnes CO2e

19,504
19,220
19,864
Category201920202021Emissions
1
4,0513,8033,900
Direct emissions controlled by Seeka
2
3,9733,6964,487
Indirect emissions from purchased electricity
3
4,0694,4523,987
Indirect transport emissions from Seeka's supply chain
4
7,4117,2697,490
Other indirect emissions from Seeka's supply chain
Total
19,50419,22019,864
Intensity-based performance indicators
Seeka is in a fast-growing industry. While it is important to report our absolute carbon result, as an expanding business it is
equally important to report our efficiency gains. To capture performance gains while our business continues to grow, our total
emissions are being benchmarked against three intensity-based measures:
–Revenues generated by Seeka - tonnes CO2e per $1,000,000 revenue
–Fruit handled by Seeka - tonnes CO2e per 100,000 class 1 trays packed
–Time invested to grow, handle and sell crops - tonnes CO2e per permanent employee
82.3
76.5
64.2
46.1
41.5
29.9
58.2
5 7. 6
50.7
201920202021201920202021201920202021
Per 100,000 class 1 trays packed
Tonnes CO2e
Per permanent employee
Tonnes CO2e
Per $1,000,000 revenue
Tonnes CO2e
$
1m
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21SEEKA LIMITED | ANNUAL REPORT 2022
Carbon reduction targets and initiatives
In June 2022, Seeka published its ambition to be net zero carbon by 2050, and set performance milestones for 2025 and 2030.
Absolute and intensity-based carbon reduction targets
for categories 1 and 2 starting from 2019 baseline
Reduction
30%
50%
Net Zero
Carbon
Reduction
2025
2030
2050
Carbon reduction initiatives
By measuring its carbon footprint, Seeka has been able to identify carbon intensive operations and develop initiatives to reduce
Seeka's total footprint.
Initiatives to achieve targets
for categories 1 and 2
1000kW
75% by 2030
Solar
Fleet Fuel
Percentage of total fleet either
low or zero emissions vehicles
2025 = 15%
2030 = 25%
Reduction in fugitive emissions
leaks based on 2019 levels
Down 50% by 2025 and
&
of solar installed by 2025 (already
at 446kW).
3000kW by 2030
Refrigerants
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ANNUAL REPORT 2022 | SEEKA LIMITED22
Hybrid vehicle fleet
To facilitate the transition to low carbon
transport, Seeka has installed two 7kW electric
vehicle chargers at Seeka 360 Head Office.
New low-carbon options are being added to
Seeka’s owned and leased vehicle fleet which
currently operates ten hybrid vehicles.
Seeka’s 2023 goals are to grow its electric
vehicle charging network and the percentage
of low-carbon vehicles.
Worm farm
In 2022, 50 tonnes of organic post harvest
waste was diverted from landfill to Seeka’s
worm farm. Nutrient-rich organic soil
conditioner recovered at the worm farm
is recycled back to Seeka orchards in a
regenerative process.
Seeka’s 2023 goals are to maximise worm farm
waste recovery and trial alternative organic
waste inputs, and investigate applying circular
waste management to other areas of the
business.
Solar energy
In 2022, Seeka had 446kW of solar installed
across its Australia and New Zealand sites
which produced more than 400MWh of
renewable energy; enough to power an electric
car 66 times around the earth. Seeka’s post
harvest facilities have large roof spaces suitable
for solar. While reducing Seeka’s carbon
footprint, Solar also mitigates the cost of grid
energy price increases.
Seeka’s 2023 goal is to progress solar to
achieve 1000kW of installations by 2025.
LED lighting and sensors
In 2022, Seeka added more LEDs and motion
sensors to its large post harvest sites. These
new LEDs use up to 70% less power than
existing fittings. Stage one of Seeka’s roll out is
expected to save nearly a million kWh annually.
Seeka’s 2023 goals are to explore daylight
sensors, and continue installing LED lighting
and motion sensors.
Waste management
In 2022, Seeka introduced soft plastics
recycling at Seeka 360 Head Office to reduce
waste going to landfill. On orchard, Seeka
recycled strings from more than 100 hectares
of kiwifruit vines, which are recycled into useful
agricultural products.
Seeka’s 2023 goals are to extend soft plastic
recycling to regional operations, and work with
our supply chain and waste service providers
to promote closed-loop waste systems.
Regenerative horticulture
Regenerative horticulture builds natural
resilience into our orchards. In 2022, Seeka
promoted sward growth, beneficial plantings,
mowing practices that reduce weed sprays,
supported organic orcharding, reduced use
of synthetic nitrogen fertilisers, protected
sensitive environments with riparian plantings,
and continued research on optimising soil
health to improve carbon and water storage.
Seeka’s 2023 goals are to expand regenerative
horticulture, and share findings with the
grower community.
Zero GWP refrigerants
In 2022, Seeka upgraded Transcool coolstores
with a new zero-carbon refrigeration system. By
replacing legacy coolstores with high-efficiency
rooms and ammonia coolant systems, Seeka is
progressing its commitment to achieve a 50%
reduction in harmful coolant leaks from the
2019 baseline.
Seeka’s 2023 goal is to further improve
refrigerant leak detection and repair systems.
Packaging and waste
Seeka is moving the fresh produce industry
towards a circular economy using low-impact
packaging and is working with experts to
introduce new technology and materials to the
logistics processes.
Seeka’s 2023 goals are to progress packaging
innovation and align operations with the New
Zealand Government’s ban on plastic products.
LED
Sustainability projects 2022
Seeka's 2022 carbon reduction initiatives have delivered sustainability gains, and form a base for further developments in 2023.
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23SEEKA LIMITED | ANNUAL REPORT 2022
Social report
Seeka’s responsibility to support employees, growers and our communities is a core business focus. With "Select Excellence", Seeka
strives to continually improve our performance for stakeholders and deliver an excellent service that supports prosperous communities.
Supply of healthy nutritious fruit
InitiativeDescriptionAchievements
Producer and supplier 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, dates and plums.
Kiwi Crush.Kiwi Crush is recovered from fresh kiwifruit that
are not suited for consumer sales.
Seeka's DNFC facility produces Kiwi Crush which
functionally benefits digestion.
Sold direct to consumers and DHB inpatient
facilities, Kiwi Crush helps people with mobility
and health issues.
Seeka’s new freeze dried Kiwi Crush Gold
provides the recommended daily intake of
vitamin C per serve.
Supplying residential care units, oncology units, and all main DHBs.
Consistent orders with positive feedback from clinicians and
patients.
Healthy gut support and laxative alternative where commercially
prepared medications are not recommended.
Kiwi Crushies.Supply through school catering services, Kiwi
Crushies are a low-sugar option for healthy
eating in schools, and provide a healthy option for
fundraising sales.
Supplying a low-sugar ice block option that complies with school
healthy eating guidelines. Lower in sugar and free of additives,
preservatives, and artificial colours.
Avocado oil.Avocados not suitable for market sales are milled
to recover virgin avocado oil.
Produce and supply healthy food grade oil that is rich in healthy fatty
acids and a good source of vitamin A and E.
Reducing our organic waste by recovering avocado oil from avocados
not suitable for direct sales.
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ANNUAL REPORT 2022 | SEEKA LIMITED24
People and community
InitiativeDescriptionAchievements
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 2022, the EAP service was available to all Seeka staff.
Health insurance.All permanent staff are provided with health and
life insurance.
Health, life and trauma insurance available to 804 fulltime
employees in 2022. Discounted health insurance rates extended to
family members.
Sponsorship of
community and
sporting groups.
Seeka supports our people and communities.Provided $320,834 in donations in 2022, see page 25 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.
Seeka cadet
programme.
The Seeka cadet programme supports the
development of skills, growth and understanding
within orchards and provides a full overview of
the industry over a three-year period.
Supported six new cadets into the workforce in 2022. Seeka's 2022
cadets will be starting their horticulture level 3 certificates, with
two cadets 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.
Collaborative
partnership with Māori.
Māori are major kiwifruit growers, and
Seeka supports their communities through
employment and orchard development.
Seeka fosters healthy communities and provides economic
opportunities to many Māori entities.
Seeka is investing in the long term welfare of Māori land, with over
75 hectares in development in partnership with Māori.
