Select Harvests Limited · ASX:SHV

Select Harvests — Investor Day (March 2017)

64 slides from Select Harvests's investor day presentation, Mar 22, 2017

  1. Slide 1: 2017 Management Briefing & Site Tour Presentation

    For personal use only Select Harvests Limited (“SHV”) 2017 Management Briefing & Site Tour Presentation 23 March 2017

  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 7.00am Introduction to Select Harvests & Business Overview - Paul Thompson (Managing Director) – 15 mins 7.15am Consumer Marketing - Mark Eva (General Manager Sales & Marketing – Consumer) – 15 mins 7.30am Orchards - Peter Ross (General Manager Horticulture) – 15 mins 8.

  4. Slide 4: Almond Industry Update

    For personal use only Almond Industry Update Paul Thompson Managing Director 4

  5. Slide 5: Today's Objectives

    Today’s Objectives For personal use only 1. Communicate SHV Strategy 2. Performance to strategy 3. Update on markets 4. Update on SHV performance 5. Interact with the Executive & key employees 6. View the key asset base 7. Understand your aspirations for SHV 5

  6. Slide 6: Strategy Map to 2025

    STRATEGY MAP TO 2025 HO RIZO N 1 – PERFECT T HE CURRENT M O DEL For personal use only Maximize Build our Optimise & Improve supply commodity systems & grow grow almond chain efficiency value through our people agri assets innovation VISION HO RIZO N 2 – T RANSIT IO N INTO INT EG RAT E D M O DEL SHV

  7. Slide 7: Business Status

    Business Status For personal use only Almond Division  Demand fundamentals remain strong  Healthy eating continues to grow  Wealthy middle class of the world looking for low cost plant protein  Supply Chain in the bottom quartile  Focussed on outcomes to improved yields, lower cost and improve

  8. Slide 8: Select Harvests 2017 Crop Update

    Select Harvests 2017 Crop Update For personal use only Harvest - 40%+ Complete  Harvest commenced two weeks later, a result of milder growing conditions in spring and early summer  Good harvest conditions to date – harvest outlook favourable 2017 Crop - 15,750 - 16,250 tonnes  Less than 10% proce

  9. Slide 9: Select Harvests 2017 Goals

    Select Harvests 2017 Goals For personal use only Almond Division  Integration of Jubilee  Commissioning of H2E Biomass plant & alternate energy sources  2017 Harvest  Evaluate strategic value accretive acquisitions  Greenfield execution  Integration of new systems Food Division  Execute China

  10. Slide 10: Almond Orchards – Our productive foundation

    Almond Orchards – Our productive foundation For personal use only Geographic diversity Secure access to diverse limits exposure to: water sources: − Weather − River Water − Disease spread − Aquifers − Insect infestation Positions the company to maximise harvest volume & reduce variance. Enables sequ

  11. Slide 11: Select Harvests – Orchard Age Profile

    Select Harvests – Orchard Age Profile For personal use only Includes Jubilee Acquisition Significant growth & improvement occurred in SHV orchard portfolio in recent years - acquisition, replants, greenfields 11

  12. Slide 12: Significant Step Change Short term Volume Growth

    Significant Step Change Short term Volume Growth For personal use only *Current FY17 Forecast Investment in almond orchards & processing assets largely complete = increased future earnings 12

  13. Slide 13: Consumer Brands & Marketing

    For personal use only Consumer Brands & Marketing Mark Eva General Manager Sales & Marketing - Consumer Products 13

  14. Slide 14: Main Categories – Branded

    Main Categories – Branded For personal use only Baking & Cooking Nuts Wholesome Snacking (Dried Fruits & Nuts) Enjoyment Snacking ( Flavoured and Salted Nuts) Muesli & Oats Natural & Wholefoods 14

  15. Slide 15: Key Activities & Outcomes – Last Months

    Key Activities & Outcomes – Last 12 Months For personal use only  Brands development – New releases to market in Lucky, Sunsol and NuVitality brands and Grew / Maintained key distribution  Lucky brand share still dominant proprietary brand in Nuts & Dried Fruits category at >37%  Transitioned to

