SELECT HARVESTS LIMITED — AGM Information 2019

Feb 21, 2019

Select Harvests Limited (ASX:SHV) 2018 Transition Period Annual General Meeting 22 February 2019

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 investment objectives, financial situation or needs of any particular investor. Investors should consider their own individual investment and financial circumstances in relation to any investment decision.

Certain statements contained in this presentation may constitute forward-looking statements or statements about future matters that are based upon information known and assumptions made as of the date of this presentation. These statements are subject to risks and uncertainties. Actual results may differ materially from any future results or performance expressed, predicted or implied by the statements contained in this presentation.

The Select Harvests Limited financial statements are prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001. This includes application of AASB 141 Agriculture in accounting for the current year almond crop, which is classified as a biological asset. In applying this standard to determine the value of the current year crop, the Company makes various assumptions at the balance date as the selling price of the crop can only be estimated and the actual crop yield will not be known until it is completely processed and sold. The resulting accounting estimates will, by definition, seldom equal the related actual results, and have a risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

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Michael Iwaniw Chairman

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Agenda

▪ Chairman’s Address

▪ Managing Director’s Address

▪ AGM Resolutions

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Select Harvests Board

• Michael Iwaniw, Chairman, Appointed Chairman November 2011*

• Michael Carroll, Non-Executive Director, Appointed March 2009

• Fred Grimwade, Non-Executive Director, Appointed July 2010

• Nicki Anderson, Non-Executive Director, Appointed January 2016*

• Fiona Bennett, Non-Executive Director, Appointed July 2017

• Paul Thompson, Managing Director, Appointed July 2012

*Standing for election

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Change to Financial Year End – Transition Period Rationale

Estimated Horticultural Cycle and New Reporting Timeframes	Estimated Horticultural Cycle and New Reporting Timeframes	Estimated Horticultural Cycle and New Reporting Timeframes
						New FY18/19							FY19/20
	Oct-18	Nov-18	Dec-18	Jan-19	Feb-19	Mar-19	Apr-19	May-19	Jun-19	Jul-19	Aug-19	Sep-19	Oct-19	Nov-19
Growing cycle
Pollination
Harvest
Processing
% of Crop Sold		20%	30%	40%	60%	70%	75%	80%	90%	95%	100%
Half Year Result						1
Lodge HY Accounts/Market Update								2
Full Year Result												3
Lodge FY Accounts/Market Update														4
1 - Crop yield and quality estimate accurate. Significant percentage								of crop is contracted or sold
2 – Able to provide market		more accurate information on crop and						price
3 - Crop and price position		finalised - limited adjustments
4 – Less fair value estimations in annual				results

The change was made to align Financial Reporting with the Horticultural cycle, providing shareholders and the market with greater certainty and transparency

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Transition Period NPAT Result

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(1.53)(1,578)
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YTD Sep 2017 is not an audited result. Tree depreciation costs of $1.5m (now in crop fair value) and grant income of $3.4m have been excluded from Sep 2017 management results to give an underlying comparison to Sep 2018’s audited result.

No 2019 Crop profit has been recognised during the Transition Period:

• All 2018 crop profit recognised in FY 30 June 2018

• At point of preparing TP accounts the fair value of the crop cannot be reliably estimated

• Full 2019 crop profit recognised during new FY19 financial year

Transition Period result positively impacted by:

• Increased hull sales volume and price

• Increased export sales (packaged foods and industrial)

• Lower interest charges (lower debt levels)

The above were offset by:

• Additional processing costs due to value adding activities in Parboil

• Lower margins in the food division (raw input cost increases and product mix)

