SELECT HARVESTS LIMITED - Annual Report 2007

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Building a Sustainable Future

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Annual Report 2007

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From the Chairman and Managing Director

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Our orchard development

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Our orchard management

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Our processing

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Our Sales and Marketing

Our mission, strategy, activities and outlook	01
Our business opportunities	02
Our business model	03
From the Chairman and Managing Director	04
Our board of directors	07
Our executive team	08
Our orchard development	09
Our orchard management	11
Our processing	12
Our primary processing	12
Our added-value processing	13
Our sales and marketing	14
Almond pool sales	14
Added-value product sales	16
Our environment, community and people	17
Statistical summary	18
Financial contents	19
Financial reports	20
Auditor’s declaration	31
Directors’ declaration	86
Independent audit report	87
ASX additional information	89

Shareholder Information

Annual General Meeting

2007/2008 Calendar

Feb Announcement of interim results Apr Payment of interim dividend

The annual general meeting will be held on Friday, 26 October, 2007, at the Arthur Streeton Auditorium, Sofitel Melbourne, 25 Collins St, Melbourne, Victoria, commencing at 2:00 pm. A separate notice of meeting has been posted to all shareholders.

Aug Announcement of preliminary full year results

Sept Annual report to shareholders Oct Payment of final dividend Oct Annual general meeting

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Our mission

is to continue to develop and expand our business, generating sustainable earnings growth and delivering increased shareholder value.

Our strategy

is to develop a fully-integrated agri-food company via ongoing diversification and expansion of our income streams, leveraging our core strengths – almond growing and knowledge of edible nuts and their markets – to develop sustained earnings growth and reduced volatility from agricultural risk.

Our activities

include operating our own orchards, managing orchards for investors, marketing almonds in domestic and export markets, and processing and marketing an extensive range of nuts and associated health food products to all market sectors. Beginning as a commodity-based almond grower, Select Harvests is now an integrated agri-food business with diversified income streams.

Our outlook

is positive, due to increasing world nut consumption, the existence of strong fundamentals in the almond market and continuing investor interest in almonds as a mainstream horticultural investment.

A further 5,000 acres of new almond plantings and the development of enhanced processing capacity are planned for 2008 and the years ahead. These developments will be complemented by significant technological and scientific advances, particularly in the area of efficient water usage and yield gains.

Our ambitious sales and marketing targets will continue to drive increased consumer demand for almonds and other edible nuts – demand which we will meet with enhanced efficiency and improved product quality.

Select Harvests Annual Report 2007 1

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Our business opportunities

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“Select Harvests is positioned to become the world’s largest almond grower. By investing in our core capabilities of farm management and processing and marketing, we are building a sustainable future for our integrated business.” John Bird: Managing Director

Our business

As a diversified agri-food company, we have strong growth opportunities around the key components of our business – the core of which are the management of almond orchards and the marketing of almonds.

Our management services income will increase as our trees mature and yields improve. Furthermore, we plan to develop an additional 5,000 acres of new orchards annually. Our sales and marketing focus is clearly aligned to the need to drive increased consumer demand for almonds and almondrelated food products.

Marketing edible nuts

Supporting our core strength in almonds is our leadership role in marketing all edible nuts within Australia. This allows us to market a comprehensive range of nuts within all the key retail categories.

We plan to leverage our core orchard development and management skill set by diversifying into other tree nut crops. This will increase the level at which our business is fully-integrated: i.e. from the orchard to the consumer.

Health foods

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Our goal of maximising the retail distribution of nuts is complemented by our range of associated health food products: for example, our marketleading ranges of muesli.

As our almond harvest increases and other tree nut crops come online, our distribution channels for almonds, edible nuts and nut-related health foods will deliver incremental sales and profits.

“

The core of our business is managing both investorowned and company-owned ” almond orchards

Growing our almond sales is the key driver for our total product portfolio.

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Select Harvests Annual Report 2007

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Our business model

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Select Harvests Annual Report 2007 3

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From the Chairman and Managing Director

“

We are managing through a period of uncertainty brought on by the prolonged drought, while continuing to develop ” our business framework for future growth.

Max Fremder: Chairman

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Key Financial Results

Select Harvests’ 2007 net profit after tax for continuing operations exceeded $28 million, a 6 % increase on the previous year’s result. Our highlight was the almond division, whose earnings rose nearly 15%.

The company’s balance sheet, cash flow and future prospects remain strong, enabling the company to pursue future growth as well as increasing the dividend.

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Financials 2007 Year ended Year ended Change
(A$’000’s) 30 June 30 June
2007 2006
Sales revenue ($A000) $229,498 $217,866 + 5%
Earnings before interest and tax $40,549 $38,369 + 6%
Net profit after tax for continuing operations $28,098 $26,492 + 6%
Ordinary dividend 57¢ 53¢ + 7.5%
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Earnings before interest and taxes from Continuing Operations

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Dividend (ordinary)

Earnings per share

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Net Profit After Tax from Continuing Operations

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4 Select Harvests Annual Report 2007

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The year in review

Our biggest-ever planting program (11,800 acres of new almond projects, including 1,000 acres of company plantings) increased our acreage by 44%. Our current total acreage of 38,600 acres provides a sound platform for future growth in management services revenue and sales revenue from company orchards.

Favourable growing conditions over the year and the maturing of young orchards doubled our almond crop tonnage to 12,000 metric tonnes (6,200 mt in 2006).

The increased tonnage from our investors’ (managed) orchards has increased processing and marketing fees for the period. However due to the high Australian dollar and the easing of world almond prices on the back of the USA’s expected large 2007 crop, returns from our company orchards declined.

Our food division has protected our key brands through increased investment in trade spend and marketing activity. This heightened activity has been required due to difficult trading conditions in the retail sector, which have applied pressure to both revenues and margins.

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arrangements (if the test case is successful) or under new arrangements they may develop.

Key issues encountered during the year

1. Managed Investment Schemes (MIS) Arrangements

We have already committed to developing 4,200 acres of new orchards for Timbercorp during 2008, as the MIS arrangements will remain in place for this year.

Despite changes to the Managed Investment Schemes (MIS) arrangements announced in February 2007, Select Harvests’ view is that almonds remain a good investment due to strong fundamentals in international markets and Australia’s production efficiencies and resultant competitiveness.

We are also assessing and trialing several different approaches to almond investment:

[Developing alternative financial ] structures and channels for new almond projects

However, we will need to adjust our approach to allow for the uncertainty surrounding MIS projects for 2009 and beyond.

[New geographical areas with ] alternative water sources
[Diversification into other tree nut ] crops (leveraging our considerable expertise in almonds).

This uncertainty is evident in the test case our partner, Timbercorp Limited, is running with the ATO in relation to MIS arrangements.

From our perspective, we plan to continue developing new orchards with our partners, either under MIS

Select Harvests Annual Report 2007 5

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irrigation trials, adopting a number of new technologies aimed at more efficient and lower water use.

2. Water management

Managing water access and usage is a key issue due to the low storages within the Murray Darling Basin and the continuing dry conditions.

We have also taken action to diversify to alternative locations with other water sources. We are progressing a project to develop almond orchards in Western Australia and have recently lodged a water license application for Stage 1 of this development (approximately 3,000 acres). If our application is successful, we expect to commence planting in 2009.

For our company orchards, we hold entitlements for approximately 120% of our 2007/08 requirements. This is due to some of these orchards having not reached maturity and full water usage. As a result, we will be able to irrigate normally provided we receive at least an 80% allocation. If the water restrictions, as now appears likely, prevent us from receiving an 80% allocation, then we will arrange for additional water, at a cost to our profit.

3. Increasing our processing capacity

Processing facilities are being expanded via the commissioning of our new almond processing plant, which will cater for our greater output in the years ahead.

For our investor orchards, we are working closely with the relevant investors and project managers to put in place similar strategies.

4. Enhancing our management team

Our food business was reviewed during the year, and we realigned its core activities to suit our almond crop first and foremost. A new management

In terms of future water management, we are investing in a number of

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and operations team are targeting efficiencies, and we are vigorously defending our key brands and supporting our almond sales.

Our outlook

We anticipate that although the company faces a period of short-term challenges, we will continue to create growth opportunities in the future due to:

[Increased fees from our ] increasing acreage of mature (producing) orchards
[Increased tonnages from our company ] orchards over the next seven years
[Increased added-value sales as our ] total almond tonnage grows
[Development of new orchards, ] in Victoria and interstate.

We will continue to operate as responsible environmental corporate citizens wherever Select Harvests has a footprint, and we are proud of our community involvement in Thomastown and Robinvale in Victoria and Brisbane. In addition, we are greatly looking forward to new community contributions at our proposed orchards in the West.

As always, we thank our staff for their efforts in a challenging environment, and the communities in which we operate for their support.

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MAX FREMDER Chairman

JOHN BIRD Managing Director

6 Select Harvests Annual Report 2007

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Our board of directors

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M A Fremder (Chairman)

Joined the board in March 1996. Formerly a director of IAMA Limited, and founder of Nufarm, one of Australia’s largest chemical manufacturers for the rural industry. Mr Fremder also was Non-Executive Director of Tassal Limited between October 2003 and March 2005. Member of the Remuneration Committee, and the Nomination Committee.

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J C Leonard, B.Mktng & Bus. Admin, MBA (Non-Executive Director)

Joined the Board in July 2004. Has held senior management positions with the Mars group of companies in Australia including General Manager of Mars Confectionery, Managing Director of Uncle Bens, and Managing Director of Mars Australia and New Zealand. In addition, he has served as President, Asia Pacific of all Mars businesses, and a Director of the Managing Board of Mars Incorporated global business. Member of the Audit and Risk Committee, and Nomination Committee.

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C G (Sandy) Clark, B.Comm, Dip.Ag.Econ (Non-Executive Director)

Joined the board in January 1998. Is currently Chairman, Aviva Australia Holdings Limited; Chairman, The Myer Family Office Limited; Director, Southern Cross Broadcasting Australia Ltd; Director, The Myer Foundation; Trustee, The William Buckland Foundation; Chairman of Council, Melbourne Grammar School; and a director of a number of private companies. Member of the Audit and Risk Committee, and the Nomination Committee, and Chairman of the Remuneration Committee.

