Seeka Limited (SEK) Earnings Call Transcript & Summary

Welcome, everybody. Welcome, everyone in the room and welcome to those online. Thank you for taking the time to come and join us today on a day where the weather is better, and let's hope we see some more of it. Sounds like we've got a problem of audio in the room. Are others having trouble hearing as well?

No, that's your voice.

It's just my voice. All right, I'll speak up. So also we have -- in the room, we've got Chris Jenkins (sic) Chris Jensen, Chairman of Seeka Growers and also [ Mark Wilkinson ] [indiscernible] [ advisors ] so welcome to them as well. I'd also like to introduce the directors quickly. Ashley Waugh's here somewhere.

Afternoon, everyone.

Virtually. Hayden Cartwright's here somewhere as well. Stewart Moss. Ratahi and Cecilia, our apologies. Cecilia had to get back to Wellington, and Ratahi's got to get back to the Waioeka Gorge before it close this evening. And I'd also like to now introduce you to our new director as we work through a process of refreshing the Board. And also, we needed a new accountant on the Board as well to take responsibility of Chair of the Audit Committee in due course. So welcome to Sharon, Sharon Creswell. You can see on the screen there, she will be an Independent Director and a member of the Audit and Risk Committee. She's a chartered accountant based in the Waikato, has had a focus on the primary sector for a number of years as a partner with PwC. She is a Director of the Network for Learning and chairs their committee, Audit and Risk Committee, a Director of Wool Impact. And as I've said, is a start of another refresh process of our Board. So our agenda today is I will make some introductory remarks and obviously, we'll -- and then we'll get Michael to give you a report on the company's activities and we're happy to take questions at the end. I thought at this time, it's quite good to refresh and remind ourselves and everybody, about just what is our business and some of the goals that we do here. So a key component of our business is that we are providing an essential service in a growth industry. Now particularly in our core activity, there's an international demand for that -- for kiwifruit. It provides high returns and it's driving growth in the kiwifruit industry in New Zealand. And we're about wanting to deliver excellent returns to our premium growers and our shareholders. And we -- in terms of what we do, we have -- if we go back a few years there, basically, we've put cardboard around kiwifruit. So we needed to expand that and develop more revenue streams. And some of those streams, I'd like to just remind you all of what they might be. Well, obviously, we grow fruit. We test it. We pack it. We coolstore it. We check it to make sure that there's high quality when it starts the distribution process and we distribute. And we're proud in that we distribute high-quality and trusted produce to our customers. We've expanded our areas in which we operate. We're operating in New Zealand, and we're now operating in Australia. So this geographical reach is giving us access to additional fruits to take to the markets and understand the marketing concept and how to look after retailers. We are a key supplier to Zespri, and we are experiencing continual growth in our international fruit sales. And the new requirement that is in all media now, and we all -- I think we all understand it, but we have to be sustainable. We have to be a leader in sustainability. And we're proud that we're trying to get ahead of others in the game in terms of understanding our impact on the climate or through measuring carbon and taking steps to reduce our carbon output, even reducing it within -- if you look at our intensity measures and reducing it even though we're growing at the same time. Because if we don't do those things, I don't think we -- our consumers will give us -- and our communities will give us a social license to operate. So this -- working in that area is nonoptional. Let's have a little bit of catch up on the 6 months because it's -- there's been climate storms and we've had to weather a storm as well. And so we've had to reset our business to manage a huge drop in the kiwifruit volumes. The yields are way down, as you can see with the numbers here. Hayward was down 30%. SunGold, down 22% on '22. And you might recall, '22 was actually down on '21. So we had to reset our business. We had to manage our costs as which is what the team has done an excellent job in doing. We -- when we stand -- so it's been a tough year, but there have been -- there have been some positives. The positives that we've had, excellent operational performance admittedly on lower volumes. The team has been innovative to lift their operational efficiencies. We've had low fruit loss. The quality of the fruit that we've sent to the markets, we lead our competitors in that respect. And we believe we've provided excellent performance for our growers in terms of overall fruit loss. One of the tough things as a consequence of lower fruit volumes is that our debt, we haven't been able to reduce the debt as we planned with the growth that we've taken on board. Encouraging thing from all this is that now banking syndicate has been very supportive. They understand the ag sector and the risk that the ag sector faces, and so we've negotiated a sustainability loan of $121 million. We've had covenants waived for the '23 season. But at the same time, we've had a complete focus on debt reduction through managing our CapEx and obviously, where the shareholders won't be happy with us, we've had to stop the dividend, right, because we just haven't got the spare cash to enable dividends to be paid. Disciplined capital expenditure. I've just touched on that. But in terms of looking forward, as well our capital demands, as always, we're going to keep that within depreciation. And we have -- already have the infrastructure in place and the capacity in place to manage the expected volumes for '23 and '24. And now the ?p?tiki insurance claim has caused us some frustration, but we're still working our way through that for our growers in that region. Positive aspect is you all came in, in nice weather. But the outlook for '24, at this stage, it's still early, but we've had good winter chill, good [indiscernible], favorable weather systems that they're improving. And all the growers are telling me that they're seeing improved bud break, and we're planning for a resurgence of volumes from this growing season. Through