Select Harvests Limited · ASX:SHV
Select Harvests — Investor Day (April 2016)
60 slides from Select Harvests's investor day presentation, Apr 6, 2016
Slide 1: 2016 Management Briefing & Site Tour Presentation
For personal use only Select Harvests Limited (“SHV”) 2016 Management Briefing & Site Tour Presentation 7 April 2016
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 7.00am Introduction to Select Harvests & Business Overview - Paul Thompson (Managing Director) – 20 mins 7.20am Finance - Paul Chambers (Chief Financial Officer & Company Secretary) – 20 mins 7.40am Orchards - Peter Ross (General Manager Horticulture) – 15 mins (On-Farm
Slide 4: Almond Industry Update
For personal use only Almond Industry Update Paul Thompson Managing Director 4 4
Slide 5: Strong foundations for growth are in place
Strong foundations for growth are in place For personal use only A Growing Asian Food Supplier - globally competitive, paddock to plate, high quality, healthy food supply 5 5
Slide 6: Growth Phase
Growth Phase For personal use only Almond Division Maintain a cash generative asset base Manage portfolio between cash generative & growth assets Position almond portfolio to grow base Year on Year Greenfield development Acquire mature orchards at the right price Improve productivity o
Slide 7: SHV - Strategy towards 2018
SHV - Strategy towards 2018 For personal use only 1. CONTROL CRITICAL MASS Secure the critical mass of nuts needed to maximize OF ALMONDS profitability and leverage the global almond opportunity. 2. IMPROVE YIELD & CROP Improve yield and overall crop value by perfecting on-farm VALUE and farm to fac
Slide 8: Investment Principles & Focus
Investment Principles & Focus For personal use only Select Harvests Investment Principles: Take advantage of the healthy eating trend and increasing Asian middle class population Generate capital returns above our WACC Grow at or above the market rate Minimise risk Account for industry c
Slide 9: Business Update
Business Update For personal use only Almond Division – Experiencing Pricing pressure Business performing to strategy, but recent price reduction was unexpected Food Division – Momentum Continues Our value added strategy is gaining traction, in particular New Products & Export Project Parb
Slide 10: 2016 SHV Crop Update
2016 SHV Crop Update For personal use only Harvest Progress Update – Ahead of previous years 90% of crop harvested (one month ahead of this time last year) All Non-Pareil harvested Volume Update – No change to 13,700 tonne estimate Not all stock has been delivered to processing centre Pr
Slide 11: Finance
For personal use only Finance Paul Chambers Chief Financial Officer & Company Secretary 11 11
Slide 12: SHV Asset Base (as at December 2015)
SHV Asset Base (as at 31 December 2015) For personal use only $ Million Plant, Property & Equipment (land, irrigation assets, processing plant, trees) $226 Working capital (includes growing crop on the trees) $113 Intangible’s (water and brands) $50 Net debt(includes lease liabilities) ($53) Other (
Slide 13: Cash flow strength
Cash flow strength For personal use only We have established a bottom quartile cost base Our asset base is at c80% of cash generating capacity Operating cash flow generated at half year stage >$80 million Renovation capex largely undertaken, reverting to maintenance capex $7 million p.a. S
Slide 14: SHV Almond Growth
SHV Almond Growth For personal use only 80% of current planted acres are cash generative By 2024, almond volumes will increase by 46% (Pink & Blue Sections only – basis capital already sunk) 2018: +3%, 2020: +22%, 2022: +39%, 2024: +46% 14 14
Slide 15: Orchard Leasing
Orchard Leasing For personal use only Innovative long term funding model with First State Super (c $150 million investment) Enables SHV to fund capital intensive, greenfield almond orchard expansion Releases capital to fund near term growth opportunities Principles: Landlord invest in land
Slide 16: Orchards
For personal use only Orchards Peter Ross General Manager Horticulture 16 16
