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SELECT HARVESTS LIMITED — AGM Information 2007
Oct 25, 2007
65792_rns_2007-10-25_1d688934-2fb2-47aa-bd59-8c8acedaf6cf.pdf
AGM Information
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Annual General Meeting 26[th] October 2007
EARNINGS HISTORY
Ordinary Dividend Per Share
Earnings Per Share
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57.0c EPS year-end 72.5c 71.0c
60 +7.5% 80
+6%
+26% +18%
70
50
+42%
+62% 60
40
50
+28%
30 +41% 40
+23%
+37% 30
20
20
10
10
0
0
cents
cents
2002 2003 2004 2005 2006 2007 2002 2003 2004 2005 2006 2007
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BUSINESS FUNDAMENTALS
• International competitiveness of Australian almonds
• Scale and mechanisation opportunities
• Strong local and international consumer demand
• Stable pricing and returns
BUSINESS FUNDAMENTALS - International Competitiveness
- Australia is a competitive almond grower with a significant advantage in crop yield and product quality allowing us to compete effectively in global markets
Comparison of USA yields against Australian yields
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1600
1400
1200
1000
800
600
400
200
0
US kg/acre Aus Kg/acre
1999 2000 2001 2002 2003 2004 2005 2006 2007
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BUSINESS FUNDAMENTALS - Scale and Mechanisation
- Almond farming is highly mechanised, providing economies of scale opportunities to maximise efficiency and competitiveness
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BUSINESS FUNDAMENTALS
- Strong Local and International Demand
- Almonds are experiencing continuous growth in consumer demand driven by an increasing awareness of the health benefits of regular consumption
WORLD SUPPLY
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USA ANNUAL PRODUCTION
1800 1400
1600 1200
1400 1000
1200 800
1000 600
800 400
600
200
400
0
200
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Crop (million lbs) Bearing acres kg/acre
annual supply consumption carry out
)
(million lbs
1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
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BUSINESS FUNDAMENTALS - Stable Pricing and Returns
- International almond pricing remains buoyant and in AUD terms remain within historical ranges
Almond Price AUD/KG
Almond Price USD/lb
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$4.50 $14.00
$4.00
$12.00
$3.50
$10.00
$3.00
$2.50 $8.00
$2.00
$6.00
$1.50
$4.00
$1.00
$0.50 $2.00
$0.00 $0.00
Normal Distribution Curve of World Almond Price
35
30
25
20
15
10
5
0
$0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00
-5
Sep-93Mar-94 Sep-94Mar-95 Sep-95Mar-96 Sep-96Mar-97 Sep-97Mar-98 Sep-98Mar-99 Sep-99Mar-00 Sep-00Mar-01 Sep-01Mar-02 Sep-02Mar-03 Sep-03Mar-04 Sep-04Mar-05 Sep-05Mar-06 Sep-06Mar-07 Sep-07 Sep-93Mar-94Mar-94 Sep-94Mar-95Mar-95 Sep-95 Mar-96 Sep-96Mar-97Mar-97 Sep-97
Frequency
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$14.00
$12.00
$10.00
$8.00
$6.00
$4.00
$2.00
$0.00
Sep-93Mar-94Mar-94 Sep-94Mar-95Mar-95 Sep-95 Mar-96 Sep-96Mar-97Mar-97 Sep-97 Mar-98 Sep-98Mar-99 Sep-99 Mar-00 Sep-00Mar-01 Sep-01Mar-02 Sep-02Mar-03 Sep-03Mar-04 Sep-04Mar-05 Sep-05Mar-06 Sep-06 Mar-07 Sep-07
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Price
EMERGING AUSTRALIAN INDUSTRY
Production Outlook
-
Total acreage now in excess of 60,000 acres
-
Total investment $1.3 billion
-
Areas: Riverland, Sunraysia and Riverina
-
2007 production 26,000 mt Future production capacity in excess of 75,000 mt
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80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Acres Tonnage
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
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-
Increasing domestic consumption and expanding export markets
-
Internationally competitive
-
Number 2 producer within 5 years
-
Scale and global significance
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Australia, 26 mt,
4%
Greece
India
Italy
Spain
Turkey
USA
Australia
USA,
594 mt, 84%
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OUR BUSINESS TODAY
2006 2007
8,355 Acres 11,809 Acres
Orchard Development
Nursery
2006 2007
2007 EBIT
24,400 Acres 35,296 Acres Orchard establishment
$5.1 M
Orchard Management
Managed Orchards Owned Orchards
2007 EBIT Almond Growing 2007 EBIT
$16.1 M Harvesting $11.6 M
Processing
Primary Processing Value-Added Processing
2007 EBIT
Almond Nuts
$4.0 M
Retail/Processing
2007 EBIT
2006 - 6,200 tonnes
$5.7 M
2007 -12,000 tonnes
Sales & Marketing
2007 EBIT
Almond Pool Sales Added Value Products
$1.7 M
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ORCHARD DEVELOPMENT
Activities
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Tree supply
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New varieties
Orchard Development (acres)
-
Orchard feasibility studies
-
Land acquisition
-
Orchard design
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Irrigation installation
