Seeka Limited (SEK) Earnings Call Transcript & Summary

[Foreign Language] I welcome to you all to this Analyst Briefing call on the Seeka Audited Financial Results for the year ended the 31st of December 2022. It's my pleasure to welcome you all and run you through the results for last year. The things which I will run you through is the last in review, a commentary on the financials, discussion about the capital management for the company and an overview of the operating segments and how they performed, a brief description of the outlook and take any questions or answer any questions that might have come online. So a little bit of material to cover this year and looking backwards from the year and both my welcome to each of you and thanks for taking interest and being online today to take this briefing. Similarly, 2022 delivered every challenge to Seeka and its growers and just when we thought there couldn't be any more, of course, there's been weather events in early 2023, that's devastated the Hawke's Bay and Gisborne regions and our thoughts and support goes out to all those growers in those regions who have suffered loss or injury or loss of life. From our perspective, fortunately, all of our people and all of our sites are safe, all of them are operating. In fact, we are operating pretty quickly again in Gisborne, packing Citrus. And all of our own orchards actually got through the storms reasonably [Technical Difficulty] impact. However, there have been some orchards affected in Gisborne and particularly in the Hawke's Bay. We expect a total loss of volume in that area to be around 600,000 trays from one large grower and we are supporting that grower and working with him to see how we can help them further. While it was challenging 2022, we did get the harvest completed. People have forgotten how tough it was and how tight it was with the uncertainties of labor, with the uncertainties of the COVID pandemic, all the issues around shipping. There was some uncertainty early in the year that we'd actually get the job done. And so we can take some heart that we actually did, although there's many things to fix, there's many things to improve on, a lot of momentum in the company to do a better job. All of the operating segments at Seeka are EBITDA positive and we have as a company returned to profit, albeit lower than what we would have anticipated or aspired to achieve. We have got operational improvements underway and capacities plans in place and we actually have those plans in place for the next 5 years. We understand what our plans are and around our core business and what we intend to do. We have got our regional presence now strengthened. We are operating in all of the major Q3 growing regions of New Zealand. Our business is what far beyond Kiwi fruit, but it is the foundation to our business, it is our core business. And so importantly, we are covered throughout all the regions. We have added to the book Opotiki, Orangewood and NZ Fruits in Gisborne, it's now called Seeka Gisborne because many of our own staff don't know what NZ Fruits are. Business are integrated, they're in place and operating. We have 11 pack houses across New Zealand, employing as a total company, around 800 people and around 4,500 seasoned employees. So a reasonable employer of people in New Zealand. We have higher revenue in the business around $348 million. Our EBITDA are $46.1 million is below that which we aspire to achieve, but is still there, $7.6 million net profit before tax, $6.5 million after tax, [ 16% ] EPS. We have total assets now just under $550 million. Industry-wide phenomena in 2022 was lower kiwi fruit yields lower than we anticipated much lower than what we would have hoped to achieve. And we actually had poorer fruit quality. It was a difficult growing season, difficult harvesting season, people harvested the fruit under pressure and perhaps damaged in that harvest process. We didn't pick up some of that damage as we handled it. We had severe labor shortages at one stage, 1,100 people short. And while we might employ 4,500, the 1,100 people short wasn't spread evenly over the regions or the pack houses I sort of hit packhouse after packhouse or packing crew after packing crew. So we had to scramble. And we had increased cost with COVID-19, in particular, the protocols that we had to achieve to actually get market access, particularly for China. So the order returns were down, we had lower yields and we had lower returns from the market. And we had some operational challenges at OPEC for which there is actually an insurance claim and process at the moment. We have, however, achieved tangible process with our sustainability drive. We have got 3 years of independently verified carbon footprint, calculations done, verified by Toitu. Our Sustainability Committee of the Board has worked with management to establish reduction targets and our initiatives to get our impact on the environment down and our sustainability report, the first one for the company has been published out to our stakeholders and shareholders. And importantly, we actually have reset the business for a more successful 2023. Of course, we've got the issues of