FORECAST: SAT: Market Update

1 Jul 2010 1:48 pm

SAT 01/07/2010 FORECAST

REL: 1348 HRS Satara Co-operative Group (NS)

FORECAST: SAT: Market Update

1st July 2010

Satara Co-operative Group Limited ("Satara") wishes to advise the market that it is forecasting significantly lower earnings for 2010 compared to the prior financial year due to both a lower level of crop processed through the Company's facilities, and the removal of tax deductibility of depreciation for buildings as announced in the Government's recent Budget.

The lower throughput has arisen from a lower number of supplying growers and a lower industry fruit yield compared to 2009.

In the recent Budget the Government announced the removal of tax deductibility of depreciation for buildings with a life of 50 years or more. Satara has taken advice on the impact of the Governments tax deductibility of depreciation for buildings with a life of 50 years or more. Based on that provisional advice, Satara anticipates that the 2010 financial result will be impacted by a one-off, non cash adjustment that will see the group's deferred tax liability increase by approximately $1.6m and see a reduction in the reported net profit after tax by a similar amount.

The Government is reviewing certain aspects of the change in tax regulations and accordingly there may be further adjustment to Satara's deferred tax liability once the review has concluded.

This one-off, non cash tax adjustment has no impact on the ongoing underlying business profitability or operating cash flows. Going forwards the loss of tax deductibility of depreciation will be largely offset by the reduction in the corporate tax rate from 30% to 28% which was announced in the same Budget.

The Company is compliant, and is expected to remain compliant with its bank covenants in 2010 and beyond.

The Board is pleased to report that recent business improvement initiatives under Tom Wilson (Managing Director) are realising commercial value for the business. The initiatives have seen the Company's business model re-engineered and refocused on profit centre accountability, cost saving initiatives and increased crop throughput, this is an ongoing process.

Based on information to hand we are forecasting that our Gold kiwifruit handling performance will see improvement again on our 2009 result where Satara was the best in the industry.

Hendrik Pieters Chairman Satara Co-operative Group Limited End CA:00196812 For:SAT Type:FORECAST Time:2010-07-01:13:48:27

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