the COVID period, SeekaFresh started to perform better than it has before, and we're still pleased with -- and are very pleased with the way that business is operating at the moment. All the developments in Australia, we're very comfortable with and are happy the way that they're developing. And to try and manage the insurance costs, which we felt were getting far too expensive by just relying on like all New Zealand insurers, we've set up our own captive and gone to the market and experienced considerable saving for insurances. Our coolstores are becoming harder and harder to insure because of the fire risk associated with those types of buildings. So it's been a storm. But in amongst that, I think there are a number of positives for us looking forward. So these are the nasty numbers of the 6 months in some respects. Our revenue, down 14% to $213 million; gross profit, down 22% to $48.4 million; EBITDA, down 26% to $36.4 million; and NPAT net profit after tax, $10.5 million for the 6 months, down 55% on the previous year. On the other side, on the other tally, you can see that we produced 11 million trays from 14,000 hectares -- 1,400 hectares, sorry. And here's the impact of volume on our business. So we're an infrastructure business with high capital cost and when you don't get volume, it has a big impact. So we're down to 30 million trays in this -- from the '23 harvest compared to 42 million trays the previous year. And if you do the math, that's about 28% or something like that. A significant impact. And of course, those volumes are below breakeven. So hence, when I turn to the next slide, it brings us in line with and confirms the guidance that we've already given the shareholders of what we expect our loss before tax will be for the full year. So we expect and are still within the range of a loss of $20 million to $25 million. So they're -- a repeat there why packhouses underutilized volumes below breakeven at 30 million. But things we hope will be better for '24 and we can return to profitability. So environmental, social and governance, so the ESG with journey there, but that's what I said, it is a journey. But I want to just give you a high-level vision of what we're trying to achieve here. We want to be a sustainable leader in horticulture and transparently report our environmental impact. Now we've already published 2 reports in terms of our carbon emissions and the programs that we're taking to reduce the carbon that we emit. In terms of total carbon numbers, we're -- and if you have done some reading on this, there's class or category 1 and 2. Category 1 and 2 is fuel and electricity basically, and those are the ones you could control. And so that's where we have our biggest impact, and they amount to around about -- they amount -- of our total carbon emissions of 1, 2 and 3, 1 and 2, we control; and 3, we can only influence, we produced about 23,000 tonnes of carbon. 1 and 2, 10,000 tonnes. So those are the ones we can control. Of that, 6,000 is electricity. Now, if you think about that, we actually can't control that either because we need that energy. We've got a high-energy consumption activity, but we have to wait for New Zealand to fully green its electricity generation to be able to reduce that. So I'm going into a little bit of detail here, but I think it's helpful to understand because carbon reduction is important that our ability to reduce it is not easy to do. So -- but we will -- and we've set those targets and we have a plan to achieve them. So that's a 30% reduction by '25, 50% reduction by '30 and net 0 by '50. And the full program and the areas that we control are around the use of refrigerants, getting more -- changing over to environmentally friendly refrigerants; use less energy; use the roof space and possibly even some of our land space to generate energy; reduce our waste; reduce the fertilizer to be more targeted as to how fertilizer goes on. It's all part of what the teams are working on to make sure we reach these targets and can demonstrate that we're leading in this area. Just to give you a sense of some of the things we've already done, we're already generating 407 kilowatts (sic) [ 407 megawatt hours ] on the roofs of where we have put solar panels up, particularly up in Northland, where the pack house is, because it also affects citrus and avocados. It operates for longer periods of the year, so the economics of it make more sense. We're diversifying in our pack houses as to what they're doing, and we're looking for other opportunities so that our pack house utilization can be improved through packing other fruits outside the kiwifruit season. We're recovering cardboard and recycling. And at the moment, we're reducing our organic waste that's going to landfill by 100 tonnes to the use of the wind farm. So some of these numbers stand out, they're quite big. When you think about 100 tonnes of waste that's been -- now been utilized to regenerate in compost. Within the sustainability loan, not only are there carbon reduction targets, but there's also health and safety targets as well. And as you can see there, our recordable injury frequency target at 2.75 is way below what we target ourselves and comparable to others as it ranks really well. So we are working on all these things, and the team do an outstanding job. So looking forward. We have the capacity for 50 million trays. We had a meeting with management and the Board yesterday and spent time to understand exactly what our capacity is, where we can make some additional efficiency grades through automation and those sorts of things, but we can deal with 50 million trays. We're not budgeting for that many next year, so 2024, we've got no capacity issues. Seasonal labor supply is greatly improved. So we're not going to experience the labor problems of the past couple of years. And management have been focusing on operational improvements and through that, reducing overhead. Outlook for '24 is positive. Yields, volume's forecast to rebound and obviously, bud break has improved. Winter chilling was better. So there's some good indication. And there's more kiwifruit orchards within our group that are entering full production. So there will be natural organic growth as well. So the team at the moment assures the Board that they're focusing on being operationally excellent and preparing for a bigger crop for the next year for this harvest. So those are my introductory remarks. I'll now ask Michael to take you through a few more matters that will be of interest to you.