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Land preparation
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Tree planting
Key Strategies
12000 11000 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
-
Support current customers to develop new orchards
-
4,200 acres for Timbercorp in 2008
-
Develop alternative markets/investors to replace MIS structure
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Diversify into other locations/water sources
-
WA Development
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Investigate tree varieties suitable to warmer climates
-
Diversify into other tree nut crops
ORCHARD MANAGEMENT
Develop Strategies
-
Enhanced technical team
-
Water Management
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Develop strategies for handling reduced
-
water availability in 2007/2008 while maintaining crop and tree productivity
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Major focus on long term reduction in water use while maintaining crop yields with a target of 20% reduction over the next 3 years
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Commence 4 separate trials in conjunction with international irrigation and horticultural experts utilising new technologies to improve irrigation efficiency and deliver water savings
-
Continue to maximise yields consistent with cost and water economics
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Acres under management 38,644 Acres Managed Company orchards 91% 9%
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% of Australia’s Almond Acreage 62%
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PROCESSING - Primary Processing
Key Strategies
-
Construction of stage 1 of a processing facility in Robinvale at a cost of $32 million
-
Increase total capacity to 40,000 mt of almond kernel
-
Highly mechanised
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Pasteurisation capacity
-
Commissioning in February 2008
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State of the art electronic sorting
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- Fully automated packing line
Future Tonnage from Existing Trees
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60,000
50,000
40,000
30,000
20,000
10,000
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
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PROCESSING - Added Value Processing
Key Strategies
-
Rationalisation, consolidation and alignment of core capabilities over the next 12 months
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Focus on cost efficient production
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Upgrade of processing and packaging technology
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“Fit for purpose” warehousing and distribution
-
Complete business process/services efficiency review
-
Low cost processor
-
Improved food hygiene management
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SALES AND MARKETING - Almond Pool
-
2007 Almond Pool increased from 6,200 mt in 2006 to 12,000 mt in 2007
-
2007 almond crop 85% sold
-
Increased domestic sales by 30% over 2006
-
Increased export focus
-
2007 export percentage to increase to approximately 55% from 40% in 2006
-
2008 Crop projected to be over 15,000 mt
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Spain, 16%
Germany, 7%
Italy, 6%
Middle East, 2%
France, 5%
India, 50% UK, 4%
Asia, 4%
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Other, 6%
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SALES AND MARKETING - Added Value
Key Strategies
-
Re-alignment of business to a nut/almond nut focus
-
Focus on maximising added value opportunities from almond pool
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Concentration of investment in key brand “Lucky”
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Re-launch of Lucky brand in spring 2007
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House brand focus on premium private label and fresh produce
-
Consolidation of sales force
-
Development of other channels
-
Development of export markets for packaged and processed almonds
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OUTLOOK Key growth areas
Increased revenue from existing managed orchards
Development of new almond orchards & other tree nut crops
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80000
70000 (Estimated fee revenue
60000 based on current
50000 plantings)
40000
30000
20000
10000
0
2008 2009 2010 2011 2012 2013 2014 2015
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Increased tonnage from Select Harvests owned orchards
Increased added-value processing and marketing of future almond tonnages and other tree nut crops
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5000
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0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
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