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 focussed on
developing fundamental skills required to fill
current openings in the horticulture industry.
In 2022, Seeka trained all new seasonal staff to operate safely and
efficiently within the kiwifruit industry.
During the season Seeka worked with local employment agencies
to provide transport and work opportunities to more than 40
people in search of work.
Seeka's training initiatives get people back into the workforce.
RSEs
InitiativeDescriptionAchievements
AccommodationSeeka arranges accommodation for all RSEs
and ensures these facilities are at an acceptable
standard, as audited by Immigration New
Zealand.
In 2022, Seeka's RSE accommodation facilities were all approved
by Immigration New Zealand.
Pastoral care.Seeka employs seven pastoral carers to facilitate
RSE health and wellbeing during their stay in New
Zealand.
In 2022, Seeka's pastoral carers supported 1,200 RSEs, with 900 in
country at any one time.
Supporting RSEs and
their families.
Seeka highly values RSE workers from the Pacific
and Malaysia. Many RSEs return year after year
and have become an integral part of the Seeka
team.
In 2022, Seeka employed RSEs from Kiribati, Malaysia, Solomon
Islands, Samoa, Tonga and Vanuatu.
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25SEEKA LIMITED | ANNUAL REPORT 2022
Sponsored organisations and events 2022
Ashbrook School
Auckland Rescue Helicopter Trust
Autism NZ
BOP Dragon Boat Club
BOP Rugby Union
BOP Symphonia
Citizens RSE Te Puke
Eastbay REAP
Eastern District Rugby & Sports
Fairhaven School Fundraising Association
Gisborne Tairāwhiti Rugby League
Gisborne Young Grower of the Year
Hauraki Waka Ama Club
Heart Kids
Katch Katikati Incorporated
Katikati Cricket Club
Katikati Hockey Club
Kerikeri Cricket Club
Kerikeri High School
Kerikeri Rugby Football Club
Kids Foundation
Lion Club Tauranga
Lions Club Katikati
Lions Club Gisborne
Made in Te Puke Trust
Matakana Island Rugby Team
Motu Trails
Mt Maunganui Bridge Club
Mums4mums Charitable Trust
Ngamuwahine Trust
Ngāpuhi Iwi Social Services
New Zealand Frisbee team
Omanu Golf Club
Ōpōtiki College
Ōpōtiki Golf Club's Matariki Golf Tournament
Ōpōtiki Surf Life Club
Otamarakau School
Our Kerikeri Community Charitable Trust
Paengaroa School
Pongakawa School
Purangi Golf & Country Club
Radio Lollipop for Children in Hospital
Rotary Club Katikati
Rotary Club Papamoa
Rotoiti Fishing Club
Tauranga Intermediate
Tauranga North Tai Mitchell
Te Aranui Youth Trust
Te Kura Mana Māori o Maraenui
Te Puke Agriculture & Pastoral Association
Te Puke Boys & Girls Agricultural Club
Te Puke Bridge Club
Te Puke Community Patrol
Te Puke Cricket Club
Te Puke Events and Promotions Group
Te Puke Golf Club
Te Puke High School
Te Puke Intermediate
Te Puke Pony Club
Te Puke Smallbore Riffle Club
Te Puke Sports & Recreation Club
Te Puke Squash Club
Te Puke Tai Mitchell
Te Puke Tennis Club
Te Ranga School
Te Rūnanga o Ngāti Ranginui
The Going Bananas Show
The Job Agency
The Kids Foundation
Tia Marae Charitable Trust
Toi Kai Rawa
Top Energy Far North Science
Te Puke Volunteer Fire Brigade
Waerenga-A-Hika Squash Club
Waihau Bay Sports
Western Bay Heritage Trust
Western BOP Cricket Association
Young Fruit Growers
Zespri AIMS Games
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ANNUAL REPORT 2022 | SEEKA LIMITED26
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27SEEKA LIMITED | ANNUAL REPORT 2022
28 Statement of profit or loss
29 Statement of comprehensive income
30 Statement of financial position
31 Statement of changes in equity
32 Statement of cash flows
33 Notes to the financial statements
Financial report
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ANNUAL REPORT 2022 | SEEKA LIMITED28
Statement of profit or loss
For the year ended 31 December 2022 - Audited
The accompanying notes form an integral part of these financial statements
New Zealand dollarsNotes
2022
$000s
2021
$000s
Revenue
3
348,387 309,569
Cost of sales
4
280,078 236,337
Gross profit
68,309 73,232
Other income
3
755 8,446
Share of profit of associates
24
1,154 236
Other costs
4
24,139 25,124
Earnings (EBITDA)
1
46,079 56,790
Depreciation expense
10
16,055 15,185
Lease depreciation expense
13
9,516 7,943
Impairment of property, plant and equipment
10
144 1,188
Impairment of biological assets
191-
Impairment of intangible assets
11
681 -
Amortisation of intangible assets
11
406 294
Earnings (EBIT)
2
19,086 32,180
Interest expense
7,204 4,082
Lease interest expense
13
4,289 4,610
Net profit before tax
7,593 23,488
Income tax charge
6
1,624 7,865
Deferred tax (benefit)
7
( 535) 763
Total tax charge / (credit)
1,089 8,628
Net profit attributable to equity holders
6,504 14,860
Earnings per share for profit attributable to the ordinary
equity holders of the company during the year
Basic earnings per share
20
$ 0.16$ 0.43
Diluted earnings per share
20
$ 0.16$ 0.42
1. EBITDA, a non-GAAP measure, is earnings before interest, tax, depreciation, amortisation, impairments and revaluations, see note 1.
2. EBIT, a non-GAAP measure, is earnings before interest and tax, see note 1.
Financial contents
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29SEEKA LIMITED | ANNUAL REPORT 2022
Statement of comprehensive income
For the year ended 31 December 2022 - Audited
New Zealand dollarsNotes
2022
$000s
2021
$000s
Net profit for the year
6,504 14,860
Items that will not be reclassified to profit or loss, net of tax
Gain on revaluation of land and buildings
10
9,736 11,535
Gain on revaluation of water shares
11
162 -
Net realised loss on revaluation of investment in shares
- ( 3)
Total items that will not be reclassified to profit or loss
9,898 11,532
Items that may be reclassified subsequently to profit or loss, net of tax
Movement in cash flow hedge reserve
21
2,864 96
Movement in foreign currency translation reserve
21
47 ( 38)
Movement in foreign currency revaluation reserve
21
( 92) ( 18)
Total items that may be reclassified subsequently to profit or loss
2,819 40
Total comprehensive income for the year attributable to equity holders
19,221 26,432
The accompanying notes form an integral part of these financial statements
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ANNUAL REPORT 2022 | SEEKA LIMITED30
Statement of financial position
As at 31 December 2022 - Audited
New Zealand dollarsNotes
2022
$000s
2021
$000s
Equity
Share capital
18
162,746 151,681
Reserves
21
55,437 43,246
Retained earnings
21
52,760 51,564
Total equity
270,943 246,491
Current assets
Cash and cash equivalents
3,554 12,361
Trade and other receivables
14
33,147 30,685
Biological assets - crop
12
18,408 18,443
Inventories
15
11,900 6,968
Irrigation water rights
127 294
Assets classified as held for sale
9
6,293 1,898
Total current assets
73,429 70,649
Non current assets
Trade and other receivables
14
5,099 814
Property, plant and equipment
10
375,788 327,830
Intangible assets
11
26,934 27,079
Right-of-use lease assets
13
55,805 49,885
Investment in associates and joint arrangements
24
5,952 3,958
Derivative financial instruments
30
3,438 -
Investment in financial assets
23
1,424 2,054
Total non current assets
474,440 411,620
Total assets
547,869 482,269
Current liabilities
Tax liabilities
6
337 7,463
Trade and other payables
16
32,778 33,034
Lease liabilities
13
9,631 6,782
Interest bearing liabilities
17
22,870 5,246
Total current liabilities
65,616 52,525
Non current liabilities
Interest bearing liabilities
17
128,072 107,757
Lease liabilities
13
60,434 56,585
Derivative financial instruments
30
- 538
Deferred tax liabilities
7
22,804 18,373
Total non current liabilities
211,310 183,253
Total liabilities
276,926 235,778
Net assets
270,943 246,491
The accompanying notes form an integral part of these financial statements
On behalf of the Board.
