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Satara faces loss after review finds double counting

Satara may post pretax loss after valuation review finds double counting

Feb. 4 (BusinessDesk) - Satara Cooperative Group, the Te Puke-based kiwifruit and avocado company, may post a full-year loss before tax after an asset revaluation review found it had double-counted its cool stores.

The company would reduce the value of land, buildings and plant by $5 million to $33.4 million if it takes all the adjustments in the 2012 year, it said in a statement today.

That would turn its pretax earnings to a loss of $2.1 million from a projected profit of $600,000, resulting in a $2.4 million reduction to its asset valuation reserve and reduce deferred tax liabilities by $500,000, it said.

The company’s shares last traded at 40 cents on the NZX and have shed a third of their value in the past two years. Chairman Hendrik Pieters said shareholders should hold off on trading the shares on the news because the company was separately in the final stages of talks over a material transaction that will be announced in the next few days.

Satara flagged the asset revaluation in its first-half results, having cut the value of assets the previous year in the wake of the devastation wreaked by Pseudomonas syringae pv. actinidiae (Psa) on the kiwifruit industry. The financial impact of the disease on the kiwifruit industry was estimated at between $310 and $410 million over the next five years by a Lincoln University study last year.

The company says that based on preliminary valuation advice, industry-wide and company specific factors would cut the value of its land and buildings by $2.3 million in the latest year. The effect of counting the value of “certain items of coolstore plant” in both land and buildings and plant and equipment in its accounts was to overstate their value in 2012 by $2.7 million, it said.

Satara said it will release more details of the adjustments with its full-year results.


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