frost in the growing season last year, that won't happen every year. It just happened last year, it hasn't happened for a long time. And we've got new packhouse automation and labor availability. Our RSE numbers have nearly doubled. We've got 1,500 RSEs approved to come into New Zealand this current year, more than double last. We've actually had very good sign-ups for early season, interest across all of our packhouses from New Zealanders. And so we're feeling more confident about labor. We've got automation projects in place at 3 facilities, KKP machine, which was due to be opened early last year and opened late, is now fully operational and running. We've got a big upgrade that's happened at Oakside machine #3 with a precise or in [indiscernible]. That machine removes 22 people a shift. We have done a big job in Gisborne with a carton handling system and stacking system. That machine operate -- will reduce 20 people a shift. And going back to KKP, we probably removed 30 to 40 jobs, 30 to 40 seasonal roles per shift out of that machine. So actually decreasing the number of people that we require in our post-harvest engine room, noting that we run 22 hours a day, 6 days a week or 7 days a week as we run. Increase in ROCE is welcome. They come at a cost, of course and including issues around accommodation. We've got accommodation facilities being built up in the Kerikeri region, which would handle, I think, 140 people to go into that facility. So that will be -- we've got it running. Our intention is may perhaps not to be the residual owner of that facility once we've built up, we'll get to that when we get to them. And we've done a lot of reviews in the company around our operational processes, our inventory management, our structuring of the business, our organization to ensure that we do a better job. We had a large focus in the company around cost management as we head into 2023 to try and buffer us any through the headwinds that we might actually encounter as we go because we produce business doesn't run like it might run on a spreadsheet. It runs as nature might dictate for us from time-to-time. So actually, we built ourselves a heavily buffer there along the way in terms of our cost containment compared to where we might have budgeted to be and perhaps on the right side of the ledger by some $4.5 million at the moment. And that will just give us a buffer in case things don't proceed as we hope that they would in the current year, including events like Gabrielle taking up some volume out of the Hawke's Bay. In terms of the financials and moving to the financials. Revenue at $348.4 million is up 13% on FY '21. We're happy with that increase. It reflects a bigger business spread across more regions. Our EBITDA are at $46.1 million is down 19% on FY '21. However, FY '21 included a $7.6 million settlement from the Crown from a Psa claim, group action that was initiated. And if I was to remove that from the 2021 numbers, our EBITDA is down by 6.3%. And so still not where we would like that EBITDA to be impacted by volume, impacted by costs, but we've moved as a company to counter that in the current year. And setting ourselves really for a 2024 year where we expect volumes, yields and costs to return to more normalized levels or as what we aspire or hope that will happen. Our profit before tax of $7.6 million, likewise affected by the $7.6 million the year before and a profit after tax of $6.5 million is in the range that we actually said to the market last year when we gave guidance. I was waiting for someone else to push the next page and realize it had to be me. And so in terms of the trends of financial performance there and the analyst briefing pack that were distributed to you, revenue has steadily increased over the years. EBITDA has sort of increased but not at the same rate as our revenues. So something management is focusing on probably between '24 before we get to a more normalized number, anticipating more normalized volumes through the business for a big part of our business, we are putting fruit through an infrastructure and toll processing for it. And so if the numbers are down, we're not whole processing the same volume of fruit. Comprehensive income, so that's including the income from our revaluations property plant and so $19.2 million. You can see that steadily increasing and NPAT at $6.5 million, really below we would like it to be. And noting that there was a one-off gain in 2021 from the settlement of Q3 claim and the year before that, there was a $5.6 million tax benefit. In terms of trends in operating segment, I feel like I've missed something out in my pack, but no doubt. In terms of operating segment performance, Orcharding EBITDA at $4.6 million, you'll hear about that in a minute, really the effect of lower yields and lower market returns and actually very disappointing returns, particularly for the hybrid variety from Zespri. Our SeekaFresh retail services at 800,000 really suffered through lockdowns and lower kiwifruit volumes last year and lower Avocado volumes, so still positive. Our post-harvest EBITDA at $59 million, actually upper about where it was the year before. We aspire for that