Slide 1: Acquisitions, Capital Raising & FY14 Results Presentation
Not for release or distribu/on in the United States For personal use only Select Harvests Limited Acquisi/ons, Capital Raising & FY14 Results Presenta/on 25 August 2014
Slide 2: Important Information
Not for release or distribu/on in the United States Important Informa5on For personal use only This presenta/on has been prepared by Select Harvests Limited (ACN 000 721 380) ("Select Harvests“, “Select”). This presenta/on contains informa/on about Select Harvests and its subsidiaries and is dated 2
Slide 3: Important Information
Not for release or distribu/on in the United States Important Informa5on For personal use only The underwriters and advisors have not been involved in the prepara/on of, and have not authorised, permibed or caused the issue, lodgement, submission, dispatch or provision of this presenta/on and do not
Slide 4: Agenda
Not for release or distribu/on in the United States Agenda For personal use only 1. Introduc5on 2. Acquisi1ons 3. Greenfields Development 4. Capital Raising 5. Future Funding Op1ons 6. FY14 Results Discussion & Analysis 7. Strategy 8. Outlook 9. Risks 10. Summary 11. Appendices 4
Slide 5: Highlights
Not for release or distribu/on in the United States Highlights For personal use only " FY2014 ü Strong earnings and strong cash flow genera1on " Almond Division ü Solid performance despite lower than forecast crop " Food Division ü Turn around on track " Significant Acquisi5ons ü 3 Acquisi1ons (1
Slide 6: FY14 financial overview
Not for release or distribu/on in the United States FY14 financial overview For personal use only Increased profit and strong cash flow genera5on despite lower than an5cipated crop volumes " Reported FY14 Net Profit aJer Tax (NPAT) of $29.0m is a record result(1) (FY13 Reported NPAT of $2.9m)(2) " FY14
Slide 7: Value enhancing acquisitions
Not for release or distribu/on in the United States Value enhancing acquisi5ons For personal use only " Substan5al increase to produc5ve asset base • 17% increase in mature orchards will provide year 1 earnings, cash flow and exposure to current strong almond pricing • 4,465 acre increase in total pl
Slide 8: Agenda
Not for release or distribu/on in the United States Agenda For personal use only 1. Introduc1on 2. Acquisi5ons 3. Greenfields Development 4. Capital Raising 5. Future Funding Op1ons 6. FY14 Results Discussion & Analysis 7. Strategy 8. Outlook 9. Risks 10. Summary 11. Appendices 8
Slide 9: Transactions overview
Not for release or distribu/on in the United States Transac5ons overview For personal use only Transac5on § Acquisi1ons of Amaroo, Grewal and Mendook (Mendook complete) Increases control of cri5cal mass of almonds § Substan1al increase in produc1ve mature almond orchards § Fourfold increase in la
Slide 10: Orchard acquisitions – Increasing Select's productive asset base
Not for release or distribu/on in the United States Orchard acquisi5ons – Increasing Select’s produc5ve asset base For personal use only Acquisi5ons Current(a) Amaroo(b) Grewal Mendook Pro forma Planted acres (of almonds) Mature 8,547 1,288 175 -‐ 10,010 Immature 2,283 758 260 -‐ 3,301 Total 10,83
Slide 11: Amaroo Orchards
Not for release or distribu/on in the United States Amaroo Orchards For personal use only ü Agreement to purchase one of Australia’s last independent orchards of significant scale ü Mature orchards acquired below Select’s development cost ü 1,288 acres of mature orchards providing year 1 cash flow
Slide 12: Acquisitions – orchard locations
Not for release or distribu/on in the United States Acquisi5ons – orchard loca5ons For personal use only Geographic diversity limits exposure to: SOUTH − Weather AUSTRALIA − Disease spread MENDOOK NEW SOUTH WALES − Insect infesta1on AMAROO GREWAL ROBINVALE Amaroo to Robinvale Distance: 225 km Drive
Slide 13: Agenda
Not for release or distribu/on in the United States Agenda For personal use only 1. Introduc1on 2. Acquisi1ons 3. Greenfields Development 4. Capital Raising 5. Future Funding Op1ons 6. FY14 Results Discussion & Analysis 7. Strategy 8. Outlook 9. Risks 10. Summary 11. Appendices 13
Slide 14: Strategic objective to double planted acreage by 2018
Not for release or distribu/on in the United States Strategic objec5ve to double planted acreage by 2018 For personal use only 25,000 20,000 350 406 2,850 (1,072) 350 1,650 2,350 15,000 7,939 1,465 (42%) Acres 1,018 1,463 21,659 10,000 2,282 (21%) 10,871 5,000 8,547 U1lising current and (58%) (79%)
Slide 15: Post acquisitions orchard profile – A balanced portfolio to support growth
