SELECT HARVESTS LIMITED — Annual Report 2005

Aug 22, 2005

SELECT HARVESTS LIMITED

RESULTS FOR THE YEAR ENDED 30 JUNE 2005 NPAT UP 43% DIVIDEND UP 62%

RESULTS

Select Harvests Limited announced today a net profit after tax of $21.7 million for the 12 months ended 30 June 2005. Directors declared a fully franked final dividend of 26 cents per share, bringing the total dividend for the year to 42 cents fully franked.

The increase in dividend and payout ratio reflects the company's earnings growth, strong balance sheet and cash flow and our confidence in the future.

KEY FINANCIAL RESULTS	Year ended30/6/05	Year ended30/6/04	$%$Increase
Total Sales (000)	$178,029	$127,380	$+40%$
EBIT (000)	$33,263	$23,836	$+40%$
Net Profit After Tax (000)	$21,716	$15,225	$+43%$
Earnings per Share (Basic)	$55.9$ cents	$40.0$ cents	$+40%$
Total Dividend per share	$42.0$ cents	$26.0$ cents	$+62%$

BUSINESS MODEL CONTINUES TO DELIVER

The business model implemented by the company over recent years continues to deliver profit growth, increased dividends and share price appreciation. The 2005 profit result represents the sixth consecutive year of earnings growth in excess of 25%.

During the last year we have further developed our business, within core strategies, planting an additional 4,100 acres of investor owned almond orchards and expanding our Food Products Division by the acquisition of the Chiquita Nibbles business.

Managing Director Mr Bird said, "The recent planting of 4,100 new acres of almonds on behalf of external investors increased the total area under our management to 18,100 acres".

"We are now one of the largest almond growers globally with scale and relevance on the world stage".

"Australian almond producers have significant advantages in crop vields and quality over the major player (USA) allowing us to compete effectively in the global market" he said.

Trading conditions continue to be favourable with almond prices trading at record levels, growth in nut consumption globally, and increasing interest in almond orchard investment.

Mr Bird said "Almond prices have risen to record highs on the back of increasing consumption and a plateauing of world production"

"Nut consumption continues to grow both domestically and internationally as a result of a growing awareness of the health benefits of regular consumption" he said.

THE YEAR IN REVIEW

Over recent years Select Harvests has established an integrated agri-food business with a diversified and increasing income stream. Activities include managing almond orchards for investors, marketing almonds in the domestic and export markets, and processing and marketing an extensive range of nut and fruit based products to retailers, distributors and food manufacturers.

• We have recently completed the establishment of a further 4,100 acres of almond $\bullet$ orchards increasing our total area under management by 29% to 18,100 acres
• The acquisition of the Chiquita Nibbles business was completed in September 2004 $\bullet$ delivering sales growth, increased market share, additional almond sales, and economies of scale. It has complemented our existing position as the leading supplier of packaged nuts to the grocery section of supermarkets, and significantly increased our share of the important and growing fresh produce area.
• Food Products Division sales for the year reached $131 million. $\bullet$
• The 2005 almond crop yielded 6,070 tonnes in total, up 70% from the previous year $\bullet$ as our investor owned orchards continue to mature. Select's owned orchards produced a record crop, up 26% on the previous year.

DIVESTMENT OF PESTICIDES BUSINESS

Select Harvests Limited has entered an agreement to sell all of the shares in Riverina Pelletising Services Pty Ltd (Pesticides Business) to Australian Businesspoint Pty Ltd for a total consideration of $5.7 million. The contract is subject to certain conditions being satisfied by the purchaser and settlement is expected to occur on the 14th October 2005. We estimate a net profit before tax of approximately $4 million from the transaction.

This business has been a good contributor to our profit over a number of years. However given it represents a non core activity which operates in a market in which we have minimal influence, it is appropriate we take the opportunity to divest the business and concentrate on the further development of our core activities.

The Directors would like to take the opportunity to thank Vince Cavanagh and his team for their efforts and dedicated service and wish them all well under the new ownership

FUTURE PROSPECTS

Global almond prices continue to be buoyant and will continue to positively impact the business. We are planning the establishment of a further 6,000 acres of managed almond orchards in 2006 with potential to increase this amount further. The larger acreage under management and the ongoing increases in production will increase management services revenue for the year. The Food Products Division continues to operate in growth markets and we are looking for further sales and distribution growth in 2006.

Given no unforseen circumstances, the outlook for the 2006 financial year remains positive across all business segments.

Tuesday, 23 August 2005

For further information please contact:

Mr John Bird - Managing Director

Mr Marcello Mattia - Chief Financial Officer

$(03)$ 9474 3544

About Select Harvests Limited

Select Harvests Limited, Australia's largest almond grower, manages in excess of 60% of Australia's almond orchards, and is firmly placed in the top 5 almond growers globally. It is also Australia's leading manufacturer, processor and marketer of a range of nuts, fruit based, and associated products to the Australian retail and industrial markets, and exports almonds to several countries in Asia. Europe and the Middle East.

Select Harvests' business streams are as follows:

Almond Operations

• Owns/leases and manages almond orchards in the Robinvale area of north-west Victoria.

• Manages on a fee for service basis, almond orchards on behalf of a number of external investors. These services include orchard establishment, farm management, harvesting, processing, and marketing.

• Currently handles approximately 40% of Australia's almond crop from owned and managed orchards.

• Exports approximately 40% of its almond production to a range of countries including India, Japan, China, Thailand, Germany, Spain, United Kingdom, United Arab Emirates and Italy.

Food Products

• Produces an extensive range of packaged nuts and associated products (snacks, cooking ingredients, mueslis, natural health foods, dried fruits, etc).

• Australia's leading supplier of processed and packaged nuts to Australian supermarkets. The Company markets product through the Lucky, Sunsol, Nu-Vit, Meriram and Soland brands.

• Manufactures a range of nut-based ingredients for food manufacturers and distributors.

Rule 4.3A

Appendix 4E Preliminary final report

Name of entity

Select Harvests Limited

ABN or equivalent company reference: 87 000 721 380

1. Reporting period

Report for the financial yearlended	30 June 2005
Previous corresponding periodis the financial year ended	30 June 2004

$2.$ Results for announcement to the market (All amounts in this report are expressed in A$'000 unless otherwise stated)

Revenues from ordinary activities (item 2.1)	Up	40%	10	$178,029
Profit (loss) from ordinary activities after taxattributable to members (item 2.2)	Up	43%$\pm 0$		$21,716
Net profit (loss) for the period attributable to members$(i$ tem $2.3)$	U p	43%	$\pm$ o	$21,716
Dividends $\langle item 2.4 \rangle$	Amount per security		Franked amount persecurity
Final dividend	$0.26 \epsilon$			$0.26 \notin$
Previous corresponding period	$0.16 \notin$			$0.16 \notin$
Record date for determining entitlements to the dividend(item 2.5)	Friday, 9 September 2005

Brief explanation of any of the figures reported above necessary to enable the figures to be understood (item $2.6$ ):

Please refer to the attached announcement to the ASX.

Statement of Financial Performance (item 3) $\overline{3}$ .

Refer to the attached financial report

• Statement of Financial Position (item 4) 4. Refer to the attached financial report
• Statement of Cash Flows (item 5) $5.$ Refer to the attached financial report
• 1. Dividends (item 6)

	Date of payment	Total amount of dividend
Final dividend - year ended 30 June 1 October 2005-2005		80.26

Amount per security

		Amount persecurity	Frankedamount persecurity at$30%$ tax	Amount persecurity offoreignsourceddividend
Total dividend:	Current year	$26.0 \notin$	26.0 $\epsilon$	$0 \notin$
	Previous year	$16.0 \notin$	16.0 $\phi$	$0\notin$

Total dividend on all securities

	Current period $A'000	PreviouscorrespondingPeriod - $A'000
Ordinary securities (each class separately)	10,158	6,164
Preference securities (each class separately)	$\sim$	w
Other equity instruments (each class separately)		$\blacksquare$
Total	10,158	6,164

7. Details of dividend or distribution reinvestment plans in operation are described below (item 6):

Dividends payable may be reinvested in ordinary shares under the company's Dividend Reinvestment Plan

The last date(s) for receipt of election notices for participation in the dividend or distribution reinvestment plan Friday, 9 September 2005

8. Statement of retained earnings

Refer to note 6 of the attached financial statements.

$9.$ Net tangible assets per security (item 3)

	Current period	Previous correspondingperiod
Net tangible asset backing per ordinarysecurity	$1.64	$1.35

10. Significant information relating to the entity's financial performance and financial position.

Please refer to the attached announcement.

1. The financial information provided in the Appendix 4E is based on the annual financial report (attached), which has been prepared in accordance with Australian accounting standards (item 13).

12. Commentary on the results for the period.

Please refer to the attached announcement.

13. Audit of the financial report

The financial report has been audited

14. Audit opinion

The audit opinion is unqualified.

15. Annual General Meeting

The annual general meeting will be at the ASX Theatrette, Ground Floor, 530 Collins Street, Melbourne on Monday 24 October 2005 at 2.00pm.

16. Periodic Disclosure Requirements Compliance Statement

• A financial report for the year ended 30 June 2005 is provided with the Appendix 4E $\blacksquare$ information.
• The financial report has been prepared in accordance with Australian Accounting $\overline{2}$ Standards.
• 3 The financial report and information provided in Appendix 4E uses the same accounting policies as those applied at 30 June 2004.
• The Appendix 4E information gives a true and fair view of the matters disclosed in the $\overline{4}$ annual financial report.
• This report is based on the annual financial report, which has been audited. 5.
• 1. The audit report has been provided with the annual financial report.
• $7.$ The economic entity has a formally constituted Audit & Risk Committee.

Sign here: Marcello Mattia (Company Secretary) Date: 23 August 2005

Print name: Marcello Mattia

Select Harvests Limited

ABN 87 000 721 380

Annual Financial Report

for the year ended 30 June 2005

. . . . . . . . . . . . . . . . . . . .

......................

AUDITOR'S INDEPENDENCE DECLARATION

To the Directors of Select Harvests Limited

In relation to the independent review for the financial year ended 30 June 2005, to the best of my knowledge and belief there have been:

• a) No contraventions of the auditor independence requirements of the Corporations Act 2001; and
• b) No contravention of any applicable code of professional conduct.