number to be much greater and will be when the volumes come back to more normalized level. We don't have the catastrophes running through the book and Australia EBITDA AUD 1 million is still positive. In terms of capital management, there will be some commentary and there already some questions about this. There's 2 pages on capital management, so some of the questions that you might have for me will come in the next slide. There's an $81.8 million increase in capital employed in FY '22, of which $48 million is an increased property, plant, equipment. Some of that's because we purchased and integrated Seeka Gisborne or NZ Fruits into the business. We put KKP into the book and we actually also completed the new 650,000 Transcool store across the road from here at 360. They are now all operational. $5.9 million in leased assets, really reflecting on the land and buildings, the acquired land and buildings into the book. We've got $2 million increase in business investments, $1.4 million of that is with Marae Trust into Orcharding and Orchard Services Enterprises. Of the $1.4 million, $400,000 was a 50% purchase for Te Kaha Orchard Services, a little business up in Te Kaha was trading very profitably at the moment, we're happy about. There was a $4.1 million increase in intangibles and other, which includes $3.5 million of goodwill from the acquisition of Seeka Gisborne or NZ Fruits. At the end of December, we had $147.4 million in bank debt. We anticipated that we had a lower profit result coming and proactively Seeka approaches banking syndicate well ahead of the end of last year to tell them that it was likely that we had some chance that we might not maintain our covenants. And so we went and renegotiated the covenants, particularly in relation to our leverage ratio and interest cover ratio, banks were happy to support the company where we proactively did it. They were scheduled to decrease over time. And actually, the December '22 number was a decrease from where it was previously. And so the banks have worked positively with the company and we have maintained compliance of our covenants as a result of that negotiation. Next covenant checkpoint is June 30, 2023, and we will continue to work with our banks and heavily support our belief, as we positively move forward. $147 million net back, includes $46.7 million increase on the year before. $13 million of that was cash for the purchase for NZ Fruits. $11.3 million was the automation projects at KKP and NZ Fruits and $4.7 million of was completing the Transcool job, Transcool job was more than $12 million. So questions come which we handle in a minute. We have a syndicated banking facility that's led by the Westpac, thank you, in addition with ASB BNZ and Rabobank. We have a $210 million debt line. Debt repayments have slowed from 2022's drop in profit. And we -- and I've already discussed the covenant relief that we saw and obtained. We have -- at the end of December 2022, $6.3 million of assets held for sale, AUD 3.1 million settled on February 2023 for some surplus water that we sold, it was 750 megaliters awarded that is beyond what we actually required over there in Australia, what we'll require in a normal dry year, not just because we're in leap year. And so we took the prudent decision to sell or liquidate the water and turn it into cash. The company has been very careful with its balance sheet management as debt management. We prudently suspended the dividend to retain the cash to make sure that we maximize our cash position and position with the bank, make sure that we're carefully set. We've been reviewing our assets and looking at assets that may not be required for core operations and challenging ourselves to do that and to sell assets that aren't actually required for core business, assets that we might have acquired with acquisitions of orchards or things like that, that we're actually just quickly working through intensively selling and we probably should have done that anyway. We will continue to work with our Board and to do the asset review and that may include selling and leasing back assets in the future to in a sense to recycle cash, reduce debt. Well, we've gone too far. So outside of that, total equity $270 million in the business. In terms of earnings this year, $0.16, not sufficient prudently for the company to make a distribution. Board will next consider that when we get to the 6 months. Company has limited its capital expenditure program in the current year to within depreciation. So -- and we're not spending capital I think excess depreciation in the current year at the moment. We will also look at -- we were at the 6 months and decide about what happens next in terms of our capital program and debt reduction. We haven't -- any dividend that we paid this year related the previous year, front of -- for 2022. And our net tangible assets is $5.97, up 5% and well ahead of the current share price I would note. In terms operation segments, in terms of Orchard operations, Orchard revenue at $80.5 million, up 4% on the year before. Revenue growth really because we had lot more Kiwifruit, Orchards in the book that we were stewarding either through