Slide 1: FY16 Results Presentation
For personal use only Select Harvests Limited (“ASX:SHV”) FY16 Results Presentation 26 August 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 Overview & Highlights Results Discussion & Analysis Market Outlook SHV Crop Update & Outlook Appendices 3
Slide 4: FY16 Financial Overview
FY16 Financial Overview For personal use only ■ Reported FY16 Net Profit after Tax (NPAT) of $33.8m ■ Underlying FY16 Net Profit after Tax (NPAT) of $27.9m ■ Underlying EBIT $41.3m (FY15 EBIT $89.6m) ■ Food Division EBIT $10.3m (FY15 $6.8m) ■ Operating cash flow $92.9m (FY15 $30.4m) ■ Net Debt $67.3
Slide 5: Business Overview
Business Overview For personal use only ■ Business environment challenged - Almond price & currency, negative & volatile. ■ Strong balance sheet underpins growth - Sale & leaseback funding 2,084 acres (844 Ha) planting ■ Growth on track - Almond greenfield planting increased crop by 12% by 2018 & 63
Slide 6: Business Overview: Safety, Sustainability, Diversity
Business Overview For personal use only Safety ■ Lost Time Injury Frequency - down 29% ■ Medically Treated Injury Frequency - down 25% ■ Hazard Identification Frequency - up 75% Sustainability ■ Zero environmental breaches ■ Commissioned first off grid solar power farm hub Diversity ■ Overall there
Slide 7: FY16 Results in Context
FY16 Results in Context For personal use only Underlying NPAT (A$ million) Planted/Bearing Almond Orchards (acres)* 59.4 Planted Acres Bearing Acres 16,521 13,311 13,824 11,943 12,319 10,022 9,443 8,804 8,804 9,295 27.9 22.9 21.6 9.5 FY12 FY13 FY14 FY15 FY16 FY12 FY13 FY14 FY15 FY16 *Planted acres a
Slide 8: Understanding FY16 Result
Understanding FY16 Result For personal use only Reported FY16 Net Profit after Tax (NPAT) $33.8m Impact of non-recurring items $5.9m ■ Gains on Asset Sales during the Period* Underlying FY16 Net Profit after Tax (NPAT) $27.9m * Gains on Asset Sales during the Period ̶ 3 properties sold to First Stat
Slide 9: Income Statement
Income Statement For personal use only Financial Result FY15 FY16 ■ FY16 Underlying EBIT $41.3m (FY15 $89.6m) ($m) ($m) ■ Almond Division Underlying EBIT $36.1m (FY15 $87.5m) Reported Result EBIT - Reported 85.9 49.8 ̶ Strong performance in challenging market Interest (5.3) (5.5) • 2016 crop key dri
Slide 10: Balance Sheet
Balance Sheet For personal use only Year Ending Balance Sheet Jun-15 Jun-16 ($m) ($m) Current Assets excl. Cash 207.5 154.1 Cash 0.3 1.4 ■ Net Debt $67.3m (FY15 $115.6m) Non-Current Assets 280.1 294.3 ̶ includes finance lease commitments of $41.8m Total Assets 487.9 449.8 ■ Gearing (Net debt/equity)
Slide 11: Cash Flow
Cash Flow For personal use only FY15 FY16 ■ Decreased working capital due to 2015 crop sales Cash Flow ($m) ($m) ■ FY16 Investing cash flows driven by: EBITDA 96.4 62.4 ̶ Orchard acquisitions $5.3m (FY15 $54.6m) Change in Working Capital (61.0) 35.4 ̶ Investment in cogen, new orchards in NSW, additi
Slide 12: Almond Division
Almond Division For personal use only Almond Division ($m) FY15 FY16 Underlying EBIT 87.5 36.1 Financials ■ Volume: FY16 crop volume est. 14,200 tonnes (FY15 14,500 tonnes) - down 2% - up on guidance ■ Processing: Hulling & shelling complete mid-August ■ 2015 Crop: Returns A$4m down ■ Price: FY16 pr
Slide 13: Almond Division
Almond Division For personal use only 17 August 2016 – the trees are in very good health and responding well to high performance program – 2017 bud potential looks strong 13
Slide 14: Food Division
Food Division For personal use only Food Division ($m) FY15 FY16 EBIT 6.8 10.3 Financials ■ Revenue of A$161.8 million was up 16.6% (FY15 A$138.8 million) ■ Improved sales mix driven margin improvement ■ Industrial sales up 17% ■ Branded Consumer sales – up 10% Highlights ■ Industrial sales - Aligni
Slide 15: Food Division
Food Division For personal use only Select continuing to release new and improved products 15
Slide 16: Market Outlook
Market Outlook For personal use only ■ Demand remains strong for both Almond and Food division ■ Consumers continue to see the benefits of all super foods with new product development remaining buoyant ■ Consumers and industry committed to consuming less sugar, preferring Green & Clean alternatives
Slide 17: Almond Market Outlook
Almond Market Outlook For personal use only Demand ■ New product development activity remaining buoyant. Almond Milk and Butters continue to grow ̶ www.dairyreporter.com/Markets/Dairy-alternatives-market-to-reach-19.5bn-by-2020 ■ Despite economic malaise Asia middle class will continue to grow ■ Com
