Slide 1: Select Harvests Limited FY2019 Full Year Results Presentation
Select Harvests Limited (ASX:SHV) FY2019 Full Year Results Presentation to 30 September 2019 29 November 2019
Slide 2: Disclaimer & Basis of Preparation
Disclaimer & Basis of Preparation 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 in
Slide 3: FY2019 Financial Overview
FY2019 Financial Overview NPAT EBITDA1 EPS 55.5 cps $53.0m $95.2m ↑ 139.7% ↑ $32.6m ↑ $43.5 m - Final dividend of 20 cps fully franked Net Debt/Equity Annualized ROCE 0perating Cashflow 6.6% - $27.4m Finance Leases 16.5% $80.3m - $0 Bank Debt - Net $7.9m Cash on Hand ↑ 9.2 ppts ↑ $62.0m 1 - Non-IFRS
Slide 4: FY2019 Business Overview
FY2019 Business Overview Almond Volume Almond Price Almond Division EBIT 22,690 MT $8.60/kg $82.2m ↑ 44.5% ↑ 6.8% ↑ $46.8m - Better than industry standard - Increased almond volumes - Continued global demand yields across all tree age - Improved almond pricing - AUD/USD exchange rate cohorts and geo
Slide 5: Income Statement
Income Statement Income Statement $ Millions FY 2018* FY 2019 Variance % Strong FY2019 Profit Result Delivered Almond Volumes MT 15,700 22,690 6,990 44.5% Increased revenue reflects higher 2019 crop value Almond Price Per KG 8.05 8.60 0.55 6.8% Total Revenue 210.2 298.5 88.3 42.0% FY 2019 EBITDA
Slide 6: Movement in SHV Group EBIT ($M)
Movement in SHV Group EBIT ($M) Minimised through acquisition and ownership strategy Investment in new technology and a clean crop Productivity improvement through targeting higher Re-grading of prior yields year crops – now all Plant based food macro and processed increased China demand 34.9 Improv
Slide 7: Balance Sheet
Balance Sheet Year Ending Balance Sheet Solid Balance Sheet In Place $ millions FY 2018* FY 2019 Increased current assets – working capital of $129.7m is higher Current Assets excl. Cash 152.0 162.1 due to value of 2020 growing crop (inventory) – as immature Cash 6.9 11.6 trees develop Non-Current
Slide 8: Cash Flow
Cash Flow Cash Flow Cashflows Driven By Performance $ millions FY 2018* FY 2019 Improved EBITDA1 of $95.2m - operational performance EBITDA 51.7 95.2 Change in Working Capital (19.8) (14.0) Cash generated used to pay down debt and invest in Tax Paid (8.5) 3.1 equipment – processing improvement,
Slide 9: Almond Division
Almond Division Almond Division 9 Carina Farm Blossom 2018
Slide 10: FY2019 Almond Division Overview
FY2019 Almond Division Overview Almond EBIT Almond Volume Almond Price 22,690 MT $8.60/kg $82.2m ↑ 44.5% ↑ $46.8m - Good Conditions ↑ 6.8% - AUD/USD hedged below 71c - Volume, price and production - Improved Horticultural - Strong demand globally cost per Kg programs - Higher in-shell mix - Frost re
Slide 11: 2019 Yield Performance
2019 Yield Performance Industry Standard Yield Target Yield Outperformance vs. Industry Standard across all mature and immature age cohorts and regions 11
Slide 12: Volume Growth
Volume Growth Select Harvests is now consistently yielding over 1.35 tonnes per acre – this adds considerable value in future years ̶ The almond crop is biannual in nature with +/- 10% per annum variation in tonnage possible Our investment in almond orchards ensures underlying organic earnings growt
Slide 13: What Select Harvests is doing to manage water
What Select Harvests is doing to manage water ■ SHV policy is to have a portfolio of water sources to minimize exposure to seasonal pricing including: ■ Entitlement ownership ■ Long and short term lease ■ Forward contract ■ Spot purchases of annual allocations ■ Executive dedicated to water purchasi
Slide 14: Almond Division Outlook
Almond Division Outlook Crop Volume Sales Horticulture - Global almond macro is - Increased investment in risk - Good pollination and growing increasingly strong mitigation - further frost fan conditions to date - Continued growing demand in installation will be reviewed - Immaturity profile and ris
Slide 15: Food Division
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Slide 16: FY2019 Food Division and Corporate Overview
FY2019 Food Division and Corporate Overview Food Division EBIT Industrial Sales Consumer Sales - Lucky branded cooking nuts market share stabilised - China market has continued to $5.0m expand for value-add products following the introduction of Coles house brand ex Parboil & Thomastown FLAT - Plant
Slide 17: Project Shaker
‘Project Shaker’ Project Shaker’s aim is to significantly improve the operational efficiency and profitability of the Food Division ■ Sales & Marketing ̶ Re-launch Lucky brand, including packaging upgrades, advertising and new product innovation ̶ Develop the Sunsol brand - use data and consumer ins
Slide 18: Awards
Awards Governor of Victoria’s Export award for 2019 in the Agribusiness Food and Beverages Category ̶ In judging the award, the following areas were highlighted: the recent success of both the Industrial and Consumer Divisions in South East Asia and China, the commitment to innovation, sustainabilit
Slide 19: FY2020 Food Division & Corporate Outlook
FY2020 Food Division & Corporate Outlook Industrial Sales Lucky Sunsol - Continued strong demand in - New packaging and marketing Export Market program to re-engage - Continue growth through - Strong relationships developed consumers export in China - Continue with China/PepsiCo - Further New Produc
Slide 20: Almond Crop Update