Le Pautner

PITCHER PARTNERS

T J BENFOLD Partner Melbourne 23 August 2005

Statement of Financial Performance

YEAR ENDED 30 JUNE 2005	Notes	ECONOMIC ENTITY		PARENT ENTITY
		2005$'000	2004$'000	2005$'000	2004$'000
Sales revenue	$\overline{2}$	178,029	127,380
Cost of sales	3(a)	(131, 605)	(91, 242)
GROSS PROFIT		46,424	36,138
Other revenues from ordinary activities	$\mathbf{2}$	870	446	18,829	16,304
Other revenues from SGARA stock adjustment	2	787	561
Distribution expenses		(3, 334)	(2, 467)
Marketing expenses		(659)	(522)
Occupancy expenses		(1,608)	(1, 314)
Administrative expenses		(2,724)	(2,500)	(1,980)	(1, 333)
Borrowing costs expensed	3	(1, 361)	(1, 369)	(1,219)	(1,182)
Other expenses from ordinary activities		(6, 171)	(6, 044)	(561)	(661)
Other expenses from SGARA tree adjustment		(229)	(342)
PROFIT FROM ORDINARY ACTIVITIES BEFOREINCOME TAX EXPENSE		31,995	22,587	15,069	13,128
INCOME TAX EXPENSE RELATING TO ORDINARYACTIVITIES	4	(10, 279)	(7, 362)	(366)	(618)
PROFIT FROM ORDINARY ACTIVITIES AFTERINCOME TAX EXPENSE		21,716	15,225	14,703	12,510
NET PROFIT		21,716	15,225	14,703	12,510
NET PROFIT ATTRIBUTABLE TO MEMBERS OFSELECT HARVESTS LIMITED	21(b)	21,716	15,225	14,703	12,510
TOTAL CHANGES IN EQUITY OTHER THAN THOSERESULTING FROM TRANSACTIONS WITHOWNERS AS OWNERS ATTRIBUTABLE TO
MEMBERS OF SELECT HARVESTS LIMITED		21,716	15,225	14,703	12,510
Basic earnings per share (cents per share)	25	55.9	40.0
Diluted earnings per share (cents per share)	25	55.7	39.7

The Statement of Financial Performance is to be read in conjunction with the Notes to the Financial Statements.

Statement of Financial Position

AT 30 JUNE 2005	Notes	ECONOMIC ENTITY			PARENT ENTITY
		2005	2004	2005	2004
		$'000	$'000	$'000	$'000
CURRENT ASSETS
Cash assets		4,539	489	4,231
Receivables	6	24,862	15,702	10	19
Inventories	7	24,796	15,444
Other	8	825	956	770	784
TOTAL CURRENT ASSETS		55,022	32,591	5,011	803
NON-CURRENT ASSETS
Receivables	9			41,205	41,673
Other financial assets	10	21	19	12,195	12,195
Property, plant and equipment	11	43,991	41,792	523	747
Deferred tax assets	4	395	322	83	124
Self-generating and regenerating assets	12	5,516	4,986
Intangible assets	13	27,367	27,245
TOTAL NON-CURRENT ASSETS		77,290	74,364	54,006	54,739
TOTAL ASSETS		132,312	106,955	59,017	55,542
CURRENT LIABILITIES
Payables	14	32,044	14,344	1,370	587
Interest-bearing liabilities	15	486	957		205
Current tax liabilities	4	3,239	2,229	318	378
Provisions	16	2,139	1,547	191	150
TOTAL CURRENT LIABILITIES		37,908	19,077	1,879	1,320
NON-CURRENT LIABILITIES
Payables	17			13,490	9,150
Interest-bearing liabilities	18	376	7,123		6,700
Deferred tax liabilities	4	2,123	1,263
Provisions	19	360	224	48	36
TOTAL NON-CURRENT LIABILITIES		2,859	8,610	13,538	15,886
TOTAL LIABILITIES		40,767	27,687	15,417	17,206
NET ASSETS		91,545	79,268	43,600	38,336
EQUITY
Contributed equity	20	46,925	43,940	46,925	43,940
Reserves	21	14,191	14,191	3,270	3,270
Retained profits (accumulated losses)	21	30,429	21,137	(6, 595)	(8,874)
TOTAL EQUITY		91,545	79,268	43,600	38,336

The Statement of Financial Position is to be read in conjunction with the Notes to the Financial Statements.

Statement of Cash Flows

YEAR ENDED 30 JUNE 2005	Notes	ECONOMIC ENTITY		PARENT ENTITY
		2005	2004	2005	2004
		$'000	$'000	$'000	$'000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers		180,687	125,862
Payments to suppliers and employees		(137, 414)	(102, 405)	(1,328)	(1,682)
Interest received		94	120	69	101
Borrowing costs		(1, 361)	(1, 369)	(1,219)	(1, 182)
Income tax paid		(8, 478)	(7, 281)	(382)	(499)
NET CASH FLOWS FROM (USED IN)
OPERATING ACTIVITIES	22(a)	33,528	14,927	(2, 860)	(3,262)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and
equipment		774	359	134
Purchase of property, plant and equipment		(6, 155)	(4,329)	(133)	(545)
Purchase of Other non-current assets	22(d)	(6,933)	(9, 145)
NET CASH FLOWS FROM (USED IN)
INVESTING ACTIVITIES		(12, 314)	(13, 115)	1	(545)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issues of ordinary shares		515	6,318	515	6,318
Proceeds from borrowings - other
Repayments of borrowings – other		(7,597)	(1, 286)	16,657	3,848
Payment of dividends on ordinary shares		(9,955)	(7,012)	(9,955)	(7, 012)
NET CASH FLOWS FROM/(USED IN)
FINANCING ACTIVITIES		(17, 037)	(1,980)	7,217	3,154
NET INCREASE/(DECREASE) IN CASH HELD		4,177	(168)	4,358	(653)
Add opening cash brought forward		362	530	(127)	526
CLOSING CASH CARRIED FORWARD	22(b)	4,539	362	4,231	(127)

The Statement of Cash Flows is to be read in conjunction with the Notes to the Financial Statements

Notes to the Financial Statements

30 JUNE 2005

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1.

(a) Basis of accounting

The financial report is a general purpose financial report which has been prepared in accordance with the requirements of the Corporations Act 2001 which includes applicable Accounting Standards. Other mandatory professional reporting requirements (including Urgent Issues Group Consensus Views) have also been complied with.

The financial report covers Select Harvests Limited as an individual parent entity and Select Harvests Limited and controlled entities as an economic entity. Select Harvests Limited is a company limited by shares, incorporated and domiciled in Australia.

The financial report has been prepared on an accruals basis and is bas ed on historical costs, except where AASB 1037: "Self Generating and Regenerating Assets" has been applied, and does not take into account changing money values or, except where stated, current valuations of non-current assets. Cost is based on the fair value of consideration that would be given in exchange for assets.

The following is a summary of the material accounting policies adopted by the economic entity in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

(b) Principles of consolidation

The consolidated financial statements are those of the consolidated entity, comprising Select Harvests Limited (the parent entity) and all entities which Select Harvests Limited controlled from time to time during the year and at balance date.

The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies which may exist.

All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full.

(e) Foreign currencies

Translation of foreign currency transactions

Transactions in foreign currencies of entities within the consolidated entity are converted to local currency at the rate of exchange ruling at the date of the transaction.

Foreign currency monetary items that are outstanding at the reporting date (other than monetary items arising under foreign currency contracts where the exchange rate for that monetary item is fixed in the contract) are translated using the spot rate at the end of the financial year.

A monetary item arising under a foreign currency contract outstanding at the reporting date where the exchange rate for the monetary item is fixed in the contract is translated at the exchange rate fixed in the contract.

Except for certain specific hedges, all resulting exchange differences arising on settlement or re-statement are recognised as revenues and expenses for the financial year. Any gains or costs on entering a hedge are deferred and amortised over the life of the contract.

Specific hedges

Where a purchase or sale is hedged specifically, exchange gains or losses on the hedging transaction arising up to the date of purchase or sale and costs, premiums and discounts relative to the hedging transaction are deferred and included in the measurement of the purchase or sale. Exchange gains and losses arising on the hedge transaction after that date are taken to the Statement of Financial Performance.

This accounting policy will be impacted on first-time adoption of AIFRS (refer to Note 34).

30 JUNE 2005

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(d) Cash and cash equivalents

Cash on hand and in banks and short-term deposits are stated at nominal value.

For the purposes of the Statement of Cash Flows, cash includes cash on hand and in banks, and money market investments readily convertible to cash within two working days, net of outstanding bank overdrafts.

Bank overdrafts are carried at the principal amount. Interest is charged as an expense as it accrues.

(e) Inventories

Inventories are valued at the lower of cost and net realisable value except for almond stocks which are measured at net market value in accordance with AASB 1037: "Self Generating and Regenerating Assets" - refer to (f) below.

Costs incurred in bringing each product to its present location and condition are accounted for as follows:

• Raw materials and consumables purchase cost on a first-in-first-out basis;
• Finished goods and work-in-progress cost of direct material and labour and a proportion of manufacturing $\blacksquare$ overheads based on normal operating capacity; and
• Almond stocks are valued in accordance with AASB 1037 "Self Generating and Regenerating Assets" whereby the cost of the non-living (harvested) produce is deemed to be its net market value immediately after it becomes non-living. This valuation takes into account current almond selling prices and current processing and selling costs.

(f) Self-Generating and Regenerating Assets

Almond Trees

Almond trees are classified as a self generating and regenerating asset and valued in accordance with AASB 1037 "Self Generating and Regenerating Assets."

Developing almond trees are valued at their growing cost until the year they achieve economic maturity. The values of economically mature almond trees are calculated using a discounted cash flow methodology. The discounted cash flow incorporates the following factors:

• Almond trees have an estimated 30-year economic life, with crop yields consistent with long-term yield rates;
• Selling prices are based on long-term average trend prices;
• Growing, processing and selling costs are based on long-term average levels;
• Cash flows are discounted at a rate that takes into account the cost of capital plus a suitable risk factor; and Asset values to be deducted from the cumulative cash flow, to determine the tree value, are based on current valuation and then adjusted annually to account for capital expenditure, depreciation and utilised acreage.