I'll stand up on the bench hey, that way you can see me. [ Nami nui kia koto katar ], my pleasure to talk to you again today. And first, let me start by acknowledging our people and our growers for their support of the company and their service to our stakeholders over the last 30 months. It's been pretty tough. Been a pretty tough run through COVID. Been a pretty tough run with all the weather and the issues. We tested our growers' patience in 2022, which we were remorseful for. We rallied ourselves and thankfully, in 2023, have put together a comprehensive performance for everybody. So that's really appreciated from all the efforts from everyone and their support. We had 1 serious harm injury in the 6 months, where 1 of our forklift operators in the middle of the night decided it was sensible to dangle their foot out the side of the forklift and caught it against a pallet when they were going past and broke their ankle. And so that was unfortunate, but 1 accident and everything that we're doing in amongst the season is disappointing, but we'll take it, I think. Just to remind you, there are 4 components to our business. I would have shown this to many people before, but in case you didn't know, there are. And so the first part of our business is, of course, that we are an orchardist. We're a large kiwifruit grower in New Zealand. We're a large avocado growing, kiwiberry grower that's headed up by Barry Penellum with a team of orchard managers and dedicated orchard contractors who work for us. We own, lease and manage orchards and we've got long-term lease orchards in development. To be honest, we only own 1 or 2 small orchards. They are largely for sale or held for land bank for post-harvest, most of them the leased or long-term lease. We do do orchard development. Within that, we are building orchards for people to design build turnkey orchards, largely in conjunction with the government or iwi or mostly third-party funded to a large degree. We have got some money in, and we are a large kiwifruit grower in our own rights. And so, of course, if your yields are down, we're like every other grower, so are our financials. And last year, the yields were down terribly. And so we were impacted in that part of our business. The second component to our business, we're a post-harvest operator, live in pack houses across the major growing regions in New Zealand from North and all the way out to Gisborne. We arrange the picking, packing, cool storage, inventory management and product dispatch of that fruit through to the market with Zespri, mostly, not all, but mostly. We have got the Delicious Nutritious Food Company, which is really a value recovery initiative, making kiwi crush, helping people who are desperately sick, taking waste kiwifruit and turning it into a high-value nutraceutical and rewarding our growers with that return largely. And we have our own innovation and maintenance team sort of supporting us, making sure that we got plant uptime, making sure that we're thinking about better ways to do things and making sure we've got balance in our operations. And so if something happens that's untoward that we didn't know about, that we didn't think was going to happen, that we can actually cope by scheduling that fruit to the right facility to be able to handle it efficiently. That's certainly helped us this year. We had fruit that was compromised with water, with fruit that was compromised by hail, and so we were able to schedule that fruit to the right facility and get a good job done for it. In that part of our business, we had the lowest fruit loss in the industry. We've delivered our grower customers amongst the highest orchard gate returns, and we've delivered our marketer the best offshore fruit quality fruit from anywhere. We've hit the treble, and so done a good job of it, albeit in a low-volume year, but comparatively, we are unashamedly #1 where we aspire to be. Third part of our business, we are Seeka Fresh. It's where we are taking fruit that we don't supply to Zespri, and we turn it into cash pretty much. We've got our own wholesale market operating at Auckland where, if you buy at the supermarket, you can largely get it from us. Avocados and kiwifruit are our large domestic varieties. We also are importing bananas, pineapple, papaya, selling eggs. If there's equipment, we'll be trading it in that part of our business. We also export things like avocados around the world and kiwiberries, just to round it all out. So that's our SeekaFresh business. It's headed up by Kate Bryant. Our post-harvest business is headed up by Paul Krone. And, of course, over in Australia, we have an Australian business headed up by Jon van Popering, where we own and lease orchards, mainly kiwifruit, 100 hectares in development, about 63 hectares -- sorry, 100 hectares in production, around 63 hectares in development. We're also growing nashis, all varieties of pear and jujubes is our latest gig. And if you want to know about jujubes, you can ask me later, and perhaps we've got some floating around the building somewhere. Our strategy, well, we went through the numbers with a stakeholder update a few months ago, so we decided not to get too deep into the