F Hutchings R Farron
Chairman Director
Dated: 23 February 2023
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31SEEKA LIMITED | ANNUAL REPORT 2022
Statement of changes in equity
For the year ended 31 December 2022 - Audited
New Zealand dollarsNotes
Share
capital
$000s
Cash
flow hedge
reserve
$000s
Foreign
currency
revaluation
reserve
$000s
Foreign
currency
translation
reserve
$000s
Share
entitlement
reserve
$000s
Water
share
revaluation
reserve
$000s
Land and
buildings
revaluation
reserve
$000s
Retained
earnings
$000s
Total
$000s
2021
Equity at 1 January 2021
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
2022
Equity at 31 December 2021
151,681 ( 388) 90 ( 208) 526 2,594 40,632 51,564 246,491
Net profit
- - - - - - - 6,504 6,504
Foreign exchange movement
- -( 92) 47 - - - - ( 45)
Other comprehensive income / (loss)
- 2,864 - - - 162 9,736 - 12,762
Total comprehensive income / (loss)
- 2,864 ( 92) 47 - 162 9,736 6,504 19,221
Transactions with owners
Shares issued
18
9,297 - - - - - - - 9,297
Employee share scheme receipts
18
794 - - - - - - - 794
Grower share scheme receipts
18
401 - - - - - - - 401
Movement in employee share
entitlement reserve
21
461 - - - ( 423) - - - 38
Movement in grower share
entitlement reserve
21
112 - - - ( 103) - - - 9
Dividends declared and paid
22
- - - - - - - ( 5,308) ( 5,308)
Total transactions with owners
11,065 - - - ( 526) - - ( 5,308) 5,231
Equity at 31 December 2022
162,746 2,476 ( 2) ( 161) - 2,756 50,368 52,760 270,943
The accompanying notes form an integral part of these financial statements
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ANNUAL REPORT 2022 | SEEKA LIMITED32
Statement of cash flows
For the year ended 31 December 2022 - Audited
New Zealand dollarsNotes
2022
$000s
2021
$000s
Operating activities
Cash was provided from:
Receipts from customers
346,084 322,400
Interest and dividends received
95 405
Cash was disbursed to:
Payments to suppliers and employees
( 313,426)( 264,868)
Interest paid
( 7,204)( 4,082)
Lease interest paid
( 4,289)( 4,610)
Income taxes paid
( 9,132)( 7,661)
Net cash flows from operating activities
5
12,128 41,584
Investing activities
Cash was provided from:
Sale of property, plant and equipment
10
596 70
Cash acquired in acquisition of business
19
33 1,501
Distributions from investment in associates
24
518 762
Sale of investment in shares
23
253 -
Proceeds from sale of assets classified as held for sale
9
527 2,310
Repayment of grower or grower entity advances
34,272 25,667
Cash was applied to:
Purchase of property, plant, equipment and intangibles
( 29,681)( 21,921)
Development of bearer plants
( 4,183)( 7,569)
Acquisition of business
19
( 8,853)( 1,302)
Acquisition of associates
24
( 1,358)( 2,600)
Investment in shares
23
-( 1,000)
Advances to growers or grower entities
( 34,022)( 25,673)
Net cash flows (used in) investing activities
( 41,898)( 29,755)
Financing activities
Cash was provided from:
Proceeds of non-current bank borrowings
17
50,000 123,000
Proceeds of current bank borrowings
17
64,753 39,236
Proceeds from employee and grower loyalty share schemes
18
1,195 9,332
Cash was applied to:
Principal lease payments
13
( 9,231)( 8,093)
Repayment of non-current bank borrowings
17
( 34,175)( 112,759)
Repayment of current bank borrowings
17
( 47,216)( 42,882)
Payment of dividend to and behalf of shareholders
22
( 4,374)( 11,717)
Net cash flows from / (used in) financing activities
20,952( 3,883)
Net (decrease) / increase in cash and cash equivalents
( 8,818) 7,946
Effect of foreign exchange rates
11( 749)
Opening cash and cash equivalents
12,361 5,164
Closing cash and cash equivalents
3,554 12,361
The accompanying notes form an integral part of these financial statements
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33SEEKA LIMITED | ANNUAL REPORT 2022
Notes to the financial statements
For the year ended 31 December 2022 - Audited
This section contains the notes to the consolidated financial statements (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 34
Accounting policies that apply to Seeka's full set of financial statements
Performance 36
Where Seeka generates its revenues and their associated operating costs
1. Segment information 36
2. Turnover 38
3. Revenue and other income 38
4. Cost of sales and operating expenses 40
5. Reconciliation of net operating surplus after taxation with cash flows from operating activities 41
6. Income tax expense 42
7. Deferred tax 43
8. Events occurring after balance date 43
Assets 44
How Seeka allocates resources across its operations
9. Assets classified as held for sale 44
10. Property, plant and equipment 45
11. Intangible assets 47
12. Biological assets - crop 50
13. Right-of-use lease assets and lease liabilities 51
Working capital 53
How Seeka manages its operating cash flow
14. Trade and other receivables 53
15. Inventories 53
16. Trade and other payables 54
Funding 55
How Seeka organises its capital structure
17. Interest bearing liabilities 55
18. Share capital 56
19. Business combination 57
20. Earnings and net tangible assets per share 58
21. Retained earnings and reserves 59
22. Dividends 61
Investments 62
How Seeka manages its investments in shares, subsidiaries, associates and joint ventures
23. Investment in financial assets 62
24. Investment in associates and joint arrangements 62
Other notes 65
All other note disclosures
25. Contingencies 65
26. Commitments 65
27. Related party transactions 65
28. Risk management 67
29. Determination of fair values of financial and non-financial assets and liabilities 70
30. Derivative financial instruments 72
31. Financial instruments summary 73
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ANNUAL REPORT 2022 | SEEKA LIMITED34
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.
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-orientated 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)
–investment in financial assets held at fair value (note 23)
–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 23 February 2023.
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 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
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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35SEEKA LIMITED | ANNUAL REPORT 2022
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
19.Business combinationValuation on acquisition
Going concern assumption
For the year ended 31 December 2022, the Group’s profitability was
adversely affected by lower kiwifruit crop yields, a wind event in Ōpōtiki,
challenging fruit quality and a tight labour market. The 2023 harvest has
been impacted by a significant frost event, variable bud break in spring
2022, and Cyclone Gabrielle in February 2023, see note 8.
Due to events prior to Cyclone Gabrielle, the Group obtained
agreement from its banking syndicate in December 2022 to modify
two of the financial covenants for the test dates as at 31 December
2022, 30 June 2023 and 31 December 2023.
The Directors have considered the forecast cash flows and covenant
compliance, including the expected impact from Cyclone Gabrielle
on the 2023 harvest. The Directors have concluded that, based on
the current information, there are no material uncertainties that the
Group would not be able to comply with those covenants as at 30 June
2023 and 31 December 2023, which are those within the 12 months
following the approval of the Group’s financial statements.
The key processes and assumptions applied in preparing the forecast
financial covenant compliance for the next 12 months are:
– kiwifruit crop forecasts for the 2023 harvest have been based on
inspections at orchards in late January and early February 2023
– targeted orchard inspections and discussions with affected growers
following Cyclone Gabrielle and making adjustments to the kiwifruit
crop forecasts for the expected crop reductions
– no further significant adverse weather events affecting the 2023
kiwifruit harvest and a normal picking and packing period.
The Group's earnings and cash flows can vary from expectations
due to unanticipated events, and such variations may increase the
possibility of breaching financial covenants. In the event that there was
a potential future or actual breach of financial covenants, the Group
has a number of avenues to manage costs and / or reduce debt. The
Directors have confidence that the banking syndicate would work with
the Group to further revise financial covenants, if that was required.
The Group’s loan facilities expire on 31 January 2024 and 31 January
2025 (see note 17) and there is no indication that these would not be
able to be refinanced at that time.
While there are uncertainties in the near-term financial performance
of the Group, the outlook for the company and the industry remains
positive. Annual crop volumes will grow as previous SunGold licence
releases mature and reach full production, and the continuing release
of new SunGold and RubyRed licences by Zespri.