Growing Almond Crop

The growing almond crop is valued in accordance with AASB 1037 "Self Generating and Regenerating Assets". This valuation takes into account current almond selling prices and current growing, processing and selling costs. The calculated crop value is then discounted to take into account that it is only partly developed, and then further discounted by a suitable factor to take into account the agricultural risk until crop maturity.

New Orchards Growing Costs

All costs associated with the establishment, planting and growing of almond trees for a new orchard are accumulated for the first three years of that orchard. Once immature trees commence bearing a commercial crop a proportion of the annual growing costs are expensed on the basis of yield achieved as a proportion of anticipated yield of a mature tree. At the end of the eighth year full maturation is deemed to occur, after which the tree is considered to be mature in terms of revenue generation and the annual growing costs are then expensed in full and the almond trees are valued as described above.

30 JUNE 2005

$\mathbf{1}$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(g) Property, plant and equipment

Cost and valuation

Plantation land, water rights and buildings on freehold land are measured on a fair value basis. Carrying amounts are regularly reviewed by directors to ensure that they do not differ materially from the asset's fair value at reporting date. Where necessary, the asset is revalued to reflect its fair value.

All other classes of property, plant and equipment are measured at cost.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from those assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets employment and subsequent disposal. The expected net cash flows have not been discounted to present values in determining recoverable amounts.

Where assets have been revalued, the potential effect of the capital gains tax on disposal has not been taken into account in the determination of the revalued carrying amount. Where it is expected that a liability for capital gains tax will arise, this expected amount is disclosed by way of note.

Depreciation

The depreciable amount of all fixed assets including buildings and capitalised leased assets, but excluding freehold land water rights, and almond trees, are depreciated on a straight line basis over their estimated useful lives to the entity commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The useful lives for each class of assets are:

	2005	2004
Buildings:	$25$ to 40 years	$25$ to 40 years
Leasehold improvements:	$5$ to 40 years	$5$ to 40 years
Plant and equipment:	$5$ to 20 years	5 to 20 years
Leased Plant and Equipment:	$5$ to 10 years	$5$ to $10$ years
Plantation land and irrigation systems:	10 to 40 years	$10$ to 40 years

Capital works in progress

Capital works in progress are valued at cost and relate to costs incurred for owned orchards and other assets under development.

(h) Leases

Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership.

Operating leases

The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased item, are recognised as an expense on a straight line basis.

30 JUNE 2005

$\blacktriangleleft$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

Finance leases

Leases which effectively transfer substantially all of the risks and benefits incidental to ownership of the leased item to the group are capitalised at the present value of the minimum lease payments and disclosed as plant and equipment under lease. A lease liability of equal value is also recognised.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the assets and the lease term. Minimum lease payments are allocated between interest expense and reduction of the lease liability with the interest expense calculated using the interest rate implicit in the lease and charged directly to the Statement of Financial Performance.

The cost of improvements to or on leasehold property is capitalised, disclosed as leasehold improvements, and amortised over the unexpired period of the lease or the estimated useful lives of the improvements, whichever is the shorter.

(i) Intangibles

Brand names

Brand names are measured at cost. Directors are of the view that brand names have an indefinite life. Brand names are therefore not depreciated.

This accounting policy will be impacted on first-time adoption of AIFRS (refer to Note 34).

Goodwill

Goodwill represents the excess of the purchase consideration plus incidental costs over the fair value of identifiable net assets acquired at the time of acquisition of a business or shares in a controlled entity.

Goodwill is amortised on a straight line basis over the period during which benefits are expected to be received. This is taken as being 20 years.

This accounting policy will be impacted on first-time adoption of AIFRS (refer to Note 34).

(j) Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

Sale of Goods

Control of the goods has passed to the buyer.

Rendering of Services

Revenue from the rendering of services is recognised upon the delivery of the service to the customer. Certain clients may be invoiced in advance of provision of services.

Interest

Interest revenue is recognised when it becomes receivable on a proportional basis taking into account the interest rates applicable to the financial assets.

Dividends

Control of the right to receive a dividend is evidenced by the approval of the dividend at a meeting of the Board of Directors in accordance with the Company's constitution.

30 JUNE 2005

$\mathbf{1}$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

Almond Stocks

Increments or decrements in the net market value of almond stocks are recognised as revenues or expenses in the Statement of Financial Performance in the financial year in which they occur. The net increment or decrement in the total market value of the almond stocks is determined as the difference between the net market value and quantities at the beginning of the year and at year end, less any further costs required to get the almonds stocks to a saleable state.

Almond Pool Revenue

Under the contractual arrangements with external growers the Company simultaneously acquires and sells the almonds and does not make a margin on those sales. These transactions are disclosed in Note 2 and are not recognised as revenue.

As at 30 June 2005 the Company held almond inventory on behalf of external growers which was not recorded as inventory of the Company.

All revenue is stated net of the amount of Goods and Services Tax (GST).

(k) Taxes

Tax-effect accounting is applied using the liability method whereby income tax is regarded as an expense and is calculated on the accounting profit after allowing for permanent differences. To the extent timing differences occur between the time items are recognised in the financial statements and when items are taken into account in determining taxable income, the net related taxation benefit or liability, calculated at current rates, is disclosed as a future income tax benefit or a provision for deferred income tax. The net future income tax benefit relating to tax losses and timing differences is not carried forward as an asset unless the benefit is virtually certain of being realised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income tax legislation, and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

Where assets are revalued no provision for potential capital gains tax has been made.

This accounting policy will be impacted on first-time adoption of AIFRS (refer to Note 34).

Tax Consolidation

The parent entity of Select Harvests Limited and its subsidiaries have implemented the tax consolidation legislation and formed a tax-consolidated group from 1 July 2003.

The parent entity and subsidiaries in the tax consolidated group have entered into a tax funding agreement such that each entity in the tax consolidated group recognises the assets, liabilities, expenses and revenues in relation to its own transactions, events and balances only. All entities in the tax-consolidated group have adopted UIG 52 to account for the effects of the tax funding agreement under the tax consolidation system. This means that:

• The parent entity recognises all current and deferred tax amounts relating to its own transactions, events and balances only;
• The subsidiaries recognise current or deferred tax amounts arising in respect of their own transactions, events and $\blacksquare$ balances only;
• All expenses and revenues arising under the tax funding agreement are recognised as a component of income tax $\blacksquare$ expense or income tax revenue by each individual entity; and
• All assets and liabilities arising under the tax funding agreement are recognised as tax-related amounts receivable from or payable to other entities in the group, rather than as tax assets or tax liabilities.

Deferred tax balances relating to the subsidiaries have been remeasured by reference to the carrying amounts of the subsidiaries' assets based on the reset tax value under tax consolidation.

The tax-consolidated group also has a tax sharing agreement in place to limit the liability of subsidiaries in the taxconsolidated group arising under the joint and several liability requirements of the tax consolidation system in the event of default by the parent entity to meet its payment obligations.

30 JUNE 2005

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST except:

• Where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable: and
• Receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position.

Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating eash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(I) Employee benefits

Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date. These benefits include wages and salaries, annual leave and long service leave.

Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be settled within twelve months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid when the liability is settled. All other employee benefit liabilities are measured at the present value of the estimated future cash outflow to be made in respect of services provided by employees up to the reporting date. In determining the present value of future cash outflows, the market yield as at the reporting date on national government bonds, which have terms to maturity approximating the terms of the related liability, are used.

Employee benefit expenses and revenues arising in respect of the following categories are charged against profit on a net basis in their respective categories:

• wages and salaries, non-monetary benefits, annual leave, long service leave, sick leave and other leave benefits.
• Other types of employee benefits.

Contributions are made by the economic entity to an employee superannuation fund and are charged as expenses when ineurred

(m) Financial Instruments

Terms and Conditions

Financial Assets

Trade receivables are carried at full amounts due less any provision for doubtful debts. A provision for doubtful debts is recognised when collection of the full amount is no longer probable.

Amounts receivable from other debtors are carried at full amounts due. Other debtors are normally settled on 30 days from month end unless there is a specific contract which specifies an alternative date. Amounts receivable from related parties are carried at full amounts due. Details of the terms and conditions are set out in Note 30.

30 JUNE 2005

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd) $1.$

Financial Liabilities

The bank overdraft is carried at the principal amount. Interest is charged as an expense as it accrues. The bank overdraft is secured by a floating charge over the Company's assets.

Liabilities are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the economic entity. Trade liabilities are normally settled on 30 days from month end.

Finance lease liability is accounted for in accordance with AASB 1008 "Leases". As at balance date, the Company had finance leases with an average lease term of four years. The average discount rate implicit in the leases is 7%. The lease liability is secured by a charge over the leased asset.

(n) Comparatives

Where necessary, comparatives have been reclassified and repositioned for consistency with current year disclosures.

(o) Rounding Amounts

The company is of a kind referred to in Class Order 98/100, issued by the Australian Securities & Investments Commission, relation to the "rounding off" of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.

