Select Harvests Limited · ASX:SHV

Select Harvests — FY2013 Earnings Presentation

50 slides from Select Harvests's earnings presentation, Aug 22, 2013

1. Slide 1: Full Year ending 30 June 2013 - Results Presentation

   For personal use only Select Harvests Limited (“SHV”) Full Year ending 30 June 2013 - Results Presentation 22 August 2013 9am AEST 1

2. 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

3. Slide 3: Agenda

   Agenda For personal use only Overview Results Discussion & Analysis Strategy Outlook Summary Appendices 3

4. Slide 4: Overview

   Overview  NPAT - Reported FY13 Net Profit after Tax of $2.9m (FY12 Reported Net Loss after Tax of $4.5m) For personal use only  Underlying FY13 NPAT $22.9m, compared to underlying FY12 NPAT $9.5m, up 141%  Result includes impact of net adjustments (inc. write-downs) of $20.0m (post-tax) - refer s

5. Slide 5: Overview

   Overview  Successful transition from a manager of orchards for 3rd parties into a fully integrated agribusiness For personal use only  Employees and management driving improved operational performance  Almond Division - began to demonstrate its potential  Better conditions (weather, markets, pri

6. Slide 6: Agenda

   Agenda For personal use only Overview Results Discussion & Analysis Strategy Outlook Summary Appendices 6

7. Slide 7: Income Statement

   Income Statement For personal use only Financial Result ($m) FY12 FY13  FY13 Underlying EBIT $37.8m (FY12 $19.6m) ($m) ($m)  includes a fair value adjustment of $20.2m (FY12 $2.5m) Reported Result  80% of sales exported EBIT - Reported (2.5) 5.3 Interest (6.2) (5.1)  Almond Division EBIT $36.4 (

8. Slide 8: FY12 and FY13 Adjustments

   FY12 and FY13 Adjustments Item Amount Explanation For personal use only FY12 FY13 Corporate 1.2  Restructuring costs and R&D Tax consulting costs in FY12 Gain on Sale of Water (4.0)  Gain on sale of 11GL of permanent water rights in FY12 Processing asset write-down 4.9  Write –down of redundant/o

9. Slide 9: WA Sale Process Update

   WA Sale Process Update  WA Greenfields Project -13,700 acres (5,546 ha) across 3 properties For personal use only  3,949 acres (1,598 ha) planted  High quality irrigation infrastructure  22GL water entitlements secured to support 4,000 acres at maturity  Capital invested $61m ($4m feasibility,

10. Slide 10: Balance Sheet

    Balance Sheet For personal use only ($m) Year ending 30/06/2012 30/06/2013  Banking refinance, increase & extension complete Current Assets excl. Cash 75.9 114.4  NAB & Rabobank - $135m Cash 1.0 8.9  $50m term expiring 2018 Non Current Assets 202.4 180.5  $60m line - working capital & business p

11. Slide 11: Cash flow

    Cash flow For personal use only ($m) FY12 FY13  $48m of 2013 crop in inventory at 30 June => convert to cash in 1HFY14 EBITDA - Underlying 25.7 42.5  Working capital has peaked Change in Working Capital (4.5) (33.8)  Investing cash flows driven by:  Acquisition $6.3m Taxes Received 4.9 0.9  Cap

12. Slide 12: Almond Division - Performance

    Almond Division - Performance Reported Underlying For personal use only EBIT ($m) FY12 FY13 FY12 FY13 Managed Orchards 9.3 4.7 14.2 4.7 Company Orchards (12.9) (0.9) 3.1 31.7 Almond Division (3.6) 4.2 17.3 36.4  Performance  FY13 crop volume est. 12,000 tonnes (FY12 - 5,830 tonnes) - up 102% - in

13. Slide 13: Almond Division - Activities

    Almond Division - Activities  For personal use only Merged horticultural and processing offices  Established Horticultural Committee  Introduce new practices, technology & increased KPI measurement – yield, quality & productivity measures  Orchard replant program - removed 570 acres of old orcha

14. Slide 14: Almond Division – Risk Mitigation

    Almond Division – Risk Mitigation Area Action For personal use only Farming Practices • Empowered farm management • Introduced Harvest guidelines to reduce weather exposure Management Tools • Great on-farm KPI’s & reporting • Introduction of Leaf Bomb Pressure Test technology Processing Standards •