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J Bird (Managing Director)

Joined the board in September 2001. Has had many years experience in the food industry and international trade. Formerly Managing Director of Jorgenson Waring Foods, John has been the CEO of Select Harvests Limited since January 1998. Member of the Nomination Committee.

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G F Dan O’Brien, B.Sc, B.VMS, MBA (Non-Executive Director)

Joined the Board in March 2004. Dan is the principal of Dromoland Capital, a private equity group, nonexecutive director of Thomas & Coffey Limited, and Coates Hire Limited, and is also an executive director of Hexima Limited. Mr O’Brien has significant commercial experience having held CEO positions for BIL Australia Limited, Mattel Asia Pacific, and The King Island Company. He holds an MBA, having graduated with distinction from Harvard Business School and is a qualified veterinary surgeon. Member of the Audit and Risk Committee, Remuneration Committee, and Nomination Committee. Mr O’Brien was a director of SPC Ardmona Limited between January 2002 and March 2005.

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R M Herron, FCA & FAICD (Non-Executive Director)

Joined the Board in January 2005. A Chartered Accountant, Mr Herron retired as a Senior Partner of PricewaterhouseCoopers in December 2002. He was a member of the Coopers & Lybrand (now PricewaterhouseCoopers) Board of Partners where he was National Deputy Chairman and was the Melbourne office Managing Partner for six years. He also served on several international committees within Coopers & Lybrand. He is a Non-Executive Director of GUD Holdings Ltd, Heemskirk Consolidated Ltd and a major industry superannuation fund. He is also a Director of Variety Club Inc. He was a nonExecutive Director of National Telecoms Group Ltd from July 2001 to June 2003. Chairman of the Audit and Risk Committee, and member of the Nomination Committee.

Select Harvests Annual Report 2007 7

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Our executive team

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Tim Millen Dip Hort (Distinction)

( Group Horticultural Manager)

Joined Select Harvests in 1996. Tim has over 18 years experience in horticulture. He has held senior horticultural positions in operations management, as well has holding the roles of Technical Officer and Horticulturist. Prior to commencing with Select Harvests, Tim was Orchard Manager for an Australian and New Zealand Nashi, Stonefruit and Pipfruit operation.

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Laurence Van Driel

Kim Martin B. Bus ( Accounting)

(Group Trading Manager)

( Group Operations Manager)

Joined Select Harvests Joined Select Harvests in 2007. Kim has in 2000. Laurence spent the majority has over 20 years of her career with experience in trading Mars Confectionary edible nuts and and Masterfoods, dried fruits. He has part of Mars Inc. She a comprehensive started her career knowledge of as an accountant international trade before moving to and deep insights into manufacturing. During the trading cultures of the last ten years, the various countries Kim has held various in which these senior manufacturing commodities are sold. and supply chain He has held senior management roles. purchasing and sales Prior to joining Mars, management positions Kim worked with with internationally PriceWaterhouse in the recognised companies. Audit division.

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Kevin Bush B.Bus & Comm (Marketing)

(Group Sales & Marketing Manager)

Joined Select Harvests in 2006. Kevin has had many years experience in the FMCG industry. He has held senior sales management positions in Australia for 16 years with Masterfoods, part of Mars Inc. Prior to this, Kevin worked in the UK for Duracell Batteries Ltd and Tesco PLC.

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Paul Chambers Bsc Hons, ACA

(Chief Financial Officer & Company Secretary)

Joined Select Harvests in 2007. Paul is a Chartered Accountant and has over 20 years experience in senior financial management roles in Australian and European organisations.

Most recently, he was CFO, Henkle ANZ and prior to that he held corporate positions with the Fosters Group. He has managed complex change, acquisition and business integration projects.

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8 Select Harvests Annual Report 2007

Orchard Development

Orchard Management

Processing Primary Processing Added-Value processing

Our orchard development

Sales & Marketing Almond Pool Sales Added-Value Product Sales

Our key activities

Tree supply
Orchard feasibility studies
Land acquisition
Orchard design
Irrigation installation
Land preparation
Tree Planting

Select Harvests completed its largest ever planting program in 2007 – lifting our acreage by a massive 44% during the year with the development of 11,800 new acres of almond orchards. This has consolidated our position as the biggest almond grower in Australia, and one of the largest in the world.

Future Developments

We are a competitive almond grower with significant advantages in crop yield and product quality, allowing us to compete effectively in global markets. Almond farming is highly mechanised and requires scale and capital to maximise efficiencies. The development of corporate farming in recent years has provided this investment and currently accounts for over 50% of Australia’s orchards.

We are confident that almonds are an attractive long-term investment. We will continue to develop and manage new almond orchards in the future, and to provide development and management services to our existing partners as they restructure their investment products to take account of the likely changes in MIS arrangements.

In this way, we are committed to developing 4,200 acres of new orchards for Timbercorp Limited next year.

During the year, Select Harvests continued the development plans of an almond project in the Midwest region of Western Australia.

At the same time, we are evaluating alternative investment structures and channels.

Given our expertise in orchard development and management, we are also exploring the opportunity to expand our activities into other tree nut crops.

Subject to the success of obtaining water licences, we have a three-stage program to develop over 12,000 acres of almond orchards.

Expanding into Western Australia

We expect Stage 1 planting to commence in 2009 once our water license application is approved.

The Murray Darling Basin on which Robinvale relies, remains under significant pressure. Accordingly, Select Harvests is seeking other growing areas with alternative water sources for future planting.

The first 3,000 acres to be developed will be at Dandaragan.

Orchard Development (acres)

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Our proposed Western Australian project in the Twin Hills, Dandargan and Badgingarra irrigation districts.

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Select Harvests Annual Report 2007 9

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Ensuring our tree supply

Our ambitious growth plans have demanded that we take strategic steps towards securing a reliable tree supply to meet the needs of future planting programs.

Our objectives have been to enhance our independence, sustainability, quality and efficiency.

This program involves

1. Tissue culturing laboratory

The development of alternative root stock via tissue culturing techniques.

2. Rootstock seedlings

Planting the rootstock in our nursery and growing them into seedlings.

3. Budwood site and nursery

Managing a high health isolation program at our budwood site to grow almond buds that will be free of disease and viruses. These buds are grafted onto the rootstock growing in our nursery.

4. Orchard planting

Planting the new trees in the orchards.

Naturally, all expertise gained through this program enhances our intellectual capital and our ability to apply this skill set to growing other tree nut crops in new projects.

Ensuring our tree supply – meeting the needs of future planting programs

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10 Select Harvests Annual Report 2007

Orchard Development

Orchard Management

Processing Primary Processing Added-Value processing

Our orchard management

Sales & Marketing Almond Pool Sales Added-Value Product Sales

Our key activities

Irrigation and nutrition
Pest and disease management
Tree care and pruning
Bee supply
Harvesting
Environmental management

Select Harvests enjoyed its biggest crop ever in 2007, harvesting some 12,000 tonnes of almonds.

Obtaining good yields, year after year, is a complex task, and one which we achieve at world’s best standards.

To ensure we continue to glean every tonne of almonds possible from our increasing acreage, we enhanced our technical team during 2007.

Water Management

As noted previously in this report, water is one of our most important resources. During the past year, we developed a number of scenarios to assist us in handling potential reduced water availability in 2008 and beyond.

Working with horticultural experts, we commenced a number of trials targeting significant reductions in water usage – with no impact on orchard productivity.

We are aiming to achieve 20% efficiencies in water usage over the next three years, while maintaining current yield levels.

Our orchards account for 60% “ ” of Australia’s almond acreage.

In addition, we have embarked upon a benchmark study, comparing our processes, product and other aspects of our business with the leading almond growers, processors and marketers in California.

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Investor and Company Orchards

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Select Harvests Annual Report 2007 11

Orchard Development Orchard Management

Processing

Primary Processing Added-Value processing

Our primary processing

Sales & Marketing Almond Pool Sales Added-Value Product Sales

Primary processing

This refers to the processing required to convert a crop from its raw, “straight-from-the-tree” harvested state to a saleable primary product. In the case of almonds this involves removing each almond’s hull and shell, and delivering a complete raw almond kernel ready for packaging or further added-value processing.

Our new facility

During 2008 we will complete and commission Stage 1 of a new processing facility in Robinvale at a cost of $32 million. This large-scale facility will incorporate the latest proven packaging and processing technologies, and will deliver significant economies and efficiencies. It will combine both the processing and packing elements of the process on the single site, as well as provide storage for field stock, raw kernel and finished goods. This first stage of the development will enable us to process 40,000 tonnes of almonds.

Future almond tonnage from existing trees

The site has the capacity to upgrade in stages to a maximum of 90,000 tonnes, dependent upon our future processing requirements.

Our almond crop will grow to 40,000 tonnes by 2011, which is more than triple our 2007 crop.

Almond quality

Our new facility will introduce additional sorting technology to ensure best possible results in almond grading. In addition, the introduction of pasteurisation technology will ensure that we continue to deliver high levels of food safety and quality.

“

Our new processing facility at Robinvale will incorporate the latest proven packaging and ” processing technologies.

Future Tonnage from Existing Trees

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Stage 1 of our state-of-the-art almond processing plant at Carina West in Robinvale, Victoria.

Select Harvests Annual Report 2007

Orchard Development

Orchard Management

Processing

Primary Processing Added-Value processing

Our Added-Value Processing

Sales & Marketing Almond Pool Sales Added-Value Product Sales

Added-value processing

Adding value in the processing phase refers to the further processing of raw materials to provide our customers (who may be manufacturers or the end-consumer) with a nut or associated health food in a form that meets their quality, convenience and taste requirements.

Today, Select Harvests has the capability to provide the following added-value processing to our almonds and other edible nuts, as well as to our associated health food products:

[ Electronic sorting ] (foreign material removal)

Our outlook

[ We will look to migrate from a ] manufacturing focus to a supplychain focus to ensure that we drive cost efficiencies. We will enhance our position as a low cost processor.
[ Innovation, both in production ] techniques and product development, will be a key driver of demand growth and delivering on consumer expectations.
[ We foresee a consistent increase in ] our use of technology and automation in the future, ensuring we stay cost competitive and continue to meet consumer and customer expectations.
[ Blanching (skin removal)]
[ Cooking (roasting & frying)]
[ Flavouring (seasoning, salting, spicing)]
[ Cutting (dicing, flaking, ] slivering & grinding)
[ Paste-making]
[ Blending]
[ Packaging (to satisfy a number ] of retail and industrial formats).