The financial statements have been prepared on a going concern basis.
Goods and services tax (GST)
The statement of profit or loss 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.
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ANNUAL REPORT 2022 | SEEKA LIMITED36
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 operating segment covers the integrated supply
chain service for the Group’s Australian-grown fruit.
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 profit or loss 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, citrus and kiwiberry crops.
The Group produces kiwifruit, avocado, citrus and kiwiberry 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, persimmon 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 profit or
loss and impairment and revaluations of other assets not attributed
directly to any other segment. It also includes the gain on sale from
assets that had been classified as held for sale, and in 2021 the
proceeds from 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.
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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37SEEKA LIMITED | ANNUAL REPORT 2022
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
2022
Income statement
Turnover
1
80,526 233,755 54,418 1,054 13,979 383,732
Gross segment revenue
80,589 237,297 19,072 1,054 13,979 351,991
Eliminations
( 63) ( 3,541) - - - ( 3,604)
Total segment revenue
80,526 233,756 19,072 1,054 13,979 348,387
EBITDA
2
4,556 58,979 794 ( 19,231) 981 46,079
Depreciation expense
4
( 1,001) ( 12,020) ( 337) ( 1,622) ( 1,075) ( 16,055)
Lease depreciation expense
5
( 1,311) ( 5,636) ( 616) ( 1,118) ( 835) ( 9,516)
Impairment of property, plant and equipment
- ( 144) - - -( 144)
Impairment of biological assets
----(191)( 191)
Impairment of intangible assets
- - ( 681) - - ( 681)
Amortisation of intangible assets
- - - ( 406) - ( 406)
EBIT
3
2,244 41,179 ( 840) ( 22,377) ( 1,120) 19,086
Lease interest expense
5
( 422) ( 2,217) ( 307) ( 412) ( 931) ( 4,289)
EBIT
3
(after lease interest expense)
1,822 38,962 ( 1,147) ( 22,789) ( 2,051) 14,797
Interest expense
6
---( 6,000) ( 1,204) ( 7,204)
Tax charge on profit
---( 2,067) 978 ( 1,089)
Profit / (loss) after tax
1,822 38,962 ( 1,147) ( 30,856) ( 2,277) 6,504
Balance sheet
Segment assets
84,881 360,366 11,482 36,613 54,527 547,869
Total assets
84,881 360,366 11,482 36,613 54,527 547,869
Segment liabilities
44,642 145,053 12,394 40,066 34,771 276,926
Total liabilities
44,642 145,053 12,394 40,066 34,771 276,926
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)
EBIT
3
(after lease interest expense)
2,266 42,431 1,038 ( 17,104) ( 1,061) 27,570
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
73,676 316,088 11,671 33,147 47,687 482,269
Segment liabilities
38,853 108,415 14,665 30,647 43,198 235,778
Total liabilities
38,853 108,415 14,665 30,647 43,198 235,778
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 2022 | SEEKA LIMITED38
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
2022 - EBITDA
EBITDA pre NZ IFRS 16
1,376 52,836 ( 51) ( 20,535) ( 1,067) 32,559
NZ IFRS 16 lease costs
3,180 6,143 845 1,304 2,048 13,520
EBITDA after applying NZ IFRS 16
4,556 58,979 794 ( 19,231) 981 46,079
2021 - EBITDA
EBITDA pre NZ IFRS 16
2,379 55,318 1,495 ( 14,912) ( 193) 44,087
NZ IFRS 16 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
2. Turnover
The following table reconciles turnover to revenue.
New Zealand dollars
2022
$000s
2021
$000s
Turnover
383,732 355,967
Value of sales made as agent
( 35,345) ( 46,398)
Revenue
348,387 309,569
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
2022
$000s
2021
$000s
Total revenue
348,387 309,569
Other income
Interest
16 67
Gain on sale of assets classified as held for sale
9
364 331
Grower share loyalty scheme
21
( 9) ( 446)
Dividends received
79 190
Increase in fair value of irrigation water rights
- 173
Proceeds from settlement of Psa claim
- 7,644
Other income
305 487
Total other income
755 8,446
Total revenue and other income
349,142 318,015
During the year the Group recognised $0.01m of costs relating to the measurement of the grower share scheme issued based on the Black Scholes
Model (Dec 2021 - $0.45m).
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39SEEKA LIMITED | ANNUAL REPORT 2022
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 one type of contract that is entered by the Australian
business; for the sale and supply of fruit.
–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 Orangewood Limited
(Orangewood) and NZ Fruits Limited (NZ Fruits) acquisitions, (see
note 19) are substantially similar in nature to Seeka’s current revenue
contracts.
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 profit or loss.
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 was recognised in 2021 when
the claim was settled and the amount was confirmed as received or
receivable.
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ANNUAL REPORT 2022 | SEEKA LIMITED40
4. Cost of sales and operating expenses
New Zealand dollarsNotes
2022
$000s
2021
$000s
Operating materials and services
192,855 163,029
Direct employee benefits
87,188 71,861
Decrease in fair value of biological assets - crop
12
35 1,447
Total cost of sales
280,078 236,337
Total other employee benefits
12,476 12,491
General administrative expenses
8,587 7,883
Audit fees paid to principal auditors - paid on a Group basis
529 493
Tax compliance and consulting (2021: tax compliance, consulting, planning, structuring and
due diligence) fees paid to principal auditors
12 242
Tax pooling services paid to principal auditors
12 13
Debt covenant compliance agreed upon procedures paid to principal auditors
7 6
Acquisition and restructuring costs
419 1,784
Directors' fees and expenses
624 536
Short term lease expenses
1,376 1,676
Decrease in value of irrigation water rights
97 -
Total other costs
24,139 25,124
Depreciation expense
10
16,055 15,185
Lease depreciation expense
13
9,516 7,943
Amortisation of intangible assets
11
406 294
Impairments and revaluations
Impairment of property, plant and equipment
10
144 1,188
Impairment of biological assets
191-
Impairment of intangible assets
11
681 -
Total impairment and revaluation
1,016 1,188
Interest expense
7,204 4,082
Lease interest expense
13
4,289 4,610
Total expenses
342,703 294,763
During the year the Group recognised $0.04m of costs relating to the measurement of the employee share schemes issued based on the Black
Scholes Model (Dec 2021 - $0.15m).
Accounting policies
Operating expenses are recognised in the statement of profit or loss 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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41SEEKA LIMITED | ANNUAL REPORT 2022
5. Reconciliation of net operating surplus after taxation with cash flows from operating activities
New Zealand dollars
2022
$000s
2021
$000s
Net operating surplus after taxation
6,504 14,860
Add non cash items:
Depreciation
16,055 15,185
Lease depreciation
9,516 7,943
Impairment of biological assets
191 -
Impairment of intangible assets
681 -
Impairment of property, plant and equipment
144 1,188
Revaluation of employee share scheme
38 153
Revaluation of grower share scheme
9 446
Movement in deferred tax
4,431 5,236
Movement in fair value of biological assets - crop
35 1,447
Amortisation of intangible assets
406 294
31,506 31,892
Add / (less) items not classified as an operating activity:
(Loss) / gain on sale of property, plant and equipment
( 138) 12
Gain on sale of assets classified as held for sale
( 364) ( 332)
Increase / (decrease) in current water allocation account
133 ( 319)
( 369) ( 639)
(Increase) / decrease in working capital:
(Decrease) in accounts payable
( 3,730) ( 7,042)
(Increase) / decrease in accounts receivable/prepayments
(6,725) 6,167
(Increase) / decrease in inventory
( 2,593) 940
(Decrease) in taxes due
( 12,465) ( 4,594)
( 25,513) ( 4,529)
Net cash flow from operating activities
12,128 41,584
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 2022 | SEEKA LIMITED42
6. Income tax expense
New Zealand dollarsNotes
2022
$000s
2021
$000s
a. Current tax expense
Current year
1,410 8,454
Prior period adjustment
214( 589)
Total current tax expense
1,6247,865
Deferred tax expense
7
Origination and reversal of temporary differences
598 ( 1,566)
Prior period adjustment
( 1,133)2,329
Total deferred tax expense
( 535)763
Total income tax expense
1,089 8,628
b. Numerical reconciliation of income tax expense to prima facie tax payable
Profit before income tax expense
7,593 23,488
Tax at the New Zealand tax rate of 28%
2,126 6,577
Tax at the Australian tax rate of 30%
( 60)( 37)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income
63 432
Benefit of tax credits
( 121)( 84)
(Over) provision in prior years - temporary differences
( 919)1,740
Income tax expense
1,089 8,628
c. Imputation credit account
Imputation credits available for use in subsequent reporting periods
27,742 28,265
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)
( 7,463) ( 6,952)
Current tax liability acquired via acquisition
19
( 653) ( 1,212)
Adjustments for prior periods
( 214) 589
Current year tax
( 1,410) ( 8,454)
Less tax paid
9,3628,610
Exchange differences
41 ( 44)
Current tax (liability)
( 337) ( 7,463)
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43SEEKA LIMITED | ANNUAL REPORT 2022
Accounting policies
Income tax expense comprises both current and deferred tax and is recognised in the statement of profit or loss.