30 JUNE 2005	Notes	ECONOMIC ENTITY		PARENT ENTITY
			2005	2004	2005	2004
			$'000	$'000	$'000	$'000
2.	REVENUE FROM ORDINARY ACTIVITIES
	Revenues from operating activitiesTotal revenues from operating activities		178,029	127,380
	Revenues from non-operating activities
Management fees					3,011	2,608
	Dividends and distributions
	- Controlled entities				13,907	11,300
	- Other corporations		2
	Total dividends and distributions		2		13,907	11,300
Interest
	- Wholly owned entities				1,708	2,295
	- Other persons/corporations		94	120	69	101
Total interest			94	120	1,777	2,396
Other Income				2
	Proceeds from disposal of property, plant &
equipment			774	324	134
	Total revenues from non-operating activities		870	446	18,829	16,304
	SGARA Revenue - Stock increment		787	561	$\blacksquare$
	Total revenues from ordinary activities		179,686	128,387	18,829	16,304
	Revenue/Cost of goods sold from Almond Pool
	Revenue from almond pool sales		12,632	5,163
	Cost of goods sold from almond pool sales		(12, 632)	(5, 163)
3.	EXPENSES AND LOSSES/(GAINS)
(a) Expenses
	Cost of goods & services sold		131,605	91,242
	Depreciation of non-current assets
	Freehold land and buildings		5	5	1
Buildings			55	75
	Plantation Land and irrigation systems		342	303
	Plant and equipment		2,453	2,173	166	107
	Total depreciation of non-current assets		2,855	2,556	167	108

30 JUNE 2005	Notes	ECONOMIC ENTITY		PARENT ENTITY
		2005	2004	2005	2004
		$'000	$'000	$'000	$'000
3. EXPENSES AND LOSSES/(GAINS) (cont'd)
Amortisation of non-current assets
Goodwill		1,514	1,413
Leased plant and equipment		323	380	8	25
Total amortisation of non-current assets		1,837	1,793	8	25
Total depreciation and amortisation expenses		4,692	4,349	175	133
Borrowing costs expensedwholly owned entities
other persons		1,361	1,369	1,219	1,182
Total borrowing costs		1,361	1,369	1,219	1,182
Movement in provisions for doubtful debts		24	27
Net expense (revenue) for movement in provision
for employee entitlements		1,166	589	117	54
Net expense (revenue) for movement in provision
for stock diminution		(105)	67
Operating lease rental
minimum lease payments		3,713	2,189
Total operating lease rental		3,713	2,189
(b) Losses/(gains)
Net loss on disposal of property, plant and
equipment		78	17	44
INCOME TAX4.
The prima facie tax, using tax rates applicable inthe country of operation, on profit andextraordinary items differs from the income taxprovided in the financial statements as follows:
Prima facie tax on profit from ordinary activitiesTax effect of permanent differences		9,599	6,776	4,520	3,939
Rebateable dividends				(4, 172)	(3,390)
Amortisation of intangible assets		454	424
Other non allowable items		237	130	8	6
Under/(over) provision of previous year		(11)	32	10	63
Income tax expense attributable to ordinaryactivities		10,279	7,362	366	618
Deferred tax assets and liabilities
Provision for income tax - current		3,239	2,229	318	378
Provision for deferred income tax - non-current		2,123	1,263
Future income tax benefit - non-current		395.	322	83	124

This future income tax benefit will only be obtained if:

(a) future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised;

(b) the conditions for deductibility imposed by tax legislation continue to be complied with; and

no changes in tax legislation adversely affect the consolidated entity in realising the benefit. $(c)$

30 JUNE 2005	Notes	ECONOMIC ENTITY		PARENT ENTITY
		2005	2004	2005	2004
		$'000	$'000	$'000	$'000
5. DIVIDENDS PAID OR PROVIDED FOR ONORDINARY SHARES
(a) DIVIDENDS PAID DURING THE YEAR
(i) Current year interimFranked dividends (16.0c per share)
(2004:10.0c)		6,225	3,840	6,225	3,840
		6,225	3,840	6,225	3,840
(ii) Previous year final (paid $1st$ October 2004)
Franked dividends (16.0c per share)		6,199	4,590	6,199	4,590
		12,424	8,430	12,424	8,430
(b) DIVIDENDS PROPOSED AND NOTRECOGNISED AS A LIABILITYFranked dividends$(26.0c$ per share, $10,157,971)
(c) Franking credit balance
Balance of franking account at year-end adjustedfor franking credits arising from payment ofprovision for income tax and dividendsrecognised as receivables, franking debits arisingfrom payment of proposed dividends and anycredits that may be prevented from distribution in
subsequent years.		28,229	25,894

The dividend franking account has been measured at the after tax profits basis not the income tax paid basis in accordance with the New Business Tax System (Imputation) Act 2002.

The tax rate at which paid dividends have been franked is 30% (2004: 30%).

$\pmb{6}$ RECEIVABLES (CURRENT)

Trade debtors	24,829	15.710	۰	-
Provision for doubtful debts	(24)	(27)		-
	24,805	15.683	٠	-
Other receivables		10	10	19
	24,862	15.702	10	19

Notes continued

30 JUNE 2005	Notes	ECONOMIC ENTITY		PARENT ENTITY
		2005$'000	2004$'000	2005$'000	2004$'000
INVENTORIES (CURRENT)7.
Raw materials
Raw materials at cost		7,234	3,248
Provision for diminution in value	7(a)	(51)	(31)
		7,183	3,217
Finished goods
Finished goods at cost		7,649	6,061
Provision for diminution in value		(466)	(381)
	7(a)	7,183	5,680
Other inventory
Other inventory at cost		5,318	2,569
		5,318	2,569
Almond stocks
At net market value		5,112	3,978
		5,112	3,978	-
Total inventories		24,796	15,444	$\overline{\phantom{0}}$
(a) Movements in Provision for diminution in value
Beginning of the financial year		(412)	(479)
Movement during the year		(105)	67
End of the financial year		(517)	(412)
OTHER CURRENT ASSETS8.
Prepayments		825	956	770	784
RECEIVABLES (NON-CURRENT)9.
Related party receivables
Wholly-owned group
controlled entities۳	28			42,304	42,772
provision for diminution	28			(1,099)	(1,099)
				41,205	41,673
10. OTHER FINANCIAL ASSETS (NON-CURRENT)
Investments at cost comprise:Shares
Other Corporations		21	19
Controlled entities - unlisted				12,195	12,195
		21	19	12,195	12,195

Notes continued

30 JUNE 2005	Notes	ECONOMIC ENTITY		PARENT ENTITY
		2005	2004	2005	2004
		$'000	$'000	$'000	$'000
11. PROPERTY, PLANT AND EQUIPMENT
Freehold land and buildings
At cost		315	465		150
Accumulated depreciation		(83)	(81)		(1)
	11(b)	232	384	$\overline{\phantom{a}}$	149
Buildings
At fair valueAccumulated depreciation	H(a)	2,792	2,792
		(261)	(206)
	11(b)	2,531	2,586	ä,
Plantation land and irrigation systemsAt fair value
Accumulated depreciation	H(a)	24,147	23,822(819)
		(1, 162)22,985	23,003	$\overline{a}$
Total land and buildings	11(b)	25,748	25,973	$\overline{\phantom{a}}$	149
Plant and equipment under lease
At cost		2,771	3,368		144
Accumulated amortisation		(1, 457)	(1,664)		(69)
	11(b)	1,314	1,704	$\overline{\phantom{0}}$	75.
Plant & equipmentAt cost		31,165	25,762	1,198	1,049
Accumulated depreciation		(15, 424)	(13,084)	(689)	(526)
		15,741	12,678	509	523
Capital works in progress	11(b)
At cost		1,188	1,437	14
	11(b)	1,188	1,437	14
Total plant and equipment		18,243	15,819	523	598
Total property, plant and equipment
Fair value		26,939	26,614
Cost		35,439	31,032	1,212	1,343
		62,378	57,646	1,212	1,343
Accumulated depreciation and amortisation		(18, 387)	(15, 854)	(689)	(596)
Total written down amount		43,991	41,792	523	747

(a) Valuations

The fair values of freehold land, and buildings on freehold land have been determined by the directors, based upon information and advice received during the previous financial year. Such valuations are performed on an open market basis, being the amounts for which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm's length transaction at the valuation date.

	Notes	ECONOMIC ENTITY	PARENT ENTITY
		2005	2005
30 JUNE 2005		$'000	$'000
(b) Reconciliations
Reconciliations of the carrying amounts of
property, plant and equipment at the beginning
and end of the current financial year.
Freehold land and buildings
Carrying amount at beginning		384	149
Additions		25	24
Depreciation expense		(5)	(1)
Disposals		(172)	(172)
		232
Buildings
Carrying amount at beginning		2,586
Depreciation expense		(55)
		2,531
Plantation Land and irrigation systems
Carrying amount at beginning		23,003
Additions		434
Disposals		(382)
Transfer Between classes		272
Depreciation expense		(342)
		22,985
Plant and equipment under lease
Carrying amount at beginning		1,704	75
Additions through acquisition of entities /
operations		505	(67)
Transfers between classes		(572)
Depreciation expense		(323)	(8)
		1,314
Plant and Equipment
Carrying amount at beginning		12,678	523
Additions		4,648	95
Disposals		(113)	(6)
Additions through acquisition of entities /
operations		142
Transfers between classes		839	63
Depreciation expense		(2, 453)	(166)
		15,741	509
Capital works in progress
Carrying amount at beginning		1,437
Additions		1,048	14
Transfers		(1, 297)
		1,188	14
Total written down value		43,991	523

	Notes	ECONOMIC ENTITY		PARENT ENTITY
		2005	2004	2005	2004
30 JUNE 2005		$'000	$'000	$'000	$'000
SELF-GENERATING AND REGENERATING12.ASSETS
SGARA Almond Trees - at net market value		5,516	4,986
		2005	2004
(a) Physical quantity of treesAlmond Trees (acres)		2,375	2,375
(a) Movement in carrying amounts
		SGARAPlantation
		$100
2005
Balance at the beginning of the year		4,986
- Additions- SGARA Tree Adjustment		759
		(229)5,516
13. INTANGIBLES
Goodwill - at cost		31,032	29,396
Accumulated amortisation		(6, 565)	(5,051)
		24,467	24,345
Brand names - at cost		2,900	2,900
		27,367	27,245
14. PAYABLES (CURRENT)
Trade creditors		7,042	5,275	97	124
Other creditors		25,002	9,069	1,273	463
		32,044	14,344	1,370	587
15. INTEREST-BEARING LIABILITIES (CURRENT)
Lease liabilityBorrowing's secured by floating charge	15(a),(b),23	486	830		$78,$
bank overdraft	15(b)	$\overline{\phantom{a}}$	127		127
		486	957		205
(a) Secured lease liability - finance lease		486	830		78

(b) Terms and conditions relating to the above financial instruments:

$(i)$ A registered mortgage debenture is held as security over all the assets and undertakings of Select Harvests Limited and the entities of the wholly owned group.

$(ii)$ A deed of cross guarantee exists between the entities of the wholly owned group.