lease arrangements or long-term lease arrangements. EBITDA at $4.6 million is down from the $5.2 million in the previous year, which reflects a reduction in yields. If you see the yields down the right-hand side, Hayward yields reduced from 12,300 trays per hectare that's 3.6 kilo tray to 9,650 and looks to be about the same the current year. And SunGold yields reduced from 14,370 trays a hectare to 12,000. Some of that was affected because of a wind event in Opotiki that happened late in the growing season. But generally, right across the board, yields are down from where we had expected them to be. The $4.6 million EBITDA also reflects lower returns from Zespri and the Haywood return down really [ lackluster ] or the low lackluster really, the average of $55,000 a hectare is at or below the cost to grow for many growers in the book, not just Seeka, right across the industry. So there's a lot of reflection and effort going on in the industry and focus to improve that number. We're exposed because of our increased presence in Opotiki to that wind event. So 2 million trays down below we expected it to be. But pretty much looking into that book and looking into that part of our business really got a very good management team in place. It's well organized. Last year, we -- to get ourselves through the job, we deployed people who had been scheduled to go into the orchards. We actually redeployed them into the packhouse, so we could actually continue to run our packing operations and actually get the fruit through. It means that the jobs that they would have been doing in the orchards, they weren't doing and there was always a margin for every job you do and because they were redeployed out of the orchards from picking and put into the packhouse so we could actually maintain service, we made money in the packhouse that we're going to make anyway, but we actually didn't make it in the orchards. So you can contemplate from that summary that in the current year where we are anticipating or do have a freer labor supply, albeit at a cost that we expect a more normalized operation -- sorry, in our Orchard operations and hopefully a return to better margins. In terms of our post-harvest operations, this is where we pick. So the Orchards, across all of the -- all of our growers are in orcharding operation and have contracted growers. This is where we organize the scheduling of the harvest, delivery of the fruit to packhouses, we pack it, we grade it. We wrap cardboard around it. We put it to sleep in a cool store and we ship it out to the markets. This part of our business is doing more than kiwifruit, we're also contract packing citrus for third parties and for our self. We're packing avocados for our self and for third parties and we're also contract packing [indiscernible]. And those other varieties in addition to packing kiwiberry, those other varieties actually are contributing quite nicely to the business, to be honest. So post-harvest revenue of $233.8 million, up 19%, it's really a volume growth, but still those volumes are well down on what we expected. And we probably had capacity in the engine to do another 10 million trays. So we actually packed 42 million trays. We probably could have handled in excess of 52 million trays in that infrastructure. And so that was problematic. Kiwifruit yields are significantly down on what we expected across the industry. We lost 2 million trays with the wind of over Opotiki. The EBITDA of $59 million, we -- lower throughputs have impacted our margins really because of lack of labor. We had higher labor costs and we paid a lot more to get those people into the shared. While the minimum wage might have been [ $22.75 ], we actually paid $24 minimum to all people in the company and so to attract because of the labor shortage. And we actually, at this stage, holding at that number for 2023 because we think that's a fair pay and well excess of the minimum wage. We pack avocados as I talked about. Look, our capacity is set for 2023, particularly here in the Te Puke region, we've probably got 600,000 trays a week of additional capacity, so we can get to that crop faster. We've got the automation over in Gisborne. We've got the new cool store here at Transcool, we've got some upgrades up in Northland. And so actually, the company is well set to harvest. We will be harvesting fruit on Friday, read Kiwi from toll, we're picking it on Friday and packing it somewhere in the weekend. In addition, we've already been packing kiwiberry, really completed the kiwiberry operation, citrus, Northland at citrus and Gisborne continue to roll out. In terms of our Seeka Fresh Retail Services operations, our Auckland business, where we're running -- this is really handing all the fruit that we don't supply through to Zespri. In addition to our export programs, we were exporting kiwifruit to Australia, avocados into Asia and Australia, kiwiberry to Australia and importing a whole range of projects, including papaya and bananas. Business been through a rocky road with all the lockdowns in Auckland, with a lot of impact on demand or very due demand, actually done a reasonably good job. Revenue down at $19.1 million really