Not for release or distribu/on in the United States Post acquisi5ons orchard profile – A balanced pormolio to support growth For personal use only Land bank Planted acreage age profile 50.0% (% of total land holding) 45.0% 40.0% 25% 67% 8% 35.0% 30.0% immature Planted orchards are Planted orchards in
Slide 16: Agenda
Not for release or distribu/on in the United States Agenda For personal use only 1. Introduc1on 2. Acquisi1ons 3. Greenfields Development 4. Capital Raising 5. Future Funding Op1ons 6. FY14 Results Discussion & Analysis 7. Strategy 8. Outlook 9. Risks 10. Summary 11. Appendices 16
Slide 17: Equity raising overview
Not for release or distribu/on in the United States Equity raising overview For personal use only § Fully underwri`en placement of new shares to raise $47m (“Placement”); and Capital raising § Non underwri`en share purchase plan made available to the Company’s eligible investors in Australia and N
Slide 18: Acquisition funding
Not for release or distribu/on in the United States Acquisi5on funding For personal use only The acquisi1ons and associated transac1on costs are to be funded through a combina1on of: Equity § Ins1tu1onal placement to raise up to $47m ─ Fully underwri`en to ins1tu1onal and professional investors onl
Slide 19: Placement & SPP timetable
Not for release or distribu/on in the United States Placement & SPP 5metable For personal use only Key events Date Record date for Share Purchase Plan Friday 22 August 2014 ASX trading halt Monday 25 August 2014 Commencement of Placement book build Monday 25 August 2014 Closure of Placement book bui
Slide 20: Agenda
Not for release or distribu/on in the United States Agenda For personal use only 1. Introduc1on 2. Acquisi1ons 3. Greenfields Development 4. Capital Raising 5. Future Funding Op5ons 6. FY14 Results Discussion & Analysis 7. Strategy 8. Outlook 9. Risks 10. Summary 11. Appendices 20
Slide 21: Future funding options
Not for release or distribu/on in the United States Future funding op5ons For personal use only Objec5ve to thoroughly evaluate alterna5ve funding structures to leverage strong cash flows and op5mise Select’s capital structure § Consistent with Select’s strategy to achieve cri1cal mass of controlled
Slide 22: Agenda
Not for release or distribu/on in the United States Agenda For personal use only 1. Introduc1on 2. Acquisi1ons 3. Greenfields Development 4. Capital Raising 5. Future Funding Op1ons 6. FY14 Results Discussion & Analysis 7. Strategy 8. Outlook 9. Risks 10. Summary 11. Appendices 22
Slide 23: FY14 result overview
Not for release or distribu/on in the United States FY14 result overview For personal use only § Significant progress on implementa5on of company’s strategy (7 plamorms) & transi5on into a fully integrated agribusiness ─ Seasonal condi1ons aside, strategically Select is ahead of where we planned to
Slide 24: Income Statement
Not for release or distribu/on in the United States Income Statement For personal use only FY13 FY14 § FY14 EBIT $41.8m (FY13 $37.7m) Financial Result ($m) ($m) § Almond Division EBIT $40.8m (FY13 $36.4m) Reported Result EBIT -‐ Reported 5.2 41.8 • Strong performance ─ 2014 crop Interest (5.0) (4
Slide 25: Balance Sheet
Not for release or distribu/on in the United States Balance Sheet For personal use only Jun-‐13 Jun-‐14 § Banking refinance, increase & extension complete Year Ending Balance Sheet ($m) ($m) • NAB & Rabobank -‐ $135m Current Assets excl. Cash 114.4 130.3 • $50m term expiring 2018 Cash 8.9 6.3 • $
Slide 26: Cash Flow
Not for release or distribu/on in the United States Cash Flow For personal use only FY13 FY14 § The majority of the 2014 crop held at 30 June Cash Flow ($m) ($m) expected to convert to cash in 1HFY15 EBITDA – (FY13 Underlying) 42.5 45.6 § Inves5ng cash flows driven by: Change in Working Capital (34
Slide 27: Almas dispute update
Not for release or distribu/on in the United States Almas dispute update For personal use only § Almas Pty Ltd (“Almas”) is owned by former directors of Select who were directors during the period of 1me to which the claim relates § Almas have commenced legal proceedings against Select in the Supr
Slide 28: Almond Division - performance
Not for release or distribu/on in the United States Almond Division -‐ performance For personal use only Almond Division ($m) FY13 FY14 Reported EBIT 3.9 40.8 Underlying EBIT 36.4 40.8 Performance § FY14 crop volume est. 10,500 tonnes including Allinga (acquired December 2013) compared to FY13 of
Slide 29: Food Division - performance
Not for release or distribu/on in the United States Food Division -‐ performance For personal use only Food Division ($m) FY13 FY14 Reported EBIT 5.5 5.6 Underlying EBIT 5.5 5.6 Performance § Industrial delivers another record result -‐ 24% up on FY13 § Revenue reduc1on driven by loss of major r