numbers. But we thought we'd tell you a bit more about our strategy and what we're up to and what's driving us along. So our first strategy is around delivering operational and financial excellence to our growers and our shareholders. We're not a co-op. We're a commercial business here to make money primarily -- screen's going dead on mine, but it will come right one hopes, battery's going flat, but never mind, it'll work out. And so it's all about excellent planning. It's around disciplined process. It's about understanding our contingency plans. It's about working out what's going to happen when it doesn't go to plan, and then getting quality fruit out to the market. This year, we weren't stress tested with volume. And next year, we expect to be. Next year, we can tell you already, there's a lot more flowers in the orchard that there were there last year. Perhaps in SunGold back to average, and the average is a lot better than last year. Haywood looks exceptional at this point of the year. It looks exceptional. If we can pollinate what we've got out there, we're in for a bumper Haywood yield, so we'll see. But we want to be excellent. We want to deliver operational excellence. We want to deliver financial excellence to our shareholders and to our growers. You can't take one over the other, and we actually got to reward our shareholders have taken. They've been patiently waiting for the dividends to return in the business. We've got to lift our financial performance to do that. We have taken this opportunity of a loss-making year to trim the ship, taken cost outs of the business, mainly people, so that's unfortunate. We've done it with due dignity and respect. Taken around $3 million of fixed cost, people-related, out of the company, trimmed us up in a way that we believe won't jeopardize our ability to perform next year. We've also put in place targeted capital expenditure. We've trimmed the capital expenditure to be within depreciation. So that way, the money, the profits that we make and we return to profits available for debt reduction or dividends if the directors think that that's prudent. And obviously, they're feeling the pressure that we should get the dividend back on the table. So when it's prudent, they'll make that decision having received a recommendation from management. Of course, we want to optimize the post-harvest capacity. We got a lot of money invested in buildings, a lot of money invested in post-harvest packing equipment, coolstore refrigeration plant, mobile plant. We've actually got to make it pay. So we've got to find a way to get more turnover through those stores, more clicking of the ticket, more return. It lowers the price for growers and makes more money for shareholders. So we're pushing for that. And of course, we want to run that plant. We want to run those buildings to do more than just kiwifruit. So we've got to do things with complementary products, packing avocados, packing citrus, packing persimmons, contract packing for people, putting dairy products into coolstores to make money to actually cover the fixed cost more. So those things are underway and have been for some time, but they support core business. And of course, our aspiration is to be excellent. Select excellence is our buy line, but we want to deliver excellent service and returns and produce and value to our stakeholders and to our shareholders. It's important. It's what we're here for. Someone might be able to go page down for me because I now longer -- I can't. I'll keep making it up, shall I, while you guys sort it out in the back. So at the -- on the top of the -- behind my head, right where my hand is actually up on the screen over there, you will see a motive, a motive above our brand, and that motive is important because actually each one of those little arrows is projecting out or pointing inwards is a brand attribute. And the idea about the brand is that if you -- if we behave consistent -- I've got it back in now, thanks. Well done. If -- How's that for doing something on the fly? That's aspirational. If we behave consistently with each of those brand attributes, if we actually behave this way, then we'll become a company, the group of people, that's what a company is, that we aspire to be through those brand values. We'll project it out into the environment, and we'll push those attributes in on ourselves. That's the whole idea of what the brand signed this fella who needs to get out more came and talked to us about when we put the whole brand rebranding in place. And so the brand attributes, our values, brand values that we put together at the time was founded on relationships. And at times we've tested that through performance, but actually thankfully, this year, we're back and then -- it only lasted for about a minute -- and then -- before it turned itself off. And so -- but I can see the back screen, it's okay, so long as you can change it from there. And so the first one, we want to be founded on relationships with our growers, with the people who trust us and with our shareholders, with the people who buy our produce. Our second brand attribute that we drives us along is we want to have and we do have a quality obsession. We -- Everything that we do is about quality, not just our produce, how we treat each other, how we interact as we're pushed along, it's all about quality. Inspirational people. We want people right across the company who are inspired to be here, who want to work with us, who are actually leaders in their own right, can actually shine in the role and the accountabilities that they've got and do a fantastic job. And I'd say to you that largely, we have that. Now you can just see me. We want to be known as independently ingenious. And so not necessarily a sheep, one of the flock that's just doing the same as everybody else, but actually no one, just thinking outside the square to delivering a result beyond what might reasonably be expected. Growing futures. As the brand attribute all around, sustainability, actually growing an environment and a company and an industry, which is for the next generation, the one beyond this. And so importantly, we're thinking about tomorrow. Importantly, within the company, we've got a genuine drive around sustainability. We are thinking about those things now. We are pushing ourselves beyond the norm to take out our impact on the environment. So we do have an industry tomorrow before -- beyond today. And of course, we want to be always safe, always safe as a company. Our job as management is to do a good job in spite of the weather, although last year, I think, if you could go one more page, it'd be great, the weather did have an impact on it. You don't need me to tell you that. It impacted on the whole horticulture industry. We had a very warm winter. We had a low bud break. We had a low crop yield. We were surprised. We thought that the fruit might get bigger because they were the lower yields, but actually, it didn't tend to. We had a late frost. It was the first frost we'd had in a decade pretty much. Everyone didn't think it was coming. The Metro system said there was only a 2% chance of frost. And we had a boomer, and a lot of people were caught. Even though the -- our loot went out, a lot of people were caught that didn't have their windmills fueled up, the pumps broke down on the pond. We had every disparate story and it absolutely wiped out a number of orchards. It was very tough. We had Cyclone Hal and Gabrielle. And then we hail in May, which was difficult in itself. We had a very wet summer. Actually quite a challenging harvest even though the yields were down because we had to go in and around the weather. That was quite difficult. We had low SunGold yields, very low. We had low dry matters, dry matter levels, which meant a population of fruit wasn't able to be harvested. And around 640,000 trays didn't get packed that normally would have got packed by this company. And so -- and the yields in Haywood were through the floor. And over in Australia, in Shepparton, you'd be forgiven for thinking you'd actually orcharding in the desert because normally it is. It gets hot. You've got days over 40 degrees there in shipping them, 9 days of normally in a growing season. Last year, we had a flood. It was underwater and so it was just so abnormal. So quite simply, the volume of kiwifruit that we handled was below that which is sufficient to make a profit. We probably break even around 36 million-odd trays, and we packed 29.7 million. Just it's simple maths. Thankfully, I can say to you before you think, oh my God, what's going on, this year's bud break flowering, as we head to pollination, looks a lot, lot more positive than it did, a lot, lot more positive. And the company is set ready to handle in its capacity somewhere greater than 50 million trays should it turn up. We're not planning for that. We're planning for another less than that. We just don't think it's critical to go from 30 million to 50 million in the season. But we have the capacity there to be able to handle that volume within the current frame with what we've got. So after the poor performance in 2022, well, the challenging performance last year, this year, we actually rallied ourselves. We have got very good performance for growers. We have got very good returns, and we have delivered Zespri, the marketer, the best offshore fruit call it. And so those things, I think, we can take some heart from, but I would say to you that it was not volume stress tested and the mission is for 2024 to do it again with much, much bigger volumes and return to profitability and get the dividend back on the road. We are -- it doesn't get any easier, though. We are in the midst of an avocado season, which there is an avocado glut right at the moment. Prices are very low. So we're having to work through that. So it is what it is. But our Australian produce is performing well. It's selling quite well. And I would say to you that last week, we were in Australia and took a look at our orchards and we, I think, were delighted with what we saw there. And in the next month, we'll confirm our delight once we get through fruit set. If we can get that order stick, we'll be really happy. So it's not all negative. The outlook is actually quite optimistic to be honest. I'm looking at somewhere. Hopefully, they're pushing this page. If I look at each of our business operations, orchards, our