Slide 17: Key Activities & Outcomes – Last Months
Key Activities & Outcomes – Last 12 Months For personal use only Plantings Allinga greenfield development has been completed – trees are in good health and growing well 348 Hectares (948 Acres) Stage 2 of the Kyndalyn Park redevelopment has commenced – trees were removed and ground preparati
Slide 18: Key Activities – Next Months
Key Activities – Next 12 Months For personal use only Plantings 1,012 Hectares (2,500 Acres) Bunargool (Mendook South) 584 Hectares (1,445 Acres) Kyndalyn Park 123 Hectares (304 Acres) Mullroo 125 Hectares (309 Acres) Amaroo 136 Hectares (336 Acres) Mt View 43 Hectares (107 Acres) Orch
Slide 19: Orchard Tour Safety
Orchard Tour Safety – Bunargool (Mendook South) Development & Carina Orchard For personal use only Key Hazards in the orchards Open Excavations Traffic (Tractors, Harvest Equipment & RTV’s ) Noise Dust Personal Equipment Requirements Hi-vis vests / shirts must be worn Face masks (if
Slide 20: Operations
For personal use only Operations Bruce van Twest General Manager Operations 20 20
Slide 21: Key Activities – Last Months
Key Activities – Last 12 Months For personal use only Almond Pre-cleaner and Crop Dryer Cost Improvement Enables plant to run with higher efficiently – reduces season length Carina West (CW) cost/kg significantly lower than Drying capability provides product stability through life cycle pr
Slide 22: Key Activities – Next Months
Key Activities – Next 12 Months For personal use only Project H2E Stage 2 – Installation and commissioning of biomass boiler + turbine Savings realised from December 2016 Goal to lower Carina West Processing Facility cost base by 20% Project Parboil (Almond value-add) Installation and co
Slide 23: Project Parboil – Almond Value-Add
Project Parboil – Almond Value-Add For personal use only Projective Objective: To install an Added Value Almond Processing & Packing Facility at Carina West Infrastructure designed using and complying to: WQA Manufactured Food Standard Version8 & Coles Food Manufacturing Supplier Requirements (CFMSR
Slide 24: Project Parboil – Almond Value-Add
Project Parboil – Almond Value-Add For personal use only Current Future Blending Frying Sorting Blanching Blending Frying Sorting TT TT Roasting Conching Packing Grinding Roasting Conching Packing Bulk Slicing Packing Packing New Blanching Grinding Slicing with Roasting CW Sorting Retail CW Processi
Slide 25: Project Parboil – Almond Value-Add
Project Parboil – Almond Value-Add For personal use only Projective Objective: To install an Added Value Almond Processing & Packing Facility at Carina West ▪ Building well underway and due for completion June 2016 ▪ Next steps ▪ April - Cladding, Drainage and underground Electrical works ▪ May - Co
Slide 26: Project Parboil – Almond Value-Add
Project Parboil – Almond Value-Add For personal use only Pasteurising/conditioning line Vertical screw Dryer conveyors 26 26
Slide 27: Project H2E – Hull to Energy
Project H2E – Hull to Energy For personal use only “Abates 23,645* tonnes of greenhouse gas emissions equivalent to removing 8,210 cars off the road” “Provides enough energy to power 2,984 homes” * Internal Estimates 27 27
Slide 28: Project H2E – Hull to Energy
Project H2E – Hull to Energy For personal use only Projective Objective: Install a biomass boiler and steam turbine, fuelled by almond hull and shell and orchard waste and converting it to heat and power 28 28
Slide 29: Operations – Carina West Plant Tour
Operations – Carina West Plant Tour For personal use only Key Hazards in Processing Plant Traffic (forklifts) Noise Compressed Air Almond dust 29 29
Slide 30: Operations – Carina West Plant Tour
Operations – Carina West Plant Tour For personal use only Personal Equipment Requirements Hi-vis vests / shirts must be worn Face masks in designated areas Eye protection in all areas Ear protection in all areas Hair nets and beard snoods Wash & Sanitise hands in designated areas 30 30
Slide 31: Operations – Carina West Plant Tour