reflects a reduction in the avocado volumes and prices and a reduction in kiwifruit volumes. EBITDA at $800,000 still positive. I'd say to you that this business has started this year 2023 extremely well and had its targeted numbers for each of the last 9 weeks. And so a nice focus going on there and we are focused on that business in particular, looking at ways to improve its profitability. In terms of our Australian business, likewise, affected over the year and we're integrated grower, packer and REIT and supplying retail or a whole range of Australian growing product including kiwifruit. Our revenue of [ $14 million ] is in line with the year before, $1 million EBITDA was down $600,000 really as we impacted the cost of inflation and COVID costs in that part of our business. We got 63 hectares of kiwifruit coming into production next year. We've got new variety pears in Australia, we got new Nashi's and priorities coming into the book. And we also have some large jujube developments underway and program for the current year, which is a variety we're very excited about. That business is actually poised to actually to turn in the current year. We've actually just been off the phone on a briefing this morning with our Australian General Manager. So I'm reasonably satisfied with how 2023 has started in that part of our business. So in terms of the outlook, if I push to the outlook, supply chain operations have been reviewed from Orchard to loadout. And everything is now geared around achieving excellence and fruit handling in the current year. So we've moved on. We understand that we had a few headwinds in anticipation of any other problems happening in this year, we've taken a cost reduction program to the business and around $4.5 million saved so far with more actually [ 2B ] save as we go through. So we're reasonably -- really, that just provides us a buffer against anything that might go against us that we we're anticipating, yields come out lower or not. We've limited our capital expenditure, but below depreciation, some of those programs are really committed. And so we've had issue taken a reasonably aggressive approach to expenditure. And the Board will review that again in June. We have prudently stopped the dividend as sensible. And likewise, the Board will review that when it gets to see more financial information once we get past the harvest. We've got an improved labor supply, large increase in RSE workers from the Pacific program to come in. And we've got 280 workers that have come back in from Malaysia, that's important. Those people have been coming to New Zealand for more than 10 years prior to the impact of COVID. And they were experienced people in the post-harvest middle management part of our business in a season since. They've been with us for a long time. They're very skilled and they're smart and they have risen up through the ranks into sort of what we call key operational roles. And when we lost them with COVID, we lost more than just the people because we lost their experience. So we're thrilled that those people are back and back into the post-harvest engine. And so that gives us lot more confidence. We've got our automation projects completed at KKP, Oakside and inside fruit is now running. And so I imagine something like 70 roles per shift has been removed out of our seasonal label demand as a result of that. And also, we will have improved throughput through those packhouses with -- particularly with the upgrade at KKP. And so as I stand here in front of the analysts, I'd say to you that our capacity and systems will see it and we've been through the ringer really getting ourselves operationally set for the new year. So it's more than just running the gauntlet. And finally, if I make some comments about Cyclone Gabrielle. Well, no significant damage to ourselves. Most of the buyer plenty was actually speed the damage and in fact, most of our growing regions sort of north of the buyer have got away with it. The Hawke's Bay was hit and one of our growers has suffered a devastating impact and we are supporting those people and they're part of our community. So it's important. We have had some impact over in Gisborne and it's still raining in Gisborne today. And so I've been talking to those growers, they hope to get away with it and we'll do what we can do to help those people. But pleasingly, we've got their packhouse running, that's operating. It's ready to go to automation. We're going to run it 24 hours a day, it's never happened before at that site. And so that's sensible. And we have limited our capital expenditure in the current year, so that to buffer ourselves and reduce debt rather than increase debt in how we are running and we'll review that when we get to the 6 months. We've got an asset review. We're continually reviewing our assets, it's not a new initiative, but we've been prudently working through our asset holdings to see what is it that we've got, what is it we have to have, what is it that we can perhaps sell or sell and leaseback and recycle capital, if that's what our Board and company thinks is sensible. So I know that I've got at least one question, looks like I've got 2.