• Marketing investment

• Other one-off food division costs and provisions

Trading in the FY2019 financial year to date remains in line with expectations

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Balance Sheet and Cash Flow

Balance Sheet

Current Assets (exc. Cash) Cash Non-Current Assets Total Assets Current Liabilities (excl. Borrowings) Borrowings Non-Current Liabilities (excl. Borrowings) Total Liabilities Total Equity Net Debt (Including Finance Leases) Net Debt/Equity Working Capital Trade and Other Receivables Inventories Trade and Other Payables Net Working Capital	Jun-17 Jun-18 Sep-18 $M $M $M 135.4 161.7 152.8 1.1 0.4 6.9 343.1 354.4 362.9
	479.6 516.5 522.6
	20.0 27.9 44.6 146.9 71.2 65.8 35.2 38.8 41.6
	202.1 137.9 152.0
	277.5 378.6 370.6
	145.8 70.8 58.9 52.6% 18.7% 15.9% Jun-17 Jun-18 Sep-18 $M $M $M 46.8 51.4 47.0 87.5 109.3 99.4 (14.3) (23.0) (40.3)
	120.0 137.7 106.1

Comparative Cashflow

Cashflow from Operations Cashflow from Investing Activities Cashflow form Financing Activities Net Cash Movement	Full Year Jun-17 Jun-18 $M $M 4.7 18.3 (56.8) (25.9) 53.8 6.8	Three Months Sep-17 Sep-18 $M $M 23.8 24.9 (7.6) (13.0) (15.9) (2.5) #
	1.7 (0.8)	0.3 9.4

September 2017 was not an audited result. This reflects management reporting results.

Balance Sheet movements for the period reflect:

• Operating cash flows of $24.9m leading to further reduction in net debt while funding capital purchases and permanent water

• Net debt levels (including finance leases) of $58.9m (June 2018 $70.8m)

• Inventories reduced as 2018 crop sales continue

• Reduction in working capital of $31.6m from June 2018

Balance Sheet remains strong with strong cash flows and improved working capital management

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Safety, Environment, People and Culture

Safety

▪ SHV’s Zero Harm Safety and Wellbeing Strategy focus is to:

• Prevent injury before it occurs

• Improve our safety performance & individual wellbeing

• Driver Risk Awareness Training has been delivered by Rural Ambulance Victoria across the Almond Division

• OHS Training for Leaders and Managers has been delivered across the business

Environment

• Zero environmental breaches

• Energy: Hull to Energy (H2E) remains our largest initiative

• Water: Using technology solutions to better monitor and utilises water resources

• Waste: H2E consumes our almond by-products (hull, shell and orchard waste) to create energy, compost, recycling and animal nutrition

People and Culture

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• Zero bullying and harassment claims received, proactively supported by Bullying, Harassment and Equal Employment Opportunity Training successfully delivered

• Leadership Development program is in progress across the business

Our focus remains on safety and long-term sustainability

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Opportunities and Challenges

■ Greenfield Development Program Investments

• Significant investment in recent years e.g. Bunargool at Euston, NSW (high yielding, large scale, preferred varieties, higher density plantings, state of the art irrigation infrastructure – low friction pumps, saving water and energy)

• This will drive significant volume and productivity increases in our business

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Processing Investments

• Investment made in increasing productivity and reducing cost (e.g. 3 new optical sorters, 2 automated optical quality control machines, Robotic packing line)

■ Food Division

• Repositioned and now capitalising on high growth Asian markets

• Industrial Division is leading the way. Consumer Division PepsiCo Agreement is exciting and meeting forecasts

■ Drought & Water

• We are dependent on a healthy Murray Darling Basin – must meet community environmental, social and agricultural needs

• We have invested in infrastructure to maximise our water productivity – “to grow more with less”

■ Accounting Standard Lease Changes (AASB 16)

• New lease standard will be adopted by Select Harvests in FY2020 (beginning 1 October 2019)

• The change will impact EBITDA, EBIT, PBT & NPAT – it will have no impact on cash flow

We are facing our challenges and investing in opportunities for long term growth

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Staff Video

Press CTRL right click on the link below to get the video to appear – then press play

https://vimeo.com/318109909

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Paul Thompson Managing Director

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Plant-Based Foods - Driving Increased Demand Growth

• Key Food Trends - Alternative proteins* and flexitarian diets were named key food trends in 2017 and 2018 by industry commentators including Rabobank, Forbes, Mintel, Innova Market Insights and MarketWatch