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
2022
$000s
2021
$000s
Net deferred tax liabilities:
Opening balance
18,373 13,137
Deferred tax liability acquired via acquisition
19
2261,865
Adjustments for prior periods
( 1,133)2,329
Exchange differences
( 26) 18
Charged to the statement of profit or loss
598 ( 1,566)
Charged to revaluation reserve
3,653 2,553
Debited to hedge reserve
1,113 37
Closing balance at end of year
22,804 18,373
The balance comprises temporary differences attributable to:
Temporary differences on non-current assets
22,712 21,574
Current liabilities
( 2,094)( 4,749)
Prepayments and accrued income
2,186 1,548
Total deferred tax liability
22,804 18,373
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 2021 - 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.
8. Events occurring after balance date
Cyclone Gabrielle
From 13 to 15 February 2023, Cyclone Gabrielle brought severe wind and rain over much of New Zealand's North Island. A number of the Group's
kiwifruit and avocado growing regions felt the force of Cyclone Gabrielle.
The Group is undertaking an initial impact assessment, but a complete understanding of the full extent of the impact on the 2023 crops will likely
remain unknown until the fruit is harvested.
The Group's core Bay of Plenty kiwifruit growing region was spared the worst of the weather and was not materially impacted by the event.
However, the Hawke’s Bay, Gisborne, Coromandel and Kerikeri regions had varying degrees of impact, with Hawke’s Bay being worst hit.
Approximately 5% of the Group's kiwifruit supply is grown in the Hawke’s Bay region. The Group will continue to assess the impact of the cyclone
and will update the market if it identifies a material loss.
The Group has made an initial assessment of its major assets and has not identified any significant damage.
Harvest 2023 kiwifruit volumes are expected to be lower than the 2022 harvest year due to an early season frost, variable bud break and now
this cyclone. The Group's response to this circumstance includes a reduction to the 2023 capital expenditure programme and a focus on reducing
costs in line with the lower crop expectation.
There are no other material events occurring subsequent to balance date requiring adjustment to, or disclosure in, the financial statements.
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ANNUAL REPORT 2022 | SEEKA LIMITED44
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 dollarsNotes
2022
$000s
2021
$000s
Opening balance at 1 January
1,898 3,844
SunGold licence transferred from intangible assets
11
491 -
Water shares transferred from intangible assets
11
3,283-
Transfers from property, plant and equipment
10
1,915 -
Development costs incurred
313 33
Sales settled by third parties at carrying value
( 1,607) ( 1,979)
Total assets classified as held for sale
6,293 1,898
The following table details the assets classified as held for sale by asset class.
New Zealand dollars
2022
$000s
2021
$000s
Asset class
Land and buildings
943 734
Property, plant and equipment
380 319
Intangible assets
3,783 304
Bearer plants
645 541
Bearer plants under development
542 -
Total assets classified as held for sale
6,293 1,898
At 31 December 2022, 16.6 hectares of Northland orchards (Dec 2021 - 13.5 hectares) owned by Seeka were classified as held for sale. During the
year three additional properties including, one 3.5 hectare orchard in Ōpōtiki, were classified as held for sale, with two subsequently sold within the
year. No growing costs have been attributed to the remaining orchards at 31 December 2022 as they are valued on a crop-off basis.
At 31 December 2022, 750ML of permanent water entitlement in Victoria, Australia, was classified as held for sale (Dec 2021 - Nil). The sale of
the water entitlement settled on 22 February 2023 for a consideration of $3.08m AUD.
All assets classified as held for sale are included in the orchard operations segment, apart from $3.3m related to the water entitlement (Dec 2021
- Nil) which was included in the Australian operations segment.
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 standard
allows for the period to extend past 12 months if the circumstances causing the delay are out of Seeka's control. As at 31 December 2022 one
orchard of 13.5 hectares (Dec 2021 - one orchard of 13.5 hectares) has taken longer than 12 months to find a willing buyer, however Seeka remains
committed to selling the property and a sale is anticipated within the next 12 months. Assets classified as held for sale are recorded at the lower of
the carrying value or fair value less costs to sell.
Critical accounting estimates and judgements
The Group used judgement to recognise the remaining orchards as held for sale, despite one being held for sale for greater than 12 months.
This judgement is based on the ability to obtain a buyer for the assets classified as held for sale. This is impacted by external real estate market forces
and changes to this estimate may result in the balance being reclassified to a non-current asset.
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45SEEKA LIMITED | ANNUAL REPORT 2022
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 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
- ( 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 1 January 2022
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
Year ended 31 December 2022
Opening net book amount
228,517 57,890 1,292 29,989 10,142 327,830
Additions from business combination
12,900 5,955 64 - - 18,919
Additions and transfers - net
4,126 13,195 1,040 5,228 10,774 34,363
Depreciation
( 7,132) ( 8,316) ( 294) ( 313) - ( 16,055)
Disposals
( 4) ( 139) ( 221) ( 114) - ( 478)
Impairment
- - - ( 144) - ( 144)
Revaluation
13,118 - - - - 13,118
Reclassification to assets classified as held
for sale
( 644) - - ( 1,271) - ( 1,915)
Foreign exchange
57 26 1 66 - 150
Closing net book amount
250,938 68,611 1,882 33,441 20,916 375,788
At 31 December 2022
Cost or valuation
280,850 150,667 3,131 37,187 21,311 493,146
Accumulated depreciation and impairment
( 29,912) ( 82,056) ( 1,249) ( 3,746) ( 395) ( 117,358)
Net book amount
250,938 68,611 1,882 33,441 20,916 375,788
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 2022, assets under
construction relate to the Transcool coolstore construction, and further
investment relating to packhouse automation.
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 CBRE Limited
t/a Telfer Young from CBRE, independent registered valuer.
In Australia valuations were undertaken by Opteon (Goulburn North
East Vic) Pty Ltd, independent valuers based in Victoria, Australia. All
Australian land and buildings were revalued at 31 December 2022.
The valuers consider four different approaches in concert to arrive at
a fair value;
1. Direct replacement cost - adds the value of the land to the
replacement cost of the buildings and other improvements based on
the current cost of construction less depreciation based on the age
of the building with an allowance for physical depreciation. Specific
consideration is given to the 'optimised depreciated replacement
cost' methodology.
2. Sales comparison - considers sales of other comparable properties.
3. Capitalisation of rentals - assumes a hypothetical lease of the property
with a current market rental being established and capitalising this
at an appropriate rate of return that would be expected by a prudent
investor. The 2022 year saw capitalisation rates decrease between
0.25% - 1.50% since the previous valuations of the same properties,
some of which may have been up to three years prior.
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).
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ANNUAL REPORT 2022 | SEEKA LIMITED46
The following table details the gain on revaluation of land and buildings recognised in the revaluation reserve, net of tax, of $9.74m in the year ended
31 December 2022 (Dec 2021 - $11.54m).
New Zealand dollars
Land
$000s
Buildings
$000s
Total
$000s
Land and buildings revaluation reserve
3,000 6,736 9,736
As a consequence of the building revaluations conducted December 2022, $6.38m (Dec 2021 - $3.45m) of accumulated depreciation was offset
directly against the assets' cost or valuation, prior to revaluation.