And so this is question time, if you'd like to ask any questions online then I welcome you to and Nicola is going to tell me what the questions are in a moment. Alternatively, on your screen is our contact details and so you're most welcome to ring us not immediately because I'm still standing in front of you. But once we get past this presentation, you're most welcome to contact us directly. So Nicola, you've got some questions.

So first question from [ Derek ] at [ Caspersen ]. I'd like some more and commentary around the Australia business, what the growth strategy is and what to take advantage right in the fourth quarter?

So our Australian business is a business that takes us out of our geography and to a different market. That business has around 100 hectares of kiwifruit and production, which we have -- which orchards that we leased from a third-party owner. We have 73 hectares of orchards in development, predominantly and primarily Hayward. So to increase that business over the year because there is big demand for kiwifruit in Australia. And the way that we run that business is quite efficient. We do export a little bit about really just for capacity management in Australia. We've got large holdings of Nashi pears, Shinko, Nijisseiki and Hosui around 200 hectares. They are all for domestic supply. We've got 95% market share in that category. We've really got 75% market share of Kiwifruit. We also grow palms, jujube's, looking lift and I think European pears, I knew there was a gap. And so the whole range of European pears, packhams, Williams, Bosch, [ Alania ], Rico, we got them all. And so that business really completes our supply chain as a produce company alter to market. We sold our major retailers in Australia, avocados from New Zealand, kiwifruit from New Zealand, kiwiberry from New Zealand and we also sell domestic fruit in Australia that we grow there. We've got branded projects on the shelf every day of the year. We also -- this year importing pears -- our own pears from Australia, put back into the supply chain through the key retail customers in New Zealand. So truly, it provides the company a complete value chain. We're integrated. We grow, we also supply to retail business is a little bit subject to weather over there. It's a difficult growing region, team has done a great job. And so our growth strategy in Australia really centers around 4 things. Firstly, to increase and get our kiwifruit in production. Secondly, is to get our jujube program up and running. It's an exciting and variety with great demand. So it's a great product. We are migrating out of heirloom pears, old variety pears and we're introducing new variety pears and nashi into that market and we have some exciting developments happening, that always takes time, but they're on your way. So hopefully, that sums up your -- that question.

Next question from [ Christian Jonathan ], what do we consider to be prudent financial ratios and are they aligned to the bank covenants?

So the Board regularly reviews what I would consider to be a prudent financial ratio. The question is around what is -- what do we consider prudent financial ratios? And at the moment, I think the key ratio that we would talk about is our leverage ratio. So that is EBITDA to debt. And we would be targeting to bring over time to bring that ratio under 2.5x. And so that's the key ratio that I think most analysts or banks are looking at. At the moment, the bank covenants, well, higher than that. But we have a program which we are working with the bank and have worked out with the bank about that over time, over a sensible period of time, reduces that into alignment. And so in our own business, we've got long-term listed elements that we know we have invested alongside the government which will bring volumes forward. So that takes a little while for that capital to actually start repaying both in terms of financial returns and orchard and also in terms of fruit going through our infrastructure. And so the bank is sensible about that. They understand what we're doing. They understand the program. We give them quite detailed forecasts and assumptions. And so hopefully, I've answered that question, Christian?

And a second question from Christian just around for quality issues that we had in FY '22 and it looks like our...going forward.

Industry had 2 sets of issues, which I think contributed to what we would generically call through quality issues. Firstly, I think at the beginning of the season, the industry understandably rush things a little bit and perhaps didn't pick or process a fruit that was kind of as great as we'd like it to be as an industry. And actually, the fruit was reasonably unforgiving, any small mix in that growing season last year that we might had on a piece of fruit turn to a rock quite quickly because it was saying more so much humidity. And so firstly, we probably had an issue with the fruit itself. Secondly, the supply chain didn't work as well as it could and offshore overloaded with fruit. And so I think supply chain beyond our stores struggled to steward that fruit in the right order and we had extraordinary losses offshore, extraordinary losses offshore. And so in the case of our own situation, with better labor, with soft handling review that we have done across all of their machines with new packing bags that Seeka will deploy into its own packing operations which actually stops rough handling that the new automation projects make us less reliant on seasonal labor, particularly at night time. Those things give me confident that we will beat the onshore problems around quality. And I think Zespri is going through the ringer to be honest about its own performance. And so I think that will resolve itself. And every time I speak another question comes and so that's great, keep them coming.

Very specific question, it's 2.5x net debt-to-EBITDA ratio on pre or close to IFRS 16 basis?

That's on pre, so the question is, is our 2.5x debt-to-EBITDA ratio on pre or post IFRS 16? IFRS 16 is an international financial reporting standard, which governs how we present leased assets and leased liabilities. And most people -- most individual can understand that and I am an accountant. And so my Chairman is going to give me a phone call directly after this, I'm sure, and tell me about why it does make sense. And so the 2.5x debt-to-EBITDA ratio is pre-IFRS 16. So it's accounting the way that everyone always accounted for the least cost as a cost. I'm waiting for another question, but it didn't turn up.

So next question, would the bank remains order for another [indiscernible] year in 2024 and what happens [ at our end ]?