Slide 30: Agenda
Not for release or distribu/on in the United States Agenda For personal use only 1. Introduc1on 2. Acquisi1ons 3. Greenfields Development 4. Capital Raising 5. Future Funding Op1ons 6. FY14 Results Discussion & Analysis 7. Strategy 8. Outlook 9. Risks 10. Summary 11. Appendices 30
Slide 31: Strategic rationale – Strategy map towards 2018
Not for release or distribu/on in the United States Strategic ra5onale – Strategy map towards 2018 For personal use only 2018 Targets: Mission: 1. CONTROL CRITICAL MASS OF Secure the cri5cal mass of nuts needed to ALMONDS maximize profitability and leverage the global almond opportunity. To deliver s
Slide 32: Agenda
Not for release or distribu/on in the United States Agenda For personal use only 1. Introduc1on 2. Acquisi1ons 3. Greenfields Development 4. Capital Raising 5. Future Funding Op1ons 6. FY14 Results Discussion & Analysis 7. Strategy 8. Outlook 9. Risks 10. Summary 11. Appendices 32
Slide 33: Outlook - Select Harvests' crop update
Not for release or distribu/on in the United States Outlook -‐ Select Harvests’ crop update For personal use only § Heavy early season frost, but no damage detected § All bees are in place at all orchards, with an increased hive density § Pollina1on is later than 2013, between 5-‐20% of trees a
Slide 34: Outlook - Global crop update
Not for release or distribu/on in the United States Outlook -‐ Global crop update For personal use only US § 30 June 2014 USDA NASS Objec1ve Forecast ─ 2014 US Crop now 2.10 billion lbs ─ Significant hor1cultural challenge which may affect yields, economics & future investment: water & bees § Curre
Slide 35: US drought situation
Not for release or distribu/on in the United States US drought situa5on For personal use only Source: Climate Central & US Drought Monitor The Californian Drought has been steadily intensifying over the year 35
Slide 36: Outlook – business focus
Not for release or distribu/on in the United States Outlook – business focus For personal use only Smart Snax Innova5on Almond Division § Integrate acquisi1ons § Secure addi1onal harvest equipment including catch & shake trial § Prepare for 2015 & 2016 greenfield plan1ngs § Further development of
Slide 37: Agenda
Not for release or distribu/on in the United States Agenda For personal use only 1. Introduc1on 2. Acquisi1ons 3. Greenfields Development 4. Capital Raising 5. Future Funding Op1ons 6. FY14 Results Discussion & Analysis 7. Strategy 8. Outlook 9. Risks 10. Summary 11. Appendices 37
Slide 38: Specific risks
Not for release or distribu/on in the United States Specific risks For personal use only Sales margins, almond price and costs § Sales are impacted by the market price of products sold which are subject to market forces of supply and demand. Specifically, the sales of almonds owned by Select Harvests
Slide 39: Specific risks (continued)
Not for release or distribu/on in the United States Specific risks (con5nued) Key suppliers For personal use only § In addi1on to water, crop size and quality is heavily reliant on a number of key suppliers including access to a sustainable annual supply of bees for tree pollina1on. Impact of foreig
Slide 40: Specific risks (continued)
Not for release or distribu/on in the United States Specific risks (con5nued) For personal use only Reliance on key personnel § Select Harvests is commi`ed to providing an a`rac1ve employment environment, condi1ons and prospects to assist in retaining its key senior management personnel. However, th
Slide 41: Acquisition risks
Not for release or distribu/on in the United States Acquisi5on risks For personal use only Comple5on Risk § Comple1on of the Amaroo and Grewal acquisi1ons are subject to a number of condi1ons precedent. It is possible that these condi1ons may be substan1ally delayed or may not be forthcoming. The P
Slide 42: Acquisition risks (continued)
Not for release or distribu/on in the United States Acquisi5on risks (con5nued) For personal use only Synergies and integra5on risk § Proposed acquisi1ons may or may not realise expected opera1onal outcomes and benefits, and may be subject to acquisi1on, counterparty and integra1on risks. In addi1on
Slide 43: Acquisition risks (continued)
Not for release or distribu/on in the United States Acquisi5on risks (con5nued) For personal use only Reliance on informa5on provided § Select Harvests undertook due diligence in respect of the acquisi1ons, which relied in part on the review of financial and other informa1on provided by the vendors.