During the year the Group reviewed and estimated the useful lives of its buildings. The result of this review was an increase of the useful lives of
the buildings to align them all with a 50 year useful life from the date of the estimate. This has standardised the useful lives of the buildings, but
they remain within the useful life range of the existing accounting policy. This change in useful lives took effect from 1 July 2022. The effect of the
change was to decrease depreciation in the second half of the year by $1.2m, compared to what the depreciation would have been if no changes
had been made. This will have a similar effect on future periods.
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
2022
$000s
2021
$000s
Cost
251,959 234,937
Accumulated depreciation
( 56,783) ( 49,227)
Depreciated historical cost
195,176 185,710
Net book amount
250,938 228,517
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
profit or loss.
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 profit or loss
during the financial period in which they are incurred.
Asset impairments are recognised in the statement of profit or loss.
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 from revaluation date are:
– Buildings 20 - 50 years
– Machinery 10 - 20 years
– Vehicles 2 - 15 years
– Furniture, fittings and equipment 3 - 10 years
– Bearer plants 5 - 50 years
Significant unobservable inputs inherit in the land and building
valuation process include potential comparative market rentals, the
market rental capitalisation rates and discount rates. The higher the
rental rate, the higher the fair value, and the higher the capitalisation
or discount rate, the lower the fair value. Significant changes in either
of these inputs would result in significant changes to the fair value
measurement. See below;
1. Market rental rates - Packhouse rental rates as described in the
valuation reports obtained in 2022 between $60/m
2
- $130/m
2
(Dec
2021 - $47.50/m
2
- $66.45/m
2
). Coolstore rental rates were between
$0.40/tray - $0.65/tray (Dec 2021 - $0.36/tray - $0.60/tray)
2. Rental capitalisation rates - Capitalistion rates as described in the
valuation reports obtained in 2022 were between 6.00% – 8.75%
(Dec 2021 - 6.50% - 9.00%).
3. Discount rates – Discount rates as described in the valuation rates
obtained in 2022 were between 6.50% - 9.00% (Dec 2021 – 7.00%
- 9.25%).
The net book value of land is $47.41m (Dec 2021 - $36.87m) and
buildings is $203.53m (Dec 2021 - $191.65m), see note 29.
Impairment of bearer plants
For the year ended 31 December 2022, $0.14m of assets were
impaired (Dec 2021 - Nil). This related to the impairment of
capitalised structures on a long-term-leased orchard.
Impairment of plant and equipment
For the year ended 31 December 2022, the Group did not impair
any fixed assets. 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
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47SEEKA LIMITED | ANNUAL REPORT 2022
11. Intangible assets
New Zealand dollarsNotes
Software
$000s
Goodwill
$000s
Water shares
$000s
Other
intangibles
$000s
Total
$000s
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)
Foreign exchange
- - ( 73) - ( 73)
Amortisation
( 261) - - ( 33) ( 294)
Closing net book amount
955 17,181 8,421 522 27,079
At 1 January 2022
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
Year ended 31 December 2022
Opening net book amount
955 17,181 8,421 522 27,079
Additions
395 - - - 395
Additions from business combination
19
- 3,681 - - 3,681
Transfers from investments in financial assets
- - -377 377
Revaluation
- - 212 - 212
Impairment
- ( 681) - - ( 681)
Foreign exchange
2 - 49 - 51
Reclassification to assets classified as held for sale
9
- - ( 3,283) ( 491) ( 3,774)
Amortisation
( 375) - - ( 31) ( 406)
Closing net book amount
977 20,181 5,399 377 26,934
At 31 December 2022
Cost
4,380 22,212 5,399 377 32,368
Accumulated amortisation and impairment
( 3,403) ( 2,031) - -( 5,434)
Net book amount
977 20,181 5,399 377 26,934
The amortisation period of software is four to five years.
Critical accounting estimates and judgements
At 31 December 2022, 42% (Dec 2021 - 44%) of Seeka's New Zealand land and building portfolio was revalued in line with policy. From 1 July 2022
the Group has reviewed the useful lives of its buildings and noticed many that required evaluation, while remaining within the policy above. The impact
of this evaluation in 2022 is an increase in useful lives and a $1.2m decrease in depreciation charged in the period.
All building useful lives remain within the policy above with it remaining unchanged. 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.
Sensitivity analysis suggests the remaining properties that were not revalued this year could cause a movement in land and buildings of between 5.5-
6.5%. This is not considered a material movement in land and building values.
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 profit or loss. When revalued assets are sold, the amounts
included in the revaluation reserve in respect of those assets are
transferred to retained earnings.
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ANNUAL REPORT 2022 | SEEKA LIMITED48
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
pre impairment
$000s
Goodwill
carrying
amount
post impairment
$000s
Pre tax
discount rate
1
EBITDA
6

growth rate
1-5 years
Terminal
growth rate
2
2022
Post harvest Post harvest operations
20,181 20,181 12.5%2% - 36%
3
2.0%
SeekaFresh Retail services operations
437 - 14.4%40% - 203%
5
2.0%
Kiwi Crush Retail services operations
244 - 14.4%0% - 9%
6
2.0%
2021
Bay of Plenty post harvest Post harvest operations
14,663 14,663 11.1%2% - 8%
3
1.0%
Northland post harvest Post harvest operations
1,841 1,841 12.5%3% - 18%
4
1.0%
SeekaFresh Retail services operations
433 433 12.5%4 - 10%
5
2.0%
Kiwi Crush Retail services operations
244 244 12.5%2%
6
2.0%
The following table details how water shares would be stated on the historical cost basis.
New Zealand dollars
2022
$000s
2021
$000s
Cost
1,436 4,719
Amortised cost
1,436 4,719
Net book amount
5,399 8,421
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 comprehensive income. There was a gain in the fair value of water
shares in the year ended 31 December 2022 of $0.21m (Dec 2021 - Nil).
Impairment tests for goodwill
At 31 December 2022, the Group's market capitalisation was $128.1m
compared to net assets of $270.9m. As a result, an impairment test
was performed on all cash generating units (CGUs), in addition to
CGUs with goodwill balances to ensure that future cash flows of the
CGUs and Group support the fair value of the assets.
Goodwill represents the 2022 acquisition of NZ Fruits, the 2021
acquisitions of Ōpōtiki Packing and Cool Storage Limited (OPAC) 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 acquisition of 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 impact of a frost event in spring 2022 along with a lower forecast
yield as a result of variable bud break is forecasted to reduce the volume
harvested in FY23. The effect of these events have been incorporated
into the impairment tests. The impact of climate change has also been
incorporated to the extent that it impacts the forecasts and considered
as part of scenario planning from an operational capacity planning
perspective. Any financial impact of climate change is expected to fall
outside of the planning period given the long-term nature of climate
change. However, scenario planning is being carried out across the
Company to prepare for the impact of climate change on future yields,
varieties and growing methods. Seeka has a long history of adapting
to the environment, such as when Psa arrived in New Zealand and the
business pivoted to the SunGold variety, alongside past climatic events
such as droughts, hail and floods. The business will continue to adapt to
the changing environment.
The annual impairment tests of goodwill were performed at 30 November
2022. Impairment indicators were considered at 31 December 2022,
however no indictors were identified that required any further impairment
tests. In previous years the annual impairment tests had been performed
at 31 December. The change in the current year was made to more closely
align with the timing of the annual budget and five year plan processes.
Additions to goodwill
During the year $3.54m of goodwill was recognised as a result of
the NZ Fruits Limited (NZ Fruits) acquisition and a further $0.15m
from updates to the goodwill acquired in the Orangewood Limited
(Orangewood) acquisition. In the year ended 31 December 2021,
$8.25m of goodwill was recognised, $7.63m from the OPAC
acquisition and $0.62m from the Orangewood acquisition. See note 19
for details of the business combinations.
Cash generating units (CGUs)
During the year ended 31 December 2022, the scope of the post harvest
CGUs were reviewed. Previously the post harvest CGUs were defined by
the geographical region, with one CGU being the Bay of Plenty and East
Coast region and a second CGU for Northland post harvest. However,
based on the most recent update of the Group’s capacity planning and
five year financial planning, more fruit is expected to be connected
through the supply chain between these two regions. Therefore, the fruit
flows, and as a result the cash flows, are interdependent and the CGUs
are better reflected as a single collective post harvest group.
This better 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.
