v2 Report - Additional Information Supplement

SEK Seeka Kiwifruit Industries Limited

IPOs and Investment Opportunities

Press releases

Seeka Kiwifruit Industries, New Zealand's largest kiwifruit grower and service provider today advised the market to expect lower profits having received a significantly lower fruit sale forecast from Zespri compared to last year.

The Zespri forecast reflected the high New Zealand dollar, along with increased crop volumes and in market competition. The volatility of the currency had made it difficult for Zespri to forecast accurately however the current Zespri forecast tray returns would adversely affect growers' right across the Industry.

This will result in a negative impact to Seeka's earnings through its kiwifruit growing business. The Company will provide further guidance once it has fully completed its analysis of the forecast and when it can reliably predict the full year impact.


For further information please contact:

Michael Franks CEO 021356516
Stuart McKinstry CFO 0212215583

Seeka Kiwifruit Industries Limited has provided the presentation made this afternoon at their Annual Meeting.


A copy of this can be requested by emailing lcr@nzx.com

Alternatively it will be posted on Seeka's website http://www.seeka.co.nz/ shortly.

Annual General Meetin : 9 Au ust 2007
Chairman's Addr ss, Brian Allison

Ladies and Gentlemen
It is my honour on behalf of the Directors to present the Annual Report and Financial statements for your consideration .Both the C O Michael Franks and the CFO Stuart McKinstry will speak to this motion also. At the same time however I shall take the opportunity to discuss where we see the way forward for this company and some of the issues relevant to pursuing it.

But firstly as you know the financial year ended 31 March 2007 was challenging and somewhat unrewarding particularly because of the exceptional incidence of fruit loss. Net profit after tax was $2.84m. ; substantially less than the previous years result. However the amortization of orchard development costs and goodwill increased by $360k. and we did not have the benefit of the exceptional profit ( $2.14m.) which the Pioneer Cool store sale yielded in 2006. In addition green fruit loss was at an unprecedented level.

For all that the result did not meet our objectives it provided an unsatisfactory rate of earnings per share and it did not reflect the benefits of having a larger company and a larger
share of total kiwifruit production. The fact that our performance level was mirrored throughout the industry and that quality issues were widespread gave us no consolation at all.

Accordingly both the Directors and Management have been giving close attention to each major part of our business and to all the factors which influence the end results. We have pursued an extensive programmed of operational improvements in this 2007 year and we have focused capital expenditure where it can achieve the best results. We are of course still exposed to the climatic and seasonal variations which impact directly on the fruit itself and we are affected by the often clumsy management of the total supply chain and the quality regime in particular.

The Mandatory convertible notes were repaid during the year through the issue of shares ($1m.) and by refinancing the balance from bank facilities. This was a positive outcome for shareholders.

Total Share Capital increased by $1.9m. of which the R CTO conversion was the largest contributor. However $700k. of shares was issued to the staff share scheme and $180k. represented the balance paid on partly-paid shares. As a result we had 12.6m shares on issue at the end of year.

For the first time Total Assets at balance date exceeded $100m. ( $106.588m. ) causing the quity Ratio to decline slightly to 49%. This is still a conservative ratio. The increase in assets of $11.3m. was reflected in total Debt funding which increased by $5.2m. In spite of lower profitability the Board maintained the dividend at 20 cents per share.

In summary the Company ended a difficult year in a strong financial position with a clear sense of purpose and with considerable confidence that it has the commitment and resources to greatly strengthen both its position in the industry and financial performance.

The Board takes this opportunity to thank the executive and staff for their fine work and for their commitment to very high standards of performance. We acknowledge also the great support
of our growers and the very constructive relationship in which we jointly pursue their best interests.

In looking to the future which I ask you to do I express my exasperation that there are elements of the industry which still without any evidence whatsoever criticize our actions and
our intentions towards the marketing structure.

So that leads me to reiterate yet again that we support Zespri in its marketing role and that in particular we support the Single-point- of - ntry to all the major off-shore markets. If there is a threat to the SP W from within this industry it will appear only as a consequence of significant inefficiency poor marketing performance bureaucratic behaviour or neglect. Our principal disagreements with Zespri and with the weaker elements of the post-harvest community hinge around Zespri's role in the future and what we see as the most effective supply chain structure. It focuses on efficiency and effectiveness of the supply chain around incentivising innovatory behaviour at all stages of the supply chain ( which most of all calls for a
truly competitive environment up to the market door )and in enhancing accountability for the delivery of market- quality fruit. We are concerned also about the level of investment required in post harvest facilities to cope with our highly seasonalised demand about ultimate packaging and packing costs and about streamlining the flow of fruit to major off-shore customers.

No doubt these disagreements frequently give rise to considerable tension between us. However that is not a bad thing if the alternative is for no change to a status quo which calls for
greater commercialization and greater flexibility of supply.

Seeka's view of the future is very consistent with recommendations of the 1995 Kiwifruit Review which called for supply relationships and responsibilities remarkably similar to our proposition. The fundamentals involve consolidation of supply into fewer and larger entities - a process which is well underway - greater flexibility of supply arrangements including in-market supply options and continuing competition between post harvest companies based on quality of service innovation and cost. The consequential outcome is the focusing of Zespri exclusively on its marketing role. That surely would be a very good thing.

The advantages to Growers include the retention of choice. But also they arise because increasingly complex quality regimes and inherent fruit handling issues have dictated increasing integration between orchard production and supply. Seeka is creating value for its Growers in the management of these issues and of the fruit itself. Moreover the role that we perform in the supply chain and its eventual extension to in-market supply is simply the logical practical outcome of the way this industry has developed.

Regrettably Zespri has not yet come to grips with this reality.

In concluding therefore I note that this is an industry in transition and that we need strong and sometimes vocal support from all our shareholders and growers. Thank you very much. Before I seek questions and comments I would like you listen to Stuart and Michael who will round out our report.

Director's Report