Operations – Carina West Plant Tour For personal use only Emergency Procedures If factory siren sounds, remain calm & follow your guide’s instructions Your guide will escort you to the emergency assembly point if required Stay on designated walk ways Keep together If in doubt – ask your
Slide 32: Trading & Industrial
For personal use only Trading & Industrial Laurence Van Driel General Manager Trading & Industrial 32 32
Slide 33: Last Months
Last 12 Months For personal use only Almond Division & Industrial – Growth continued Demand remained strong at record prices, but volume growth stagnated Manufacturers continued to look for “smarter” ways to use product e.g. sliced & coated Positioning SHV as a pan Asian supplier of raw and
Slide 34: Almond Pricing over a year crop period (USD)
Almond Pricing over a 10 year crop period (USD) For personal use only Almond Price Nonpareil SUP 23/25 (USD/lb) (USD/lb) Historical Rolling Average USD/lb 5 Year Rolling Average USD/lb Linear ((USD/lb)) $5.00 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $- Mar-07 Mar-08 Mar-09 Mar-10 Mar-11
Slide 35: Almond Pricing over a year crop period (AUD)
Almond Pricing over a 10 year crop period (AUD) For personal use only Almond Price Nonpareil SUP 23/25 (AUD/kg) (AUD/kg) Historical Rolling Average AUD/kg 5 Year Rolling Average AUD/kg Rollng Average USD vs AUD Linear ((AUD/kg)) $14.00 $9.00 $8.00 $12.00 $7.00 $10.00 $6.00 $8.00 $5.00 $6.00 $4.00 $3
Slide 36: Almonds competitively priced against other tree nuts
Almonds competitively priced against other tree nuts For personal use only Tree Nut Spot Pricing March 2010 vs March 2015 vs March 2016 (USD/lb) Averaged March 2016 Averaged March 2015 Averaged March 2010 $2.50 Almond $4.55 $2.42 $3.65 Hazelnut $6.80 $2.80 $4.75 Roasted & Salted $5.35 Pistachio $3.9
Slide 37: Market Outlook
Market Outlook For personal use only Demand: Demand remains strong, current prices expected to generate growth over next 6 to 12 months as they did in 2013 and prior periods Consumers continue to see the benefits of almonds as a super food with new product development remaining buoyant Almon
Slide 38: Consumer Brands & Marketing
For personal use only Consumer Brands & Marketing Mark Eva General Manager Sales & Marketing - Consumer Products 38 38
Slide 39: Key Activities & Outcomes – Last Months
Key Activities & Outcomes – Last 12 Months For personal use only Brands development - Proprietary brands + >10% YTD February Increased Lucky brand share of Baking and Cooking nut Category from 38.8% to 41.0% MAT NuVitality brand replacement for previous Nu-vit brand going to market from March
Slide 40: Key Activities – Next Months
Key Activities – Next 12 Months For personal use only Brands development – Expand brands into related categories Lucky brand into new categories and development in current categories Continued development of Sunsol Muesli brand Execute NuVitality launch Build direct consumer relationship
Slide 41: Recent New Product Development
Recent New Product Development For personal use only Lucky Smart Snax and Trail Mixes ranged nationally in Coles, NuVitality primarily Export, Lucky Entertainers is new launch 41 41
Slide 42: Closing Overview
For personal use only Closing Overview Paul Thompson Managing Director 42 42
Slide 43: Market Outlook
Market Outlook For personal use only Demand: Underlying demand for our products remains strong Consumers continue to see the benefits of almonds & other plant proteins Plant based protein will continue to be a key strategy to transform diets away from sugar We can do more to support demand
Slide 44: US (California) Update
US (California) Update For personal use only US Crop Update (2015/16) – mixed start to season Industry experienced good chill hours and bloom conditions Largest US grower removed 10,000 acres (25% of almond portfolio) New plantings indicate growers still transitioning towards more secure wat
Slide 45: SHV 2016/7 Business Objectives
SHV 2016/7 Business Objectives For personal use only 1. Zero Harm OH&S strategy 2. Improve average mature tree yield 3. Acquire orchards at the right price 4. Grow and strengthen Food Business 5. Implement Greenfield program 6. Implement Biomass/Cogen plant 7. Implement Parboil 8. Implement 1Select