Slide 18: Almond Market Outlook – US Shipments 2015/16
Almond Market Outlook – US Shipments 2015/16 For personal use only US Export Shipments US Domestic Shipments Total US Almond Shipments 2014/15 2015/16 Growth 2014/15 2015/16 Growth 2014/15 2015/16 Growth (million lbs) (million lbs) (%) (million lbs) (million lbs) (%) (million lbs) (million lbs) (%)
Slide 19: Select Harvests Update
Select Harvests Update For personal use only ■ The 2017 crop has had sufficient chill hours and is now at the pollination stage of the lifecycle ■ Bees are in place and we anticipate a strong bloom with good crossover ■ We can see the benefit of new horticultural programs - the 2017 bud potential lo
Slide 20: Productivity Improvements
Productivity Improvements For personal use only ■ Improve Yield ■ Improve Mix ■ Improve On-Farm practice ■ Improve Transport and Handling ■ Asset Utilisation ■ Cost-out Capex – Project Parboil, Project H2E Business focus to drive better productivity from base 20
Slide 21: Significant Organic Volume Growth
Significant Organic Volume Growth For personal use only 80% of current planted acres are cash generative Current plan is fully funded and no additional processing investment required 21
Slide 22: 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 23: Strategy - Planning for Excellence & Growth
Strategy - Planning for Excellence & Growth 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
Slide 24: 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 25: 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
Slide 26: Food Division - Brands
Food Division - Brands For personal use only • Market leader in the cooking nut category. Value share 43.6 % as at 19 April 2016. • Cooking Nut product range: almonds, walnuts, cashews, hazelnuts, brazil nuts, pine nuts, pistachios, macadamias, sunflower seeds and pepitas (Snacking product range: po
Slide 27: 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
Slide 28: Operations - Project H2E – Hull to Energy
Operations - Project H2E – Hull to Energy For personal use only Project Overview: Biomass boiler and steam turbine, fuelled by almond hull and shell converting it to heat and power. Abating 24000 tonnes* of greenhouse gas. *Internal estimate Reduces energy cost by 20%, enhancing Carina West’s positi
Slide 29: 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
Slide 30: Select Harvests – Orchard Profile
Select Harvests – Orchard Profile For personal use only Select Harvests Planted Under Development Total Planted Almond orchard portfolio (as at 30 June 2016) (as at 30 June 2016) (as at 26 August 2016) Acres Hectares Acres Hectares Acres Hectares Central region Company Owned 3,852 1,559 310 125 4,16
Slide 31: Select Harvests – Orchard Age Profile
Select Harvests – Orchard Age Profile For personal use only Significant growth & improvement occurred in SHV orchard portfolio in recent years - acquisition, replants, greenfields 31
Slide 32: 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) - LHS Historical Rolling Average AUD/kg - LHS 5 Year Rolling Average AUD/kg - LHS Rollng Average USD vs AUD - RHS Linear ((AUD/kg) - LHS) $14.00 $1.00 $0.90 $12.00 $0.80 $10.00 $0
Slide 33: 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 34: Select Harvests – Horticultural Costs
Select Harvests – Horticultural Costs For personal use only 34
Slide 35: US Almond Production - Ageing
US Almond Production - Ageing For personal use only Source: USDA NASS, 2016 California Almond Forecast Report, 10 May 2016 38% of California’s total Almond Orchard Acreage is more than 21 years old 6% of Select Harvests total Almond Orchard portfolio is over 21 years old 35
Slide 36: US - Groundwater Depletion Concerns
US - Groundwater Depletion Concerns For personal use only Purple Shading = Critically Overdrafted Groundwater Basins Groundwater - Some of the biggest counties are reliant on critically overdrafted groundwater basins Dept of Water Resources has a well defined timeline to groundwater legislation and
Slide 37: US Almond Production & Drought
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 much improved on 2015 37
Slide 38: Useful Almond Industry Websites
Useful Almond Industry Websites For personal use only ■ Industry Associations ─ Californian Almond Board www.almondboard.com ─ United States Drought Monitor http://droughtmonitor.unl.edu/Home/StateDroughtMonitor.aspx?CA ─ Dept. of Water Resources (DWR) – Reservoir Levels http://cdec.water.ca.gov/cde
Slide 39: 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