Select Harvests Limited · ASX:SHV
Select Harvests — Morgans Queensland Conference 2015
33 slides from Select Harvests's conference presentation, Oct 21, 2015
Slide 1: Investing in Productivity & Growth
For personal use only Select Harvests Limited (“SHV”) Investing in Productivity & Growth Morgans Queensland Conference Presentation 21 October 2015
Slide 2: Disclaimer & Basis of Preparation
Disclaimer & Basis of Preparation For personal use only This presentation is provided for information purposes only and has been prepared using information provided by the company. The information contained in this presentation is not intended to be relied upon as advice to investors and does not ta
Slide 3: Agenda
Agenda For personal use only 1. 2015 Highlights 2. Strategy – Objectives & Activities Overview 3. Almond Division 4. Food Division 5. 2016 Business Objectives & Outlook 6. Appendices 3 3
Slide 4: FY15 Financial Highlights
FY15 Financial Highlights For personal use only Restated FY14 FY15 Financial Result ($m) ($m) Reported Result Reported FY15 Net Profit after Tax (NPAT) of $56.8m is a EBIT - Reported 31.3 85.9 record - up 163% Interest (4.5) (5.3) (Note: Restated FY14 Reported NPAT* of $21.6m) NPBT 26.8 80.6 Tax
Slide 5: FY15 Business Highlights
FY15 Business Highlights For personal use only Record almond crop 14,500 tonnes & pool price A$11.45/kg Acquisition of 2 orchards Amaroo Mullroo Funding initiatives Equity Raising $65m Sale and Leaseback with First State Super Food Business bottom line growth – FY15 EBIT $6.8M v FY14
Slide 6: SHV Strategy - Objectives & Activities Overview
SHV Strategy - Objectives & Activities Overview FY13 INITIATIVES FY14 INITIATIVES FY15 INITIATIVES FY 15 + For personal use only 1. CONTROL CRITICAL Secure the critical mass of • Acquired 521 Ha (1,286 acres) • Acquired 275 Ha (680 acres) • Acquired 1,004 Ha (2,481 acres) • Acquire mature orchards M
Slide 7: Almond Division
Almond Division For personal use only Allinga Farm Greenfield Development (384Ha/948 acres) – October 2015 Strategy to move from manager to farmer is working 7 7
Slide 8: Almond Supply - Geographic Diversity & Scale
Almond Supply - Geographic Diversity & Scale For personal use only Geographic diversity limits exposure to: − Weather − Disease spread − Insect infestation Amaroo to Robinvale Distance: 225 km Drive Time: 2.5 hours Mullroo to Robinvale Distance: 140 km Drive Time: 1.8 hours Mendook to Robinvale Dist
Slide 9: Almond Supply - Orchard Profile
Almond Supply - Orchard Profile For personal use only Age Profile of SHV Almond Orchard Portfolio 20% 18% 15% 14% 66% 5% 16% 962 Ha (2,376 acres) 926 Ha (2,286 acres) 4,361 Ha (10,772 acres) 310 Ha (766 acres) Currently announced Planted orchards are Planted orchards in econmic sweetspot - Planted o
Slide 10: Almond Orchard Expansion
Almond Orchard Expansion For personal use only Strategic Objective: Grow the critical mass of almonds to 20,000 tonnes by FY24/25 Key Projects: Organic Growth Develop existing infrastructure at Amaroo Mullroo and Mendook to support existing orchards and growth Improve on farm water managem
Slide 11: Innovation – Almond Business
Innovation – Almond Business For personal use only Objective: Reduce orchard development costs by 5% Key Projects: Efficiency Use GPS technology to maximise land use Cost Automated tree planting to reduce manual handling Replace tree staking with trellis Allinga Farm, Greenfield Developm
Slide 12: Innovation – Hull to Energy
Innovation – Hull to Energy For personal use only Strategic Objective: Substantially improve the almond processing plant’s competitiveness and ongoing viability by reducing its cost base by 20% Key Projects: Stage 1 Bundle Carina West Processing and 2 nearby dams by laying connecting cable into
Slide 13: 2015 Crop Update
2015 Crop Update For personal use only Belvedere Farm – August 2015 Wemen Farm – October 2015 Sufficient chill hours between seasons Good bloom in NSW & SA, whilst Vic solid Between now and Dec, nut size and 2016 growth to be determined Weather outlook remains favourable Crop estimate will
Slide 14: Global Market Update
Global Market Update For personal use only Demand 2014/15 Global supply has been absorbed by demand, with US carryover stock between seasons remaining flat US and Indian demand remains strongest Many markets have shown short term resistance to higher prices 212 Products with almond ingredien
Slide 15: Supply – Difficult to substitute
Supply – Difficult to substitute For personal use only Global Tree Nut Production 2006-2014 1,200,000 Almond Share of Global Tree Nut Production 2006 2014 Increase 1,000,000 Volume - Tree Nuts 2.77MT 3.49MT 0.71MT Volume - Almonds 0.67MT 1.08MT 0.41MT % of Global Tree Nut Production - Almonds 24% 31
Slide 16: Demand = Protein Affordability