• Australia - 28% of Asian born Australian’s diet is mainly vegetarian, 13% for European and Australian born Australians (Nielsen: Where’s the growth? 2017)

• US - Retail sales of plant-based foods that directly replace animal products grew 8.1% in the 12 months to August 2017 (Good Food Institute, Plant Based Foods Association and Nielsen 2017)

• Europe A 2017 Rabobank report suggested that alternative proteins could represent a third of total EU protein demand growth in the next five years

• Asia - Between 2012 and 2016, new vegetarian and vegan product launches increased by 140% and 440% respectively in Southeast Asia alone (Persistence Market Research 2017)

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*Includes plant based protein and protein sources, fermented protein and cultured meats

Demand is growing for plant-based foods that improve health and nutrition

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Strategy

Vision

To be a Leader in the Supply of Better for You Plant Based Foods

Values

Strategic Priorities

The pathway to achieving our vision

Operational Focus

What we do everyday

Trust & Respect Integrity & Diversity Sustainability Performance Innovation Treat all stakeholders with All decisions and transactions Our focus is on the long-term Exceed expectations on a daily Constantly challenge ourselves trust and respect will not compromise the sustainability of our basis to improve everything integrity of the organisation or environment, business and individual community Optimise the Almond Base Grow our Brands Expand Strategically Increase productivity and achieve sustainably high Grow our consumer and industrial brands, aligned to Pursue value accretive acquisitions that align with our yields from our growing almond orchard base the increasing consumption of plant based foods core competencies in the plant based agrifoods sector Customers Supply Chain People Capital Exceed our current customer’s Optimise our end-to-end supply chain Focus on a safe working environment, Target capital discipline, balance sheet expectations and grow our customer to achieve maximum value for the well-being, company culture, strength, superior shareholder returns base, focused on the Asian marketplace business as a whole leadership development and staff and long term growth training, attraction and retention

Goal

Sustainable Shareholder Value Creation

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2019 Crop & Harvest Update

• Growing Conditions - Growing season for the 2019 crop has been very favourable

• Presence of frost and heat events - our investment in frost fans and water management systems has mitigated these events

• Orchard Health - Orchard specific horticultural programs have led to excellent tree health

• Costs - Almond cost per kg (excluding water) is expected to reduce further from 2018 levels

• Weather Outlook - Forecasted weather outlook for the 2019 harvest period is positive

• Harvest - Harvest has commenced

• Processing - Processing of the crop has commenced this week

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We have secured all our water for the 2019 growing season

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Orchard Video

Press CTRL right click on the link below to get the video to appear – then press play

https://www.dropbox.com/s/sa29eqxokvjmef3/ABA%20-%20Select%20Harvest.m4v?dl=0

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Almond Division Update

• Demand/Marketing - Seeing continued strong demand for our almonds, with our marketing focussed on Asia

• FY2019 Volume - 1,000 HA (2,470 acres) of greenfield orchards will be harvested for the first time.

• Water - The recent movement in water pricing has been significant. Our water procurement policies have protected us in part from the full impact of these increases.

• Further mitigation strategies include the use of technology to better manage water usage. These include:

  • Phytech real time stress monitoring, and

  • Ceres Aerial monitoring Nitrogen Density tracking

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Australian almond exports are up 11 times for the same period last year

• Hull Sales - Improved almond hull returns from selling into the stockfeed markets has offset some of the increased water cost.