New equipment

The introduction of two new packaging technologies – an edge-seal, stand-up pack and a re-sealable tub pack – will provide us with contemporary packaging solutions for consumers. It will also give us a new platform for increased capacity and productivity.

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Select Harvests Annual Report 2007 13

Orchard Development

Orchard Management

Processing Primary Processing Added-Value processing

Our Sales and Marketing Almond pool sales

Sales & Marketing Almond Pool Sales Added-Value Product Sales

Our market position

We continue to enhance our position as one of the leading almond growers and marketers in the world.

Australia’s 2007 crop is estimated at 25,000 metric tonnes (16,000 tonnes in 2006) contributing 3% of world production. Australia will challenge Spain as the number 2 producer in the years ahead.

Almond Price AUD/KG

Select Harvests will contribute 12,000 metric tonnes (48%) of Australia’s 2007 crop, from 6,200 metric tonnes (38%) in 2006.

This significantly larger almond pool has required an increased export focus with export percentages likely to increase from 40% to 60% when the sales are complete. Approximately 80% of the 2007 crop has been contracted to date with over 60% packed and shipped.

We continue to trade strongly within the context of a higher Australian dollar and an easing of the world almond price.

World almond producers, showing Australia’s share of world almond production

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“ Select Harvests will contribute 12,000 metric tonnes (48%) of Australia’s 2007 crop, from 6,200 ” metric tonnes (38%) in 2006.

Select Harvests Annual Report 2007

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After a number of years of stagnant supply, the USA is forecasting a record crop in 2007 providing the opportunity to meet increasing consumer demand.

Record shipments in the 2006 crop year have continued at the start of the 2007 season. The increased supply has resulted in some price easing but prices remain at the high end of historical levels.

Our outlook

The fundamentals of the world almond market remain strong, particularly in Australia.

We are globally competitive in our cost of production, and due to favourable growing conditions, such as reduced exposure to insect damage, we produce high quality almonds.

The almond market is also experiencing continuous growth in consumer demand.

This is being driven by an increasing awareness of the health benefits of regularly eating almonds.

Australia will play a more significant role in meeting this increasing world demand for almonds as our production grows from 25,000 metric tonnes this year to 70,000 metric tonnes by 2014.

Select Harvests, being one of the largest almond growers in the world, will be the leader in both our domestic and export markets.

USA Annual Almond Production

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2007 crop numbers are estimates.
USA Almond Production vs. Shipments
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2007 crop numbers are estimates.
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Select Harvests Annual Report 2007 15

Orchard Development Orchard Management

Processing Primary Processing Added-Value processing

Sales & Marketing Almond Pool Sales Added-Value Product Sales

Our Sales and Marketing Added-Value product sales

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Our added-value product sales includes all almonds, other edible nuts and associated health food products that we sell to our retail and wholesale customers as well as to our food manufacturers and food service customers.

We have invested in our core heritage of cooking nuts as well as in the rapidly growing, healthy snacking segment.

Our future growth will also be driven by the increasing consumer awareness of the health benefits of almonds and other edible nuts.

These customers give us strong channels of distribution for our increasing almond crop.

Health benefit initiatives

We are proud supporters of two industry initiatives to raise consumer awareness of these health benefits.

Our market position

We have maintained our market leading positions in our key categories, namely cooking nuts and muesli, albeit through increased trade and promotional investment.

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New edge packaging for our Lucky range

Our outlook

Our leadership in marketing all edible nuts has strengthened our role as a supplier of premium private label nut products.

We anticipate that we will grow our added-value product sales in the year ahead.

The Nuts for Life program focuses on informing health professionals as to the latest health research on nuts.

We continue to grow our sales outside of the major supermarkets by supporting our health food store customers.

One of the drivers of this growth will be the relaunch of our largest brand: Lucky.

Lucky is the market leading nut brand within the supermarket dried fruit and nut category. Lucky has a proud 50 year heritage in this segment.

The Almond Board of Australia is actively communicating with consumers to encourage them to eat ‘a handful of almonds everyday’.

Our strategies for the year ahead include:

[ Re-aligning our focus to nuts in ] general, and almonds in particular

In September 2007, Lucky will be relaunched with new packaging and a new look.

There are great heart health benefits to eating a handful of almonds a day.

[Maximising the opportunities to add ] value to the almonds available from our almond pool

The two new packaging styles – stand-up edge seal packs and resealable tub packs – have been chosen to deliver greater consumer convenience and freshness.

[Consolidating our sales force to ] improve efficiency and effectiveness

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[Continuing to grow our distribution ] channels outside of the key supermarket retailers, and
[Developing export markets for ] packaged and processed almonds.

New tubs packs for the Lucky healthy snacking range

16 Select Harvests Annual Report 2007

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Our environment, community and people

Our environment

We are leading in the care for our environment in Robinvale, Victoria, through the creation of our Wildlife Management Plan. This plan is being developed in consultation with the Victorian Government Department of Sustainability and Environment. Once completed, we expect that it will become a benchmark for all horticulture in the State.

The key objectives of this plan are:

[To protect endangered and ] threatened wildlife
[To minimise harm to other ] wildlife, and
[To ensure compliance with relevant ] ISA and Australian Standards for environmental management.

This plan seeks to integrate best practice wildlife management throughout our operations, and to align wildlife management as a core component of our business.

We have also committed to sponsoring a major ecological research project with Charles Sturt University to understand how a native species, the Regent Parrot, can thrive in our agricultural environment. This study will look at opportunities to redesign our agricultural operations to minimise any detrimental impact to native species without compromising production or efficiency.

“ As we grow, so do the communities where we operate – and we are actively supporting people, services, schools and other community groups in Robinvale, Victoria and elsewhere.”

Our people

Our community

As well as working to improve our environment, we are also proud of our work in developing both the communities in which we work and our people.

Many of our employees are currently undertaking a range of training courses including: horticulture certificates, horticulture diplomas, administration certificates, engineering & fabrication certificates and irrigation courses.

As the largest employer in the Robinvale area, we are proud to support a number of different community and sporting programs.

Thirty-one staff in our orchard operations received certificates after successfully completing a Certified Irrigation Managers course. The Sunraysia Institute of TAFE in association with the Irrigation Association of Australia formed a partnership to deliver the training. We are the first agri-business to receive multiple Certified Irrigation Manager certificates as part of our continued workplace training initiative.

Through the continued support of Select Harvests, the Robinvale Secondary College Chaplaincy offers staff and students with a comprehensive counselling program. This program helped identify students with dyslexia and in the wake of the Kerang rail disaster, offered teachers and students intensive counselling.

We were also pleased to support the Robinvale Football Club, Euston Football Club, Robinvale Netball Association, Robinvale Tennis Club, Robinvale Rowing Club, Robinvale/Euston Cricket Association, Robinvale Swimming and Diving Associaton, Robinvale District Harness Racing Association through financial donations and donations of our products.

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Select Harvests Annual Report 2007 17

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Statistical Summary

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select harvests consolidated results
for years ended 30 June 2007 2006 2005 2004 2003 2002
Total sales 229,498 217,866 173,864 127,381 80,994 78,327
Earnings before interest and tax 40,549 38,369 33,069 23,836 17,421 14,749
Operating profit before tax 40,014 37,903 31,802 22,587 16,110 12,803
Net profit after tax 28,098 26,492 22,104 15,225 10,962 8,554
Earnings per share (Basic) (cents) 71.0 67.1 56.9 40.0 31.3 25.4
Return on shareholders’ equity (% pa) 29.4 26.1 25.1 19.2 18.3 17.3
Dividend per ordinary share (cents) 57.0 53.0 42.0 26.0 18.5 13.5
Special dividend per ordinary share (cents) - 10.0 - - - -
Dividend franking (% pa) 100 100 100 100 100 100
Dividend payout ratio (%) 80.0 80.0 75.4 65.7 62.8 54.5
Financial ratios
Net tangible assets per share ($) 1.72 1.83 1.52 1.35 1.08 0.77
Net interest cover (times) 75.8 82.3 26.2 19.1 13.3 7.6
Debt/equity ratio (%) 1.7 1.3 1.0 10.2 15.4 38.9
Current asset ratio (times) 1.32 1.82 1.52 1.70 1.61 1.30
Balance sheet data as at 30 June
Current assets 70,983 72,455 58,832 32,486 25,077 22,599
Non-current assets 89,170 79,421 78,676 74,469 60,672 63,090
Total assets 160,153 151,876 137,508 106,955 85,749 85,689
Current liabilities 53,680 39,905 38,757 19,077 15,581 17,381
Non-current liabilities 10,969 10,490 10,656 8,610 10,162 18,971
Total liabilities 64,649 50,395 49,413 27,687 25,743 36,352
Net assets 95,504 101,481 88,095 79,268 60,006 49,337
Shareholders’ equity
Share capital 41,953 52,665 46,925 43,940 36,206 34,199
Reserves 11,273 12,691 13,766 14,191 9,458 9,458
Retained profits (accumulated losses) 42,278 36,125 27,404 21,137 14,342 5,680
Total shareholders’ equity 95,504 101,481 88,095 79,268 60,006 49,337
Other data as at 30 June
Fully paid shares (000) 38,739 39,708 39,069 38,525 35,455 34,585
Number of shareholders 2,953 3,369 2,999 2,413 2,054 1,610
Select Harvests’ share price
– close ($) 11.60 13.02 9.70 6.67 4.80 3.10
Market capitalisation 449,372 516,998 378,970 256,965 170,184 107,214
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$‘000 (except where indicated)

18 Select Harvests Annual Report 2007

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Financial Contents

Directors’ Report	20
Auditor’s Independence Declaration	31
Corporate Governance Statement	32
Income Statements	38
Balance Sheets	39
Statement of Changes in Equity	40
Cash Flow Statements	41
Notes to the Financial Statements	42
1. Summary of significant accounting policies	42
2. Financial risk management	51
3. Critical accounting estimates and judgements	52
4. Revenue	52
5. Expenses	53
6. Income tax	53
7. Discontinued operation	54
8. Dividends paid or provided for on ordinary shares	56
9. Cash and cash equivalents	56
10. Receivables (current)	57
11. Inventories (current)	57
12. Derivative financial instruments (current)	58
13. Receivables (non-current)	59
14. Other financial assets (non-current)	59
15. Property, plant and equipment	60
16. Deferred tax assets	62
17. Biological assets – almond trees	63
18. Intangibles	64
19. Payables (current)	64
20. Interest-bearing liabilities (current)	64
21. Provisions (current)	65
22. Payables (non-current)	65
23. Interest-bearing liabilities (non-current)	65
24. Deferred tax liabilities (non-current)	67
25. Provisions (non-current)	67
26. Contributed equity	68
27. Reserves and retained profits	69
28. Cash flow statement	71
29. Expenditure commitments	72
30. Events occuring after balance date	73
31. Earnings per share	74
32. Remuneration of directors and key management personnel	74
33. Remuneration of auditors	78
34. Related party disclosures	79
35. Segment information	80
36. Interest rate risk	82
37. Controlled entities	83
38. Employee benefits	83
39. Contingent liabilities	83
Directors’ Declaration	86
Independent Audit Report	87
ASX Additional Information	89

Select Harvests Annual Report 2007 19

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Directors’ Report

The directors present their report together with the financial report of Select Harvests Limited and controlled entities (referred to hereafter as the “consolidated entity”) for the year ended 30 June 2007 and the independent auditor’s report thereon.