Look, I think the question is, will the banks remain supportive on a poor 2023 scenario? I think the answer is, there is nothing that suggests that they won't be. And also, I think if you look into the produce industry, if you look at the events that's happening in the Hawke's Bay, if you look at what's happening in Gisborne, we are still profitable. We're actually still generating cash. We are still generating cash well in excess of our interest cost. And we are working positively with our bankers. We are not giving them surprises. We are giving them commentary open and honest dialogue and we're working constructively with them and we are proactively taking steps to optimize our financial results. So we have limited expenditure. We have slowed the capital program and so there's no suggestion at all from the banks as any issue there in fact and look, the results that we have delivered are well within the range with which we had spoken to them about when we talked to them last quarter last year another one.

Now so you've spoken about selling any noncore assets, what's the margin on those assets?

Well, at the moment, in the reported results, I think the number was $4.1 million of which were sold some in Australia, AUD 3.1 million in water shares and there was Australian dollars. I think the answer is that the review continues. We haven't actually targeted anything at the moment. And so when and if the Board decides that something that we will do, we will come back and tell the market if it's market sensitive, we always do that. So at the moment, it's too early to say. But we continue to look -- continue to think about our business, continue to look -- think about the portfolio of assets that are in the book. There's another question.

Yes, so, one of the cost-down initiatives you spoke about and how much do they go for the full year?

So the cost out initiatives that we spoke about are largely around people and asset holdings and cost of holding assets. And so the full year cost out would be 4.5 month and there wasn't any -- those costs of large, that's really through attrition, where roles people have retired or left the company and we've actually reorganized the roles within the company, so that we can cope without them. That really just sets us for any impacts that we weren't expecting like the Hawke's Bay, all like a significant inflationary cost around insurance or something that which we don't know about. And so really in the produce game, it's not like a spreadsheet. It is a little bit about managing life and so we actually set ourselves up to be able to buffer in case something bad happens that we are not expecting.

So David from [ Trades ] would like you to elaborate on a sentence that there's growing sentiment and on grounds, so how that speak complete to the failure and the season?

Yes, so that -- so the question is about put some color around the comments that the harvest should be completed earlier in the season. So that's really around the gold harvest and when is the right time to complete the gold harvest. So as part of our operational review process, we went and talked to growers about what were their expectations of the business. And their expectation of the business is that we don't have a gold harvest sort of pushing into what we would call week 19. Week 19 is sort of somewhere after the 11th of May. And the thinking is that while some orchards can cope with that, not all orchards can. And so you're actually running the gauntlet a little bit about if you push orchards after the 11th of May, the fruit that you're handling is soft. In the way that the shipping work actually works, you actually don't have the opportunity to move that fruit as you might, ship it out because you're actually committed to shipping other fruit really in a priority order. And so in our capacity plans that we've undertaken, we anticipate completing our harvest for gold sort of somewhere mid-week '18. So somewhere about the 8th of May is a date that we think that will complete well ahead -- was it done last week, we're really not running everything in anger, we're still packing the Haywood fruit, but the gold fruit is really just into the tail. And so we expect to more than be able to meet our gross expectations. I'd also say to you that our capacity plans are set on a 5.5-day operating week. We do run 6 or we do run 7 as we need to. And so we actually -- and we also have got CI who controls mass storage as a way to buffer the company. More questions?

Yes, so given what that price increases on price harvest over the last 2 years, given the -- coming it is not approved volume year and it's not for returns or down, is there any picture to reduce pricing?

So the question is around pricing and is there any pressure to reduce pricing? Well, the answer is there might be some pressure, but our pricing will be announced later on today. There is some price there up and price increase is coming. We have done some innovative things for our goals, I understand it's a competitor on the course will give you a heads up. So we won't, for example, be providing gross as an option to go fixed year 3-year pricing as one of the innovations that we will be rolling out today. But there is some pricing that will be announced later on today, understanding there's another post-harvest company on this call. There is another one, there is one for me.

That's clear.

Are you true? All right. Clear line, no more questions gone. Okay. So that's it for me. Thanks very much for all the questions. I thought there was really quite a good set of questions. If there's any other questions that people would like to ask and didn't feel comfortable asking in the public, you're most free to contact us. Thank you very much for your interest in the company and next time will be sometime around June when we get to the end of harvest and we're ready to talk about where we're up to. Of course, we have the annual shareholder meeting coming up in April. So notice will go at that due course. All right. Thanks very much, people thanks for your time. Bye-bye.