Select Harvests Limited · ASX:SHV
Select Harvests — H1 FY2010 Earnings Presentation
31 slides from Select Harvests's earnings presentation, Feb 15, 2010
Slide 1: Results Presentation for 6 months ended 31st December 2009 and Strategy Update
For personal use only SELECT HARVESTS Results Presentation for 6 months ended 31st December 2009 and Strategy Update 15th February 2010
Slide 2: Agenda
Agenda For personal use only Introduction 1H10 Results Positioned for Growth Outlook 2
Slide 3: Overview
Overview For personal use only Credentials as professional farm managers recognised by Olam NEW AGREEMENT WITH Management contract signed for 29,500 acres of almond orchards OLAM PROVIDES EARNINGS STABILITY Initial term of 3 crop years Fixed fee plus incentive based on almond price and perfo
Slide 4: Agenda
Agenda For personal use only Introduction 1H10 Results Positioned for Growth Outlook 4
Slide 5: 1H10 Results Highlights
1H10 Results Highlights For personal use only NPAT $10.102 million (+1.3% against last half year) EPS 25.6 cents (25.5 cents last half year) Strong cash generation and cash conversion Reduction in debt Olam contract provides earnings stability Record almond crop estimate on reduced water
Slide 6: Solid performance in period of transition
Solid performance in period of transition Profit and loss statement For personal use only Half Year ended Half Year ended % Increase (A$m) 31/12/08 31/12/09 (decrease) Sales Revenue 134.2 124.1 (7%) EBIT - Management Services 12.2 9.2 (24%) Almond Orchards 2.3 4.9 117% Almond Division 14.5 14.1 (2%)
Slide 7: Strengthening balance sheet, debt reduction
Strengthening balance sheet, debt reduction For personal use only Balance Sheet as at 31 December 2009 Half Year Full Year Half Year (A$m) ended 31/12/08 ended 30/6/09 ended 31/12/09 Current Assets 70.0 74.1 67.4 Cash On Hand 3.7 7.0 1.8 Non Current Assets 126.9 133.9 134.1 Total Assets 200.6 215.0
Slide 8: Strong operating cash flow
Strong operating cash flow For personal use only Cash flow statement Half Year ended Half Year ended (A$m) 31/12/08 31/12/09 EBITDA 18.0 17.9 Working capital focus Working Capital (increase)/decrease (6.3) 9.3 Return to replacement capital Capital expenditures (6.7) (2.7) expenditure Taxes paid
Slide 9: Almond Division
Almond Division For personal use only Emerging from a period of challenge (relatively lower almond prices, drought, and uncertainty during transition of Timbercorp orchards into new ownership) Transition of 29,500 acres to Olam, with productive capacity of the trees well maintained during the sa
Slide 10: Almond Division – Managed orchards
Almond Division – Managed orchards Management Services provided on existing For personal use only arrangements EBIT down in first half due to 2007 orchards transitioning from fixed fee to cost plus arrangements and a number of one-off income items in previous year Record 2010 crop estimate of
Slide 11: Almond Division – Owned orchards
Almond Division – Owned orchards For personal use only Positive development in EBIT more than doubling last year supported by larger crop, lower costs and an improved price 2010 crop estimate 2,900 mt (+11%) Improved almond prices significantly above 2009 crop levels Water allocations curren
Slide 12: Food Division
Food Division For personal use only • Net sales increase of 2%, with proportional growth in EBIT • Domestic sales of almonds up 15 % • Positive response to marketing campaign run by Almond Board of Australia • Market share of “Lucky” brand reached highest level for 4 years • Operational improvements
Slide 13: Agenda
Agenda For personal use only Introduction 1H10 Results Positioned for Growth Outlook
Slide 14: Compelling Global Market Dynamics
Compelling Global Market Dynamics For personal use only Global almond market worth GLOBAL ALMOND DYNAMICS (m lbs) USD$4.5 billion at current pricing Almond consumption growing: growth of c.9% per annum over the past 10 years Supply restricted by lack of suitable growing conditions Demand dri
Slide 15: Australia’s Contribution to Global Supply
Australia’s Contribution to Global Supply For personal use only 15
Slide 16: Changing Dynamic of Export Market
Changing Dynamic of Export Market For personal use only 16
Slide 17: Australia is a good almond growing region
Australia is a good almond growing region Advantageous natural environment: For personal use only Climate: cold winters and warm summers Suitable soil: nutrient right Few pests and diseases Australian almond industry set to grow significantly as orchards reach full maturity Australian al
Slide 18: Select Harvests has Unique Capabilities
Select Harvests has Unique Capabilities For personal use only Strong track record in managing almond orchards (38,500 acres ranks as second largest area managed globally) Capability and capacity to manage all facets of large scale almond operation from orchard through to consumer Orchard estab
Slide 19: Market Leading Position
Market Leading Position For personal use only 38,500 acres under management 3,368 acres owned or leased 4,500 acres owned for development in WA, plus 22,000 ML of water rights 9,644 ML of permanent water rights owned (+ 5,344 ML leased) 20,000 MT produced in FY09 Existing orchards will p
Slide 20: Select Harvests Almond Strategy
Select Harvests Almond Strategy For personal use only Leverage our expertise in establishing and managing almond orchards and processing, marketing and selling almonds Retain and grow orchards under management Expand orchards directly owned or leased to provide a higher degree of control and b
Slide 21: Select Harvests’ drivers of growth
Select Harvests’ drivers of growth For personal use only Volume growth Expand Consolidate Develop up to from existing orchards position in 10,000 acres of orchards under Murray Darling orchards in reaching full management • Acquiring or WA maturity • Leverage track leasing • Stage 1 – 2,000 • Set to
Slide 22: Volume Growth from Maturity Profile
Volume Growth from Maturity Profile For personal use only Existing orchards will produce c.50,000 tonnes at full maturity: 64% of Australia’s almond crop 22
Slide 23: Consolidating position in Murray Darling
Consolidating position in Murray Darling For personal use only Acquisition of 1,619 acres of established almond orchards in Lake Powell Conditional upon unit holders’ vote to be held in March (75% approval) Purchase price of $25m Potential to sell and leaseback water rights Orchards due to
Slide 24: Growth in Western Australia
Growth in Western Australia For personal use only Select Harvests owns 4,500 plantable acres of land plus 22,000 ML of permanent water licenses in the Dandaragan plateau region in the northern wheat belt of WA Entry cost below replacement cost in Murray Darling Stage 1 development of 2,000 acr
Slide 25: Capital management
Capital management For personal use only Board continues to consider most appropriate capital structure for the business that will ensure a strong balance sheet that is capable of funding future growth Funding likely to consist of combination of additional term debt, balance sheet initiatives, o
Slide 26: Agenda
Agenda For personal use only Introduction 1H10 Results Positioned for Growth Outlook
Slide 27: Almond price dynamics
Almond price dynamics For personal use only 27
Slide 28: Almond price dynamics
Almond price dynamics For personal use only
Slide 29: Almond price dynamics
For personal use only Almond price dynamics
Slide 30: Outlook
Outlook Almond price recovery For personal use only Yields up with record crop estimate 2010 crop under management estimated 28,000 mt (+ 25%) Owned orchards 2010 crop estimated at 2,900 mt (+11%) Water costs down Assuming almond price is maintained and crop forecast is delivered, foreca
Slide 31: Questions
For personal use only Questions 31