  16. Slide 16: Key Activities & Outcomes – Next Months

    Key Activities & Outcomes – Next 12 Months For personal use only  Brands development – Development in existing and Expanding to related categories  Lucky, Sunsol and NuVitality brands to new product categories  Invest in Research and Brand communications to develop further opportunity, protect ba

  17. Slide 17: Recent New Product Development

    Recent New Product Development For personal use only Brands are now more contemporary and innovative and well positioned in Nuts & other Plant based, Better-for-you foods categories 17

  18. Slide 18: Orchards

    For personal use only Orchards Peter Ross General Manager Horticulture 18

  19. Slide 19: Key Activities & Outcomes – Last Months

    Key Activities & Outcomes – Last 12 Months For personal use only  Plantings 1,008 Hectares (2,492 Acres)  Bunargool greenfield development – 578 Hectares (1,428 Acres)  Mullroo greenfield development – 129 Hectares (320 Acres)  Amaroo greenfield development – 135 Hectares (334 Acres)  Mt View g

  20. Slide 20: Key Activities – Next Months

    Key Activities – Next 12 Months For personal use only  Plantings 361 Hectares (892 Acres)  Farm 7 Green field development – 158 Hectares (390 Acres)  Amaroo Green field development – 180 Hectares (445 Acres)  Carina Green field development – 23 Hectares (58 Acres)  Orchard programs  Continue w

  21. Slide 21: Orchard Tour Safety – Bunargool & Carina Orchard

    Orchard Tour Safety – Bunargool & Carina Orchard For personal use only  Key Hazards in the orchards  Traffic (Tractors, Harvest Equipment & RTV’s )  Noise  Dust  Personal Equipment Requirements  Hi-vis vests / shirts must be worn  Face masks (if required)  Eye protection (if required)  Ear

  22. Slide 22: Trading & Industrial

    For personal use only Trading & Industrial Laurence Van Driel General Manager Trading & Industrial 22

  23. Slide 23: Overview of current market

    Overview of current market. For personal use only  Demand:  Demand remains strong, 28 percent increase from the same time last year.  Consumers continue to see the benefits of almonds as a super food with new product development remaining buoyant.  The market is very strong with 84% of the New c

  24. Slide 24: What is driving the almond prices?

    What is driving the almond prices? For personal use only * This is internal company data. Please note this is a reflect of one nut variety & size not the total pool return Key influencers on price • Demand did react adversely to record high prices but is now back on track and consumption growing • R

  25. Slide 25: Almond Pricing History

    Almond Pricing History - 9 year crop period. For personal use only Source: Company data. Note this is on variety pricing only Long term pricing momentum remains positive 25

  26. Slide 26: How do almonds sit in the basket with other nuts?

    How do almonds sit in the basket with other nuts? For personal use only Almonds are currently the best value in the basket, which will drive consumption 26

  27. Slide 27: New almond products on shelf

    New almond products on shelf For personal use only New almond products launched in Supermarkets as an ingredient in over 100 Country Markets March 2015 – Feb 2016 March 2016 – Feb 2017 2015-16 2016-17 Almonds 9255 Almonds 8876 Cashews 3120 Cashews 3366 Hazelnuts 6083 Hazelnuts 5614 Walnuts 1683 Waln

  28. Slide 28: Outlook

    Outlook For personal use only  Demand:  Demand remains strong, current prices will generate growth over next 6 to 12 months as they did in 2013 and prior.  Consumers continue to see the benefits of almonds as a super food with new product development remaining buoyant.  Almond Milk and Butters c

  29. Slide 29: OH&S and Sustainability

    For personal use only OH&S and Sustainability Kathie Tomeo General Manager Human Resources 29

  30. Slide 30: Safety and Environment

    1. Safety Environment For personal use only MTIs: RCA 48% Manual Heavy equip/tools equipment Injuries – handling LTIs: 32% Various Manual manual incentive handling plans in handling 55% place Remote Striking Location objects 20% Specialist Management Risks LTIs: RCA Not Need to Hazard ID: change rep

