Select Harvests Limited · ASX:SHV

Select Harvests — Investor Presentation (January 2014)

52 slides from Select Harvests's investor presentation, Jan 20, 2014

1. Slide 1: Asia Investor Briefing

   For personal use only Select Harvests Limited (ASX:SHV) Asia Investor Briefing January 2014 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: Rationale - Why Select Harvests?

   Rationale - Why Select Harvests? For personal use only 1. Excellent Industry Fundamentals 4. Competitive Advantage: Quality Assets  Supply/Demand  88% of SHV orchards will mature in 1 year  Counter-cyclical to USA  State of Art Carina West processing facility  Market leading brands 2. Integrate

4. Slide 4: 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

5. Slide 5: Demand - Drivers & Facts

   Why Almonds? - Demand - Drivers & Facts For personal use only  What is Driving Demand?  Developed Economies - Healthy eating & the movement to proteins  Developing Economies - Increased wealth & the movement to proteins based Westernize diet  Australian & Californian Almond Boards - Opening new

6. Slide 6: Supply - Drivers & Facts

   Why Almonds? - Supply - Drivers & Facts For personal use only  What is Driving Supply?  Concentrated Supply - 83% of the global almond supply is from California USA  2nd & 3rd Largest Producers - Australia and Spain each represent a month’s supply  Substitute nuts - Similar agronomic challenges

7. Slide 7: Supply & Demand – High Growth

   Why Almonds? - Supply & Demand – High Growth 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 

8. Slide 8: Concentrated Supply, Broad Demand

   Why Almonds? - Concentrated Supply, Broad Demand Global Almond Production (2013/14) Global Almond Consumption (2013/14) For personal use only 1% 1% 1% 2% USA 2% 2% EU China 3% 3% India 31% UAE United States 3% Japan 7% Australia 4% Turkey European Union 83% Canada Turkey 6% 6% Australia Chile South

9. Slide 9: High & Diverse Demand Growth

   Why Almonds? - High & Diverse Demand Growth 800 Top 5 US Almond Import Growth Markets (2007/8 - 2011/12) For personal use only CHINA GROWTH Volume(M lbs): 190 compared to Australian Almond Production 700 Gross %: 407% - millions lbs CAGR %: 50% USA GROWTH Volume(M lbs): 152 Gross %: 38% 600 CAGR %:

10. Slide 10: Almond Price

    Why Almonds? - 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

11. Slide 11: Historical Farm Gate Pricing (US)

    Why Almonds? - Historical Farm Gate Pricing (US) For personal use only Source: Almond Board of California, August 2013 Almond Industry Position Report. Note: Volumes in millions of pounds, Prices in US$/pound Almond pricing has steadily increased in recent years, despite the production of record cro

12. Slide 12: Annual Almond Cycle

    Why Almonds? - 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 Blossom

13. Slide 13: Long Life & Lead Time to Maturity

    Why Almonds? - 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 1.20 Yield (Tonnes/Acre) 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 3 Year 15 Y

14. Slide 14: 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

15. Slide 15: 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.

16. Slide 16: Both Dominate & Versatile

    Why Almonds? - Both Dominate & Versatile Global Tree Nut Production 2006-2012 For personal use only 1,200,000 Almond Share of Global Tree Nut Production 2006 2012 Increase 1,000,000 Volume - Tree Nuts 2.77MT 3.41MT 0.64MT Volume - Almonds 0.67MT 1.06MT 0.39MT % of Global Tree Nut Production - Almond

17. Slide 17: 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

18. Slide 18: Outlook - Global Crop (Dec Update)

    Why Almonds? - Outlook - Global Crop (Dec Update)  US Crop – Almond Board California – Almond Industry Position Report DEC 2013 For personal use only  Smaller crop – US 2013 Crop est. 2.0 billion lbs – similar to 2012  US 2013 Crop is = 2nd largest crop in history  Faster harvest - harvest condi