Slide 46: SHV Almond Growth
SHV Almond Growth For personal use only 80% of current planted acres are cash generative By 2024, almond volumes will increase by 46% (Pink & Blue Sections only – basis capital already sunk) 2018: +3%, 2020: +22%, 2022: +39%, 2024: +46% 46 46
Slide 47: Thank you
For personal use only Thank you 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 Please note that background material/data regarding the global almond industry can be fo
Slide 48: Appendix
For personal use only Appendix 48 48
Slide 49: Select Harvests – Orchard Summary
Select Harvests – Orchard Summary For personal use only Select Harvests Planted Under development Total Almond orchard portfolio Acres Hectares Acres Hectares Acres Hectares Central region Company Owned 4,169 1,688 - - 4,169 1,688 Leased 1,481 600 1,400 567 2,881 1,166 Total 5,650 2,287 1,400 567 7,
Slide 50: Select Harvests - Financial History
Select Harvests - Financial History For personal use only Source: Company Data 50 50
Slide 51: Global Supply - US Almond Production & Drought
Global Supply - US Almond Production & Drought For personal use only 14% - North Counties % of US Almond Prod’n Orange States = Severe Drought 86% - South Counties % of US Almond Prod’n Red States = Extreme Drought Dark Brown States – Exceptional Drought Drought Situation is consistent with 2015 – D
Slide 52: Global Supply - US Almond Production & Drought
Global Supply - US Almond Production & Drought For personal use only Snow Pack is below average – it will impact Surface Water situation 52 52
Slide 53: Appendix: Carina West Processing Plant
For personal use only Appendix 1 Carina West Processing Plant 53 53
Slide 54: Site Information – Carina West
Site Information – Carina West For personal use only The site occupies 100 hectares of land 48,000 MT hull storage area Commissioned in 2008 at a cost of $40 million ALMADS customised stock control & traceability system Hulling and Shelling capacity is 30,000MT Almond Pasteuriser (5 log
Slide 55: Site Information: Storage
Site Information For personal use only Storage Each load received is assigned a barcoded ticket at the weighbridge KCI Elevator is used to reduced damage All piles are segregated at all times by farm and by farm lot for traceability All piles are covered prior to and during rain events F
Slide 56: Site Information: Hulling and Shelling
Site Information For personal use only Hulling and Shelling Hull and shell capacity of 10t/hr (kernel weight). First sorter is a Satake colour sorter which removes any mould and foreign material Second sorter is a Best Helius laser sorter which removes splits, brokens & insect damage. All
Slide 57: Site Information: Sorting and Packing
Site Information For personal use only Sorting and Packing There are 2 colour sorters in the Packing Shed The Packing line has a capacity of 6t – 10t/hr depending on carton/bag size Pack sizes are: 5kg – 22.68kg cartons 500kg – 1000kg bulk bags The Packing line is a fully automated C
Slide 58: Site Information: Warehouse
Site Information For personal use only Warehouse All kernel and finished goods are stored in a climate controlled warehouse at 10 degrees This helps with keeping the product fresh, and also breaks the life cycle of insects (moths) The warehouse has a capacity of 13,000 bins and 300 pallets o
Slide 59: Site Information
Site Information For personal use only Technical Manager Operations CW Quality Team Baoanh Vu Spezza SQF2000 & HACCP ver:2003 Quality Assurance Quality Assurance Manager Co-ordinator Gary Letts Belinda Coutts Quality Assurance Laboratory Team Leader Assistant Fiona Serong Suvira Dathong Quality Assu
Slide 60: Useful Links
Useful Links For personal use only Derco Foods http://www.dercofoods.com/en/reports RPAC Almonds http://www.rpacalmonds.com/marketnews/ Blue Diamond Ingredients http://www.bdingredients.com/category/almond-market-analysis/ Almond Investors http://www.almondinvestors.com.au/index.php/almond-projects/