Select Harvests Limited · ASX:SHV
Select Harvests — Shareholder Meeting (February 2023)
59 slides from Select Harvests's shareholder meeting presentation, Feb 27, 2023
Slide 1: 2022 Annual General Meeting – Healthy and Sustainable
2022 Annual General Meeting – Healthy and Sustainable 27 February 2023 1
Slide 2: Travis Dillon - Chairman
Travis Dillon- Chairman SZ Seect HARVESTS. & ce) 2
Slide 3: Board of Directors and Management
Travis Dillon Fred Grimwade Fiona Bennett Michelle Somerville Chairman Non-Executive Director Non-Executive Director Non-Executive Director Appointed May 2022 Appointed July 2010 Appointed July 2017 Appointed December 2023* Margaret Zabel Paul Thompson Guy Kingwill Brad Crump Non-Executive Director
Slide 4: This Presentation is Approved by The Board of Select Harvests
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 take into account the investment objectives, financial sit
Slide 5: Chairman's Address, Managing Director's Address, Business of the AGM
■ Chairman’s Address − Company Overview − Board Transition − Managing Director Succession − Strategy Update − FY2023 Priorities ■ Managing Director’s Address − 2022 Performance − 2023 Sustainability Report − Almond Pricing and Market Conditions − Business Outlook ■ Business of the AGM 5
Slide 6: Chairman's Address
Chairman’s Address ZZ SELECT HARVESTS Bae 5)
Slide 7: Orchard Profile
Listed on the ASX (SHV), with a market capitalisation of A$470m (15 February 2023) and 451 employees (excluding external contractors). Australia’s second largest almond producer and marketer with core capabilities across: Horticulture, Orchard Management, Almond Processing, Sales and Marketing.
Slide 8: Select Harvests Orchard Map and Benefits of Geographic Diversity & Scale
Select Harvests Orchard Map Benefits of Geographic Diversity & Scale ■ Geographic diversity limits exposure to: − Weather − Disease spread − Insect infestation ■ Positions the company to maximise harvest volume and reduce variance ■ Enables sequential progression of harvest period across regions for
Slide 9: Property and water valuation notes
Note: * Property valuations were completed by independent valuers Herron Todd White in September 2022 ** Water valuations were determined by management against market pricing as at 30 September 2022 *** Discounted value of earnings of leased orchards over lease term 9
Slide 10: Board Transition
Board Transition ZZ SELECT HARVESTS Bae 5) _
Slide 11: Continuing Directors
Michael Iwaniw • Appointed June 2011 • Chair of Select Harvests • Chair of Mergers and Acquisitions Committee • Member of Remuneration and Nomination Committee • Member of Audit & Risk Committee Fred Grimwade • Appointed July 2010 • Member of Audit Risk Committee • Member of Remuneration and Nominat
Slide 12: New Directors: Margaret Zabel and Michelle Somerville
Margaret Zabel • Appointed October 2022 • Extensive experience across in food and beverage sectors • Experienced ASX listed Director • Key skills in business strategy, marketing and innovation, customer and people management • Current Chair of Sustainability Committee Michelle Somerville • Appointed
Slide 13: MD Transition
MD Transition ZZ SELECT HARVESTS Bae 5) _
Slide 14: Outgoing Managing Director achievements
- Appointed CEO and Managing Director in July 2012 - Led and developed a strong safety culture throughout the company and industry in general - Delivered the strategic transition of Select to it becoming one of the world’s leading fully integrated almond agribusiness - Has increased Select’s planted
Slide 15: Incoming CEO and Managing Director
- Commenced as Select Harvests’ CEO and Managing Director on 20th February 2023 - Has been CEO of Alliance Group Limited since 2015 – Annual turnover of $NZ2,200M, 5,000 staff and 7 manufacturing plants across NZ - Major domestic and export markets serviced - Strong safety improvement delivered at A
Slide 16: Strategy Update
Strategy Update ZZ SELECT HARVESTS Bae 5) _
Slide 17: Select Harvest Strategy
Select Harvest Strategy Select Harvests — in control of our destiny VISION TRUST & INTEGRITY & VALUES RESPECT DIVERSITY DO THE BE ONE RIGHT THING TEAM bells ‘Optimise the Almond Base THE Pat tat ah ne and achieve wn sustainably is from our growing unvisiON almond’ orchard base ‘ Customers Supply Cha
Slide 18: Delivering
Delivering Delivering ■ Delivering yield outperformance: across all tree age cohorts and growing regions1 Optimise the ■ FY2022 crop was over 28,500 MT, +80% increase since FY2018 Almond Base ■ Delivered a flat almond production cost per kilogram in FY2022: $5.88/kg ■ Focused on growing opportunitie
Slide 19: International Nut and Dried Fruit Council statistics
Source: International Nut and Dried Fruit Council – Statistical Yearbook 2021/22 19
