v2 Report - Additional Information Supplement
SAT Satara Co-operative Group (NS)
Press releases
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Satara
Co-operative Group (NS) SAT 3
Sep, 2007, 10:26 HALFYR HALF
YEAR RESULT FOR THE SIX MONTHS ENDED 30 JUNE 2007 |
Financial
Summary
Revenue from ordinary activities $37,308,183 up 8%
Profit from ordinary activities before rebate and tax $2,009,770 up 40%
Profit from ordinary activities after tax attributable to investors
$1,331,286 up 41%
Net Profit attributable to investors $1,331,286 up 41%
Six Months ended
30 June 2007 Six Months ended
30 June 2006
Earnings Per Share
Basic earnings per share 8.1 cents; 5.8 cents
Diluted earnings per share 8.1 cents; 5.8 cents
Consistent with the prior years no interim dividend is proposed.
An explanation of the figures reported above is provided in the following
pages of this report.
COMMENTARY ON RESULTS
Exceptional growing conditions, a successful packing season and the
largest crop ever supplied have enabled the Company to produce a record
interim result. The net surplus before rebates and tax is $2.0 million for
the six months ended June 30th 2007. This represents a 40% increase over
the net surplus for the same period last year of $1.4 million. The
significant improvement in performance is largely due to the Post Harvest
Division successfully processing a very large crop. The directors are
pleased with the growth in half year profit.
Shareholders should consider the results for the half year in conjunction
with the following operational overview.
POST HARVEST
The 2007 crop volume of 12.5 million trays is 1.0 million trays up on the
2006 figure. This substantial increase in volume meant that the Company
processed 800,000 trays more substantial than the 11.7 million trays we
anticipated. As a consequence all packing facilities were fully utilised
and additional commercial coolstorage was required in order to accommodate
the entire crop.
Increased wage costs, as a result of a regulatory increase in the minimum
wage combined with changes to the annual leave legislation, were a major
feature of the 2007 packing season. The packing season was also impacted
by higher than usual reject rates in much of the crop supplied. This
caused a reduction in packhouse throughputs and drove up processing costs.
Despite both of these factors the Company was able to successfully
mitigate much of the impact of the additional cost by generating extra
efficiencies through effective labour management and the implementation of
packing technology.
The half year accounts include the profit from crops processed during the
main packing season. However they do not include the profit derived from a
further 1.3 million trays of fruit that have been held in the Company's
Controlled Atmosphere stores that is scheduled to be packed from July
through to September.
The Collins Lane development was completed at the start of the packing
season. The directors are happy with the performance of the facility in
its first season of operation, and are particularly pleased with the
performance of the new photograder technology. The new Controlled
Atmosphere stores at Collins Lane have also operated very successfully.
Onshore fruit loss has been less of a feature of the 2007 storage season
to this point. Gold fruit loss caused by physical damage and other factors
continues to be a concern for the Company and the industry. However, it is
pleasing to report that the soft fruit problems that affected the
Company's Gold crop in 2006 have been completely eliminated this year. In
the Green and Organic crops the Company's fruit loss is currently much
lower than at the same time last year and is also lower than industry
average in both categories.
ORCHARDS
The Orchard Division harvested 2.3 million trays from the Company's leased
orchards during the 2007 season. This figure is slightly up on last year's
production of 2.2 million trays and comes through increased yields from a
reduced canopy area. The decrease in leased hectares has occurred as a
result of orchards moving from a leased to managed status within the
Company.
The vast majority of the Company's leased orchards produce Green kiwifruit
which means that the results for the Division are primarily influenced by
ZESPRI'S market return for the green variety. The six month accounts have
been prepared on the basis of the reduced ZESPRI income forecast for the
2007 season. Fortunately, the impact of this substantial decrease in
forecast revenue has been mitigated by the structure of the new lease
contracts which are being progressively rolled out.