orcharding business supplied just under 40% of the fruit to our post-harvest business. We are an orchardist to secure supply to our post-harvest infrastructure. They like everybody else was -- were hit by lower yields. And so the revenue was down because the yields were down, but they did a lot of innovations last year -- sorry, this year in this harvest, which actually improved the total company performance. Quite simple, a little flap over the top of a packing bag that was deployed by us has dramatically changed the fruit quality that we actually handled as a company. And so that was a simple but inspirational innovation that they did and has dramatically improved our post-harvest performance because we've got a better fruit on the way and in premiering orchards. We have got orchards coming into production. Around 53 hectares will come into production next year from developing orchards, long-term lease developed orchards. And of course, we've got the money invested alongside the K?noa fund and those long-term leases up the coast, which includes packing commitments all the way out to 2050. So once they get into production in the next couple of years, we will be seeing the benefits from those longer-term investments coming to fruition. In terms of our post-harvest engine, it's our core business. It's where all the assets are. That's where the cash flow is generated as it should be because that's where the investment is. Generated 71% of our revenue. And kiwifruit is still our foundation product. It is where we generate our cash. We have a focus on getting the maturity right. We've actually made huge strides in the company in and around our inventory management. And of course, one thing that's different about our inventory management is that growers get to see it real time online from their app. They have an app on their phone that they can go and see where their inventory is at and how it's performing. It's kind of a bit scary, but that's what we do. And we have delivered fruit to the wharf in spec on time and, in fact, we've delivered something like more than 5,000 pallets beyond our share to keep our boats full on the way through the season. Where other people couldn't supply because they're having product problems or difficulties in the supply chain, we made up for it. And so we should take some heart from that. We have continued to invest in KKP. We've got automation also happening at Oakside and Transpack now for next year. We've got the Transcool coolstores commission going well. All of the operating margins in the company on a per trade basis were achieved as planned. Our simple problem was the volume was down. So our focus is on quality. Our focus is on doing a great job, delivering the market a excellent quality fruit and our growers a great return. And so this year, we've been able to achieve that. Team's done a good job, done a really good job, actually. Trick's going to be to do it again next year. In terms of SeekaFresh and our retail services business, this is where we complete the supply line. So this is where we are selling produce through to retail across New Zealand and Australia really, where the fruit's not supplied [indiscernible]. And so business has gone through a resurgence this year. Our return to profit is going pretty well. Our volumes are up. A lot more kiwifruit to sell. Lot more avocados to sell. Business has focused well and really, it might be a small highlight financially, but it's doing -- it's gone really, really well at last. There's a small boutique wholesale market in Auckland and exporting from there and the job's gone pretty well in that part of our world, to be honest. In terms of Australian operations, been tougher in that part of the world up until now. They had all of the same pressures that we've had with COVID and with climate, but we've got -- in Australia, we have branded produce on the shelf every day of the year. Our new categories over the year are exciting. We've got jujubes, and we've got this exceptional red nashi fruit on the way through. We'll have 15 hectares grafted by the end of this year heading to production. It's an exceptional piece of fruit. You'll have to try it to believe it, but it is a wonderful, wonderful piece of fruit that with nashi, alongside our jujube developments in that part of the world. And so I'd say to you that the kiwifruit orchards there look as good as they've ever looked. And if we can get that crop to pollinate, we're on our way. Health and safety and our social governance reporting. Well, to their credit, the safety -- sorry, our sustainability team at Seeka has matured, and actually are now delivering excellent results and reporting. Second sustainability report's being produced for our stakeholders. It's out there in the real world where we've got 4 years of verified carbon footprint data. So it's independently verified by Toit? Envirocare. We've got plans to reduce the impact that we're having on the environment. And we've got a sustainability linked loan for $201 million and not 121, $201 million, with specific targets that benefit us if we achieve those targets and penalize us if we don't. So we're incentivized to do a better job. And I think the