Directors

The qualifications, experience and special responsibilities of each person who has been a director of Select Harvests Limited at any time during or since the end of the financial year is provided below, together with details of the company secretary as at the year end. Directors were in office for this entire period unless otherwise stated.

Names, qualifications, experience and special responsibilities

M A Fremder (Chairman)

Joined the board in March 1996. Formerly a director of IAMA Limited, and founder of Nufarm, one of Australia’s largest chemical manufacturers for the rural industry. Mr Fremder also was Non-Executive Director of Tassal Limited between 3 October 2003 and 18 March 2005. Member of the Remuneration Committee and the Nomination Committee.

Interest in Shares and Options: 5,777,234 fully paid shares.

J Bird (Managing Director)

Became the CEO of Select Harvests Limited in January 1998. Has had many years in the food industry and international trade. Formerly Managing Director of Jorgenson Waring Foods. Appointed Managing Director and joined the Board in September 2001. Member of the Nomination Committee.

Interest in Shares and Options: 518,122 fully paid shares, 67,600 options expiring 20 October 2007 exercisable at $7.78 each and 23,067 options expiring 31 October 2008 exercisable at $11.05 each.

C G (Sandy) Clark, B.Comm, Dip.Ag.Econ, FAICD (Non-Executive Director)

Joined the board in January 1998. Is currently Chairman, Aviva Australia Holdings Limited; Chairman, The Myer Family Office Limited; Director, Southern Cross Broadcasting Australia Ltd; Director, The Myer Foundation; Trustee, The William Buckland Foundation; Chairman of Council, Melbourne Grammar School; and a director of a number of private companies. Appointed Chairman of Brown Brothers Holdings from 14 June 2007. Former Deputy Chairman of Legal Practice Board of Victoria and former Director of CGNU Australia Holdings Limited. Member of the Audit and Risk Committee and the Nomination Committee, and Chairman of the Remuneration Committee.

Interest in Shares and Options: 23,892 fully paid shares.

G F Dan O’Brien, B Sc, B VMS, MBA (Non-Executive Director)

Joined the Board on 29 March 2004. Dan is the principal of Dromoland Capital, a private equity group, Non-Executive Director of Thomas & Coffey Limited, and Coates Hire Limited, and is also an Executive Director of Hexima Limited. Mr O’Brien has significant commercial experience having held CEO positions for BIL Australia Limited, Mattel Asia Pacific, and The King Island Company. He holds an MBA, having graduated with distinction from Harvard Business School and is a qualified veterinary surgeon. Member of the Audit and Risk Committee, Remuneration Committee, and Nomination Committee. Mr O’Brien was a Director of SPC Ardmona Limited between 9 January 2002 and 4 March 2005.

Interest in Shares and Options: 51,090 fully paid shares.

J C Leonard, B.Mktng & Bus. Admin, MBA (Non-Executive Director)

Joined the Board on 21 July 2004. Has held senior management positions with the Mars group of companies in Australia including General Manager of Mars Confectionery, Managing Director of Uncle Bens, and Managing Director of Mars Australia and New Zealand. In addition, he has served as President, Asia Pacific of all Mars businesses, and a Director of the Managing Board of Mars Incorporated global business. Member of the Audit and Risk Committee, and Nomination Committee.

Interest in Shares and Options: 484,797 fully paid shares.

20 Select Harvests Annual Report 2007

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R M Herron, FCA & FAICD (Non-Executive Director)

Joined the Board on 27 January 2005. A Chartered Accountant, Mr Herron retired as a Senior Partner of PricewaterhouseCoopers in December 2002. He was a member of the Coopers & Lybrand (now PricewaterhouseCoopers) Board of Partners where he was National Deputy Chairman and was the Melbourne office Managing Partner for six years. He also served on several international committees within Coopers & Lybrand. He is a Non-Executive Director of GUD Holdings Ltd, Heemskirk Consolidated Ltd, Royal Automobile Club Of Victoria (RACV) Ltd and a major industry superannuation fund. Chairman of the Audit and Risk Committee, and member of the Nomination Committee.

Interest in Shares and Options: 5,000 fully paid shares.

R Palmaricciotti, B Comm, ACA, MBA (Company Secretary)

Appointed to the position of Company Secretary and Chief Financial Officer in December 2006. He has many years experience in financial, project and general management roles gained within Australian and international organisations. Most recently he was General Manager Finance at PMP Print, and prior to that he was at Graincorp Ltd in various finance and project management roles. He is qualified as a Chartered Accountant and MBA.

Interest in shares and options: 0 fully paid shares.

Corporate information

Nature of operations and principal activities

The principal activities during the year of entities within the consolidated entity were:

Processing, packaging, marketing and distribution of edible nuts, dried fruits, seeds, and a range of natural health foods, and
The growing, processing and sale of almonds to the food industry from company owned almond orchards, the provision of management services to external owners of almond orchards, including orchard development, tree supply, farm management, land rental and irrigation infrastructure, and the marketing and selling of almonds on behalf of external investors.

There were no other significant changes in the nature of the activities of the consolidated entity in the financial year. In the previous financial year, effective 1 October 2005, Select Harvests Limited sold all of its shares in Riverina Pelletising Services Pty Ltd and ceased its involvement in the production of pelletised snail, slug and rodent baits for third party brand owners. There were no other significant changes in the nature of the activities of the consolidated entity in the previous financial year.

Employees

The consolidated entity employed 340 full time employees as at 30 June 2007 (2006: 297 employees).

Review and results of operations

Refer to the announcement lodged with the ASX and the report before the Appendix 4E.

Significant changes in the state of affairs

No significant changes in the state of affairs of the consolidated entity occurred during the financial year.

Significant events after the balance date

On 27 August 2007, the Directors declared a fully franked final dividend of 35 cents per ordinary share to be paid on Monday 1 October 2007 to shareholders registered at 5.00 pm on Friday 7 September 2007. No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

On 1 July 2007 a lease agreement was entered into for the lease of a 1,002 acre almond orchard from Sandhurst Trustees Limited in which the consolidated entity has the right to harvest the almond trees owned by the lesser for the term of the agreement. This lease has been disclosed as a lease commitment in note 29.

Likely developments and expected results

Refer to the announcement lodged with the ASX and the report before the Appendix 4E.

Select Harvests Annual Report 2007

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Environmental regulation and performance

The consolidated entity’s operations are subject to environmental regulations under laws of the Commonwealth or of a State or Territory. Details of the consolidated entity’s performance in relation to such environmental regulations follows:

The consolidated entity holds licences issued by the Environmental Protection Authority which specify limits for discharges to the environment which are the result of the consolidated entity’s operations. These licences regulate the management of discharge to the air and stormwater run-off associated with the operations.

There have been no significant known breaches of the consolidated entity’s licence conditions.

During the year the company was charged with offences under the Wildlife Act 1975 in relation to taking protected wildlife. The company was fined $16,000 for the offence. The company regretted that this incident occurred. The company takes its environmental responsibilities seriously, has a good record in environmental management to date, and adheres to environmental plans that preserve the habitat of native species. Almond developments have had a positive environmental impact. The change in land use and the increase in food source have seen a rejuvenation of remnant native vegetation and an increase in the wildlife population, in particular bird species. The company has committed funding to the monitoring of Regent parrot populations around our orchards and the effectiveness of protecting native vegetation corridors in preserving wildlife.

Remuneration report

Principles used to determine the nature and amount of remuneration (audited)

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. Non-executive directors receive fees and do not receive options or bonus payments. Further details regarding components of directors’ and executive remuneration are provided in the notes to the financial statements.

(i) Short-term incentives

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 consolidated entity level, divisional level, or functional level, as applicable, for the financial year. The Remuneration Committee is responsible for assessing whether the KPIs are met based on detailed reports on performance prepared by management.

(ii) Long-term incentives

In addition, the consolidated 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 upon achievement of a 10% increase in EPS. The Remuneration Committee is responsible for assessing whether the targets are met based on reports prepared by management.