Slide 44: General risks
Not for release or distribu/on in the United States General risks For personal use only Share price and volume fluctua5ons § Securi1es may experience extreme price and trading volume fluctua1ons. Following the Capital Raising, there may not be an ac1ve trading market in Select Harvests’ shares. If a
Slide 45: General risks (continued)
Not for release or distribu/on in the United States General risks (con5nued) For personal use only Taxa5on implica5ons § Future changes in Australian taxa1on law, including changes in interpreta1on or applica1on of the law by the courts or taxa1on authori1es in Australia, may affect taxa1on treatmen
Slide 46: Agenda
Not for release or distribu/on in the United States Agenda For personal use only 1. Introduc1on 2. Acquisi1ons 3. Greenfields Development 4. Capital Raising 5. Future Funding Op1ons 6. FY14 Results Discussion & Analysis 7. Strategy 8. Outlook 9. Risks 10. Summary 11. Appendices 46
Slide 47: What we are building?
Not for release or distribu/on in the United States What we are building? For personal use only § A strong and trustworthy company that looks aher stakeholder interests § A company of passionate people § A well run integrated company that is well posi1oned to benefit from the indisputable global a
Slide 48: Why Select Harvests?
Not for release or distribu/on in the United States Why Select Harvests? For personal use only 1. Excellent Industry Fundamentals 4. Compe55ve Advantage: Quality Assets § Supply / demand § Balanced por{olio of mature orchards and land bank for future produc1on growth § Counter-‐cyclical to USA §
Slide 49: Thank you
Not for release or distribu/on in the United States For personal use only Thank you Please direct any queries to: Paul Thompson Paul Chambers Andrew Angus Managing Director Chief Financial Officer Investor Rela1ons +61 3 9474 3544 +61 3 9474 3544 +61 402 823 757 49
Slide 50: Agenda
Not for release or distribu/on in the United States Agenda For personal use only 1. Introduc1on 2. Acquisi1ons 3. Greenfields Development 4. Capital Raising 5. Future Funding Op1ons 6. FY14 Results Discussion & Analysis 7. Strategy 8. Outlook 9. Risks 10. Summary 11. Appendices 50
Slide 51: Greenfield & Replant Program (indicative)
Not for release or distribu/on in the United States Greenfield & Replant Program (indica5ve) For personal use only 2015 2016 2017 2018 Total (acres) (ha) (acres) (ha) (acres) (ha) (acres) (ha) (acres) (ha) Greenfield Allinga 1,000 405 -‐ -‐ -‐ -‐ -‐ -‐ 1,000 405 Amaroo -‐ -‐ 750 303 750 303 -
Slide 52: SHV 2015 orchard profile (including acquisitions)
Not for release or distribu/on in the United States SHV 2015 orchard profile (including acquisi5ons) For personal use only Almond orchard Planted Orchard Planted Orchard Bearing Orchard Bearing Orchards pormolio Area (acres) Area (hectares) Area (acres) Area (hectares) Northern Region Owned 1,491 604
Slide 53: SHV 2015 orchard profile (including acquisitions)
Not for release or distribu/on in the United States SHV 2015 orchard profile (including acquisi5ons) For personal use only AREA BY TREE AGE Years 0-‐7 Years 8-‐26 Years 26+ TOTAL PLANTED AVAILABLE TO PLANT TOTAL (acres) (ha) (acres) (ha) (acres) (ha) (acres) (ha) (acres) (ha) (acres) (ha) Northern
Slide 54: SHV - Food Division - brand Summary
Not for release or distribu/on in the United States SHV -‐ Food Division -‐ brand Summary For personal use only • Market leader in the cooking nut category. • Cooking Nut product range: almonds, walnuts, cashews, hazelnuts, brazil nuts, pine nuts, pistachios, macadamias, sunflower seeds and pepitas
Slide 55: Supply – demand dynamic attractive
Not for release or distribu/on in the United States Supply – demand dynamic a[rac5ve For personal use only Tonnes Carry-‐out Global Production Total Supply Consumption § Global market worth an 1,600,000 es1mated US$4.5 billion 1,400,000 § Supply and demand have grown at 8% CAGR over past decade 1
Slide 56: Almond price