	Notes		ECONOMIC ENTITY		PARENT ENTITY
30 JUNE 2005		2005$'000	2004$'000	2005$'000	2004$'000
16. PROVISIONS (CURRENT)
Employee benefits	19(a)	2,059	1,547	191	150.
Other		80
		2,139	1,547	191	150
17. PAYABLES (NON-CURRENT)
Aggregate amounts payable to related parties- wholly owned companies				13,490	9,150
				13,490	9,150
INTEREST-BEARING LIABILITIES18.(NON-CURRENT)
Lease liability	18(a),(b),23	376	423
Borrowing's secured by floating charge
• bills of exchange and promissory notes	18(b)		6,700		6,700
		376	7,123		6,700
(a) Secured lease liability - finance lease		376	423

(b) Terms and conditions relating to the above financial instruments:

A registered mortgage debenture is held as security over all the assets and undertakings of Select Harvests $(i)$ Limited and the entities of the wholly owned group.

A deed of cross guarantee exists between the entities of the wholly owned group. $(ii)$

19. PROVISIONS (NON-CURRENT)

Employee entitlements	19(a)	360	224	48	36
(a) Aggregate employee entitlements liability		2,419	1,771	239	186
(b) Number of full time employees at year end		276	252	11	7
20. CONTRIBUTED EQUITY
(a) Issued and paid up capital
Ordinary shares fully paid		46,925	43,940	46,925	43,940
		46,925	43,940	46,925	43,940
(b) Movements in shares on issue
		2005		2004
		Number ofshares	$'000	Number ofshares	$$^{*}000$
Beginning of the financial year		38,525,552	43,940	35,455,341	36,206
Issued during the year
• Dividend reinvestment scheme		287,268	2,470	234,311	1,416
■ Employee share scheme		256,300	515	302,400	491
• Other shares issued				2,533,500	5,827
End of Financial year		39,069,120	46,925	38,525,552	43,940

	Notes	ECONOMIC ENTITY		PARENT ENTITY
		2005	2004	2005	2004
30 JUNE 2005		$'000	$'000	$'000	$'000

20. CONTRIBUTED EQUITY (cont'd)

(c) Share Options

Options over ordinary shares:

Employee share scheme

The company continued to offer employee participation in short-term and long-term Incentive schemes as part of the remuneration packages for the employees of the companies. Both the short-term and long-term schemes involve payments up to an agreed proportion of the total fixed remuneration of the employee, with relevant proportions based on market-relativity of employees with equivalent responsibilities.

The employee is able to receive payments under the short-term incentive scheme based on the achievement of agreed business plans by the individual. This performance is measured and reported by a balanced scorecard approach.

The long-term scheme involves the issue of options to the employee, under the executive share option scheme. During or since the end of the financial year, 228,700 options (2004: 502,000 options) have been granted under this scheme (refer note 26 and Directors' Report for further details). The market value of ordinary Select Harvests Limited shares closed at $9.70 on 30 June 2005 ($6.67 on 30 June 2004).

21. RESERVES AND RETAINED PROFITS

Capital reserve	21(a)	3,271	3,271	3,270	3,270
Asset revaluation	21(b)	10.920	10,920
		14,191	14,191	3,270	3,270
Retained profits	21(c)	30.429	21.137	(6,595)	(8, 874)
(a) Capital
(i) Nature and purpose of reserve
The capital reserve is used to isolate realised

capital profits from disposal of non-current assets.

(b) Asset revaluation

(i) Nature and purpose of reserve

The asset revaluation reserve is used to record increments and decrements in the value of non-current assets. The reserve can only be used to pay dividends in limited circumstances.

(ii) Movements in reserve
Balance at beginning of year	10,920	6,187
Surplus on Revaluation		4,733
Balance at end of year	10,920	10,920
(e) Retained profits
Balance at the beginning of year	21,137	14,342	(8,874)	(12, 954)
Net profit attributable to members of Select
Harvests Limited	21,716	15,225	14,703	12,510
Total available for appropriation	42,853	29,567	5,829	(444)
Dividends paid	(12, 424)	(8, 430)	(12, 424)	(8, 430)
Balance at end of year	30,429	21,137	(6, 595)	(8, 874)

Notes continued

	Notes	ECONOMIC ENTITY		PARENT ENTITY
		2005	2004	2005	2004
30 JUNE 2005		$'000	$'000	$'000	$'000
22. STATEMENT OF CASH FLOWS
(a) Reconciliation of the net profit after tax tothe net cash flows from operations
Net profit		21,716	15,225	14,703	12,510
Non-Cash Items
Depreciation and amortisation		3,178	2,936	175	133
Amortisation of goodwill		1,514	1,413
SGARA revenue - stock		787	561
SGARA expense - trees		(229)	(342)
Net (profit)/loss on disposal of property, plant
and equipment		(106)	(11)	44
Dividends received from controlled entities				(13,907)	(11,300)
Interest received				(1,708)	(2,295)
Management fees received				(3,011)	(2,608)
Management fees paid
Changes in assets and liabilities
(Increase)/decrease in trade receivables		(9,122)	(3, 330)
(Increase)/decrease in inventory		(5,685)	(4,733)
(Increase)/decrease in receivables and other
assets		341	234	23	58
Increase in trade and other creditors		18,793	2,194	787	74
(Decrease)/increase in income tax payable		1,010	137	(60)	170
(Decrease)/increase in deferred income tax
liability		833	(56)	42	(57)
(Decrease)/increase in employee entitlements		498	699	52	53
Net cash flow from operating activities		33,528	14,927	(2, 860)	(3,262)
(b) Reconciliation of cash
Cash balance comprises:
Cash at bank		4,539	489	4,231
Bank Overdraft			(127)		(127)
Closing cash balance		4,539	362	4,231	(127)

(e) Credit stand-by arrangements and loan facilities

The economic entity and the Company have a bank overdraft facility available to the extent of $2,000,000 (2004: $2,000,000).

As at 30 June 2005 the economic entity and company have used $Nil (2004: $0) of the facility.

The economic entity and the Company have a commercial bill facility available to the extent of $28,000,000 (2004: $22,900,000).

As at 30 June 2005 the economic entity and Company have used $Nil (2004: $6,700,000).

ECONOMIC ENTITY

PARENT ENTITY

Notes

	2005	2004	2005	2004
30 JUNE 2005	$'000	$'000	$'000	$'000
22. STATEMENT OF CASH FLOWS (cont'd)
(d) Acquisition of Entities and Businesses
There were no acquisitions of entities during theyear. In the 2004 year Select Harvests Marketing
Pty Ltd, a wholly owned subsidiary of SelectHarvests Limited, acquired 100% of the sharecapital of Meriram Pty Ltd and Kibley Pty Ltd atan initial cost of $9.145 million.
During the year the economic entity paid $1.5million to the shareholders of Meriram Pty Ltdand Kibley Pty Ltd in relation to the achievementof the EBIT target for the financial year ended 30June 2004.
During the year the economic entity acquired theChiquita Nibbles business from Chiquita BrandsSouth Pacific Limited for a total consideration of$5.4 million.
Details of this transaction are:
Purchase consideration	6,933	9,145
Cash consideration	6,933	9,145
Assets and liabilities held at acquisition date:
Receivables		2,278
Inventories	4,225	3,046
Property, plant and equipment	647	2,544
Intangible assets		1,168
Other assets	81	406
Creditors		(2,909)
Interest liabilities	(505)	(691)
Provisions	(150)	(668)
Other liabilities		(314)
	4,298	4,860	$\qquad \qquad \blacksquare$
Goodwill on consolidation	2,635	4,285
	6,933	9,145

Notes continued

At 30 June 2005 an additional amount of $500,000, as noted in Note 33, became due and payable and was recognised as a liability as at 30 June 2005. This amount has been added to the goodwill on consolidation.

Notes continued

	Notes	ECONOMIC ENTITY		PARENT ENTITY
		2005	2004	2005	2004
30 JUNE 2005		$'000	$'000	$'000	$'000
EXPENDITURE COMMITMENTS23.
Lease expenditure commitments
(i) Operating leases (non-cancellable):
Minimum lease payments
Not later than one year۰		3,860	2,659
Later than one year and not later than۰
five years		13,599	10,815
Later than five years۰		13,442	14,413
Aggregate lease expenditure contracted۰
for at reporting date		30,901	27,887
Aggregate expenditure commitments comprise:
Aggregate lease expenditure contracted for at
reporting date		30,901	27,887
Operating lease payments are for rental of premises, farming and factory equipment.
(ii) Finance leases:
Not later than one year۰		536	882		78
Later than one year and not later than۰
five years		426	441

HVC Years	440	441	۰
Total minimum lease payments$\mathbf{m}$	962	1,323		78
Future finance charges$\blacksquare$	(100)	(70)	۰	۰
Lease liability$\blacksquare$	862	1,253		78
- Current liability	486	830
- Non-current liability	376	423	$\overline{\phantom{0}}$
	862	1,253		78

24. SUBSEQUENT EVENTS

On 23 August 2005, the Board announced that a contract of sale was signed to sell all of the shares in Riverina Pelletising Services Pty Ltd, for a total consideration of $5.7 million to Australian Businesspoint Pty Ltd. Subject to certain conditions precedent being satisfied, the sale is scheduled to be completed on Friday 14 October 2005, with an effective date of 1 October 2005.

There has been no other matter or circumstance, which has arisen since 30 June 2005 that has significantly affected or may significantly affect:

• a) the operations, in financial years subsequent to 30 June 2005, of the economic entity, or
• b) the results of those operations, or
• c) the state of affairs, in financial years subsequent to 30 June 2005, of the economic entity.

Notes continued

	Notes	ECONOMIC ENTITY		PARENT ENTITY
	2005		2004	2005	2004
30 JUNE 2005		$'000	$'000	$'000	$'000
25. EARNINGS PER SHARE
The following reflects the income and share dataused in the calculations of basic and dilutedearnings per share:
Net profit		21,716	15,225
Earnings used in calculating diluted earnings per
share		21,734	15,264
		Number of shares
		2005	2004
Weighted average number of ordinary sharesused in calculating basic earnings per share		38,864,450	38,041,423
Effect of dilutive securities:
Share options		153,518	439,622
Adjusted weighted average number of ordinaryshares used in calculating diluted earnings per
share		39,017,968	38,481,045

30 JUNE 2005

26. REMUNERATION OF DIRECTORS AND EXECUTIVES

Remuneration levels are set to attract and retain appropriately qualified and experienced directors and senior executives. The Remuneration Committee may obtain independent advice on the appropriateness of remuneration packages, given trends in the marketplace. Remuneration packages include a mix of fixed remuneration, performance based remuneration, and equity based remuneration.