  31. Slide 31: OH&S & Wellbeing Strategy

    OH&S & Wellbeing Strategy For personal use only Our Zero Harm strategy aims to prevent incidents before they happen and improve individual wellbeing • 25% Year on Year reduction in LTIFR and MTIFR • 75% Year on Year increase in HIFR Our 4 key strategic priority areas: 1. Safety Leadership: Culture a

  32. Slide 32: 2016 Safety Results

    2016 Safety Results For personal use only 2015/16 Rolling 12 Rolling 12 Comments FINANCIAL Months Months LTIFR 18 15 -16.6% Pleasing result short of target, but right (Lost Time Injury Frequency momentum Rate) MTIFR 40 26 -35% Great result significantly less employees (Medically Treated Incident req

  33. Slide 33: Sustainability - Environment

    2. Sustainability - Environment For personal use only Increased water Low energy Pollination & efficiency technology Water Less waste: to orchards & off-the- Bee Worm Farm grid farm hub Management SHV has a significant impact Native Energy Communities on local vegetation & >$100K community donations

  34. Slide 34: Sustainability Strategy

    Sustainability Strategy For personal use only Our strategy delivers sustainability by protecting and improving our environments through: • Nil environmental incidents • Less waste • Less resources per tonne • Employer of Choice Our 3 key strategic priority areas: 1. Social: developing beneficial rel

  35. Slide 35: Operations – Carina West Almond Processing Plant

    For personal use only Carina West Almond Processing Plant “From Paddock to Plate” Operations Bruce van Twest General Manager Operations 35

  36. Slide 36: Key Activities – Last Months

    Key Activities – Last 12 Months For personal use only  Project H2E – Hull to Energy Biomass boiler and steam turbine, fuelled by almond hull and shell and orchard waste and converting it to heat and power  Stage 1 – Complete - savings realised from March 2015 of $1m to date  Stage 2 – Commissioni

  37. Slide 37: Key Activities – Next Months

    Key Activities – Next 12 Months For personal use only  Project H2E – Hull to Energy  Complete commissioning  Bed down running conditions  Fine tuning to minimise input cost & maximise output savings (including hull substitution)  Project Parboil – Almond Value-Add Facility  Complete commission

  38. Slide 38: Quality Control

    Quality Control For personal use only Full QA Moisture / mould / insects / Control Points kernel size / defects / foreign material vs USDA QA Control Points Insect Fogging Rare Earth Fumigation Metal Electronic Detection Sorters Unilever Electronic Free Fall Approved Electronic Sorters Time & Metal

  39. Slide 39: Project Parboil – Almond Value-Add

    Project Parboil – Almond Value-Add For personal use only 39

  40. Slide 40: Operations – Carina West Plant Tour: Hazards

    Operations – Carina West Plant Tour For personal use only  Key Hazards in Processing Plant  Traffic (forklifts)  Noise  Compressed Air  Almond dust 40

  41. Slide 41: Operations – Carina West Plant Tour: Equipment

    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 41

  42. Slide 42: Operations – Carina West Plant Tour: Emergency

    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

  43. Slide 43: Closing Overview

    For personal use only Closing Overview Paul Thompson Managing Director 43

  44. Slide 44: Strategy Map to 2025

    STRATEGY MAP TO 2025 HO RIZO N 1 – PERFECT T HE CURRENT M O DEL For personal use only Maximize Build our Optimise & Improve supply commodity systems & grow grow almond chain efficiency value through our people agri assets innovation VISION HO RIZO N 2 – T RANSIT IO N INTO INT EG RAT E D M O DEL SHV

  45. Slide 45: 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

  46. Slide 46: How large can the 2017 crop be?

    How large can the 2017 crop be? For personal use only Data sourced from Wonderful 46

  47. Slide 47: How large can the 2017 crop be?

    How large can the 2017 crop be? For personal use only 47

  48. Slide 48: How large can the 2017 crop be?

    How large can the 2017 crop be? For personal use only 48

  49. Slide 49: How are current shipments looking?

    How are current shipments Looking? For personal use only Current shipments are tracking at 28% above that of last year 49