The goodwill that arose through the NZ Fruits acquisition, as well as the
goodwill from the OPAC and Orangewood acquisitions, are all part of the
post harvest CGU.
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
post harvest CGU is set at 9% as this represents the Board's
assessment of the Group's weighted average cost of capital.
2. The long term growth rate is based on the long term expected
inflation rate, being within the RBNZ inflationary target of 1%-3%.
The Group has set its terminal growth rates at 2% to ensure a
long term conservative growth estimate has been applied in the
impairment tests.
3. The EBITDA growth rate for the 2024 year assumes a return to
“normal” yields and therefore represents a 36% increase. However,
the remaining EBITDA growth rates sit between 2-4%, which is
considered conservative for the kiwifruit industry.
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49SEEKA LIMITED | ANNUAL REPORT 2022
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).
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
there are impairment indicators) 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 profit or loss.
Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are
not subject to amortisation and are tested annually for impairment,
or more frequently if events or changes in circumstances indicate
that they might be impaired. Other assets are tested for impairment
whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher
of an asset’s fair value less costs of disposal and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash inflows which are
largely independent of the cash inflows from other assets or groups
of assets (cash-generating units (CGUs)). Non-financial assets other
than goodwill that suffered an impairment are reviewed for possible
reversal of the impairment at the end of each reporting period.
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 2022, impairment was identified in the SeekaFresh and Kiwi Crush CGUs as a result of the impairment tests performed.
4. The EBITDA growth rates for Seeka Fresh appear significant, but
only due to the low profitability achieved by this segment. The
business remains in a loss making position over the period of the
impairment test.
5. The EBITDA growth used for the Kiwi Crush reflect a 9.4% increase
in year one, and then a growth rate between 0%-1% every year
thereafter. This reflects the consistency in the profitability of this
CGU, with limited growth expected over the period.
6. EBITDA, a non-GAAP measure, is earnings before interest, tax,
depreciation, amortisation, impairments and revaluations.
At 31 December 2022, all goodwill balances were reviewed for
indicators of impairment.
Post harvest CGU
The goodwill relating to the post harvest cash generating unit is
supported by historical profitability, with a positive outlook and
significant growth path ahead. The 2022 kiwifruit harvest, despite
being challenging, achieved increased total volumes on the prior year
and packing volumes are expected to increase further in future years.
Challenges in the 2022 harvest, including lower yields, poorer storing
kiwifruit, labour availability issues, and issues across the supply chain,
caused a decline in profitability. However, the post harvest segment
operated profitably throughout the year.
For these reasons, there are no indications of impairment of the
goodwill relating to the post harvest cash generating unit.
No other reasonable changes to key assumptions would require an
impairment of goodwill.
SeekaFresh CGU
The fresh market has been impacted significantly by three years of
Covid-19 disruption, in particular servicing the hospitality industry
which has been struggling due to lockdowns predominately in
Auckland. The second half of 2022 saw promising improvements in the
fresh market business as new markets and customers were accessed.
Profitability from commissions has decreased, due to lower volumes of
class two kiwifruit, alongside lower volumes and variable quality in the
start of the 2022/23 avocado harvest. The commissions in both these
key categories have been lower than previous years. Class 2 kiwifruit
returns are expected to improve in coming years as more volume
comes onstream.
Despite the fresh market turnaround in the second half of the year,
alongside a forecast kiwifruit volume increase, the forecast assumes a
post-tax operating loss for the five year period of the impairment test.
This has led to impairment being identified within the CGU and the
entirety of the goodwill, being $0.43m, has been impaired in the year
ended 31 December 2022.
The impairment and recoverable amount of the CGU have been
calculated using both the value-in-use method and fair value less
costs of disposal. The value-in-use method was used. The recoverable
amount of the assets in the CGU is $2.07m.
Kiwi Crush CGU
The Kiwi Crush CGU has operated profitably and consistently since
the business was acquired. The kiwiberry variety has performed very
well. Demand for Kiwi Crush in supermarkets, hospitals, and aged care
facilities remains high, particularly as the product is high in vitamin
C and has proven health benefits. However, using a higher discount
rate than in previous years, the returns of the business do not support
the book value of the assets held. Impairment was identified within
the CGU and the entirety of the goodwill, being $0.24m, has been
impaired in the year ended 31 December 2022.
The impairment and recoverable amount of the CGU have been
calculated using both the value-in-use method and fair value less
costs of disposal. The value-in-use method was used. The recoverable
amount of the assets in the CGU is $2.93m.
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Accounting policies
The Group's biological assets are the crops growing on bearer plants in the Group's leased and owned orchards. All crops have a maturity period of
less than one year and will be harvested within 12 months from the Group's balance date.
Biological assets are measured at fair value less costs to sell provided this can be measured reliably, otherwise they are measured at cost.
When insufficient biological transformation has occurred fair value is not able to be measured reliably. Biological assets at cost are not depreciated as
they are in the process of maturing.
Fair value is determined as the estimated net market return less selling costs and costs to market.
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 pear 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
2022
$000s
2021
$000s
Carrying amount at beginning of period
18,443 19,890
Crop harvested during the period
Fair value movement from the beginning of the period to point of harvest
12,075 18,504
Fair value when harvested
( 30,518) ( 38,394)
Crop growing on bearer plants at end of period
Crop at cost
18,345 18,324
Crop at fair value
63 119
Carrying value at end of period
18,408 18,443
The following table reconciles fair value movement of biological assets - crop.
New Zealand dollars
2022
$000s
2021
$000s
Movement in carrying amount
( 59) ( 1,431)
Exchange differences
24 ( 16)
Net fair value movement in crop
( 35) ( 1,447)
The following table details the classification of biological assets - crop.
New Zealand dollars
2022
$000s
2021
$000s
Australia - all varieties
4,007 4,127
New Zealand - kiwifruit crop
13,597 13,673
New Zealand - avocado crop
804 643
Carrying value at end of period
18,408 18,443
Crop where fair value cannot be measured reliably
Kiwifruit, nashi, Packham and Corella pear crops are not considered to have achieved sufficient biological transformation at balance date therefore
fair value is not able to be measured reliably and, as such, these crops are measured initially at cost less impairment.
Crop valued at fair value
Where a crop has achieved sufficient biological transformation, it is measured at fair value less costs to sell using unobservable inputs in the fair
value assessment. These unobservable inputs include forecasted sales prices achieved once the crop is harvested and marketed for sale, if the
forecast price was to increase so would the fair value of the crop.
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51SEEKA LIMITED | ANNUAL REPORT 2022
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
2022
$000s
2021
$000s
Right-of-use lease assets
Land and buildings
32,884 27,171
Orchard leases
17,310 18,250
Equipment
2,812 1,516
Motor vehicles
2,799 2,948
Total right-of-use lease assets
55,805 49,885
The movements for the year are as follows:
Right-of-use lease asset movements
Opening balance
49,885 50,831
Additions and renewals
16,269 7,412
Disposals, reclassifications and early terminations
( 944)( 460)
Exchange rate differences
11145
Depreciation
( 9,516) ( 7,943)
Closing balance
55,805 49,885
The classification for depreciation of right-of-use lease assets is as follows:
Land and buildings
3,793 3,197
Orchard leases
1,386 1,368
Equipment
2,254 1,586
Motor vehicles
2,083 1,792
Total depreciation of right-of-use lease assets
9,516 7,943
New Zealand dollars
2022
$000s
2021
$000s
Lease liabilities
Current
9,631 6,782
Non-current
60,434 56,585
Total lease liabilities
70,065 63,367
The liabilities are classified as follows:
Lease liabilities
Land and buildings
37,614 29,319
Orchard leases
26,148 26,718
Equipment
3,274 1,766
Motor vehicles
3,029 5,564
Total lease liabilities
70,065 63,367
The movements for the year are as follows:
Lease liability movements
Opening balance
63,367 64,382
Additions and renewals
16,796 7,412
Finance lease additions
-80
Disposals, reclassifications and early terminations
( 873)( 432)
Exchange rate differences
618
Principal lease payments
( 9,231) ( 8,093)
Closing balance
70,065 63,367
Additions
On 2 February 2022, the Group acquired NZ Fruits, which included $1.92m of right-of-use lease assets and lease liabilities, see note 19.