sustainability team within the company is getting -- has gone a long way. Of course, our efforts are around electricity, it's around refrigerant leakages, it's around reducing the amount of unnecessary fertilizer use, and it's around waste reduction. And so those 4 things, if we do that, if we get our solar up and running and we target those 4 areas, we'll easily reduce our carbon emissions to [ open ] the targets that the Board has targeted management to achieve. Of course, safety is a big issue for us. We gear up. We've got so many people, 4,500 seasonal workers of around 1,500, up to around 1,500 are RSEs. Labor has changed. Labor is no longer a constraint. Labor seems to have freed up with the return of the backpackers and international visitors. And so actually keeping them more safe when they're working for us is a trick and particularly next year, when we've got the volumes and we have that harvest with anger. So I think looking forward, which is my last slide, you'll be happy, for those of you nearly asleep, you can wake up right -- oh, I actually missed that slide. Of course, as part of our program, we did open Star Base, Turanga Whetu, there in Sharp Road. It's a combination of 140 RSEs. It was opened with the local Tamawhariua and that part of the world. And we've built that at the moment, our intention is not to own it; our intention is to sell it and lease it back because we don't think we need to have our shareholders' money tied up in that kind of investment. And we'll investigate that in the new year when we get to it. But that's a -- it's a fantastic facility. It's as good as you'll see anywhere. Up to 140 people can stay there. It is like a chicken hutch. There is a load -- whole lot of rooms around, but it's got really good facilities and good amenities and it's as good as they'll get anywhere. So looking forward, this is -- actually is my last page, and so that was -- the last one was the penultimate one. I think the outlook for 2024 genuinely is for higher volumes. The bud break in the flower numbers that we're seeing in the orchards now are encouraging, will be better than encouraging, to be honest. In Haywood, they're exceptional. In SunGold, they're average and if the average is a lot better than last year, thanks. So we'll take it. We've got the automation set to deliver capacity and performance gains, and we're completing a couple of little bits of automation upgrades at Oakside too with a new camera grader and an upgrade to the camera grading at Transpack. I would counsel everybody that important to us is making sure we've got balance, we've got contingency planning. The crop may not come the way we think. We might have another hail event. Having automation everywhere may actually be contrary to doing a good job, an efficient job for our growers and an efficient use of our shareholders' funds. So having some packing machines floating around, which are manual graders, so the old way that we don't mind slowing down if we need to, to do a good job is important. But we do have, as automated technologies, you can see in the industry, we've got the capacity to handle 50 million-plus trays that's there. And so it's important. And we've got an automation plan that runs out over 5 years. We've also got a risk management plan in the company that sees us addressing things like [ partners' just water ] and the capital maintenance that you expect us to have. And we're doing that even though we've had a harder year. We've got active cost management. I've told you that we've got the leaner business and set now, $3 million in annual cost savings, largely from labor. We've also got the captive in place. And so if you don't know what the captive is, we actually have our own insurance company, Seeka Risk Management Limited. We've placed the insurance policy with ourselves, and then we're going to lay it off and something like more than 70% of our insurance cover is placed directly with the reinsurance market in London direct from our own insurance company. The benefit of that is that while our insurance cost has gone up, it hasn't gone up by anything like it was going to go up if we were stuck here in New Zealand. And the outlook is if we can maintain a good insurance record, that it won't go up by what it would have gone up by if it was here in New Zealand. So 6 or 7 figure saving already. So that's there. And we have, with the Board, prudently limited our capital expenditure to within depreciation, which means the profit goes to debt reduction or dividends, and so both of those things are sensible. And we're focused on getting the profit up. The outlook today compared to last year's starkly slightly different. We actually had a much colder into the winter. The winter chill units went up, pre hurricane, and we're actually seeing pretty good flowering about to happen across those orchards now. And if we can get that pollinated, we'll be very happy. So that's it from me. I'm going to hand you back to the Chairman to take any questions. And thanks to the team at the back who managed to get the technology running or done. [ Jamie and McDermot ] there, thank you. All right? And sorry, Chris Jensen not Chris Jenkins, but we know who you are. Cool.