Satara Co-operative Group Ltd
COMMENTARY ON RESULTS (CONTINUED)
AVOCADOS
The Bravo Avocado Company, a joint venture between Satara and Aongatete
Coolstores Ltd, had a successful first season of operations and has been
well supported by growers in Northland and the Bay of Plenty. The new
export avocado season is about to commence and Bravo is expecting to pack
a record crop between the Northland and Bay of Plenty operations. Despite
a number of the Northland orchards suffering severe storm damage, the
combined volume from both regions will still allow the Post Harvest
activities, carried out by Satara, to make a positive contribution to the
business.
INDUSTRY CONSOLIDATION
Satara continues to participate in industry discussions regarding
opportunities to drive value and improve operational performance in the
post harvest sector. Value creating opportunities will provide gains to
both shareholders and growers by strengthening the industry supply chain
and protecting our internationally competitive position.
NEW ZEALAND INTERNATIONAL FINANCIAL REPORTING STANDARDS ("NZ IFRS")
The half-year result, for the period ending June 30th 2007, is the Group's
first result reported under NZ IFRS. The comparative financial information
has been restated to comply with the new accounting standards. A detailed
explanation of how the transition to NZ IFRS has affected the Company's
financial position and financial performance is set out in the notes to
the financial statements.
The main impact of the adoption of NZ IFRS is on the statement of
financial position.
Under NZ IFRS Transactor share capital is classified as a liability
because it is redeemable at the option of the shareholder. Consequently
the Company has had to reclassify its paid up Transactor share capital
from equity to liabilities in the restated balance sheet notwithstanding
the Transactor share capital has majority voting rights. This is an
inappropriate classification for the Company so it has joined with other
co-operative companies to have this classification issue addressed by
either the international and domestic standard setting bodies or through
legislation.
In addition, the Company must now also recognise a deferred income tax
liability on the revalued amount of its buildings. This liability is
significantly in excess of the actual tax that would be payable if the
buildings were sold.
These two adjustments have the effect of reducing the Group's reported net
assets by approximately $9 million at 30th June 2007.
Neither of these financial reporting changes has impacted on the Company's
cash flow, its financial strength, or the state of the underlying
business. However, the impact of these adjustments has caused a
significant reduction in the Group's reported net assets per share
compared to the net assets per share figure that would have been reported
under the previous accounting standards ($1.93 per share at 30 June 2007
under NZ IFRS compared to $2.55 under the previous accounting standards).
Ironically the reported reduction in net assets has occurred when the
business is in fact stronger than it has been at any time in the past.
INTERIM REBATE
On the basis of ZESPRI'S first market return forecast, it appears that
many kiwifruit growers will experience a period of relative financial
hardship for the next twelve months. While an improvement in foreign
exchange rates may lift the forecast market return slightly, there is no
doubt that final returns for the year will still be lower than were
forecast at the start of the season. This could not have come at a worse
time for growers after the difficult 2006/07 season.
Under the circumstances, and based on the strong half year performance and
full year forecast for the Post Harvest Division, the Directors have
resolved to pay an interim rebate of 10 cents per Class I tray of
kiwifruit packed to all of the Company's Transactor shareholders. The
interim rebate will be paid on 16th October 2007.
As a Co-operative Company the Directors are pleased to be in position to
provide an advance on the full year rebate that will deliver a cash flow
boost to our grower shareholders.
Satara Co-operative Group Ltd
COMMENTARY ON RESULTS (CONTINUED)
OUTLOOK
The use of the half year result as an indication of the potential full
year result can only be considered in the context of the seasonal nature
of all the Company's business activities.
The Directors believe that, as a result of ZESPRI's recent forecast for
market returns, the business may fall slightly short of achieving its
previous financial performance predictions for the full year. The final
result will be dependant on the actual fruit value for the 2007/08 season
which impacts several parts of the business to varying degrees.