Not for release or distribu/on in the United States Almond price For personal use only Note: this chart is for indica/ve purposes only – it represents one premium almond grade (of the many that Select Harvests produce and sell) and its sole reason for inclusion is to give the reader an understanding
Slide 57: Australian almond industry snapshot
Not for release or distribu/on in the United States Australian almond industry snapshot For personal use only Company Orchards Processing Sales & Marke5ng Select Harvests 13,311 acres (5,389 ha) –19%* Primary Processing 30KT Robinvale Consumer, Foodservice & market share Vic Industrial businesses Gl
Slide 58: Key drivers – weather – annual almond cycle
Not for release or distribu/on in the United States Key drivers – weather – annual almond cycle For personal use only Adverse weather is biggest threat Dormancy Nuts Mature Almond Trees are Forma1on of Fruit/ dormant between Kernel, Hull, Leaves § Pollina1on – Wet weather & Wind impacts May-‐July
Slide 59: Almond trees long life & lead time to maturity
Not for release or distribu/on in the United States Almond trees long life & lead 5me to maturity For personal use only § Almond trees take 7 years to mature, then produce at that level for approx. 18 more years before tapering Almond Tree Life Cycle & Yield 1.60 1.50 1.40 1.30 1.20 1.10 Yield (Ton
Slide 60: Select's financial history
Not for release or distribu/on in the United States Select’s financial history For personal use only SHV Historical Summary Units 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total Sales (A$M) 217.9 229.5 224.7 248.6 238.4 248.3 251.3 191.1 188.3 EBIT (A$M) 38.4 40.5 27.1 26.8 26.0 22.6 19.6 37.7 41.
Slide 61: Industry information
Not for release or distribu/on in the United States Industry informa5on For personal use only Useful websites for US almond crop and price informa5on § Industry Associa1ons ─ Californian Almond Board www.almondboard.com § US Companies ─ Blue Diamond Growers www.bluediamond.com ─ Almond Insights ww
Slide 62: US drought situation – Temperature/Snowpack
Not for release or distribu/on in the United States US drought situa5on – Temperature/Snowpack For personal use only Temperature § Six Months In and Sizzling California Sets Record -‐ Andrea Thompson, Climate Central, 16 July 2014 ─ California just finished the ho`est first half year on record, a pe
Slide 63: US Drought Situation – Groundwater
Not for release or distribu/on in the United States US Drought Situa5on – Groundwater For personal use only Groundwater § Satellite Study Reveals Parched U.S. West Using Up Underground Water -‐ Karen Northon, NASA, 24 July 2014 ─ A new study by NASA and University of California, Irvine, scien1sts
Slide 64: International offer restrictions / disclosures
Not for release or distribu/on in the United States Interna5onal offer restric5ons / disclosures For personal use only This document does not cons/tute an offer of new ordinary shares ("New Shares") of the Company in any jurisdic/on in which it would be unlawful. In par/cular, this document may not be
Slide 65: International offer restrictions / disclosures
Not for release or distribu/on in the United States Interna5onal offer restric5ons / disclosures For personal use only United Kingdom Neither the informa/on in this document nor any other document rela/ng to the offer has been delivered for approval to the Financial Conduct Authority in the United Kin
Slide 66: International offer restrictions / disclosures
Not for release or distribu/on in the United States Interna5onal offer restric5ons / disclosures For personal use only Hong Kong WARNING: This document has not been, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong K
Slide 67: International offer restrictions / disclosures
Not for release or distribu/on in the United States Interna5onal offer restric5ons / disclosures For personal use only Singapore This document and any other materials rela/ng to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authorit