15. Slide 15: Almond Division - Outlook

    Almond Division - Outlook  For personal use only Orchard maturity profile - Largely offsets orchard replant program  NSW - Improving maturity profile of SHV Company Orchards  VIC - short term yield constraints as SHV Company orchard replant program implemented  Nil Olam contribution in FY14 – im

16. Slide 16: Food Division - Performance

    Food Division - Performance Reported Underlying For personal use only EBIT ($m) FY12 FY13 FY12 FY13 Food Division 6.0 5.5 6.0 5.5  Performance  Very competitive domestic market in all sectors  Industrial deliver record result - 40% up on FY12  Loss of private label almond contracts with major re

17. Slide 17: Food Division – Activities & Outlook

    Food Division – Activities & Outlook For personal use only Activities  Performance improvement program to right size supply chain  Consumer products price increases  Scoping new markets both local and export  Deliver initial innovation  Increase reporting & measurement  Exited unprofitable SKU

18. Slide 18: Agenda

    Agenda For personal use only Overview Results Discussion & Analysis Strategy Outlook Summary Appendices 18

19. Slide 19: SHV Path Forward – Phases

    SHV Path Forward – 3 Phases LEGEND For personal use only •Done Consolidation Business Improvement Growth •Underway •Future One Select Restore the Basics Build foundations Expand and grow  Exit Olam  Improve returns in Food Div  Leverage core competencies  Improve farm practices yield  Acquire a

20. Slide 20: Growth Opportunities

    Growth Opportunities  Orchards For personal use only  Better horticultural performance across all trees  Maturing of immature trees  Replant older trees  Replant more productive varieties & at higher densities  Processing  New processing contracts  Improve processing: safety, processing & pe

21. Slide 21: Strategy Map Towards 2018

    STRATEGY MAP TOWARDS 2018 For personal use only 1. CONTROL CRITICAL MASS Secure the critical mass of nuts needed to maximize Mission: OF ALMONDS profitability and leverage the global almond opportunity. To deliver 2. IMPROVE YIELD & CROP sustainable Improve yield and overall crop value by perfecting

22. Slide 22: Agenda

    Agenda For personal use only Overview Results Discussion & Analysis Strategy Outlook Summary Appendices 22

23. Slide 23: Supply-Demand Dynamic Attractive

    Supply-Demand Dynamic Attractive World Almond Supply vs Demand  Global market worth an estimated For personal use only Carry-out Global Production Total Supply Consumption 1,600,000 US$4.5 billion 1,400,000  Supply and demand have grown at 8% CAGR over past decade 1,200,000 1,000,000  Current dem

24. Slide 24: Almond Price

    Almond Price Long Term Almond Price (NPS 23/25) and Exchange Rate For personal use only $14.00 $1.5000 $1.3000 $12.00 $1.1000 $10.00 Almond Price (A$/Kg, US$/Kg, US$/lb) $0.9000 AUD/USD Exchange Rate $8.00 $0.7000 Note: this chart is for indicative $6.00 purposes only – it represents $0.5000 one pre

25. Slide 25: Global Crop Update

    Global Crop Update For personal use only  US Crop  2 May 2013 USDA National Agricultural Statistics Service (NASS) Subjective Estimate  2013 US crop estimate 2.0 billion lbs  7 July 2013 USDA NASS Objective Forecast  2013 US Crop now 1.85 billion lbs  2013 crop down 5% - 7% but still near reco

26. Slide 26: Agenda

    Agenda For personal use only Overview Results Discussion & Analysis Strategy Outlook Summary Appendices 26

27. Slide 27: Summary

    Summary  Leadership For personal use only  Sharper focus on delivering performance and improvement  Integrated business model  Source of strategic advantage  Confident SHV has the right strategy  SHV is well positioned  Good industry - healthy product with strong, historical & forecast long t

28. Slide 28: What we are building

    What we are building For personal use only  A strong and trustworthy company that looks after stakeholder interests  A business that can manage the dynamic agricultural cycle and can mitigate the inherent risks  A company that responds to the challenges and learns from the experience  A cash gen