Details of remuneration (audited)

Details of the remuneration of the directors and the key management personnel (as defined in AASB 124 Related Party Disclosures) of Select Harvests Limited and the consolidated entity are set out in the following tables. The key management personnel of the consolidated entity includes the directors as listed above and the following executive officers, which also includes the 5 highest paid executives of the consolidated entity:

22 Select Harvests Annual Report 2007

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NAME POSITION	EMPLOYER
K Bush Group Manager Sales & Marketing (from 25 September 2006) K Martin Group Operations Manager (from 16 January 2007) T Millen Group Horticultural & Farm Operations Manager R Palmaricciotti Chief Financial Officer & Company Secretary (appointed to the role 22 December 2006) L Van Driel Group Trading Manager M Mattia Chief Financial Officer & Company Secretary (resigned from the role 21 December 2006) R Tanti National Sales Manager (to 21 July 2006) W Turner General Manager Almond Division (to 13 July 2006)	Select Harvests Food Products Pty Ltd Select Harvests Limited Kyndalyn Park Pty Ltd Select Harvests Limited Select Harvests Food Products Pty Ltd Select Harvests Limited Select Harvests Food Products Pty Ltd* Kyndalyn Park Pty Ltd

NAME
POSITION

EMPLOYER

K Bush
Group Manager Sales & Marketing (from 25 September 2006)
K Martin
Group Operations Manager (from 16 January 2007)
T Millen
Group Horticultural & Farm Operations Manager
R Palmaricciotti Chief Financial Officer & Company Secretary
(appointed to the role 22 December 2006)
L Van Driel
Group Trading Manager
M Mattia
Chief Financial Officer & Company Secretary (resigned from the role 21
December 2006)
R Tanti
National Sales Manager (to 21 July 2006)
W Turner
General Manager Almond Division (to 13 July 2006)

Select Harvests Food Products Pty Ltd
Select Harvests Limited
Kyndalyn Park Pty Ltd
Select Harvests Limited
Select Harvests Food Products Pty Ltd
Select Harvests Limited
Select Harvests Food Products Pty Ltd*
Kyndalyn Park Pty Ltd

*Select Harvests Food Products Pty Ltd - formerly Select Harvests Marketing Pty Ltd

The nature and amount of each major element of the remuneration of each director of the Company and each of the key management personnel of the company and the consolidated entity for the financial year is detailed below.

Remuneration of Directors of Select Harvests Limited

2007	ANNUAL REMUNERATION BASE FEE $ SHORT TERM INCENTIVES $ NON CASH BENEFITS $ SUPERANNUATION CONTRIBUTIONS $	LONG SERVICE LEAVE ACCRUED	LONG TERM REMUNERATION OPTIONS NUMBER GRANTED VALUE $ TOTAL $
NON EXECUTIVE M A Fremder 103,000 - - 6,000 - - - 109,000 C G Clark 50,000 - - 4,500 - - - 54,500 G F Dan O’Brien 50,000 - - 4,500 - - - 54,500 J C Leonard 50,000 - - 4,500 - - - 54,500 R M Herron 50,000 - - 4,500 - - - 54,500 EXECUTIVE - J Bird 474,319 267,462 36,737 42,792 18,000 86,067 101,999 941,309

2006	ANNUAL REMUNERATION BASE FEE $ SHORT TERM INCENTIVES $ NON CASH BENEFITS $ SUPERANNUATION CONTRIBUTIONS $	LONG SERVICE LEAVE ACCRUED	LONG TERM REMUNERATION OPTIONS NUMBER GRANTED VALUE $ TOTAL $
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 42,000 - - 3,780 - - - 45,780 R M Herron 42,000 - - 3,780 - - - 45,780 EXECUTIVE J Bird 422,614 177,512 34,484 37,049 16,000 114,800 87,499 775,158

Select Harvests Annual Report 2007

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Remuneration of the key management personnel of the Company and the Consolidated Entity

2007	ANNUAL REMUNERATION BASE FEE $ SHORT TERM INCENTIVES $ NON CASH BENEFITS $ SUPERANNUATION CONTRIBUTIONS $	LONG SERVICE LEAVE ACCRUED	LONG TERM REMUNERATION OPTIONS NUMBER GRANTED VALUE $ TOTAL $	LONG TERM REMUNERATION OPTIONS NUMBER GRANTED VALUE $ TOTAL $
K Bush (Commenced 25/09/06) 173,538 - - 27,000 - - - K Martin (Commenced 16/01/07) 104,893 - - 9,440 - - - L Van Driel 148,095 50,000 20,689 13,154 5,000 12,667 15,945 T Millen 130,117 20,000 44,712 11,896 5,000 7,333 9,837 R Palmaricciotti (Commenced 14/12/06) 107,986 - 2,806 9,719 - - - M Mattia (Resigned 31/12/06) 134,908 55,337 18,830 8,563 - 26,200 30,810				200,538 114,333 252,883 221,562 120,511 248,448
ANNUAL REMUNERATION LONG TERM REMUNERATION 2007 BASE FEE $ SHORT TERM INCENTIVES $ NON CASH BENEFITS $ SUPERANNUATION CONTRIBUTIONS $ LONG SERVICE LEAVE ACCRUED OPTIONS NUMBER GRANTED VALUE $ TOTAL $
M Mattia 176,664 71,661 38,238 15,857 - 19,500 19,286 321,706 M Ciobo 210,000 - 30,251 39,670 3,000 - - 282,921 R Tanti (Commenced 29/9/04) 187,388 21,500 23,816 11,002 - 7,400 7,252 250,958 L Van Driel 128,624 25,000 20,923 11,920 5,000 15,300 11,466 202,933 W Turner 116,307 30,246 18,519 17,512 - 14,400 14,252 196,836 T Millen 105,256 15,026 24,187 11,896 4,000 7,500 5,558 164,270

Notes

The terms ‘director’ and ‘officer’ have been treated as mutually exclusive for the purposes of this disclosure.

The elements of remuneration have been determined on the basis of the cost to the company and the consolidated entity.

Options granted as part of remuneration have been valued using the Black-Scholes option pricing model, which takes account of factors such as the option exercise price, the current level and volatility of the underlying share price and the time to maturity of the option.

Key management personnel are those directly accountable and responsible for the operational management and strategic direction of the Company and the consolidated entity.

The category “other” includes the value of any non-cash benefits provided and includes FBT where applicable.

Service arrangements (audited)

Service arrangements between the consolidated entity and executive directors and key management personnel are on a continuing basis and include, in certain cases, relevant notice periods. There are no specific termination benefits applicable to the service arrangements.

24 Select Harvests Annual Report 2007

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J Bird, Managing Director

Term of Agreement – on-going agreement
Base salary, inclusive of superannuation for the year ended 30 June 2007 of $555,000.

K Bush, Group Manager Sales and Marketing

Term of Agreement – on-going agreement
Base salary, inclusive of superannuation for the year ended 30 June 2007 of $261,600.

K Martin, Group Operations Manager

Term of Agreement – on-going agreement
Base salary, inclusive of superannuation for the year ended 30 June 2007 of $245,000.

T Millen, Group Horticultural and Farm Operations Manager

Term of Agreement – on-going agreement
Base salary, inclusive of superannuation for the year ended 30 June 2007 of $185,591.

R Palmaricciotti, Chief Financial Officer & Company Secretary

Term of Agreement – Contract role until September 2007
Base salary, inclusive of superannuation for the year ended 30 June 2007 of $220,000.

L Van Driel, Group Trading Manager

Term of Agreement – on-going agreement
Base salary, inclusive of superannuation for the year ended 30 June 2007 of $180,000.

Share based compensation (audited)

(i) Executive Share Option Scheme

The current 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 at the time the offer was made.

Individual parcels of options offered to participating employees are based on a percentage of fixed remuneration. The options are granted annually in three tranches on achievement of a 10% increase in EPS. Options granted as remuneration are subject to continuing service with the consolidated entity. Options granted as remuneration are valued at grant date in accordance with AASB 2 Share-based Payments. No options previously granted as remuneration have lapsed during the year.

The assessed fair value at offer date is determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at offer date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.

The model inputs for options offered during the year ended 30 June 2007 included:

a) options are granted for no consideration, have a three year life, and one third of the options offered vest in each year and are exercisable from the date of vesting to the expiry date
b) exercise price: $13.13 (2006- $11.05)
c) offer date: 22 September 2006 (2006 – 22 September 2005)
d) expiry date: 31 October 2009 (2006 – 31 October 2008)
e) volume weighted average share price at offer date: $13.09 (2006 – $11.03)
f) expected price volatility of the company’s shares: 49.44% (2006 – 27.10%)

g) expected dividend yield: 4.05% (2006 – 3.81%)

h) risk free interest rate: 5.89% (2006 – 5.10%)

The following table is a summary of the Executive Share Option Schemes currently in place.

The following table is a summary of the Executive Share Option Schemes currently in place.
PARTICIPATING EMPLOYEES OPTION VALUATION EXERCISE PRICE NO. OF OPTIONS OFFERED EXPIRY DATE GRANTED AUGUST 05 GRANTED AUGUST 06 FORFEITED DURING YEAR	BALANCE
2004 Offer 4 $0.98 $7.78 234,300 20 October 2007 86,100 67,400 38,900 2005 Offer 4 $1.72 $11.05 153,300 31 October 2008 - 51,101 34,736 2006 Offer 4 $3.57 $13.13 68,095 31 October 2009 - - 10,297	41,900 67,465 57,798
Total 455,695 86,100 118,501 83,933	167,163

Select Harvests Annual Report 2007

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(ii) Options Granted

During or since the end of the financial year, the Company granted options over unissued ordinary shares to the executive director and the following key management personnel of the Company as part of their remuneration.

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NUMBER OF OPTIONS NUMBER OF OPTIONS
GRANTED 2007 GRANTED 2006
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	GRANTED 2007	GRANTED 2006
DIRECTOR
J Bird	86,067	114,800
KEY MANAGEMENT PERSONNEL
M Mattia	26,200	19,500
W Turner	18,600	14,400
L Van Driel	12,667	15,300
T Millen	7,333	7,500
R Tanti	13,867	7,400

(iii) Shares Issued on Exercise of Options

Details of ordinary shares in the company provided as a result of the exercise of remuneration options to each director of the consolidated entity and other key management personnel are set out below.

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NUMBER OF SHARES NUMBER OF SHARES
ISSUED ON EXERCISE OF ISSUED ON EXERCISE OF
OPTIONS 2007 OPTIONS 2006
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	OPTIONS 2007	OPTIONS 2006
DIRECTOR
J Bird	87,600	155,400
KEY MANAGEMENT PERSONNEL
M Mattia	26,200	28,300
W Turner	18,600	21,400
L Van Driel	3,900	22,400
T Millen	5,400	11,100
R Tanti	21,267	-

The amounts paid per ordinary share by each director and other key management personnel on the exercise of options at the date of exercise were as follows.

NUMBER OF SHARES	AMOUNT PAID ON EACH SHARE
114,600	$5.60
32,900	$7.78
17,367	$11.05

There were no amounts unpaid on the shares issued.