Demand = Protein Affordability – October 2015 For personal use only Source: Protein Data - Australian Institute of Sport (AIS) . Pricing based on company survey (on-line Australian retail pricing, October 2015). Almonds are one of the most affordable protein sources across all food types 16 16
Slide 17: Almond Price
Almond Price For personal use only Note: this chart is for indicative 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 of the historical relativity of the current almond
Slide 18: El Nino Impacts
El Nino Impacts For personal use only Increased rain in California Experience shows it takes 3 years for almond trees to recover from drought US government determined to introduce water regulation similar to Australia Normal year - 50% of California’s water is sourced from snow & 30% from aqui
Slide 19: US Ground Water
US Ground Water For personal use only Current forecast is El Nino will be a similar event to 1983 75%+ of almond industry is in Tulare & Central valleys Industry shift North, due to better water availability, but at a cost Regulation, not nature, solves this situation 19 19
Slide 20: NSW (Narrandera) Groundwater levels
NSW (Narrandera) Groundwater levels For personal use only Source : NSW DPI live data Significant difference between Australian & US water management – regulation ensures aquifer recharge 20 20
Slide 21: Total Return per ML (Riverina NSW)
Total Return per ML (Riverina NSW) For personal use only Many crops have insufficient profitability to withstand over $200/ML increase 21 21
Slide 22: Water
Water For personal use only SHV Strategy Own & Long term lease* 33%, 3-5 year term lease 33% and 33% spot To have access to least 15%-20% more water than required Own or long term leases* when sourcing from aquifer - no short term exposure Own high quality surface entitlements with reliable
Slide 23: Food Division
Food Division For personal use only Turn around has commenced 23 23
Slide 24: Innovation – Food Business (Industrial)
Innovation – Food Business (Industrial) For personal use only Strategic Objective: Increase sales in global food processing market Key Objectives: Increase offshore presence with multi-national and Asian confectionery manufacturers Identify food manufacturers looking to increase protein conten
Slide 25: Project Parboil – Almond Value Add
Project Parboil – Almond Value Add For personal use only Strategic Objectives: Address the current capacity shortfall of “value add” almond products Open sales opportunities from customers demanding peanut-free processing environments Key Projects: Establish a new state-of-the-art ‘value add’
Slide 26: Innovation – Food Business (Packaged Food)
Innovation – Food Business (Packaged Food) For personal use only Strategic Objective: Increase sales in value added categories Transformation has commenced despite tough domestic environment 26 26
Slide 27: SHV 2016 Business Objectives
SHV 2016 Business Objectives For personal use only 1. Roll out Zero Harm OH&S strategy – deliver 25% y.o.y. reduction in LTI’s 2. Improve average mature tree yield equal to or greater than 1.3 tonnes/acre (3.2 tonnes/ha) • Select Harvests FY15 average yield 1.26 tonnes/acre (3.1 tonnes/ha) 3. Acquir
Slide 28: Business Outlook
Business Outlook For personal use only Demand in both Divisions will increase as the benefits of healthy eating are promoted High prices will continue to test the market US almond supply will be constrained SHV volume growth will be driven by organic improvements, greenfield development and
Slide 29: Thank you
For personal use only Join us on Instagram for Thank you regular snaps on Orchards, Food Business & Products Please direct any queries to: Paul Thompson Paul Chambers Andrew Angus Managing Director Chief Financial Officer Investor Relations +61 3 9474 3544 +61 3 9474 3544 +61 402 823 757 29 29
Slide 30: Select Harvests Financial history
Select Harvests Financial history For personal use only 2006 2007 2008 2009 2010 2011 2012 2013 2014* 2015 SHV Historical Summary Units Total Sales (A$M) 217.9 229.5 224.7 248.6 238.4 248.3 251.3 191.1 188.1 223.5 EBIT (A$M) 38.4 40.5 27.1 26.8 26.0 22.6 19.6 37.7 31.3 89.6 EBIT Margin (EBIT/Sales -
Slide 31: Select Harvests Tree Area by Age
Select Harvests Tree Area by Age For personal use only Tree age (at Feb 2016 Harvest) Area Area (Acres) (Ha) 1 948 384 2 727 294 3 611 247 4 0 0 5 0 0 6 0 0 7 0 0 8 1,907 772 9 2,804 1135 10 1,097 444 11 889 360 12 1,169 473 13 505 205 14 294 119 15 455 184 16 651 264 17 609 247 18 167 68 19 225 91
Slide 32: Horticultural Costs
Horticultural Costs For personal use only SHV FY2015 Horticulture Costs by Percentage Others 11% Labour 17% Havest 14% Fert & Chem Fixed 21% 10% Water Bee 8% 5% Energy 14% Source: Company Data 32 32
Slide 33: US Crop History Analysis
US Crop History Analysis For personal use only Crop Year 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 Actual Actual Actual Actual Actual Actual Actual Actual Actual Forecast Bearing Acres 510,000 610,000 640,000 710,000 750,000 770,000 800,000 820,000 850,000 870,0