29. Slide 29: Why Select Harvests?

    Why Select Harvests? For personal use only 1. Excellent Industry Fundamentals 4. Competitive Advantage: Quality Assets  Supply/Demand  85% orchards mature in 1 year  Counter-cyclical to USA  State of Art Carina West processing 2. Integrated Business Model facility  Orchards  Market leading bra

30. Slide 30: Thankyou

    For personal use only Thankyou 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 30

31. Slide 31: Appendices

    For personal use only Appendices 31

32. Slide 32: SHV Board

    SHV Board For personal use only Name Title Date joined Board Michael Iwaniw Chairman November 2011 Paul Thompson Managing Director July 2012 Fred Grimwade Non-Executive Director July 2010 Ross Herron Non-Executive Director January 2005 Michael Carroll Non-Executive Director March 2009 Paul Riordan N

33. Slide 33: SHV Executive Team

    SHV Executive Team For personal use only Name Title Paul Thompson Managing Director Peter Ross GM Horticulture Bruce Van Twest GM Operations Mark Eva GM Consumer Sales & Marketing Laurence Van Driel Group Trading Manager Paul Chambers CFO/Company Secretary Tom Kite HR Manager 33

34. Slide 34: Select Harvests Financial History

    Select Harvests Financial History For personal use only 2006 2007 2008 2009 2010 2011 2012 2013 SHV Historical Summary Units Total Sales (A$M) 217.9 229.5 224.7 248.6 238.4 248.3 251.3 191.1 EBIT (A$M) 38.4 40.5 27.1 26.8 26.0 22.6 19.6 37.7 EBIT Margin (EBIT/Sales - %) (%) 17.6% 17.6% 12.1% 10.8% 1

35. Slide 35: Select Harvests Snapshot

    Select Harvests Snapshot • SHV is Australia’s leading integrated almond business with significant positions throughout the entire almond value chain. For personal use only As at 21 Aug 2013 Orchards Processing Sales & Marketing Summary of Capability Portfolio 11,449 acres (4,635 hectares “ha”) Prima

36. Slide 36: Australian Almond Industry Snapshot

    Australian Almond Industry Snapshot For personal use only Company Orchards Processing Sales & Marketing Select Harvests 11,449 acres (4,635 ha) – Primary Processing 30KT Consumer, Foodservice & 15% market share Robinvale Vic Industrial businesses Global Nut Trader Vic & NSW Value Added Processing Ro

37. Slide 37: Almond Division – Orchards & Processing

    Almond Division – Orchards & Processing Farmed Orchard Area Bearing For personal use only Controlled Orchards Acres Hectares Acres Hectares Owned 4,013 1,624 3,444 1,394 Leased 1,481 600 1,481 600 Victoria 5,494 2,224 4,925 1,994 Owned 1,511 612 1,511 612 Leased 3,017 1,221 3,017 1,221 NSW 4,528 1,8

38. Slide 38: Orchards – Geographic Diversity

    Orchards – Geographic Diversity Robinvale (Ouyen) January July For personal use only Temp - Avge Min (Deg C) 15.7 4.3 - Avge Max (Deg C) 32.4 15.2 Avge Annual Rainfall (mm) 333.5 Hillston January July Temp Robinvale to Hillston - Avge Min (Deg C) 18.3 3.7 382km Hillston - Avge Max (Deg C) 33.4 15.2

39. Slide 39: Key Drivers - Weather - Annual Almond Cycle

    Key Drivers - Weather - Annual Almond Cycle Adverse weather is biggest threat For personal use only Dormancy Nuts Mature Almond Trees are dormant between Formation of Fruit/Kernel, Hull, •Pollination – Wet weather & Wind impacts May-July Leaves •Petal fall to early nutlet development – Frost impacts

40. Slide 40: SHV Orchard Profile - A Competitive Advantage

    SHV Orchard Profile - A Competitive Advantage SHV Company Orchards (Owned & Leased) - Age Profile (Years) - % For personal use only . (as at 21 Aug 2013) 46% of SHV Company 30.0%Orchards yet to mature 11% of SHV Company Orchards (44% in next 2 years) have passed peak economic maturity 25.0% 43% of S