Additional Information (unaudited)

(i) Principles used to determine the nature and amount of remuneration: relationship between remuneration and company performance

The overall level of executive reward takes into account the performance of the consolidated entity over a number of years, with greater emphasis given to the current year. Over the past 5 years, the consolidated entity’s profit from ordinary activities after income tax has grown at an average rate of 28% per annum, and total shareholder return has grown at an average rate of 38% per annum.

26 Select Harvests Annual Report 2007

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(ii) Details of remuneration: cash bonuses and options

For each cash bonus and grant of options included above, the percentage of the available bonus or grant that was paid, or that vested, in the financial year, and the percentage that was forfeited because the person did not meet the service and performance criteria is set out below. No part of the bonuses is payable in future years. No options will vest if the conditions are not satisfied hence the minimum value of the option yet to vest is nil. The maximum value of the options yet to vest has been calculated based on the option price.

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NAME CASH BONUS OPTIONS
PAID FORFEITED YEAR VESTED FORFEITED FINANCIAL YEARS MINIMUM TOTAL MAXIMUM TOTAL
% % GRANTED % % IN WHICH VALUE OF GRANT VALUE OF GRANT YET
OPTIONS YET TO VEST ($)
MAY VEST TO VEST ($)
J Bird 100 2004 66 - 2008 - 33,124
2005 33 - 2008 -
2009 - 79,350
2006 - - 2007 -
2008 -
2009 - 131,251
L Van Driel 100 2004 66 - 2008 - 4,018
2005 33 - 2008 -
2009 - 16,053
2006 - - 2007 -
2008 -
2009 - 27,000
T Millen 100 2004 66 - 2008 - 1,960
2005 33 - 2008 -
2009 - 12,155
2006 - - 2007 -
2008 -
2009 - 27,838
(iii) Share based compensation: options
REMUNERATION VALUE VALUE VALUE TOTAL
CONSISTING OF OPTIONS GRANTED EXERCISED LAPSED VALUE
A B C D
DIRECTORS
J Bird 25% $101,999 $87,600 - $105,923
KEY MANAGEMENT PERSONNEL
T Millen 15% $9,837 $5,400 - $9,997
L Van Driel 15% $15,945 $3,900 - $16,063
W Turner 15% $21,476 $21,476 - -
M Mattia 15% $30,810 $33,810 - -
R Tanti 15% $18,375 $25,627 - -
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A The percentage of the value of remuneration consisting of options, based on the value at grant date set out in column B

B The value at grant date calculated in accordance with AASB2 Share-based payments of options granted during the year as part of remuneration.

C The value at exercise date of options that were granted as part of remuneration and were exercised during the year.

D The value at lapsed date of options that were granted as part of remuneration and that lapsed during the year.

(iv) Loans to directors and executives

Information on loans to directors and executives (if any), are set out in note 34.

Select Harvests Annual Report 2007

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( v) Share options granted to directors and the most highly remunerated officers

Options over unissued ordinary shares of Select Harvests Limited granted and not exercised during or since the end of the financial year to the five most highly remunerated officers of the company as part of their remuneration were as follows:

NAME	OPTIONS GRANTED & NOT EXERCISED
J Bird	90,667
T Millen	7,533
L Van Driel	12,867
M Mattia	-
M Ciobo	-

The options were granted under the consolidated entity’s executive share option scheme on 28 August 2006 and 24 August 2005. Details of options granted to the directors and the five most highly remunerated officers of the consolidated entity can be found above. No options have been granted since the end of the financial year.

(vi) Unissued Ordinary shares Under Option

At the date of this report unissued ordinary shares of the company under option are:

OFFER NUMBER OF SHARES EXERCISE PRICE	EXPIRY DATE
2004 81,800 $7.78 2005 33,734 $11.05	20 October 2007 31 October 2008

All options expire on the earlier of their expiry date or termination of the employee’s employment.

Current option holders do not have any right, by virtue of the option, to participate in any share issue of the company or any related body corporate.

Dividends – Select Harvests Limited

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DIVIDENDS CENTS $
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DIVIDENDS CENTS $	DIVIDENDS CENTS $

Final dividends proposed and not recognised as a liability: • on ordinary shares 35.0 Fully Franked Dividends paid in the year: Interim for the year • on ordinary shares 22.0 Final for 2006 shown as recommended in the 2006 report • on ordinary shares 33.0	13,558,666 8,801,538
	22,360,204
	13,103,560

Indemnification and insurance of directors and officers

During the year the Company has paid a premium in respect to an insurance contract to indemnify directors and officers against liabilities that may arise from their position as directors and officers of the Company and its controlled entities.

Officers indemnified include the Company Secretary, all directors, and executive officers participating in the management of the Company and its controlled entities.

Further disclosure required under section 300 (9) of the Corporations Act 2001 is prohibited under the terms of the contract.

28 Select Harvests Annual Report 2007

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Directors’ meetings

The number of meetings of directors (including meetings of committees of directors) held during the financial year and the number of meetings attended by each director were as follows:

MEETINGS OF COMMITTEES	MEETINGS OF COMMITTEES	MEETINGS OF COMMITTEES	MEETINGS OF COMMITTEES	MEETINGS OF COMMITTEES
	DIRECTORS’ MEETINGS NUMBER ELIGIBLE TO ATTEND NUMBER ATTENDED	AUDIT AND RISK NUMBER ELIGIBLE TO ATTEND NUMBER ATTENDED	REMUNERATION NUMBER ELIGIBLE TO ATTEND NUMBER ATTENDED	NOMINATION NUMBER ELIGIBLE TO ATTEND NUMBER ATTENDED
M A Fremder 11 11 - - 1 1 1 1 J Bird 11 11 - - - - 1 1 C G Clark 11 11 4 4 1 1 1 1 G F Dan O’Brien 11 10 4 3 1 1 1 1 J C Leonard 11 11 4 4 - - 1 1 R M Herron 11 11 4 4 - - 1 1

Committee membership

During or since the end of the financial year, the company had an Audit and Risk Committee, a Remuneration Committee, and a Nomination Committee comprising members of the Board of Directors.

Members acting on the committees of the Board during or since the end of the financial year were:

AUDIT AND RISK REMUNERATION	NOMINATION
R M Herron (Chairman) C G Clark (Chairman) C G Clark M A Fremder G F Dan O’Brien G F Dan O’Brien J C Leonard	M A Fremder (Chairman) J Bird C G Clark G F Dan O’Brien J C Leonard R M Herron

Directors’ interests in contracts

Directors’ interest in contracts are disclosed in note 34 to the financial statements.

Auditor’s independence declaration

A copy of the auditor’s independence declaration in relation to the audit for the financial year is set out on page 31.

Non-audit services

Non-Audit services are approved by resolution of the Audit and Risk Committee and approval is provided in writing to the board of directors. Non-audit services provided by the auditors of the consolidated entity during the year, are detailed in note 33. The directors are satisfied that the provision of the non-audit services during the year by the auditor is compatible with the general standard of independence for auditors imposed by Corporations Act 2001 as non-audit services are reviewed by the Audit & Risk Committee to ensure they do not impact the impartiality and objectivity of the auditor.

Select Harvests Annual Report 2007

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Rounding

The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) under the option available to the company under ASIC Class Order 98/100. The Company is an entity to which the Class Order applies.

Proceedings on behalf of the company

There are no material legal proceedings in place on behalf of the company as at the date of this report.

Corporate governance

In recognising the need for the highest standards of corporate behaviour and accountability, the directors of Select Harvests Limited support and have adhered to the ASX principles of corporate governance. The Company’s corporate governance statement is contained in detail in the corporate governance section of this annual report.

Signed in accordance with a resolution of the directors.

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M A Fremder Chairman Melbourne, 27 August 2007

Select Harvests Annual Report 2007

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Auditor’s independence declaration

As lead auditor for the audit of Select Harvests Limited for the year ended 30 June 2007, I declare that to the best of my knowledge and belief, there have been:

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Select Harvests Limited and the entities it controlled during the period.

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Andrew Mill Partner

Melbourne 27 August 2007

PricewaterhouseCoopers

Liability limited by a scheme approved under Professional Standards Legislation.

Select Harvests Annual Report 2007

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Corporate Governance Statement

This statement outlines the key corporate governance practices of the consolidated entity which considers the ASX Corporate Governance Council recommendations.

Board of Directors and its Committees

Role of the Board

The Board of Directors of Select Harvests Limited is responsible for the overall corporate governance of the consolidated entity. The Board guides and monitors the business and affairs of Select Harvests Limited on behalf of the shareholders by whom they are elected and to whom they are accountable. Details of the Board’s charter is located on the company’s website.

The Board seeks to identify the expectations of the shareholders, as well as other regulatory and ethical expectations and obligations. In addition, the Board is responsible for ensuring that management’s objectives and activities are aligned with the expectations and risks identified by the Board and ensuring arrangements are in place to adequately manage those risks.

To ensure that the Board is well equipped to carry out its responsibilities it has established guidelines for the nomination and selection of Directors and for the operation of the Board.

The Board has delegated responsibility for the operation and administration of the company to the Managing Director and the executive management team. The Board ensures that this team is appropriately qualified and experienced to carry out its responsibilities and has in place procedures to assess the performance of the Managing Director and the executive management team.

Board Processes

To assist in the execution of its responsibilities, the Board has established a Remuneration Committee, and an Audit and Risk Committee. The Board also performs, as part of its function, the role of Nomination Committee. These Committees have written charters, which are reviewed on a regular basis and are located on the company’s website. The Board has also established a framework for the management of the consolidated entity.

The full Board holds twelve scheduled meetings each year, plus any additional meetings at such other times as may be necessary to address any specific matters that may arise.

The agenda for meetings is prepared and includes the Managing Director’s report, financial reports, business segment reports, strategic matters, governance and compliance. Submissions are circulated in advance. Executives are involved in Board discussions where appropriate, and Directors have other opportunities, including visits to operations, for contact with a wider group of employees.

Director Education

The consolidated entity has a process to educate new Directors about the nature of the business, current issues, the corporate strategy, and the expectations of the consolidated entity concerning performance of Directors. Directors also have the opportunity to visit the facilities of the consolidated entity and to meet with management to gain a better understanding of business operations. Directors are able to access continuing education opportunities to update and enhance their skills and knowledge.