Michael commented on the brand attributes which help drive the culture and as a Board, we see that with -- when we -- 2 of the plants and talk with the staff, that they understand those attributes and live and breathe them every day. So it's certainly -- when we set those some years ago, it's really pleasing to see that they've embedded themselves in the culture of this company.

Right. I'm happy to take some questions. And I know there's some from online, but I'll have you take one from the floor or if there are any. Otherwise, we'll take the online questions. Yes?

Just focusing on the depreciation. Obviously, it all changed. Is that a permanent change? Or is it just something you've done temporarily?

Well, it's sort of a benchmark that most companies will follow in some respects. But when you're going through a large period of growth, which we have been, sometimes the CapEx is required beyond depreciation. But at the moment, and we don't see a lot of need for CapEx in terms of growth, it's about keeping within that, which is clearly needed for maintenance, maintenance CapEx and also spending some CapEx on where we can improve automation for efficiency gains.

Is your full appreciation team to overrun [indiscernible]?

Now I might have to get the CFO to answer that. But I'll have a go myself. I think we try to assess what the residual value of assets may be and depreciate them over their estimated life before they're replaced or sold or worn out. So I'd be very surprised if we have a lot of depreciation recover. So do we have much depreciation recover, Nicola? No, she's shaking her head. So our depreciation really is in line with the actual experience we're achieving with wasting of assets. Jim, are you reading questions are you? Thanks, Jim.

You've got some online questions. Please comment on Seeka's care of the environment and staff in recent harsh weather and financial conditions.

All right. I suppose if that question's directed to us all, the flooding that's occurred in the Hawke's Bay, if we think about where our staff work and our facilities, their risk of flood is quite low. So our facilities are unlikely to have flood damage from that in that way. So if that's the nature of the question, I would have thought our staff are fairly safe specifically from flood and weather change. Any more, Jim?

Another question here. What does the future look like reference to climate change, sprays, air quality?

All right. So well, this is a question that we've been asking management to respond to the Board is what is the climate risk long term on Seeka's business? Now they've done some work on that and a lot -- and work has been done by plant and food. The conclusion that plant and food has drawn that climate change is likely to be beneficial for horticulture, but for -- well, even specifically for kiwifruit was it will improve and there'll be more growing regions suitable for kiwifruit. So it's not all doom and gloom; there's actually potentially opportunity there with climate change.

It's another question. Why has the value of Seeka shares dropped nearly 51% in 17 months?

Yes, I think we might have answered that already today. We haven't had the volume to make the money. So therefore, we can't distribute a dividend. So there's all those reasons. There was probably some selling as a hangover from the growth that we did with company acquisitions, but the reality is there's very little volume traded on kiwi shares -- Seeka shares. And another one, is there, Jim?