Almond Price Expected range - A$8.20/kg – A$8.50/kg

We are anticipating above industry standard yields and improved pricing versus FY2018

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Food Division Update

■ Industrial - Strong Sales

• Industrial Segment of the Food Division continues to see strong demand in both domestic and export markets

• Industrial sales continue to grow with additional relationships developing in the important Chinese market

• Parboil efficiency continues to improve with high quality value add products achieving increased margins

■ Consumer International - Export Sales Continue to Increase

• Pepsico partnership growing as planned

• China remains a critical market for SHV’s branded growth

• China sales remain in line with our expectations - currently focused on the Chinese New Year sales peak for both Sunsol & Lucky

■ Consumer Domestic - Lucky brand remains a focus

• Domestic market share stabilised - good demand across the year-end holiday period & sales in line with expectations

• New product development underway with targeted launches during FY2019

• Trusted quality brands remain the key platform for organic growth moving forward

■ Private Label Contracts

• Efficient low margin business adding to the bottom line

■ ERP System

• JDE system implemented – benefits to be realized through the FY2019 year

Our reinvestment in brands and focus on exports is showing positive signs

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Key Take Outs

1. Zero Harm

• Number One Priority

2. Fundamentals of the business & industry remain strong

• Global consumption of plant protein & almonds forecast to grow at 6-8% per annum

3. Almond strategy is in place with annual crop increases to be delivered through maturing greenfield orchards and higher yields

• Our target is for future yields to be above industry standard

4. Food Business is ready to grow

• Investing to invigorate brands for local, industrial and export markets

5. Cost Focus

• Continued cost/kg focus – water procurement and usage critical

6. Capital Management

• Capital being allocated to focus on delivery of returns above WACC

7. Change to AASB16 Leasing Standard will impact Select Harvests

• These changes will not affect Operating Cash Flow

8. Asset Valuations

• The valuation revealed that these specific assets were valued significantly higher than their carrying value - by $99 million

Focussed business improvements and targeted investments to create sustainable shareholder value

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Annual General Meeting 22 February 2019 Consideration of The Financial Statements & Reports

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Resolution #1: Remuneration Report

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Resolution #1: Remuneration Report

For: Against: Open-Usable:

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Resolution #2(a): Election of Michael Iwaniw

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Resolution #2(a): Election of Michael Iwaniw

For: Against: Open-Usable:

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Resolution #2(b): Election of Nicki Anderson

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Resolution #2(b): Election of Nicki Anderson

For: Against: Open-Usable:

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Resolution #3: Approval of Issue of Awards Under Long Term Incentive Scheme

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Resolution #4: Approval of Amendment of Terms of Existing Awards Under Long Term Incentive Plan

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Resolution #5 (a): Remuneration Arrangements for the Managing Director – Participation by the Managing Director in the Long Term Incentive Plan

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Resolution #5 (b): Remuneration Arrangements for the Managing Director – Approval of Termination Benefits for Managing Director

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Discussion

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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 Harvests website.

www.selectharvests.com.au

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Select Harvests - Financial History

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 SHV Historical Summary Units*

