Investor Presentaiton
Explanation of certain non-IFRS operating measures
Transacted Sales
Transacted Sales are used by management as a key measure to assess Costa's sales and marketing performance and market share. Transacted Sales represent the aggregate volume of
sales in which Costa is involved in various capacities (including sales of third party-grown produce marketed by Costa under agency arrangements), as well as royalty income. Transacted
Sales are not considered by Costa to be a revenue measure. There are material differences between the calculation of Transacted Sales and the way in which revenue is determined under
AAS.
Transacted Sales comprise:
⚫statutory revenue;
• gross invoiced value of agency sales of third party produce;
• Costa's proportionate share of joint venture sales relating to the African Blue and Polar Fresh joint ventures;
•
royalty income from the licensing of Costa blueberry varieties in Australia, the Americas and Africa; and
• 100% of Driscoll's Australia Partnership sales after eliminating Costa produce sales to the Driscoll's Australia Partnership. Prior to the formation of Driscoll's Australia in 2010, all of
Costa's domestic sales and marketing activities for the berry category were managed by Costa.
Other market participants, including Costa's retailer customers, frequently do not distinguish between the various capacities in which Costa may transact with them. For example, the
arrangements under which Costa delivers produce to its customers usually does not specify whether the produce is grown by Costa, marketed by Costa on behalf of third party growers
under agency arrangements or otherwise sourced from third party growers. Accordingly, Costa believes that other market participants perceive the aggregate of all sales in which Costa is
involved (including as a grower, sales agent, trader and joint venture party) as reflective of Costa's market share and therefore indicative of its negotiating position.
Similarly, management looks at Transacted Sales as a measure that indicates, on a comparative basis, Costa's sales and marketing performance. While movements between the various
components of Transacted Sales can be relevant for this assessment, the aggregate of all components is a key indicator of Costa's overall sales and marketing performance.
Investors should note that Transacted Sales are presented for the purposes described above and are not considered by Costa to be a revenue measure. There are material differences
between the calculation of Transacted Sales and the way in which revenue is determined under AAS, including that, under AAS:
⚫ the invoiced value of agency sales is excluded from revenue with only the commission associated with the agency sales recognised as revenue;
• joint ventures are accounted for under the equity method, with only Costa's share of the joint venture NPAT recognised in the statement of profit or loss; and
• royalty income is recognised as other income in the statement of profit or loss.
See Table 38 of the prospectus for a reconciliation of pro forma revenue to pro forma Transacted Sales for FY2013, FY2014, 1H FY2014 and 1H FY2105.
Operating EBITDA
Operating EBITDA is EBITDA before SGARA, adjusted to include Costa's proportionate share of EBITDA from non-wholly owned entities. This measure is used by management to evaluate
the operating performance of the overall business, inclusive of the performance of non-wholly owned entities on a look-through basis, without the non-cash impacts of depreciation and
amortisation, fair value movements in SGARA and interest and tax charges, which are significantly affected by the capital structure and historical tax position of Costa. Under AAS, joint
ventures are accounted for using the equity method, with only Costa's proportionate share of NPAT from joint ventures recognised in the statement of profit or loss. The inclusion of the
proportionate share of joint venture EBITDA in Operating EBITDA is not in accordance with AAS
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