Slide 20: Consumer trends
Source: International Nut and Dried Fruit Council – Statistical Yearbook 2021/22 Consumers continue to seek: - Plant based food solutions as vegan and flexitarian diets increase in popularity - Sustainable and responsible food production options - Value for money healthy options - Versatility – cons
Slide 21: FY2023 Priorities
1. Safety and Wellbeing - Ensure safety and wellbeing of all stakeholders 2. Horticultural Program - Complete 2023 harvest and invest in 2024 crop 3. Cost Control - Maintain a focus on absolute cost to minimise cost per kg 4. Price and Quality Realisation - Deliver best price and best quality from c
Slide 22: Managing Director Address – Paul Thompson
Managing Director Address Paul Thompson 22
Slide 23: Triple Bottom Line Focus
Triple Bottom Line Focus Business strategy and operational focus is across three platforms: Planet, People and Profit ZB SELECT HARVESTS & GD 33
Slide 24: 2022 Crop Revaluation – ASX Announcement
2022 Crop Revaluation – ASX Announcement 27th January - The quality of the 2022 crop is the worst the Company has experienced over the last ten years. The wet harvest required mechanical drying of a large portion of the 2022 crop and this has contributed to a higher percentage of inventory being gra
Slide 25: FY2022 Financial Results
Reported Reported Earnings per Share (Basic) $4.8m $37.9m 3.9 cents A final dividend of 2 cents per share has NPAT from continuing operations $6.2m EBITDA from continuing operations $40.4m been declared Net Debt to Equity Reported Operating Cash Flow 25.9% $10.1m $26.8m Impacted by delays in harvest
Slide 26: Market and Crop
■ In FY2022 demand was negatively impacted by COVID restrictions, Russia/Ukraine conflict and inventory management ■ Hyper inflation and interest rates in many economies is impacting customer and consumer Market Market confidence ■ Retailers and manufacturers have not passed through price decreases
Slide 27: Market Conditions
Market Conditions ■ The industry was operating with an oversupply of almonds due to a combination of the large US crop and the inability to move crop as a result of logistical congestion post COVID ■ Demand was adversely impacted by COVID in China, Russia/Ukraine conflict in Europe and the re-balanc
Slide 28: A core value underpinning our business strategy
A core value underpinning our business strategy 28
Slide 29: Sustainability definition and reporting approach
We recognise the United Nations Brundtland Commission definition of sustainability, which is defined as ‘meeting the needs of the present without compromising the ability of future generations to meet their own needs’. We are committed to minimising negative impacts and maximising positive impac
Slide 30: Food Safety, Water Efficiency, Emissions
■ We achieved a customer complaint rate of fewer than 1 complaint per million kilograms of product sold. Food Safety ■ We passed our external Safe Quality Food (SQF) audit. There were no reportable incidents of non- compliance with regulations and voluntary codes.. ■ We have continued to invest sign
Slide 31: Almond growing is a closed loop
Almond growing is a closed loop 77 >| Growing almonds ina closed loop We are minimising waste and maximising value by utilising everything that comes from our orchards; the hull, the shell, the fruit and all biomass. < ZB SELECT HARVESTS & GD 31
Slide 32: Almond Hull to Energy, Waste Ash to Compost and Fertiliser
Almond Hull Waste Ash Almond Hull Fly Ash to Energy to Compost to Fertiliser to Liquid Fertiliser Select Harvests co-generation Select Harvests has developed By-product ash generated by Select Harvests developed an power station is the integral an innovative process for our co-generation power innov
Slide 33: Crop Estimate, Harvest Update, Market Demand
■ Above average summer rains have disrupted horticultural program execution including increased wet area and disease management. The impact was greater in NSW. ■ The growing conditions have made forecasting more challenging. Based on historical Crop Estimate average yields and current maturity profi
Slide 34: California pollination disruption
California’s recent blizzard and forecast weather conditions continue to disrupt pollination. The most significant events have been in the in Sacramento and San Joaquin Valleys Many marketers have withdrawn from the market as they wait to assess pollination. The next United States Department of Agri
Slide 35: Cost, Environmental Sustainability and Outlook
■ Cost pressures are expected to increase in 2023, with: Cost ■ Carbon tracking and modelling processes have been put in place as a foundation to meet our Net Zero Target Environmental ■ Compost commercialisation business case is in development Sustainability ■ After successful greenhouse testing -