Almond Crop Update Almond Board of California October 2019 Position Report: - USDA Subjective Estimate - 10 May 2019 = 2.20 billion pounds (1 million MT) - Industry forecasting 2.3 to 2.4 billion pounds - Oct YTD Receipts 1.60 billion vs 1.55 billion pounds LY up 2.36% - Shipments 609m vs 570m pound
Slide 21: Strategy and 2020 Priorities
Strategy and 2020 Priorities Bunargool Orchard Blossom 2018 21 Photo Carina Farm Blossom 2018
Slide 22: Select Harvests – in control of our destiny
Select Harvests – in control of our destiny Vision To be a Leader in the Supply of Better for You Plant Based Foods Trust & Respect Integrity & Diversity Sustainability Performance Innovation Values Treat all stakeholders with trust and respect All decisions and transactions will not compromise the
Slide 23: Vertically Integrated from 'Paddock to Plate'
Vertically Integrated from ‘Paddock to Plate’ Primary Orchards → Production → Processing ■ 7,677 planted hectares of ■ Responsible for farm ■ Single site facility responsible for almond orchards management across all our the primary processing of our ■ Combination of owned orchards, both owned and a
Slide 24: FY2020 Top Priorities
FY2020 Top 10 Priorities 1. Continue 2020 Crop Horticultural Program – Ensure optimal tree health and production 2. Implement New Technology – Capital investment in new sorting technology (improved quality) 3. Cost Reductions - Continue to reduce cost per kg across all production stages 4. Mitigate
Slide 25: Thank you
Thank you Please direct any queries to: Paul Thompson Brad Crump 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 found on the Select Harvest
Slide 26: Select Harvests - Financial History
Select Harvests - Financial History 3 months transition + SELECT HARVESTS CONSOLIDATED 2009 2010 2011 2012 2013 * 2014 2015 2016 2017 2018 2018 2019 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
Slide 27: Almond Orchards – Our productive foundation
Almond Orchards – Our productive foundation 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 sequential progression of
Slide 28: Select Harvests – Orchard Profile
Select Harvests – Orchard Profile Select Harvests Total Planted Almond orchard portfolio (as at 30 September 2019) Acres Hectares Central Region Company Owned 4,183 1,693 Leased 3,422 1,385 Total 7,605 3,078 Northern Region Company Owned 1,797 727 Leased 3,017 1,221 Total 4,814 1,948 Southern Region
Slide 29: Optimise Almond Base - Orchard Age Profile
Optimise Almond Base - Orchard Age Profile Growth and improvement occurred in SHV orchard portfolio in recent years - acquisition, replants, greenfields 29
Slide 30: Targeting an Above Average Yield Per Acre @ Maturity
Targeting an Above Average Yield Per Acre @ Maturity Harvest Volume (tonnes) per acre Harvest Volume (tonnes) per acre based on 1.35 Tonnes per Acre at Year based on 1.2 Tonnes per Acre @ Maturity & Immature Yields at 2019 Maturity Levels 1 0.0 0.0 2 0.0 0.0 3 0.3 0.45 4 0.5 0.92 5 0.8 1.16 6 1.0 1.
Slide 31: A$/Kg Tree Nut Pricing
Tree Nut Pricing A$/Kg Almonds are currently the best value in the basket - driving consumption 31
Slide 32: Cost of production
Cost of production 2019 Crop - Cost Per KG – Excluding Tree Depreciation (A$/KG) Horticultural Costs Water Costs Harvest Costs Rental Costs Processing Costs Total Crop Costs (Excl. Water) 2018 Crop 2019 Crop Achieving increased yields has led to improved productivity 32
Slide 33: Water Market Pricing
Water Market Pricing ■ Water prices have decoupled from supply and demand fundamentals ̶ The drought is having a major impact on water prices, but is not the only factor underpinning higher water prices ̶ Influence of increased permanent cropping on demand and deliverability ̶ Governments policies a
Slide 34: The ownership of water has changed
The ownership of water has changed ■ The share of permanent entitlements owned by non-water users and the environment has increased significantly Changing ownership of high-reliability water shares in northern Victoria Source: Victorian Water Register 34
Slide 35: Murray-Darling Basin water market inquiry
Murray-Darling Basin water market inquiry ■ SHV will participate in the ACCC’s Murray-Darling Basin water markets inquiry ̶ SHV supports the Murray-Darling Basin (MDB) system. Clearly defined water property rights and tradable markets supported by robust price mechanisms have significantly improved
Slide 36: Almond Market Outlook – US Shipments October 2019
Almond Market Outlook – US Shipments October 2019 US October 2019 Position Report US Export Shipments US Domestic Shipments US Total Shipments Last Year This Year Growth Growth Last Year This Year Growth Growth Last Year This Year Growth Growth (million lbs) (%) (million lbs) (%) (million lbs) (mill
Slide 37: AASB 16 – Leases – Impact from 1 October 2019
AASB 16 – Leases – Impact from 1 October 2019 Initial impact on adoption as follows: Balance sheet #039;000 30 September AASB 16 1 October 2019 Transition 2019 Financial Impact Total Current Assets 173,666 173,666 Total Non Current Assets 379,190 379,190 Major leases relate to long term orchard lease
Slide 38: Useful Almond Industry websites
Useful Almond Industry websites Industry Associations Californian Almond Board www.almondboard.com Almond Board of Australia www.australianalmonds.com.au Industry Reports US Crop Forecasts (Subjective, Objective) http://www.almonds.com/growers/resources/crop-forecasts/tc-NASS-Crop-and-Acreage-