On 22 November 2021, the Group acquired Orangewood, which included $0.08m of 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 5.37% and 12.36%. 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 profit or loss over the term of
the lease.
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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
2022
$000s
2021
$000s
Total packaging at cost
8,618 5,032
Other inventories at cost
3,282 1,936
Total inventories
11,900 6,968
In the current year, $37.52m (Dec 2021 - $30.25m) of inventory costs were expensed to cost of sales in the statement of profit or loss.
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
2022
$000s
2021
$000s
Current trade receivables (net of provision for doubtful debts)
20,109 17,148
Prepayments
3,203 2,188
Prepaid deposits
619 1,146
Accrued income and other sundry receivables
9,216 10,203
Current trade and other receivables
33,147 30,685
Non current trade receivables
5,099 814
Non current trade and other receivables
5,099 814
Total trade and other receivables
38,246 31,499
Within current trade receivables, $4.79m are past due (Dec 2021 - $2.49m), of which 4.02% are more than 90 days (Dec 2021 - 1.81%).
Prepaid deposits includes $0.62m for avocado trees and kiwifruit vines not yet received (Dec 2021 - $1.15m).
At December 2021, accrued income included $2.26m of funds received in FY22 in relation to the settlement of the Psa claim.
The balance in accrued income and other sundry receivables includes income to be received from orcharding operations over leased and owned
orchards relating to 419 hectares (Dec 2021 - 399 hectares).
A $0.24m provision for doubtful debts is recognised in the accounts (Dec 2021 - $0.25m).
At December 2022, non-current trade receivables includes $2.20m losses carried forward on Hayward short term leased orchards to be recovered
in a future period when the orchards return to a profit making position expected in the 2024 harvest. The remaining balance of non-current trade
receivables relates to debtors secured against crop supply commitments with repayment terms of up to five years and is considered recoverable.
Non current receivables also include $3.06m (Dec 2021 - $0.84m) of long term receivable balances with agreed long-term payment terms.
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.
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16. Trade and other payables
New Zealand dollars
2022
$000s
2021
$000s
Trade payables
6,329 6,166
Accrued expenses
17,940 17,372
Employee expenses
6,619 8,300
GST payable
1,853 1,069
Other payables
37 127
Total trade and other payables
32,778 33,034
Trade payables include $0.18m for capital works in progress (Dec 2021 - $1.77m) and accrued expenses includes $2.00m for capital purchases
(Dec 2021 - $0.08m).
Accrued expenses include costs to be incurred from orcharding operations on 419 hectares (Dec 2021 - 399 hectares) of leased and owned
orchards. Accrued expenses also include costs relating to the retail service 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 during acquisition through amalgamation, and under the dividend reinvestment plan, grower
incentive and employee share schemes.
17. Interest bearing liabilities
New Zealand dollars
2022
$000s
2021
$000s
Current secured
Interest bearing liabilities
23,110 5,466
Capitalised loan fees to be amortised in the next 12 months
( 240) ( 220)
Total current interest bearing liabilities
22,870 5,246
Non current secured
Interest bearing liabilities
128,151 108,045
Remaining capitalised loan fees to be amortised
( 79) ( 288)
Total non-current interest bearing liabilities
128,072 107,757
Total interest bearing liabilities
150,942 113,003
Analysis of movements in borrowings:
At 1 January
113,003 83,019
Cash flow - additional borrowings
114,753 162,236
Cash flow - repayment of borrowings
( 81,391) ( 155,641)
Loans acquired via acquisition
19
4,175 24,013
Capitalised loan fees - amortised over the life of the loan
188 ( 508)
Exchange differences
214 ( 116)
At 31 December
150,942 113,003
Analysis of total facilities:
Drawn
151,261 113,511
Available
59,296 76,903
Total facilities at 31 December
210,557 190,414
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 2022
AUD $17m
18,151 5.04%31 January 2024
NZD $40m
40,000 5.50%31 January 2024
NZD $50m
50,000 5.70%31 January 2025
NZD $20m
20,000 6.96%31 January 2024
Term loans as at 31 December 2021
AUD $17m
18,045 2.68%31 January 2024
NZD $40m
40,000 3.40%31 January 2024
NZD $50m
50,000 3.60%28 January 2025
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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ANNUAL REPORT 2022 | SEEKA LIMITED56
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
Shares20222021
Authorised and issued share capital
Ordinary shares - fully paid and no par value:
Opening balance
40,176,160 32,204,039
Shares issued under:
Ōpōtiki Packing and Cool Storage Limited amalgamation
19
- 7,042,574
Orangewood Limited amalgamation
19
- 639,302
NZ Fruits Limited amalgamation
19
1,687,860 -
Dividend reinvestment programme
124,262 290,245
Total shares issued
41,988,282 40,176,160
Ordinary shares - classified as follows:
Held by ordinary shareholders
41,567,947 39,437,524
Held by Seeka Share Trustee Limited
420,335 738,636
Total shares issued
41,988,282 40,176,160
New Zealand dollars
2022
$000s
2021
$000s
Movements in ordinary paid up share capital:
Opening balance of ordinary shares
154,642 110,210
Transfer from grower share entitlement reserve
112 1,363
Transfer from employee share entitlement reserve
461 -
Issues of ordinary shares during the year
9,297 43,069
Closing balance of ordinary share capital
164,512 154,642
Movements in treasury share capital:
Opening balance of ordinary shares
2,961 12,293
Employee share scheme receipts - 2016 issue
( 7) ( 54)
Grower loyalty share scheme receipts - 2019 issue
( 401) ( 8,782)
Employee share scheme receipts - 2019 issue
( 787) ( 496)
Closing balance of shares held as treasury capital
1,766 2,961
Net share capital
162,746 151,681
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
$12.75m, which is 2.33% of total 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

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57SEEKA LIMITED | ANNUAL REPORT 2022
19. Business combination
Acquisition through amalgamation of New Zealand Fruits Limited (NZ Fruits)
In February 2022, the Group amalgamated NZ Fruits, a kiwifruit, citrus and persimmon post harvest business based in Gisborne, East Coast, New
Zealand, into a newly-formed 100%-owned subsidiary of Seeka Limited, being Seeka East Limited. NZ Fruits shares were cancelled with each share
being exchanged for 7.5016 shares in Seeka and $39.3495 cash. Seeka shares were issued based on a price of $5.2455 per Seeka share (equal to
the VWAP of shares traded over 10 business days, finishing on 9 December 2021, with all fractions of Seeka shares rounded up to the next whole
number).
The purchase was settled on 2 February 2022 for a consideration of $17.53m by the issue of 1,687,860 ordinary shares in Seeka at a market price of
$5.14 on the settlement date of 2 February 2022, being the market price on the acquisition date as per NZ IFRS 3 (Business Combinations), and a
cash consideration of $8.85m. The change in the share price on acquisition date had the impact of decreasing goodwill by $0.18m.
NZ Fruits has contributed $15.30m of revenue and $0.18m of net profit before tax to the Group for the period 2 February to 31 December 2022. If
the acquisition had occurred on 1 January 2022, NZ Fruits would have contributed $15.60m of revenue and $0.32m of net loss before tax for the
year ended 31 December 2022. 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 for fair value adjustments to property, plant and equipment
had it applied from 1 January 2022, including consequential tax effects.
The following table details the fair values of assets and liabilities recognised at acquisition.
New Zealand dollars
2022
$000s
Cash consideration paid to shareholders
8,853
Shares issued in consideration
8,676
Total purchase consideration
17,529
Land and buildings
12,900
Property, plant and equipment
6,019
Inventories
441
Right-of-use lease asset
1,920
Cash and cash equivalents
33
Trade and other receivables
617
Trade and other payables
( 963)
Current tax liability
( 653)
Interest-bearing liabilities
( 4,175)
Deferred tax liability
( 226)
Lease liabilities
( 1,920)
Fair value of new assets and liabilities
13,993
Goodwill
3,536
Total purchase consideration for shares
17,529
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.
In 2021, 1,917,165 shares issued to kiwifruit growers vested. In 2022, the
remaining 144,638 shares issued to avocado growers vested, see note 21.
Employee share scheme
On 15 March 2019, the Group invited eligible employees to participate in
a three-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 vested in 2022, see note 21.
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