Chairmans Report 2005

 

SEDDON VINEYARDS OF MARLBOROUGH LIMITED

CHAIRMAN’S REPORT

 

 

 

Financial Results

 

On behalf of your Board I am pleased to report that for the year ended 30 June 2005, the company has produced earnings before tax of $130,092 from its grape growing activity. As a result of the current stage of the replanting programme there has however been a reduction in the revaluation of vines of $201,408, resulting in a net operating deficit of $71,316. As detailed in the Dividend policy note below, the Board has declared a fully imputed dividend of  7.5 cents per share. This will be paid on 7^th December 2005.

 

Vintage 2005

 

The 2005 harvest was affected by the cold late spring and some difficult weather conditions during harvest. The replanting program had an effect on the yield as expected with a little over 500 tonnes being harvested, however with the replanting being completed this year, each subsequent year should see an improvement in yield until the grape vines reach maturity. The Board acknowledges the outstanding work performed by vineyard manager Carl Jackson and his team in achieving this result.

 

 

Replanting Programme

 

A total of 75,450 plants have now been replaced with grafted vines, equating to approximately 35% of our total plantings. The first re-plantings in 2003 will reach full production in 2007 and the latest plantings will continue to provide an increasing yield through to 2009 when they reach maturity. All of the replanted vines are showing good growth rates and are in a healthy condition.

 

Vineyard Valuation

 

The property was again valued in accordance with our accounting policy. The valuer, Hadley & Lyall Limited of Blenheim, has ascribed a current market value of $9,750,000 (2004 $9,000,000) to the property. This value has been incorporated into the financial accounts.

 

Dividend Policy

 

The Directors’ policy in regards to dividends is that they only be paid when it is financially prudent to do so. Whilst the company has not achieved the high level of profitability achieved in 2004, given the company’s strong balance sheet and improved cash position and also the desire to utilise all imputation credits prior to a possible merger, the Directors have resolved to pay the company’s third dividend at 7.5 cents (fully imputed) per share, in December 2005.

 

Share Trading

 

The Board’s move to place Seddon Vineyards Ltd on the “Unlisted” shares website (www.unlisted.co.nz) has proved to be a successful one. The comments we have had back from shareholders have been positive, especially in regards to the convenience of use of the site and the availability of information on share trades and prices.

 

 

Merger

 

As advised in the “News from the Boardroom” in August, the merger talks with the Terra Vitae Board have re-commenced. The timing of the merger is designed to maximise any tax benefits available to both companies and to minimise the costs associated with the process. Both Boards are working towards a 30 June 2006 merger date, conditional of course on the merger being sanctioned by shareholders. We expect to call a special meeting in March 2006, where the proposal will be voted on by shareholders.

 

 

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Directorship(s)

 

The Board has met regularly throughout the year to deal with issues such as;

 

•  annual budgets
•  the vineyard management plan
•  the replanting program
•  monitoring financial performance
•  negotiation of grape prices
• the possible merger with Terra Vitae

 

 

Once again I personally wish to thank my fellow directors, Ian Montgomerie and Andrew Pearson, for their contribution and assistance over the last twelve months and also to Alan O’Sullivan, the Company Secretary for his management of the operation of the Board, our financial affairs, the shareholders correspondence, our shareholder register and the company affairs in general.

 

 

Conclusion

 

As a major supplier of grapes to Villa Maria I am sure I can speak on behalf of the Seddon shareholders in expressing a great deal of pride in the results and accolades which Villa Maria and its Managing Director, George Fistonich have achieved over the past year. I am pleased that Seddon Vineyards has in its own way contributed to this success. I wish to thank George Fistonich and his team for their enthusiastic and professional support in assisting the company in a difficult growing year. The year 2005 will be remembered for the variation in growing conditions and the completion of the replanting program shortly after balance date. We can now look forward to the opportunity to increase our yield each year as the new plants mature.

 

 

Joe Ferraby

Chairman,

Seddon Vineyards of Marlborough Limited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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