41. Slide 41: Almond Trees Long Life & Lead Time to Maturity

    Almond Trees Long Life & Lead Time 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 1.60 1.50 1.40 1.30 Yield (Tonnes/Acre) 1.20 1.10 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 Year 19 Year 30 Ye

42. Slide 42: Business Unit – Food Division

    Business Unit – Food Division  MARKET LEADING BRANDS  KEY CATEGORIES For personal use only  Nuts  Snack Foods  Private Label  Health Foods  Fresh Produce  Muesli  Blends  Dried Fruits PROCESSING CAPABILITY KEY CUSTOMERS  Blanching  Slicing  Slivering  Meal  Pastes  Roasting  Blendin

43. Slide 43: Select Harvests Food Products - Brand Summary

    Select Harvests Food Products - Brand Summary • Market leader in the cooking nut category. For personal use only • Cooking Nut product range: almonds, walnuts, cashews, hazelnuts, brazil nuts, pine nuts, pistachios, macadamias, sunflower seeds and pepitas (value share 37% in the MAT to 22.07.12) • S

44. Slide 44: Why Almonds? - Sustainable Positive Fundamentals

    Why Almonds? - Sustainable Positive Fundamentals For personal use only  Tight Supply  Long lead time to mature production (7 years)  18-21 years of subsequent mature production  Strong Demand  Developed Economies - healthy eating  Developing Economies - affluence shift from carbohydrate to pro

45. Slide 45: Why Almonds? – Global Super Food

    For personal use only 0.00 0.25 1.25 1.50 0.50 0.75 1.00 1.75 2.00 2.25 Fromage Frais Light - 150 g Reduced fat yoghurt - 200 g Tofu - 120 g Cooked rice - 400 g Lentils - 150 g Cooked pasta - 330 g Small eggs - 2 Lean lamb - 35 g * Lean chicken - 40 g * Cottage cheese - 70 g Grilled fish - 50 g Whol

46. Slide 46: Why Almonds? - Health & Economic Benefits

    Why Almonds? - Health & Economic Benefits Nutrient Content (%) & Price (A$/Kg) of a Range of Tree Nuts For personal use only 30.0% $60 $53 25.0% $50 21.2% 21.0% 20.0% $40 $33 $32 15.3% 15.2% $31 15.0% 15.0% 14.3% $30 13.7% 12.2% $25 $20 $22 $20 9.9% $20 9.7% 9.2% 9.6% 10.0% $20 7.5% 7.8%8.0% 6.7% 5.

47. Slide 47: Why Almonds? - Both Dominate & Versatile

    Why Almonds? - Both Dominate & Versatile Global Tree Nut Production 2006-2011 For personal use only 1,200,000 Almond Share of Global Tree Nut Production 2006 2011 Increase 1,000,000 Volume - Tree Nuts 2.77MT 3.10MT 0.32MT Volume - Almonds 0.67MT 1.11MT 0.44MT % of Global Tree Nut Production - Almond

48. Slide 48: Why Almonds? - US Almond Production Plateauing

    Why Almonds? - US Almond Production Plateauing Californian Almond Acreage, Yield & Production For personal use only Year Bearing Area Non- Bearing Area Yield Production (acres) (acres) (lbs/acre) (tonnes/acre) (lbs) (tonnes) 1995 418,000 65,700 885 0.4 370,000,000 168,182 1996 428,000 72,400 1,190 0

49. Slide 49: Why Almonds? - Aust. Production Counter-Cyclical

    Why Almonds? - Aust. Production Counter-Cyclical Global Almond Consumption 2011/12 For personal use only Global Almond Production 2011/12 EU-27 27% United States United States 7% India 9% 3% EU-27 United Arab Emirates 5% 2% Australia Vietnam 1% Turkey 4% Turkey 0% Chile 3% Canada 86% 35% Other 3% Ja

50. Slide 50: Industry Information

    Industry Information For personal use only  Useful websites for US almond crop and price information  Industry Associations  Californian Almond Board www.almondboard.com  US Companies  Blue Diamond Growers www.bluediamond.com  Almond Insights www.almondinsights.com  Paramount Farms www.paramo

Select Harvests — FY2013 Earnings Presentation on 6ix