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ZESPRI Maintains Dividend in Tough Marketing Year

2 June 2005

ZESPRI Maintains Dividend in Tough Marketing Year

ZESPRI Group Limited has ended the 2004-05 financial year strongly with net profit after tax up 16% to $26.5 million on hard won global sales that were 12% up on the previous year to top the billion dollar mark.

“The year to March 31 2005 tested the integrated orchard to retail ZESPRI™ System with its single point of market entry (SPE) like no other. Faced with significantly higher volumes, a strong New Zealand dollar and variable eating and storage quality, the focus was on managing to optimise returns and retain premium positioning,” ZESPRI Group Chairman, Craig Greenlees said, in announcing the audited results for the year.

“Unfortunately grower returns per tray were down but overall the SPE structure and the strength of our brand, based on our reputation for integrity, consistently superior quality and marketing support that drives sales, helped to produce a very creditable result.”

Mr Greenlees said the Board intended to declare a fully imputed final dividend of 25 cents per fully paid share. This will be paid in August 2005, in addition to the first interim dividend paid in February of 25 cents per share. This represents a dividend yield of 12% (fully imputed) on the new issue price of $4.10 per share.

Equity at balance date was $77.0 million, up from $53.9 million at March 31 2004. This amount includes $12.6 million in proceeds from the share offer. The issue of 4.2 million shares to under-shared growers to achieve a closer alignment of company shareholding and production was 83% subscribed.

New business units - Aragorn and ZESPRI Fresh Produce - both achieved turnarounds, reporting modest operating surpluses in 2004-05.

Mr Greenlees said that solid marketing performances in Europe and Asia which overcame the challenges of volume and eating quality, firm leadership and some temporary shelter from the escalating New Zealand dollar, contributed to another consecutive year of growth.

“2004-05 was a milestone year for ZESPRI and the New Zealand kiwifruit industry. We capped the centennial year celebrations by joining the league of billion dollar exporters, consolidated our winning streak of another consecutive year of growth and demonstrated that integration, innovation and co-operation are enduring values,” he said.

Mr Greenlees said that commitment to working together to enhance the industry’s unique advantages in the face of the new competitive market reality was where all energies should be directed.

“ZESPRI’s success - and industry success too - has been predicated on anticipating and delivering in time to customers’ needs through investing in relationships and building the reputation and integrity of the integrated system and its brand.

“Profitable and sustainable growth through enhancing the value proposition we can deliver to customers with a year-round, differentiated, premium product range, is our goal and the basis on which we are now formulating and testing the strategies to guide us through the next 10 years of our evolution,” he said.

Outlook 2005-06 Mr Greenlees said the 2005-06 selling season which started in May would be testing.

“We’ve had a slower than desirable start with increased freight costs and a New Zealand dollar that remains very strong against all of our trading currencies.

“Having said that, initial sales into Asia have been strong with local currency prices in some markets up on last year. Our European sales programme is not due to begin until the first week of June but everything is set for a positive start.”

Mr Greenlees said the focus would be on offsetting the adverse currency factor as far as possible by increasing revenues and reducing costs where practicable.

For further information please contact: Peter Anderson GM Corporate and Organisational Development ZESPRI International Ltd Phone: 07 572 7753 Mobile: 021 300 542 Email: peter.anderson@zespri.com

Performance Highlights

COMPANY PERFORMANCE

Net profit after tax up 16% to $26.5 million Equity increases to $77.0 million (includes $12.6 million share issue proceeds) 2003-04 dividend of 50 cents per share paid in October 2004 First interim dividend of 25 cents per share paid in February 2005 Intention to declare a final dividend of 25 cents per fully paid share Share issue of 4.2 million shares, subscribed at 83%, raised $12.6 million and achieved closer alignment between shareholding and production

MARKET PERFORMANCE Net global kiwifruit sales grew 12% to $1.02 billion Volumes shipped up 25% to 81.5 million trays Record sales volumes in Europe at 45.1 million trays and strong pricing in local currencies Record sales volumes in Japan and Asia at 26.7 million trays and record prices in local currencies

INDUSTRY PERFORMANCE Total fruit and service payments up 4% to $611.0 million but on per tray basis were down 17% to $7.49 First payment of annual loyalty premium for the 2004-05 season of 10 cents per Class 1 tray in June 2005. Total fruit and service payments including loyalty premium of $618.9 million or $7.59 per tray Average orchard gate return including loyalty premium (OGR) per productive hectare: - GREEN - down 15% to $31,872 - GREEN ORGANIC - down 10% to $33,462 - GOLD - up 11% to $49,358

ENDS


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