NZSX Listing Profile - Turners and Growers

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36 operation, which makes extensive use of an electronic auction system. The Fresh Domestic division includes: • Pre-Pack; • Fruit Case Company; • Fruit and Produce imports; • Banana ripening and marketing; • Floramax; and • a nationwide transport and freight operation. Pre-Pack Pre-Pack is a “value add” activity offered by the Fresh Domestic division that packages produce into customer/shopper sized bags for supermarkets. The most common packaging is one to five kilogram take-home packs of potatoes, onions and carrots. Pre-Pack mostly charges under a cost-plus structure. Turners & Growers expects the range of produce packaged by Pre-Pack to increase and as such Turners & Growers Group Listing Document has invested in technology to accommodate potential developments in this business. Fruit Case Company Turners & Growers acts as an integrated fresh fruit and produce company. As part of its service offering to customers it provides containers, boxes and crates for produce to be transported in, both from the farm/orchard to Turners & Growers and then from Turners & Growers to the store. This operation is called the Fruit Case Company and it specialises in hiring containers and certain other equipment such as bins and wooden pallets to Turners & Growers’ producer and retailer clients. Hire equipment is subject to a hire charge and a bond that is paid by the hirer and repaid by the Fruit Case Company upon the return of the hired item. As at 30 June 2004 the Fruit Case Company owned approximately 1 million plastic crates, 6,000 bins and 58,000 wooden pallets. Fruit and Produce Imports This activity primarily focuses on the supply to the New Zealand consumer of fruit and produce varieties not customarily grown in this country. Produce is also imported to supplement supply to retailers at times when domestic supply is out of season or in low supply. The Company has been involved in the importation of produce since the early 20th century. For example, an invoice for imported citrus dated October 1920 shows “importation of 214 cartons American lemons, 429 Sydney oranges, 285 Valencia oranges, and 662 Island oranges”. Bananas are Turners & Growers major import line however the importation of seasonal produce includes grapes (Australia, California, Chile), mangoes (Asia, Central and South America), Pacific Island produce (taro, yams etc), United States stonefruit and Californian and Australian citrus. These items are also supplemented by a winter vegetable programme and a melon programme from Australia. The Company utilises its extensive network of temperature controlled storage facilities throughout New Zealand to facilitate the importing of produce. Banana Operations Bananas are imported by ship from Ecuador on a two weekly cycle. On arrival they are in an unripened, “green” condition suitable for short-term storage over a further fortnight. These cartons of unripened fruit are held in bulk “holding” rooms at specific temperatures. This supply is then broken down and transferred, as required, into the Company’s ripening rooms where the temperature is increased and ethylene is circulated; (a gas which occurs naturally in the fruit and is responsible for its traditional “yellow” complexion). After optimal ripening the fruit is available for distribution to the retail trade. The Group has banana holding and/or ripening facilities in 11 locations throughout New Zealand and handles about 35 million kilograms of bananas each year. Floramax Turners & Growers has successfully conducted domestic flower auctions for many decades, although originally somewhat as an adjunct to fruit and produce operations. As with fruit and produce, main flower auctions used to be held at least twice per week throughout the country. Traditionally each auction handled flowers supplied by smaller regional growers to florists and retailers within the each local region. Turners & Growers Group Listing Document 37
38 In 2000 the company set up Floramax as an independent operating division within the Group domestic arm to give a specialist nation-wide focus to the business. This action was augmented by the simultaneous introduction in the Auckland flower market of New Zealand’s first fully computerised Dutch clock auction system in which buyers place bids electronically through individual key-pads. Floramax has gradually consolidated its regional business units and now conducts auctions in Auckland, Wellington and Christchurch. Nationwide Transport and Freight Operation The transport operations of the Group support the demanding requirements of the domestic fresh operations. Experience has shown that the transport of perishable products requires careful management (that is, different produce may react differently depending on temperature and distance transported). A key focus is to get fresh produce through the supply chain as quickly and Turners & Growers Group Listing Document as carefully as possible. A core requirement and strategic advantage of Turners & Growers’ transport operations is its flexibility in routing and equipment and its commitment to operating day and night, twelve months of the year. The business is categorised into two main groups, longhaul and short-haul. The Company owns a number of substantial long-haul units for servicing the main trunk routes and to service the key supply bases such as Pukekohe, Ohakune, Southland and Hawkes Bay. This business is supplemented where expedient by the use of external contractors. The short haul business includes: • clearance of imported produce from wharves and airports; • deliveries between business units and from local growers to packhouses or markets; • deliveries from Status packhouses to markets; and • customers and retailer deliveries. Turners & Growers upgrades its transport fleet on a rolling basis, reflecting age and usage. Many of the units incorporate cooling systems for temperature controlled cartage. Collectively the Turners & Growers Fleet averages about 4 million kilometres per annum and currently comprises 49 trucks and 44 trailer units. Fresh Export Business The Fresh Export operations of Turners & Growers contributed $269 million of revenue to the Group in 2003 (45% of total revenue) and were responsible for exporting more than 133 million kilograms of apples in addition to other fruit from New Zealand. The key divisions within the Fresh Export operations are: • ENZA Pipfruit; and • ENZA Global Variety Development Programme. ENZA Pipfruit The largest part of the Fresh Export operations is the ENZA business. ENZA was acquired by Turners & Growers as part of the Company’s acquisition of ENZA on 31 December 2002. ENZA was originally established from the deregulation of the former New Zealand Apple and Pear Marketing Board in 2001, and comprises the storage, inventory management and systematic export of New Zealand pipfruit across a selling season of seven to eight months. Fruit is sold in a series of “grower pools”, sorted by a number of factors including variety, size and colour, in order to spread the benefit and risks, which vary throughout the season, across similar growers. In 2004, ENZA expects to export approximately 7 million tce of apples and pears to world markets including the United Kingdom, Continental Europe, North America and Asia. ENZA is responsible for the export of between 30% to 40% of the expected annual New Zealand apple and pear harvest. ENZA takes title to the apples and pears at submission into inventory or when a grower delivers the fruit along side the ship ready for export. ENZA obtains finance to part pay growers for their produce prior to ENZA actually selling the produce. The produce is Turners & Growers Group Listing Document 39
Page 1 and 2: a fresh opportunity Turners & Growe
Page 4 and 5: Largest network of domestic fresh p
Page 6 and 7: 4 Chairman’s Letter Although the
Page 8 and 9: An Introduction to Turners & Grower
Page 10 and 11: 12 1974 First exporter to charter a
Page 12 and 13: 16 Core Values Turners & Growers is
Page 14 and 15: 20 Financial Information The financ
Page 16 and 17: 24 Principal Assumptions Underlying
Page 18 and 19: Director since 1994, executive dire
Page 20 and 21: Corporate Governance Role of the Bo
Page 24 and 25: 40 shipped to the relevant internat
Page 26 and 27: 44 Strategy Turners & Growers Fresh
Page 28 and 29: 48 Banana price competition The cur
Page 30 and 31: 52 Principal subsidiaries of the Co
Page 32 and 33: 56 (b) Purchase of ENZA Limited: Th
Page 34 and 35: 60 Turners & Growers Limited (with
Page 36 and 37: Turners & Growers Limited (with ENZ
Page 38 and 39: Turners & Growers Limited (with ENZ
Page 48: 88 Directory Directors A.I. Gibbs M

NZSX Listing Profile - Turners and Growers

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