Executive directors and senior executives may receive short term incentives based on achievement of specific business plans and performance indicators, which include financial and operational targets relevant to performance at the economic entity level, divisional level, or functional level, as applicable, for the financial year. In addition, the economic entity offers executive directors and senior executives participation in the long-term incentive scheme involving the issue of options to the employee under the executive share option scheme. The executive share option scheme provides for the offer of a parcel of options to participating employees on an annual basis, with a three-year expiry period, exercisable at the market price set at the time the offer was made. The options are granted annually in three tranches on achievement of the performance hurdles.

Non-executive directors each receive a base fee of $45,780 per annum. The Chairman receives up to twice the base fee. Non-executive directors do not receive any performance related remuneration nor are they issued options on securities.

The following table provides the details of all directors of the economic entity ("specified directors") and the five or more executives of the economic entity with the greatest authority ("specified executives") and the nature and amount of the elements of their remuneration for the year ended 30 June 2005.

30 JUNE 2005

REMUNERATION OF DIRECTORS AND EXECUTIVES (cont'd) 26.

Remuneration of Directors of Select Harvests Limited
Annual remuneration					Long Term Remuneration
2005	Base Fee$	ShortTermIncentives	NonCashBenefits	Superannuati-onContributions	OptionsNumber	GrantedValue$	Total$
Non Executive		$	$	$
M A Fremder	84,000			7,560			91,560
C G Clark	42,000			3,780			45,780
G F Dan O'Brien	42,000			3,780			45,780
J C Leonard (appointed21/07/04)	39,773			3,580			43,353
R M Herron (appointed27/01/05)Executive	18,025			1,622			19,647
J Bird	332,823	155,041	32,766	29,478	136,400	77,089	627,197
Total Specified Officers	558,621	155,041	32,766	49,800	136,400	77,089	873,317
2004Non Executive
M A Fremder	70,370			6,333			76,703
B P Burns (retired30/06/04)	35,185			3,167			38,352
C G Clark	35,185			3,167			38,352
D J Williams (resigned16/02/04	23,457			2,111			25,568
G F Dan O'Brien(appointed $29/03/04$ )Executive	9,179			826			10,005
J Bird	286,470	119,093	39,576	25,633	176,000	70,593	541,365
Total Specified Officers	459,846	119,093	39,576	41,237	176,000	70,593	730,345

30 JUNE 2005

26. REMUNERATION OF DIRECTORS AND EXECUTIVES (cont'd)

Remuneration of the five or more executives of the economic entity with the greatest authority.

		Annual Remuneration			Long Term RemunerationOptions Granted
2005	Base Fee$	ShortTermIncentives$	NonCashBenefits$	SuperannuationContributions$	Number	ValueS	TotalS
M Mattia (Chieffinancial officer andCompany secretary)	159,332	57,168	37,984	14,149	8,800	8,800	277,433
M Ciobo (Generalmanager -- Meriram)	210,000		30,530	18,900			259,430
R Tanti (Sales &marketing manager -Food Products,Melbourne) (commenced29/9/04)	91,477			6,060			97,537
V Cavanagh (General$m$ anager – pesticides)	80,665	9.984	16,800	8,109	18,200	10,162	125,720
T Millen (Horticulturalmanager)	96,195	13,930	5.000	9,826	9,300	5,156	130,107
W Turner (Generalmanager - almonddivision)	115,705	27,067	19,000	12,759	7,000	7,000	181,531
L Van Driel (Tradingmanager)	99,163	17,487	14,821	9,625	19,800	10,974	152,070
Total Specified Officers	852,537	125,636	124,135	79,428	63,100	42,092	1,223,828

Annual Remuneration					Long Term RemunerationOptions Granted
2004	Base Fee$	ShortTermIncentives	NonCashBenefits	SuperannuationContributions	Number	ValueS	TotalS
		$	$	S
M Ciobo (Generalmanager - Meriram)	210,000		15,989	18,900			244,889
M Mattia (ChiefFinancial Officer and	139,635	4,366	40,900	12,462			197,363
Company secretary)
V Cavanagh (General$m$ anager $-$ pesticides)	74,980	11,063	16,800	7,681	24,100	9,630	120,154
T Millen (Horticulturalmanager)	85,854	9,317	5,000	8,510	7,500	3,356	112,037
P Petropolous(Operations manager)	75,753	3,660	19,000	6,804			105,217
W Turner (Generalmanager-almonddivision)	111,046	10,237	19,000	10,196			150,479
L Van Driel (Tradingmanager)	107,939	18,594		9,625	15,900	7,074	143,232
Total Specified Officers	805,207	57,237	116,689	74,178	47,500	20,060	1,073,371

30 JUNE 2005

26. REMUNERATION OF DIRECTORS AND EXECUTIVES (cont'd)

Options and rights over equity instruments granted as remuneration

During the reporting period, the following options over ordinary shares were granted and vested during the current year under the executive share option scheme:

Remuneration Options

	GrantDate:	Granted $&$VestedNumber	Value peroption at grantdate	ExercisePrice	FirstExerciseDate	LastExerciseDate
Specified Directors
J Bird	27/8/0427/8/0427/8/04	55,40051,80029,200	$0.410$0.486$1.000	$1.66$3.31$5.60	27/8/0427/8/0427/8/04	20/10/0428/10/0501/11/06
Specified Executives
M. Mattia	27/8/04	8,800	$1.000	$5.60	27/8/04	01/11/06
V. Cavanagh	27/8/0427/8/0427/8/04	7,7006,8003,700	$0.410$0.486$1.000	$1.66$3.31$5.60	27/8/0427/8/0427/8/04	20/10/0428/10/0501/11/06
T. Millen	27/8/0427/8/0427/8/04	3,8003,7001,800	$0.410$0.486$1.000	$1.66$3.31$5.60	27/8/0427/8/0427/8/04	20/10/0428/10/0501/11/06
W. Turner	27/8/04	7.000	$1.000	$5.60	27/8/04	01/11/06
L. Van Driel	27/8/0427/8/0427/8/04	8,6007,3003.900	$0.410$0.486$1.000	$1.66$3.31$5.60	27/8/0427/8/0427/8/04	20/10/0428/10/0501/11/06

All options vest immediately upon granting. Options expire up to 3 years after vesting. Exercise price equals the market price at date of offer. The service and performance criteria, together with other details are described above. All options expire on the earlier of their expiry date or termination of the individual's employment. The options are exercisable at any time after they have been granted.

Share issued on exercise of remuneration options

During the financial year, the following shares were issued on the exercise of options previously granted as remuneration:

	Number of Shares	Amount paid per share
Specified Directors
J Bird	166.200	$1.66
Specified Executives
V Cavanagh (General manager -pesticides)	23,100	$1.66
T Millen (Horticultural manager)	11,400	$1.66
L Van Drief (Trading manager)	8,600	$1.66
	7.300	$3.31

There are no amounts unpaid on the shares issued as a result of the exercise of the options.

30 JUNE 2005

26. REMUNERATION OF DIRECTORS AND EXECUTIVES (cont'd)

Number of options held by directors and specified executives

The movement during the financial year in the number of options over ordinary shares in the company held, directly or indirectly, by each specified director and specified executive is as follows:

	Held at1 July2004	Granted asRemuneration	Exercised	Held at30 June2005	Vested andexercisable at30 June 2005
Specified Directors
J Bird	162,600	136.400	(166, 200)	132,800	132,800
Specified Executives
M Mattia (Chief financial officer& Company secretary)		8,800		8.800	8,800
V Cavanagh (General manager $-$pesticides)	22,200	18.200	(23,100)	17,300	17,300
T Millen (Horticultural manager)	11,300	9.300	(11,400)	9.200	9.200
W Turner (General manager -almond division)		7,000		7,000	7.000
L Van Drief (Trading manager)	7.300	19.800	(15.900)	11,200	11.200

No options held by specified directors or specified executives are vested but not exercisable

Number of shares held by directors and specified executives

The movement during the financial year in the number of ordinary shares of the company held, directly or indirectly, by each specified director and specified executive, including their personally related entities is as follows:

2005	Held at 1 July2004	Received asremuneration	Received onexercise of	Other - DRP.sales $&$	Total
Specified Directors			options	purchases
Non Executive
M A Fremder	5,548,911			49,441	5,598,352
$J \cap$ Leonard (appointed 21/7/2004)				413,091	413,091
C G Clark	22,079			848	22,927
$R$ M Herron (appointed $27/01/05$ )				5.000	5,000
G F Dan O'Brien	20,000			30,000	50,000
Executive
J Bird	266,107		166,200	(161, 185)	271,122
Specified Executives
M Mattia (Chief financial officer &Company secretary)				2,000	2,000
M Ciobo (General manager -Meriram)	35,728				35,728
L Van Driel (Trading manager)	8,600		15,900	(4,000)	20,500
V Cavanagh (General manager –pesticides)	141,365		23,100	(52,000)	112,465
T Millen (Horticultural manager)	11,514		11,400		22,914

Other transactions with specified directors and specified executives

There were no other transactions with specified directors and specified executives that require disclosure in accordance with AASB 1046 for the year ended 30 June 2005.

30 JUNE 2005

	Notes	ECONOMIC ENTITY		PARENT ENTITY
		2005	2004	2005	2004
		$'000	$'000	$'000	$'000
AUDITORS' REMUNERATION27.
Amounts received or due and receivable by Pitcher Partnersfor:
An audit or review of the financial reportof the entity and any other entity in the
consolidated entity		118,800	126,380	118,800	126,380
Other financial services	$\left( a\right)$	80,987	29,765	80,987	29,765
		199,787	156,145	199,787	156,145

(a) Amounts paid or payable to an auditor for non-audit services provided during the year by the auditor to any entity that is part of the consolidated entity for:

	2005	2004
Taxation compliance and advice	17,858	12,000
Tax consolidation advice	24,892	3,100
IFRS advice	29.505
Other	8.732	14,665
	80,987	29,765

28. RELATED PARTY DISCLOSURES

Directors

The directors of Select Harvests Limited during the financial year were:

M A Fremder	-1 Bird
J C Leonard (Appointed 27 July 2005)	-C G Clark
R M Herron (Appointed 27 January 2005)	G F Dan O'Brien

30 JUNE 2005

Wholly-owned group transactions

Loans

Loans are made by Select Harvests Limited to controlled entities under normal terms and conditions.