19. Slide 19: Outlook - Supply - US Drought

    Why Almonds? - Outlook - Supply - US Drought Jerry Brown declares California drought emergency, urges 20 percent cut in water use By David Siders, Phillip Reese and Matt Weiser The Sacramento Bee For personal use only Published: Friday, Jan. 17, 2014 - 10:54 pm Copyright 2014 The Sacramento Bee. All

20. Slide 20: Outlook - Supply - US Drought

    Why Almonds? - Outlook - Supply - US Drought For personal use only Red states = Extreme Drought – 63% of California (1 year ago – 0%) – 100% of US almond crop Orange states = Severe Drought – 90% of California (1 year ago – 22%) – 100% of US almond crop 20

21. Slide 21: Outlook - Supply - US Drought

    Why Almonds? - Outlook - Supply - US Drought % of US Almond Production Volume by County (2011/12) For personal use only 23.4% & Drought Status (as at 14 Jan 2014) 22.0% Extreme Drought = 100% of AUS lmond Producing Counites 13.4% 10.7% 10.2% 4.4% 4.2% 3.0% 2.4% 2.2% 1.9% 0.9% 0.6% 0.3% 0.3% Kern Fre

22. Slide 22: Australian Almond Industry

    Why Almonds? - Australian Almond Industry Company Orchards Processing Sales & Marketing For personal use only Select Harvests 11,560 acres (4,680 ha) – 15% Primary Processing 30KT Robinvale Consumer, Foodservice & market share Vic Industrial businesses Global Nut Trader Vic,SA & NSW Value Added Proc

23. Slide 23: Background

    SHV - Background  History For personal use only  Listed on ASX in 1978  Developer and manager of orchards & almonds  Service provider to Managed Investment Schemes (“MIS”)  Developed a significant portion of the current Australian almond industry  Heavily reliant on government, MIS and a singl

24. Slide 24: Snapshot - as at Jan 2014

    SHV - Snapshot - as at 1 Jan 2014 SHV SEGMENTS ALMOND DIVISION FOOD DIVISION For personal use only Business Almond Orchards & Trading Processing – Processing – Thomastown Sales & Marketing Functions Carina West As at 1/1/2014 Summary of Almond Orchard Portfolio Primary Processor Value Added Processo

25. Slide 25: Orchards - Geographic Diversity

    SHV - Orchards - Geographic Diversity Geographic Diversity Limits For personal use only exposure to: •Weather •Disease spread •Labour availability •Insect infestation Robinvale (Ouyen) January July Hillston Temp Robinvale to Hillston - Avge Min (Deg C) 15.7 4.3 Distance: 382 km - Avge Max (Deg C) 32

26. Slide 26: 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 1 Jan 2014 - basis Feb 2014 Crop Harvest) . 35.0% 17% of SHV Company 10% of SHV Company Orchards yet to mature Orchards have passed (15% in next year) peak eco

27. Slide 27: FY13 - Financial Performance Overview

    SHV - FY13 - Financial Performance Overview  Earnings Before Interest & Tax (“EBIT”) For personal use only  Reported FY13 EBIT A$5.3M  Underlying FY13 EBIT A$33.7M (up 92% vs Underlying FY12 EBIT A$19.6M)  Net Profit after Tax (“NPAT”)  Reported FY13 NPAT A$2.9M (vs Reported FY12 Net Loss After

28. Slide 28: FY13 - Income Statement

    SHV - FY13 - Income Statement For personal use only Financial Result (A$m) FY12 FY13  FY13 Underlying EBIT A$37.7m (FY12 A$19.6m) Reported Result  Includes a fair value adjustment of A$20.2m (FY12 A$2.5m) EBIT - Reported (2.5) 5.3 Interest (6.2) (5.1)  80% of sales exported NPBT/(Net Loss before

29. Slide 29: FY13 - Balance Sheet

    SHV - FY13 - Balance Sheet For personal use only (A$m) Year ending 30/06/2012 30/06/2013  Banking refinance, increase & extension complete Current Assets excl. Cash 75.9 114.4  NAB & Rabobank - A$135m Cash 1.0 8.9  A$50m term - expiring 2018 Non Current Assets 202.4 180.5  A$60m line - working c