SUMMARY
Satara's business has continued to grow during 2007. The Management team
is focused on driving further operational efficiencies and optimizing the
performance of the business. During the six months under review the Post
Harvest Division produced a strong result and the Orchard Division,
although subject to a decrease in market return, has made a significant
contribution to the profitability of the business.
Overall the Directors are pleased with the Company's execution of its
business plan and its performance for the first half of the year.
Chairman's report
Satara Co-operative Group Limited
For immediate release
March 12 2007
Satara Reports Solid Result in Difficult Conditions
While it has been a difficult year for the kiwifruit industry, due to
high levels of fruit loss, NZAX listed cooperative post harvest operator
Satara has posted a full year surplus of $3.6 million, before rebates
and tax, on revenues of $55.5 million.
Chairman Andrew Fenton says the company will pay a dividend of 5 cents
per share and a rebate of 28 cents per tray.
"While the overall result for the year represents a substantial
improvement on the previous year's performance of a $1.9 million
surplus, the impact of high fruit loss meant it fell short of
expectations." he says.
Group General Manager Murray Gough says given the high costs of fruit
loss, the company has done reasonably well.
"Originally we forecast a surplus in the region of $4.9 million,
but then the true nature of the season kicked in."
He says growers throughout the industry are hurting from this season's
fruit loss.
"Perhaps Satara growers can take some comfort in the fact that as
transactor shareholders in the co-operative they will receive the same
rebate as they did last year," he says.
He also points to some smoothing of returns between segments within the
co-operative as providing a safety net for growers who belong to the
co-operative.
"It means we can focus on creating long term gains for the whole
group."
The Post Harvest Operation packed 11.5 million trays, which was a record
crop for the company.
While the Orchard Division posted a $2 million dollar loss, this
represents a $1.8 million improvement over the 2005 year due mainly to
the partial implementation of restructured contracts for the leased
orchards.
In June 2006 Satara purchased a 20% stake in Kiwi Produce Ltd, a company
specialising in pre-packing and marketing a wide variety of fruit in
both the Australian and domestic markets. This investment produced a
strong return in its first year of contribution.
During 2006 Satara and Aongatete Coolstores Ltd formed a new avocado
business called Bravo Avocado Company Limited. The current forecast for
the coming avocado crop suggests Satara will be required to pack around
450,000 trays for Bravo in 2007/08 which will result in greater
profitability in this area of business.
Satara is well advanced in a $13.5 million capital expenditure programme
to ensure its growers have the best available facilities to handle fruit
efficiently during 2007 and beyond.
These investments will drive grower and investor returns in the seasons
ahead.
For more information contact:
Murray Gough 027 212 5582
For media assistance contact:
Darrell Carlin 021 709 907
RESULTS FOR ANNOUNCEMENT TO THE MARKET
For the year ended 31 December 2006
Financial Summary
Revenue from ordinary activities $55,525,628 up 7.7% on the prior year
Profit from ordinary activities after tax attributable to investors
$765,285 up 437.4% on the prior year
Net Profit attributable to investors $765,285 up 437.4% on the prior
year
Dividend
Final Dividend Declared 5.00 ?
Imputation Credits attached 2.46 ?
Record Date 23 March 2007
Payment Date 30 March 2007
STATEMENT OF FINANCIAL PERFORMANCE
For the year ended 31 December 2006
Notes; 2006; 2005
$ $
Total Operating Revenue 55,525,628; 51,573,887
Total Operating Expenses 1; (51,953,180);( 49,662,000)
Operating Surplus Before Taxation & Rebate 3,572,448; 1,911,887
Rebate To Transactor Shareholders 2; (2,427,824); (2,185,401)
Operating Surplus/(Deficit) Before Taxation 1,144,624 ; (273,514)
Less Tax (Expense) / Credit (379,339); 46,662
Net Surplus/(Deficit) after Taxation
765,285 ; (226,852)
Basic earnings per share (cents per share) 4.7; (1.4)
Diluted earnings per share (cents per share) 4.7; (1.4)
Director's Report