  50. Slide 50: Select Harvests – Orchard Profile

    Select Harvests – Orchard Profile For personal use only Total Planted & Under Select Harvests Planted* Under Development Development Almond orchard portfolio (as at 31 December 2016) (as at 31 December 2016) (as at 28 February 2017) Acres Hectares Acres Hectares Acres Hectares Central region Company

  51. Slide 51: Select Harvests - Financial History

    Select Harvests - Financial History For personal use only 2006 2007 2008 2009 2010 2011 2012 2013 2014* 2015 2016 SHV Historical Summary Units Total Sales (A$M) 217.9 229.5 224.7 248.6 238.4 248.3 251.3 191.1 188.1 223.5 285.9 EBIT (A$M) 38.4 40.5 27.1 26.8 26.0 15.4 19.6 37.7 31.3 89.6 41.3 EBIT Ma

  52. Slide 52: Income Statement

    Income Statement For personal use only Financial Result 1H16 1H17  Underlying EBIT $17.9m (1H16 $28.8m) - down ($m) 38% Revenue 166.4 126.5  Almond Div. $15.6 m (1H16 $25.0m) EBITDA - Underlying 34.7 25.1  down 38% Depreciation (5.9) (7.2)  Food Div. $5.1m (1H16 $6.7m) EBIT - Underlying 28.8 17.

  53. Slide 53: 1st Half 2017 Performance

    1st Half 2017 Performance For personal use only Food Division Reported EBIT ($m) 1H16 1H17 Variance Food Division 6.7 5.1 -25%  Revenue of A$78.0m was down 15.0 % (A$91.7 million 1H16)  Commodity price reductions impact industrial price realisation, volumes have remained strong  Lucky Market shar

  54. Slide 54: Understanding the Result

    Understanding the Result For personal use only Almond Division Result 1H16 1H17 ($m) Reported EBIT 29.1 15.6 Gain on asset sales (4.1) - EBIT (excluding gain on asset sales) 25.0 15.6 Benefit of 2015 crop revaluation on 1H16 (4.0) - Adverse impact of 2016 crop revaluation on 1H17 - 5.1 EBIT (adjuste

  55. Slide 55: Balance Sheet

    Balance Sheet For personal use only ($m) Period Ending 31/12/2015 31/12/2016 Current Assets excl. Cash 163.2 138.0  Net Debt1 (inc. lease liabilities) $98.4m Cash 12.7 2.2  Net Debt2 (exc lease liabilities) $58.4 m Non Current Assets 276.3 309.3 449.5  Gearing (Net Debt to Equity) of 34.6% 1 Tota

  56. Slide 56: Cash Flow

    Cash Flow For personal use only ($m) 1H16 1H17 Underlying EBITDA 34.7 25.1  Operating cash flow (pre-tax) $31.1m Change in Working Capital 48.3 8.3  Taxes paid of $25.3 m Taxes paid (25.3) Net Interest (2.2) (2.3)  Working capital decrease of $8.3m Cash flow from operating activities 80.8 5.8  P

  57. Slide 57: Carina West Processing Plant

    For personal use only Carina West Processing Plant 57

  58. Slide 58: 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/JDE customised stock control & traceability system • Hulling and shell capacity of 10t/hr (kernel weight). • Almond Pas

  59. Slide 59: 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 comply to: WQA Manufactured Food Standard Version8 & Coles Food Manufacturing Supplier Requirements (CFMSR) v

  60. Slide 60: Project Parboil – Almond Value-Add

    Project Parboil – Almond Value-Add For personal use only Metal Detection Blancher Spiral Elevators Flow Head Dryer Climate Controlled Warehouse 60

  61. Slide 61: 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. 61

  62. Slide 62: Project H2E – Hull to Energy

    Project H2E – Hull to Energy For personal use only Project Completion – June 2017 62

  63. Slide 63: 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/

  64. Slide 64: 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

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