30. Slide 30: FY13 - Cash flow

    SHV - FY13 - Cash flow For personal use only (A$m) FY12 FY13  A$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: Taxes Received 4.9 0.9  Acquisit

31. Slide 31: FY13 - Segment Profitability

    SHV - FY13 - Segment Profitability For personal use only ALMOND DIVISION Reported Underlying EBIT (A$m) – pre Corporate Costs FY12 FY13 FY12 FY13 Managed Orchards 9.3 4.7 14.2 4.7 Company Orchards (12.9) (0.9) 3.1 31.7 Almond Division (3.6) 4.2 17.3 36.4 FOOD DIVISION Reported Underlying EBIT (A$m)

32. Slide 32: FY13 - Achievements

    SHV - FY13 - Achievements  For personal use only Almond Division - began to demonstrate its potential  Better conditions (weather, markets, price, exchange rate)  Better management and decision making (tools, techniques & cost control)  Better outcomes (volumes, quality, profits)  Acquisitions

33. Slide 33: Almond Division - Activities & Outlook

    SHV - Almond Division - Activities & Outlook Activities For personal use only  2014 SHV Crop - Horticultural program well underway harvest will commence mid Feb  Orchard maturity profile - Largely offsets orchard replant program  NSW - Improving maturity profile of SHV Company Orchards  VIC - sh

34. Slide 34: Almond Division - Risk Mitigation

    SHV - 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 Standa

35. Slide 35: Food Division - Brand Summary

    SHV - Food Division - 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) • Snacking pr

36. Slide 36: Food Division - Activities & Outlook

    SHV - 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 & consumer insights  Increase reporting & measurement

37. Slide 37: Growth Opportunities

    SHV - 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, processin

38. Slide 38: Strategy towards 2018

    SHV - Strategy towards 2018 Status For personal use only 1. CONTROL CRITICAL MASS Secure the critical mass of nuts needed to maximize Commenced OF ALMONDS profitability and leverage the global almond opportunity. 2. IMPROVE YIELD & CROP Improve yield and overall crop value by perfecting on-farm VALU

39. Slide 39: Summary

    SHV - 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

40. Slide 40: 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 40

41. Slide 41: Appendices

    For personal use only Appendices 41

42. Slide 42: Financial History

    SHV - 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% 10.9% 9.1%

43. Slide 43: 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

44. Slide 44: 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 44

45. Slide 45: Orchard Portfolio

    SHV - Orchard Portfolio Bearing Planted For personal use only SHV Controlled Orchards Acres Hectares Acres Hectares Owned 3,444 1,394 3,663 1,483 Leased 1,481 600 1,481 600 Victoria 4,925 1,994 5,144 2,083 Owned 1,511 612 1,511 612 Leased 3,017 1,221 3,017 1,221 NSW 4,528 1,833 4,528 1,833 Owned 680

46. Slide 46: Almond Division - Performance

    SHV - 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%

47. Slide 47: Food Division - Performance

    SHV - Food Division - Performance Reported Underlying For personal use only EBIT (A$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 m

48. Slide 48: Food Division - Sunsol - Renovation

    SHV - Food Division - Sunsol - Renovation For personal use only New Packaging. New Formulation. New Pricing 48

49. Slide 49: FY12 and FY13 Adjustments

    SHV - FY12 and FY13 Adjustments Item (A$) 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

50. Slide 50: WA Sale Process Update

    SHV - 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 A$61m (A$4m feasi

51. Slide 51: Outlook - US Drought

    Why Almonds? - Outlook - US Drought THE PRESS-ENTERPRISE Published: January 04, 2014; 08:00 PM For personal use only A record dry year offers a grim reminder to California about the perpetual peril of drought — and the need for preparedness. The state cannot escape the weather patterns that threaten

52. Slide 52: Outlook - US Drought

    Why Almonds? - Outlook - US Drought For personal use only California (which produces 83% of global almond supply) is experiencing drought of considerable historical significance 52

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