2018

Total Revenue (A$M) 218.0 229.8 224.8 248.7 239.1 250.0 251.3 191.1 188.3 223.6 286.2 242.1 210.2 EBIT (A$M) 38.4 40.5 27.1 26.8 26.0 22.6 19.6 37.7 31.3 89.6 41.3 17.0 34.9 EBIT Margin (EBIT/Sales - %) (%) 17.6% 17.6% 12.1% 10.8% 10.9% 9.0% 7.8% 19.7% 16.6% 40.1% 14.4% 7.0% 16.6% PBT (A$M) 37.9 40.0 25.4 23.0 23.6 18.5 13.4 32.7 26.8 84.3 35.8 12.0 29.5 NPAT (A$M) 26.5 28.1 18.1 16.7 17.3 17.7 9.5 22.9 21.6 59.4 27.9 9.2 20.4 Issued Shares No. of Shares 39.7 38.7 39.0 39.5 39.8 56.2 56.8 57.5 58.0 71.4 72.9 73.6 95.2 Earnings Per Share (AUD Cents per Share) 67.1 71.0 46.7 42.6 43.3 33.7 16.8 40.1 37.5 82.9 46.7 12.6 23.2 Dividend per Share (AUD Cents per Share) 53.0 57.0 45.0 12.0 21.0 13.0 8.0 12.0 20.0 50.0 46.0 10.0 12.0 Payout Ratio (%) 80.0% 80.0% 96.7% 28.2% 48.5% 38.6% 47.6% 29.9% 53.3% 60.3% 98.5% 79.4% 51.7% Net Tangible Assets per Share (A$/Share) 1.83 1.57 1.41 1.56 1.87 2.17 2.19 2.14 2.38 3.35 3.22 2.95 3.34 Net Interest Cover (times) 82.3 75.8 15.6 7.1 10.7 6.7 3.2 7.5 7.0 16.9 7.5 3.4 6.5 Net Debt (A$M) 1.3 1.6 46.8 52.4 45.0 73.1 66.8 79.3 94.8 115.9 68.7 145.8 70.8 Shareholders Equity (A$M) 101.5 95.5 94.1 100.9 113.6 168.8 160.3 159.5 175.4 287.4 290.9 277.6 378.6 Net Debt to Equity Ratio (%) 1.3% 1.7% 49.7% 51.9% 39.6% 43.3% 41.7% 49.7% 54.1% 40.3% 23.6% 52.5% 18.7% Share Price (A$/Share) 13.02 11.60 6.00 2.16 3.46 1.84 2.40 3.90 5.14 11.00 $6.74 $4.90 $6.90 Market Capitalisation (A$M) 517.0 449.4 234.1 85.4 137.6 103.5 120.0 224.3 298.1 785.4 491.5 360.7 657.1 P/E Ratio 19.5 16.0 12.9 5.1 8.0 5.8 12.6 9.8 13.8 13.2 17.6 39.0 32.3 Return on capital employed 25.1% 23.8% 15.2% 8.7% 8.7% 16.6% 10.5% 21.0% 11.2% 4.9% 7.3%

Source: Company Data

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Useful Almond Industry websites

Industry Associations

• Californian Almond Board

• Almond Board of Australia

• Nuts for Life

www.almondboard.com www.australianalmonds.com.au www.nutsforlife.com.au

• Nuts for Life – Almond Health Facts

www.nutsforlife.com.au/nut-fact-sheets/almondhealthfacts/

Industry Reports

• US Crop Forecasts (Subjective, Objective)

• Monthly Almond Position Reports

• Almond Almanac

• UC Davis Almond Development Costings

http://www.almonds.com/growers/resources/crop-forecasts/tc-NASS-Crop-and-Acreage-Reports http://newsroom.almonds.com/position-reports http://www.almonds.com/sites/default/files/2017%20Almanac%20Final%20-%20updated%207.5.18.pdf https://coststudies.ucdavis.edu/en/current/commodity/almonds/

Almond Companies

• Blue Diamond Growers

www.bluediamond.com

• Blue Diamond Ingredients

• Almond Insights

• Derco Foods

• RPAC Almonds

• Wonderful Pistachios & Almonds

www.bdingredients.com/category/almond-market-analysis www.almondinsights.com

www.dercofoods.com/en/english-reports/english-almond-reports www.rpacalmonds.com/marketnews www.wonderfulpistachiosandalmonds.com/#ourdifference

Definitions & Explanations

1 – EBITDA & EBIT are Non-IFRS measures used by the company are relevant because they are consistent with measures used internally by management and by some in the investment community to assess the operating performance of the business. The non-IFRS measures have not been subject to audit or review.

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Almonds – Key Health Facts

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Source: Nuts For Life - Almond Fact Sheet - available at the link below:

https://www.nutsforlife.com.au/nut-fact-sheets/almondhealthfacts/

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EBIT Sensitivity

	Impact on EBIT ($m)
Volume+/-500 tonnes +/- A $2.0M Almond Price (A$/kg) +/- A$0.10/kg +/- A $1.8M Exchange Rate-/+ 1 cent movement in AUD/USD cross rate +/- A $2.0M Growing and Processing Cost-/+ 10% +/- A$ 5.5M

Source: Nuts For Life

Demand is growing for plant based foods that improve health and nutrition

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Thank you

Please direct any queries to:

Paul Thompson Brad Crump Andrew Angus Managing Director Chief Financial Officer Investor Relations and Company Secretary +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 website.

www.selectharvests.com.au

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