Independent Professional Advice and Access to Company Information

Each Director has the right of access to all relevant company information and to the Company’s executives and, subject to prior consultation with the Chairman, may seek independent professional advice at the consolidated entity’s expense.

32 Select Harvests Annual Report 2007

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Composition of the Board

The names of the Directors of the company in office at the date of this report are set out in the Directors’ report.

The composition of the Board is determined in accordance with the following ASX principles:

The Board should comprise at least four Directors;
The Board should maintain a majority of independent non-executive Directors;
The Chairperson must be a non-executive Director; and
The Board should comprise Directors with an appropriate range of qualifications, skills and experience.

The Board assesses the independence of each Director in light of interests known to the Board, as well as those disclosed by each Director. In accordance with the ASX Corporate Governance Council’s recommendations, the Board wishes to outline the following:

The Chairman of the Company, Mr M A Fremder, is a substantial shareholder, having a 14.9% shareholding at 30 June 2007.
The Chairman of the Company, Mr M A Fremder, owns (directly or indirectly) almond orchards totalling 2,053 acres in respect to which the consolidated entity provides orchard management services under contract at market rates.
A non-executive Director of the Company, Mr J C Leonard, owns (directly or indirectly) almond orchards totalling 1,753 acres in respect to which the consolidated entity provides orchard management services under contract at market rates.
A non-executive Director of the Company, Mr Dan O’Brien, acquired from Select Harvests, via an associated entity, $64,945 worth of Almond Hull suitable for livestock feed. This was purchased at market prices.

Nomination Committee

The Board of Directors, as one of its important functions, performs the role of Nomination Committee. The Board’s role as Nomination Committee is to ensure that the composition of the Board of Directors is appropriate for the purpose of fulfilling its responsibilities to shareholders.

The duties and responsibilities of the Board in its role as Nomination Committee are as follows:

To access and develop the necessary and desirable competencies of Board members;
To develop and review Board succession plans;
To evaluate the performance of the Board;
To recommend to the Board, the appointment and removal of Directors; and
Where a vacancy exists, to determine the selection criteria based on the skills deemed necessary and to identify potential candidates with advice from external consultants.

The Chairman of the Board evaluates the performance of each Board member annually in the last quarter of each financial year. The Chairman of the Audit Committee reviews the performance of the Chairman of the Board in the same period. The performance of each Board member is reviewed against the Board charter and any specific objectives agreed and set by the Board for the consolidated entity.

The Nomination Committee meets annually unless otherwise required. The Committee met once during the financial year and the Committee members’ attendance record is disclosed in the table of Directors’ meetings. The members of the Nomination Committee are disclosed in the Directors’ Report. Further details of the Nomination Committee’s charter are available on the Company’s website.

Remuneration

Remuneration Committee

The Remuneration Committee reviews and makes recommendations to the Board on remuneration packages and policies applicable to the Managing Director, senior executives and the Directors themselves. It evaluates the performance of the Managing Director and is also responsible for share option schemes, incentive performance packages, superannuation

Select Harvests Annual Report 2007

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entitlements and fringe benefits policies. Remuneration levels are reviewed annually and the Remuneration Committee may obtain independent advice on the appropriateness of remuneration packages, given trends in the marketplace.

The members of the Remuneration Committee are disclosed in the Directors’ Report.

The Managing Director is invited to Remuneration Committee meetings as required to discuss senior executives’ performance and remuneration packages.

The Remuneration Committee meets once a year or as required. The Committee met once during the financial year and the Committee members’ attendance record is disclosed in the table of Directors’ meetings.

Further details of the Remuneration Committee’s charter is available on the company’s website.

Remuneration Policies

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 consolidated entity level, divisional level, or functional level, as applicable, for the financial year. In addition, the consolidated 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 do not receive any performance related remuneration.

Audit and Risk Committee

The Audit and Risk Committee has a documented charter, approved by the Board. All members of the Committee are non-executive Directors with a majority being independent, and the Chairman of the Audit and Risk Committee is not the Chairman of the Board of Directors.

The members of the Audit and Risk Committee during the financial year are disclosed in the Directors’ Report.

The external auditors, the Managing Director and Chief Financial Officer are invited to Audit and Risk Committee meetings at the discretion of the Committee, and the external auditor also meets with the Audit Committee during the year without management being present. The Committee met four times during the year and the Committee members’ attendance record is disclosed in the table of Directors’ meetings.

The Managing Director and the Chief Financial Officer have provided a statement in writing to the Board that the consolidated entity’s financial reports for the year ended 30 June 2007 present a true and fair view, in all material respects, of the consolidated entity’s financial condition and operational results and are in accordance with the relevant accounting standards. This statement is required annually.

Further details of the Audit and Risk Committee’s charter are available on the Company’s website.

The duties and responsibilities of the Audit and Risk Committee include:

Recommending to the Board the appointment of the external auditors;
Recommending to the Board the fee payable to the external auditors;
Reviewing the audit plan and performance of the external auditors;
Determining that no management restrictions are being placed upon the external auditors;
Evaluating the adequacy and effectiveness of the reporting and accounting controls of the company through active communication with operating management and the external auditors;

34 Select Harvests Annual Report 2007

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Reviewing all financial reports to shareholders and/or the public prior to their release;
Evaluating systems of internal control;
Monitoring the standard of corporate conduct in areas such as arms-length dealings and likely conflicts of interest;
Requiring reports from management and the external auditors on any significant regulatory, accounting or reporting development to assess potential financial reporting interest;
Reviewing and approving all significant company accounting policy changes;
Reviewing the company’s taxation position;
Reviewing the annual financial statements with the Chief Financial Officer and the external auditors, and recommending acceptance to the Board;
Evaluating the adequacy and effectiveness of the company’s risk management policies and procedures including insurance; and
Directing any special projects or investigations deemed necessary by the Board or by the Committee.

The Audit and Risk Committee is committed to ensuring that it carries out its functions in an effective manner. Accordingly, it reviews its charter at least once in each financial year.

Risk Management

The Board oversees the establishment, implementation, and review of a system of risk management within the consolidated entity. The consolidated entity’s areas of focus in respect of risk management practices include, but are not limited to, environment, occupational health and safety, property, financial reporting and internal control.

The Board is responsible for the overall risk management and internal control framework, but recognises that no cost-effective risk management and internal control system will preclude all errors and irregularities. The Board has the following procedures in place to monitor performance and to identify areas of concern:

Strategic Planning – The Board reviews and approves the strategic plan that encompasses the consolidated entity’s strategy, designed to meet the stakeholders’ needs and manage business risk. The strategic plan is dynamic and the Board is actively involved in developing and approving initiatives and strategies designed to ensure the continued growth and success of the consolidated entity;
Financial reporting – Monthly actual results are reported against budgets approved by the Directors and revised forecasts prepared during the year;
Functional Reporting – Key areas subject to regular or periodical reporting to the Board include, but are not limited to, operational, treasury (including foreign exchange), environmental, occupational health & safety, insurance, and legal matters;
Continuous disclosure – A process is in place to identify matters that may have a material effect on the price of the Company’s securities and to notify them to the ASX; and
Investment appraisal – Guidelines for capital expenditure include annual budgets, appraisal and review procedures, due diligence requirements where businesses are being acquired or divested.

The Managing Director and Chief Financial Officer have provided a statement in writing to the Board that the declaration made in respect of the consolidated entity’s financial reports is founded on a system of risk management and internal compliance and control which reflects the policies adopted to date by the Board, and that the consolidated entity’s risk management and internal control and compliance system is operating effectively in all material respects based on the criteria for effective internal control established by the Board.

Select Harvests Annual Report 2007 35

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Ethical Standards

All Directors, managers and employees are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the consolidated entity. The consolidated entity’s code of conduct includes the following:

Conflict of Interest

Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. Should a situation arise where the Board believes that a material conflict exists, the Director concerned shall not receive the relevant Board papers and will not be present at the meeting when the item is considered. Details of Director related entity transactions with the Company and consolidated entity are set out in the notes to the financial statements.

Dealings in Company Shares

Directors and senior management are prohibited from dealing in Company shares except within a four week trading window that commences 48 hours after the release of the consolidated entity’s results at year end and half year on the basis that they are not in possession of any price sensitive information. Directors must advise the ASX of any transactions conducted by them in shares in the Company.

Communication with Shareholders

The Board of Directors aims to ensure that shareholders are informed of all major developments affecting the consolidated entity’s state of affairs. Information is communicated to shareholders as follows:

The annual report is distributed to all shareholders (unless a shareholder has specifically requested not to receive the document), including relevant information about the operations of the consolidated entity during the year, changes in the state of affairs and details of future developments;
The half yearly report contains summarised financial information and a review of the operations of the consolidated entity during the period. The half year audited financial report is lodged with the Australian Securities and Investments Commission and the ASX, and sent to any shareholder who requests it;
The consolidated entity has nominated the Company Secretary to ensure compliance with the consolidated entity’s continuous disclosure requirements, and overseeing and co-ordinating disclosure of information to the ASX;
Information is posted on the consolidated entity’s website immediately after ASX confirms an announcement has been made to ensure that the information is made available to the widest audience. The consolidated entity’s website is www.selectharvests.com.au;

• The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and identification with the consolidated entity’s strategy and goals. It is the policy of the consolidated entity and the policy of the auditor for the lead engagement partner to be present at the Annual General Meeting to answer any questions about the conduct of the audit and the preparation and content of the auditor’s report; and

Occasional letters from the Chairman and Managing Director may be utilised to provide shareholders with key matters of interest.

36 Select Harvests Annual Report 2007

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This financial report covers both Select Harvests Limited as an individual entity and the consolidated entity consisting of Select Harvests Limited and its subsidiaries. The financial report is presented in the Australian currency.

Select Harvests Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Select Harvests Limited 360 Settlement Road Thomastown Vic 3074

A description of the nature of the consolidated entity’s operations and its principal activities is included in the review of operations and activities and in the directors’ report, both of which are not part of this financial report.

The financial report was authorised for issue by the directors on 27 August 2007. The company has the power to amend and reissue the financial report.