Loans are made to Select Harvests Limited by controlled entities under normal terms and conditions.

Management fees are received by Select Harvests Limited from controlled entities under normal terms and conditions.

Director-related entity transactions

Services

Select Harvests Limited has an Almond Orchard Management Agreement and a Land Lease agreement with Maxdy Nominees Pty Ltd, a company in which Mr M A Fremder is a director. Under the terms of the agreements, Select Harvests Limited has developed and continues to manage 300 acres of almond orchard on a fee basis for Maxdy Nominees Pty Ltd.

In addition, Select Harvests Limited will process and sell the entire production of the orchard for the entire 25-year life of the orchard. The economic entity received an amount of $951,906 during the financial year in relation to the above contract. The agreements are under normal terms and conditions no more favourable than those which it is reasonable to expect the entity would have adopted if dealing with the director or director-related entity at arms length in the same circumstances.

29. SEGMENT INFORMATION

Segment products and locations

During the financial year, a review was conducted and substantially similar segments in the almond operations of the economic entity combined to reflect the continuing shift in strategic direction and growth of the almond business from owned orchards to orchards managed on behalf of third parties. The economic entity has the following business segments:

• × The food products division processes, markets, and distributes edible nuts, dried fruits, seeds, and a range of natural health foods.
• The almond operation comprises the growing, processing and sale of almonds to the food industry from company owned almond orchards; the sale of a range of management services to external owners of almond orchards, including consultancy, orchard development, tree supply, farm management, land rental and, irrigation infrastructure; and the sale of almonds on behalf of external investors.
• The pesticide products operation comprises the production of pelletised snail, slug and rodent baits for other marketers.

The economic entity operates predominantly within the geographical area of Australia.

30 JUNE 2005

29. SEGMENT INFORMATION (cont'd)

Business segments	Food Products		Almond Operations		Pesticide Products		Eliminations andCorporate		Economic Entity
	2005$'000	2004$'000	2005$1000	2004$400	2005$'000	2004$'000	2005$'000	2004$1000	2005$'000	2004$$^{\dagger}000$
Revenue
Sales to customers outside the consolidated
entity	131,381	88,442	42,483	35,164	4,165	3,775		$\left(1\right)$	178,029	127,380
Intersegment revenues	721	18	19,075	7,205	509	443	(20, 305)	(7,666)
Sale of Almonds to customers outside theeconomic entity on behalf of managed orchard
owners (Note 1)			12,632	5,163					12,632	5,163
Less Cost of Almonds sold by the economicentity on behalf of managed orchard owners
(Note 1)			(23,508)	(8,117)			10,876	2,954	(12, 632)	(5,163)
Other revenue	89	321	1,364	584			134		1,588	905
Total segment revenue	132,191	88,781	52,046	39,999	4,675	4,218	(9,295)	(4,713)	179,617	128,285
Unallocated revenue									-69	102
Total consolidated revenue									179,686	128,387
Results
Segment result	8,115	6,813	26,297	18,264	1,259	752	(2, 408)	(1,993)	33,263	23,836
Unallocated expenses									(1,268)	(1, 249)
Consolidated entity profit from ordinaryactivities before income tax expense									31,995	22,587
Income tax expense									(10, 279)	(7, 362)
Consolidated entity profit from ordinaryactivities after income tax expense									21,716	15,225
Net profit									21,716	15,225

30 JUNE 2005

29. SEGMENT INFORMATION (cont'd)

Business segments	Food Products		Almond Operations		Pesticide Products		Eliminations andCorporate		Economic Entity
	2005$†000	2004$'000	2005$'000	2004$'000	2005$'000	2004$'000	2005$'000	2004$1000	2005$'000	2004$$*000$
Assets
Segment assets	70,938	61,729	58,316	46,889	2,349	2,279	709	(3,942)	132,312	106,955
Liabilities
Segment liabilities	7,829	9,493	30,381	10,326	631	265	1,926	7,603	40,767	27,687
Other segment information:
Acquisition of non-current segment assets	1.548	1.225	4,457	2,637	17	15	133	557	6,155	4,434
Depreciation and amortisation of segment assets	2,971	2.510	1,446	1,377	100	114	175	348	4,692	4,349

The economic entity provides a range of management and other services to externally owned or third party orchards. The income and expenses associated with the provision of orchard establishment, orchard management, harvesting, maintenance services and processing and marketing are included in the "Almond Operations" segment of the above summary. In addition to these services, the economic entity sells the crop of almonds harvested from the orchards of the external owners. Almond pool sales are sales of almonds for externally owned almond orchards, which are sold by the economic entity on a pooled basis, the proceeds from which are distributed to the pool participants.

30 JUNE 2005

30. FINANCIAL INSTRUMENTS

(a) Interest rate risk

The consolidated entity's exposure to interest rate risks and the effective interest rates of financial assets and financial liabilities, both recognised and unrecognised at the balance date, are as follows:

					Fixed interest rate maturing in:
Financial Instruments	Floating interestrate		1 year or less		Over 1 to 5 years		More than 5 years		Non-interestbearing		Total carryingamount as per theStatement ofFinancial Position		Weighted averageeffective interestrate
	2005$$^{\dagger}000$	2004$3000	2005$'000	2004$'000	2005$'000	2004$'000	2005$$^{\prime}000$	2004$'000	2005$'000	2004$'000	2005$'000	2004$'000	2005$\frac{6}{6}$	2004$\frac{9}{6}$
(i) Financial assets
Cash	537	487	4,000	-						2	4,539	489	3.0	2.5
Trade and other receivables									24,862	15,597	24,862	15,597	$\blacksquare$
Total financial assets	537	487	4,000	$\tilde{\phantom{a}}$	$\overline{\phantom{a}}$		$\overline{\phantom{a}}$		24,864	15,599	29,401	16,086
(ii) Financial liabilities
IBank overdraft		127										127		9.1
lTrade creditors								۰	7.042	5,275	7,042	5,275
Other creditors								$\overline{\phantom{a}}$	25,002	9,069	25,002	9,069
Finance lease liability			486	830	376	423					862	1,253	7.0	7.0
Bills of exchange and promissory
motes				6,700								6,700		$6.0*$
Foreign exchange contracts	10,295	17,504
Total financial liabilities	10,295	17,631	486	7,530	376	423			32,044	14,344	32,906	22,424

* There is one facility for fixed borrowings at an interest rate of 6.18%. The average interest rate is included in the table.

30 JUNE 2005

30. FINANCIAL INSTRUMENTS (cont'd)

(b) Credit risk exposures

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets is the carrying amount of those assets, net of any provisions for doubtful debts of those assets, as disclosed in the statement of Financial Position and Notes to the Financial Statements.

Credit risk for derivative financial instruments arises from the potential failure by counterparties to the contract to meet their obligations. The credit risk exposure to forward exchange contracts is the net fair value of these contracts.

The economic entity does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the economic entity.

Concentrations of credit risk

The Company minimises concentrations of credit risk in relation to trade receivables by undertaking transactions with a large number of customers from across the range of business segments in which the group operates. Refer also to Note 29 - Segment Information.

(c) Net fair values

For other assets and other liabilities the net fair value approximates their carrying value.

The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the Statement of Financial Position and in the Notes to the Financial Statements

(d) Forward exchange contracts

The economic entity enters into forward exchange contracts to buy and sell specified amounts of foreign currency in the future at stipulated exchange rates. The objective in entering the forward exchange contracts is to protect the economic entity against unfavourable exchange rate movements for both the contracted and anticipated future sales and purchases undertaken in foreign currencies.

The full amount of the foreign currency the economic entity will be required to pay or purchase when settling the brought forward exchange contracts should the counterparty not pay the currency it is committed to deliver to the Company. At balance date the net amount was $$10,295,000$ (2004: $$17,503,960$ ).

The accounting policy in regard to forward exchange contracts is detailed in note $I(c)$ .

At balance date, the details of outstanding forward exchange contracts are:

Buy United States Dollars	Sell Australian Dollars		Average Exchange Rate
	2005	2004	2005	2004
Settlement
	$'000	$2000	S	S
Less than 6 months	10,994	3,654	0.76	0.71
6 months to 1 year	1,080
Greater than 1 year	248
	12,322	3,654
Buy Australian Dollars	Sell United States Dollars		Average Exchange Rate
	2005	2004	2005	2004
Settlement
	$'000	$2000	S	S
Less than 6 months	15,796	7,850	0.64	0.54
6 months to 1 year	1,770		0.49
1 year to 2 years	5,051	8,257	0.59	0.57
2 years to 3 years		5,051		0.59
	22,617	21,158

30 JUNE 2005

31. CONTROLLED ENTITIES

Country of Incorporation	Percentage Owned (%)	2004
Australia	100	100.
Australia	100	100.
Australia	100	100.
Australia	100.	100.
Australia	100	100.
Australia	100	100.
Australia	100	100-
Australia	100	100.
		2005

(b) Controlled Entities Acquired

No controlled entities were acquired during the financial year ended 30 June 2005.

32. EMPLOYEE BENEFITS

Executive share option scheme

The economic entity has in place an executive share scheme. The scheme provides for the board to offer to eligible employees a parcel of options, which will be granted for no consideration in three equal tranches over a period of approximately three years from the date of each result announcement to the ASX in each financial year.

Each option is convertible into one ordinary share. The exercise price of the options, determined in accordance with the rules of the scheme, is based on the weighted average price of the company's shares over the first 50 sales of shares in the ordinary course of trading on the stock market of the ASX immediately following the result announcement.

All options expire on the earlier of their expiry date or termination of the employee's employment. The granting of options is conditional upon the economic entity achieving growth of at least 10% in EPS in each financial year over the preceding financial year. Accordingly, the scheme does not represent remuneration for past services.

There are no voting or dividend rights attached to the options.