Slide 36: Thank You
. A Thank You ZB SELECT HARVESTS & ELD 35
Slide 37: Business of the AGM
Business of the AGM ZZ SELECT HARVESTS Bae Coe
Slide 38: Ordinary Business Resolutions
Ordinary Business − Consideration of Financial Statements and Reports Resolutions − Resolution 1: Adoption of Remuneration Report − Resolution 2: Election of Directors − Resolution 3: Participation by the Managing Director in the Long-Term Incentive Plan 38
Slide 39: Consideration of Financial Statements and Reports
Consideration of Financial Statements and Reports ZB SELECT HARVESTS & ce) 39
Slide 40: Q&A Session
Q&A Session ZB SELECT HARVESTS & ce) 40
Slide 41: Resolution #1: Remuneration Report
Resolution #1: Remuneration Report SZ Seect HARVESTS. & ce) a
Slide 42: Resolution 1 voting results
For: 70,816,530 Against: 3,122,081 Open-Usable: 334,739 42
Slide 43: Election of Directors: Margaret Zabel and Michelle Somerville
Margaret Zabel Michelle Somerville Non-Executive Director Non-Executive Director Appointed October 2022 Appointed December 2022 43
Slide 44: Voting results: Margaret Zabel
For: 74,051,314 Against: 384,617 Open-Usable: 416,755 44
Slide 45: Voting results: Michelle Somerville
For: 74,246,640 Against: 190,630 Open-Usable: 414,051 45
Slide 46: Resolution #3: Participation by the Managing Director in the Long-Term Incentive Plan
Resolution #3: Participation by the Managing Director in the Long-Term Incentive Plan
Slide 47: Resolution 3 voting results
For: 73,191,915 Against: 988,952 Open-Usable: 332,142 47
Slide 48: Incoming Managing Director background
- CEO of Alliance Group Limited since 2015 - Annual turnover of $NZ2,200M - 5,000 staff - 7 manufacturing plants across NZ - Major domestic and export markets serviced - Delivered improvements across Safety, Growth, Profitability and Market Penetration 48
Slide 49: Contacts
Paul Thompson Brad Crump Andrew Angus Managing Director CFO and Company Secretary 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 found on the Select Harvests Limited website. 49
Slide 50: Appendices
Appendices ZZ SELECT HARVESTS Bae esi
Slide 51: Long-term average almond price
LONGTERM AVERAGE ALMOND PRICE IS APPROXIMATLEY AU$8.25/KG Source: Stratamarkets Global Almond Report 51
Slide 52: Global consumption growth has driven almond production increase
Global consumption growth has driven the increase in almond production 2021/22 ALMOND PRODUCTION WORLD ALMOND PRODUCTION Kernel Basis (Metric Tons) Kernel Basis (Metric Tons) Australia, 8% y 124,439 Spain, 7% 0 109,200 Turkey, 1% | 18,000 Onion a aio 8 a Mininta NS yin » to | BOR Tunisia, 1% | 16,50
Slide 53: Income economies (GNI per capita)
GNI = Gross National Income (per capita) = High Income Economies = Low To Middle Income Economies = Low Income Economies 53
Slide 54: Select Harvests Consolidated Results
SELECT HARVESTS CONSOLIDATED 2009 2010 2011 2012 2013 * 2014 2015 2016 2017 2018 2019 + 2020 2021 2022 RESULTS FOR YEARS ENDED 30 SEPTEMBER/ JUNE 30-June 30-September Total sales 248,581 238,376 248,316 246,766 190,918 188,088 223,474 285,917 242,142 210,238 298,474 248,262 288,220 231,274 Earnings
Slide 55: Volume Growth
Volume Growth Our investment in greenfield developments and orchard acquisitions will underpin along term sustainable production profile Select Harvests Theoretical Harvest Volume (MT) ° oO Coen) { 9.6% } | ° ° o S) B a a Q Fy19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 Theoretical Volume m
Slide 56: Select Harvests Orchard Profile
Select Harvests Orchard Profile Select Harvests Planted Almond Hectares1 Select Harvests Total Planted Hectares1 Almond orchard portfolio (as at 30 September 2022) hectares acres Central Region Company Owned 1,693 4,183 Piangil Orchard 1,566 3,870 Leased 1,385 3,422 Total 4,644 11,475 Northern Regio
Slide 57: Age Profile of Select Harvests Almond Orchards
Age Profile of Select Harvests Almond Orchards1 (100% of current planted hectares are cash generative) 1. Tree age is in reference to the 2023 crop 57
Slide 58: Almond orchard acquisitions and greenfield developments since 2010
26 separate almond orchard acquisitions and greenfield developments since 2010: 7,968 hectares in total1 Pre 2010 (1,294 ha) 2011 2014 2016 • Kyndalyn Park (405 ha) • Belvedere (603 ha) • Allinga (253 ha) • Mountview (81 ha) • Boundary Bend (127 ha) • Bannerton (48 ha • Amaroo (782 ha) • Mountview g
Slide 59: Definition & Explanations
Select Harvests Internal Video https://vimeo.com/680215981 Industry Associations Californian Almond Board www.almondboard.com Almond Board of Australia www.australianalmonds.com.au International Nut and Dried Fruit Council www.nutfruit.org/about-us/history Industry Reports US Crop Forecasts
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