30 JUNE 2005 32. EMPLOYEE BENEFITS (cont'd)

Summary of options over unissued ordinary shares

Details of options over unissued ordinary shares at the beginning and ending of the reporting date and movements during the year are set out below:

2004									Number of optionsat end of vear
Grantdate	Exercisedate on orafter	Expirydate	ExercisePrice	Number ofoptions atbeginningof vear	Optionsgranted	Optionslapsed	Optionsexercised	On Issue	V ested	Proceedsreceived	Numberof sharesissued	Fair valueper share	Fair valueaggregate
30/08/2001	30/08/2001	20/10/2003	1.55	82,900			82.900			128.495	82,900	. 77	146,733
28/08/2002	28/08/2002	20/10/2003	1.55	82.900			82.900			128,495	82,900	3.15	261,135
01/09/2003	01/09/2003	20/10/2003	1.55		93,300		93,300			144,615	93,300	5.60	522,480
28/08/2002	28/08/2002	20/10/2004	1.66	79,100	$\overline{\phantom{a}}$		12,200	66,900	66,900	20,252	12,200	3.15	38,430
01/09/2003	01/09/2003	20/10/2004	1.66		87,500		20,600	66,900	66,900	34,196	20,600	5.60	115,360
01/09/2003	01/09/2003	20/10/2005	3.31		92,500		10,500	82,000	82,000	34,755	10,500	5.60	58,800

2005								Number of optionsat end of year
Grantdate	Exercisedate on orafter	Expirydate	ExercisePrice	Number ofoptions atbeginningof vear	Optionsgranted	Optionslapsed	Optionsexercised	On Issue	Vested	Proceedsreceived	Numberof sharesissued	Fair valueper share	Fair valueaggregate
28/08/2002	28/08/2002	20/10/2004	1.66	-66,900			66,900			111.054	66,900	3.15	210,735
01/09/2003	01/09/2003	20/10/2004	1.66	66,900	$\overline{\phantom{0}}$		66,900			111,054	66,900	5.60	374,640
27/08/2004	27/08/2004	20/10/2004	1.66.		79,100		79.100			131,306	79,100	7.82	618,562
01/09/2003	01/09/2003	20/10/2005	3.31	82,000			19.700	62,300	62,300	65,207	19,700	5.60	110,320
27/08/2004	27/08/2004	20/10/2005	3.31		85,200		15.600.	69,600	69,600	51,636	15,600	7.82	121,992
27/08/2004	27/08/2004	01/11/2006	5.60		64,400		8,100	56,300	56,300	45,360	8.100	7.82	63,342

The fair value of shares issued as a result of exercising the options during the reporting period is the market price of the company's shares on the ASX as at the close of trading on the exercise date.

30 JUNE 2005

32. EMPLOYEE BENEFITS (cont'd)

The amounts recognised in the financial statements of the economic entity in relation to executive share options exercised during the financial year were:

	2005	2004
Issued and Paid up Capital		40 I

33. CONTINGENT LIABILITIES

Upon achieving an EBIT target of $2.5 million in each of the financial years ending 30 June 2004 and 30 June 2005, further payments to a maximum of $2 million are to be made in respect of the acquisition of Meriram Pty Ltd and Kibley Pty Ltd.

During the year the economic entity paid $1.5 million to the shareholders of Meriram Pty Ltd and Kibley Pty Ltd in relation to the achievement of the EBIT target for the financial year ended 30 June 2004.

As at 30 June 2005 $500,000 became payable in accordance with the share purchase agreement and this amount has been recognised as a liability as at 30 June 2005.

34. IMPACT OF ADOPTING AUSTRALIAN EQUIVALENTS TO INTERNATIOAL FINANCIAL REPORTING STANDARDS

The economic entity has evaluated the key differences in accounting policies that are expected to arise from adopting AIFRSs and the key differences in accounting policies that are expected to arise from adopting AIFRSs are detailed below. The transition date for first-time adoption of AIFRS is 1 July 2004. A reconciliation of estimated adjustments to opening balances at 1 July 2004, together with restated results under AIFRSs for the financial year to 30 June 2005, is provided below.

Share based payments

Under AASB 2 Share based Payments, the economic entity will be required to determine the fair value of equity settled transactions and recognise an expense in the Statement of Financial Performance. Share-based payments to directors and other employees (such as the grant of options under the Employee Option Plan) will also be expensed under AIFRS.

On first-time adoption of AIFRSs, retained earnings at 1 July 2004 and reported results for the financial year to 30 June 2005 will be adjusted for all share-based payments granted after 7 November 2002, which do not vest prior to 1 January 2005. An estimate of the financial impact is provided in the reconciliation note below.

Goodwill and brand names

Goodwill on consolidation will be recalculated to derecognize intangible assets acquired in business combinations that do not meet the identifiability criteria under AIFRS, and to recognize deferred tax liabilities at the acquisition date under the balance-sheet method.

Amortisation of goodwill will cease on first-time adoption of AIFRS. Therefore on adoption of AIFRSs, reported results for the financial year to 30 June 2005 will be adjusted for amortization charges from 1 July 2004. However, amortization charges prior to 30 June 2004 may not be reversed under the first-time adoption provisions.

Under IFRS, goodwill and brand names will be subject to annual impairment testing. The economic entity does not anticipate any write-downs for impairment of goodwill on first-time adoption of AIFRSs.

Impairment of Assets

The recoverable amount test under Australian GAAP will be replaced by impairment testing whereby the recoverable amount is determined as the higher of fair value less costs to sell and value in use. Value in use incorporates the use of discounted cash flows.

The economic entity does not anticipate any write-downs for impairment of non-current assets on first-time adoption of AIFRSs.

Income taxes

Under AIFRS a balance sheet approach will be adopted under which temporary differences are identified for each asset and liability rather than accounting for the effect of timing and permanent differences between taxable and accounting profit. In addition, a future income tax benefit must be recognized for tax losses where their realization is considered probable. Under Australian accounting standards tax losses may only be recognized where realization is considered to be virtually certain.

30 JUNE 2005

34. IMPACT OF ADOPTING AUSTRALIAN EQUIVALENTS TO INTERNATIOAL FINANCIAL REPORTING STANDARDS (cont'd)

On first-time adoption of AIFRSs, adjustments to the provision for deferred tax will be required for initial asset revaluations, foreign currency exchange provisions, and tax losses.

Derivative Financial Instruments

The entity uses derivative financial instruments for hedging purposes. These instruments have not previously been recognised in the financial statements. Hedging instruments will be recognised in the financial statements on first-time adoption of AIFRS. An estimate of the financial impact is provided in the reconciliation below.

1. Reconciliation of Total Equity at 1 July 2004

	$7000
Total equity at 1 July 2004 as reported under Australian Accounting Standards	79,268
Share-based payments/options reserve:
DRRetained Earnings	54
Options Granted ReserveCR.	(54)
Adjustments relating to the recalculation of deferred income tax using the balance sheetmethod at 30 June 2004	(5,739)
Deferred gains/losses on cash flow hedges not previously recognised at 30 June 2004	3.820
Total equity at 1 July 2004 as restated under AIFRSs	77,349

2. Reconciliation of Operating Profit after Tax for the year ended 30 June 2005:

	$7000
Operating profit after tax for the financial year to 30 June 2005 as reported under
Australian Accounting Standards	21,716
Share-based payments earned during the year	(219)
Goodwill on consolidation adjustments:
Reversal of amortisation for the year	1.514
Deferred tax adjustment for the year
Operating profit after tax as restated under AIFRS for the year ended 30 June
2005	23.011

3. Reconciliation of Total Equity at 30 June 2005:
	$2000
Total equity at 30 June 2005 as reported under Australian Accounting Standards	91,545
Share-based payments/options reserve:
Retained EarningsDR.	219
CR.Options Granted Reserve	(219)
Adjustments to operating profit for the year as described above - Goodwill	1,514
Increase/decrease in fair value of financial instruments designated as cash flow hedging
instruments for the year	59
Adjustments to equity for the year as described above	(1.919)
Total equity at 30 June 2005 as restated under AIFRS	91.199

Direkter Declaration

The directors declare that the financial statements and notes set out on pages 17 to 54 in accordance with the Corporations $A$ an $\hat{1}$ 03 (c)

• Comply with accounting Standards, the Corporations Regulations and other mandatory prefessional reporting $\langle \mathbf{a} \rangle$ ragulomania.
• The a trac and fuz view of the financial position of the consolidated entity as at 30 June 2005 and of to 猜 performance as represented by the results of its sperations and its cash flows, for the financial year ended on that date: and
• That the directors have been given the declassion required under section 293A of the Corporations Act 2001 from 後 the Managing Director and Chief Financial Officer for the ficancial year ended 30 June 2005.

In the directors' opinion there are reasonable grounds to believe that Schet Harvests Limited will be able at pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the directors.

M A Premaler Chairman

Međenime, 13 August 1803

INDEPENDENT AUDIT REPORT

To the members of Select Harvests Limited

Scope

We have audited the financial report of Select Harvests Limited and controlled entities for the financial year ended 30 June 2005 comprising the Directors' Declaration, Statement of Financial Performance, Statement of Financial Position, Statement of Cash Flows and notes to the financial statements.

The company's directors are responsible for the financial report. We have conducted an independent audit of this financial report in order to express an opinion on it to the members of the company.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether the financial report is free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial report, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion whether, in all material respects, the financial report is presented fairly in accordance with Accounting Standards and other mandatory professional reporting requirements in Australia and Corporations Act 2001 so as to present a view which is consistent with our understanding of the company's financial position and performance as represented by the results of their operations and their cash flows.

The audit opinion expressed in this report has been formed on the above basis.

Audit Opinion

In our opinion, the financial report of Select Harvests Limited and controlled entities is in accordance with:

• $(a)$ the Corporations Act 2001, including:
  • $\left( i\right)$ giving a true and fair view of the company's and consolidated entities financial position as at 30 June 2005 and of its performance for the financial year ended on that date; and
  • complying with Accounting Standards in Australia and the Corporations Regulations 2001; and $(ii)$
• $(b)$ other mandatory professional requirements in Australia.

there Putner

PITCHER PARTNERS

T J BENFOLD Partner Melbourne

Date: 23 August 2005