Through the use of the internet, we have ensured that our corporate reporting is timely, complete, and available globally at minimum cost to the company. All financial reports and other information are available on our website: www.selectharvests.com.au

Select Harvests Annual Report 2007

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Income Statements

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FOR THE YEAR ENDED 30 JUNE 2007 NOTES CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
Revenue
Sales of goods and services 4 229,498 217,866 - -
Other revenue 4 265 162 27,801 29,694
Total revenue 229,763 218,028 27,801 29,694
Other income (expenses)
Almond stock fair value adjustment 1,071 467 - -
Almond tree fair value adjustment 92 85 - -
- -
Total other income (expenses) 1,163 552
Expenses
Cost of sales 5 (175,790) (165,546) - -
- -
Distribution expenses (4,258) (4,021)
- -
Marketing expenses (706) (622)
- -
Occupancy expenses (2,048) (2,052)
Administrative expenses (2,850) (3,094) (2,742) (2,665)
Finance costs 5 (800) (628) (2,043) (903)
Other expenses (4,460) (4,714) (968) (494)
Profit before income tax 40,014 37,903 22,048 25,632
Income tax expense 6 (11,916) (11,411) 34 (201)
Profit from continuing operations 28,098 26,492 22,082 25,431
Profit from discontinued operations 7 - 4,309 - 4,033
Profit for the year 28,098 30,801 22,082 29,464
Profit attributable to members of Select Harvests Limited 27(c) 28,098 30,801 22,082 29,464
Earnings per share for profit from continuing operations
attributable to the ordinary equity holders of the company:
Basic earnings per share (cents per share) 31 71.0 67.1
Diluted earnings per share (cents per share) 31 70.8 67.0
Earnings per share for profit attributable to the ordinary
equity holders of the company:
Basic earnings per share (cents per share) 31 71.0 78.1
Diluted earnings per share (cents per share) 31 70.8 77.9
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The above income statements should be read in conjunction with the accompanying notes.

38 Select Harvests Annual Report 2007

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Balance Sheets

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FOR THE YEAR ENDED 30 JUNE 2007 NOTES CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
Current assets
Cash and cash equivalents 9 6,924 22,557 6,529 21,775
Trade and other receivables 10 33,459 24,442 705 728
Inventories 11 30,169 24,682 - -
Derivative financial instruments 12 431 774 431 774
Total current assets 70,983 72,455 7,665 23,277
Non-current assets
Receivables 13 - - 51,063 36,256
Other financial assets 14 - - 9,607 9,607
Property, plant and equipment 15 53,580 44,382 276 464
Deferred tax assets 16 692 345 555 223
Biological assets – almond trees 17 5,998 5,799 - -
Intangible assets 18 28,900 28,895 - -
Total non-current assets 89,170 79,421 61,501 46,550
Total assets 160,153 151,876 69,166 69,827
Current liabilities
Payables 19 46,406 34,407 437 408
Interest-bearing liabilities 20 1,399 953 1,302 852
Derivative financial instruments 12 627 44 627 44
Current tax liabilities 2,766 2,294 2,766 2,294
Provisions 21 2,482 2,207 306 199
Total current liabilities 53,680 39,905 5,438 3,797
Non-current liabilities
Payables 22 - - 16,904 7,964
Interest-bearing liabilities 23 237 350 58 75
Deferred tax liabilities 24 10,178 9,718 - -
Provisions 25 554 422 93 71
Total non-current liabilities 10,969 10,490 17,055 8,110
Total liabilities 64,649 50,395 22,493 11,907
Net assets 95,504 101,481 46,673 57,920
Equity
Contributed equity 26 41,593 52,665 41,953 52,665
Reserves 27 11,273 12,691 3,628 4,300
Retained profits (accumulated losses) 27 42,278 36,125 1,092 955
Total equity 95,504 101,481 46,673 57,920
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The above balance sheets statements should be read in conjunction with the accompanying notes.

Select Harvests Annual Report 2007 39

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Statements of changes in equity

FOR THE YEAR ENDED 30 JUNE 2007 NOTES CONSOLIDATED PARENT ENTITY 2007 2006 2007 2006 $’000 $’000 $’000 $’000	FOR THE YEAR ENDED 30 JUNE 2007 NOTES CONSOLIDATED PARENT ENTITY 2007 2006 2007 2006 $’000 $’000 $’000 $’000	FOR THE YEAR ENDED 30 JUNE 2007 NOTES CONSOLIDATED PARENT ENTITY 2007 2006 2007 2006 $’000 $’000 $’000 $’000
Total equity at the beginning of financial year 101,481 88,095 57,920 Changes in fair value of cash flow, net of tax 27(a) (1,395) (1,360) (649) Net income (expense) recognised directly in equity (1,395) (1,360) (649) Profit for the year 27(c) 28,098 30,801 22,082 Total recognised income and expense for the year 26,703 29,441 21,433 Transactions with equity holders in their capacity as equity holders: - Contributions of equity, net of transaction costs 26(a) 3,531 5,740 3,531 - Employee share options 27(a) 1,265 285 1,265 - Dividends provided for or paid 8(a) (21,945) (22,080) (21,945) - Share buy back 26(b) (15,531) - (15,531) (32,681) (16,055) (32,657) Total equity at the end of financial year 95,504 101,481 46,673	101,481 88,095 57,920 27(a) (1,395) (1,360) (649) (1,395) (1,360) (649) 27(c) 28,098 30,801 22,082 26,703 29,441 21,433 26(a) 3,531 5,740 3,531 27(a) 1,265 285 1,265 8(a) (21,945) (22,080) (21,945) 26(b) (15,531) - (15,531) (32,681) (16,055) (32,657)	46,614 (2,105)
		(2,105)
		29,464
		27,359 5,740 287 (22,080) -
		(16,053)
		57,920

The above statements of changes in equity should be read in conjunction with the accompanying notes.

40 Select Harvests Annual Report 2007

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Cash flow statements

FOR THE YEAR ENDED 30 JUNE 2007 NOTES CONSOLIDATED PARENT ENTITY 2007 2006 2007 2006 $’000 $’000 $’000 $’000	FOR THE YEAR ENDED 30 JUNE 2007 NOTES CONSOLIDATED PARENT ENTITY 2007 2006 2007 2006 $’000 $’000 $’000 $’000	FOR THE YEAR ENDED 30 JUNE 2007 NOTES CONSOLIDATED PARENT ENTITY 2007 2006 2007 2006 $’000 $’000 $’000 $’000
Cash flows from operating activities Receipts from customers (inclusive of goods and services tax) 251,512 236,975 - Payments to suppliers and employees (inclusive of goods and services tax) (210,519) (189,982) 28,196 40,993 46,993 28,196 Interest received 265 162 218 Interest paid (800) (628) (682) Income tax paid (10,667) (12,145) (10,667) Net cash inflow/(outflow) from operating activities 28(a) 29,791 34,382 17,065 Cash flows from investing activities Proceeds from sale of property, plant and equipment 135 208 - Proceeds from sale of pesticide products division 7 - 5,645 - Payment for property, plant and equipment (10,787) (5,646) (121) Payment for other non-current assets (2,460) (500) - net cash inflow/(outflow) from investing activities (13,112) (293) (121) Cash flows from financing activities Proceeds from issues of ordinary shares 1,100 1,360 1,100 Share Buy Back (15,531) - (15,531) Repayments of borrowings (117) (494) 5 Dividends payment on ordinary shares, net of DRP (18,213) (17,773) (18,213) Net cash inflow/(outflow) from financing activities (32,761) (16,907) (32,639) Net increase/(decrease) in cash and cash equivalents (16,082) 17,182 (15,695) Cash and cash equivalents at the beginning of the financial year 21,721 4,539 20,939 Cash and cash equivalents at the end of the financial year 28(a) 5,639 21,721 5,244		- (3,636)
	40,993 46,993 28,196 265 162 218 (800) (628) (682) (10,667) (12,145) (10,667)	(3,636) 128 (462) (12,145)
	29,791 34,382 17,065	(16,115)
	135 208 - - 5,645 - (10,787) (5,646) (121) (2,460) (500) -	43 5,646 (90) -
	(13,112) (293) (121)	5,599
	1,100 1,360 1,100 (15,531) - (15,531) (117) (494) 5 (18,213) (17,773) (18,213)	1,362 - 43,635 (17,773)
	(32,761) (16,907) (32,639)	27,224
	(16,082) 17,182 (15,695) 21,721 4,539 20,939	16,708 4,231
		20,939

The above cash flow statements should be read in conjunction with the accompanying notes.

Select Harvests Annual Report 2007 41

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Notes to the Financial Statements 30 June 2007

1. Summary of significant accounting policies

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial report includes separate financial statements for Select Harvests Limited as an individual entity and the consolidated entity consisting of Select Harvests Limited and its subsidiaries.

(a) Basis of preparation

This general purpose financial report has been prepared in accordance with Australian equivalents to International Financial Reporting Standards (AIFRSs), other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001 .

Compliance with IFRSs

Australian Accounting Standards include AIFRSs. Compliance with AIFRSs ensures that the consolidated financial statements and notes of Select Harvests Limited comply with International Financial Reporting Standards (IFRSs). The parent entity financial statements and notes also comply with IFRSs except that it has elected to apply the relief provided to parent entities in respect of certain disclosure requirements contained in AASB 132 Financial Instruments: Presentation and Disclosure.

Historical cost convention

These financial statements have been prepared under historical cost convention, as modified by the revaluation of available-forsale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit and loss, and certain classes of property, plant and equipment.

Critical accounting estimates

The preparation of financial statements in conformity with AIFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher level of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3.

(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 at any point during the year and at balance date.

Subsidiaries are all those entities (including special purpose entities) over which the Group has power to govern the financial and operating policies, generally accompanying of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date at which control is transferred to the group. They are deconsolidated from the date that control ceases.

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.

Investments in subsidiaries are accounted for at cost in the individual financial statements of Select Harvests Limited.

42 Select Harvests Annual Report 2007

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(c) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each entity comprising the consolidated entity are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Australian dollars, which is the functional and presentation currency of Select Harvests Limited.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in equity as qualifying cash flow hedges.

(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 cash flow statement, 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 fair value less estimated point of sale costs in accordance with AASB 141: “Agriculture”- 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 overheads based on normal operating capacity; and
Almond stocks are valued in accordance with AASB 141 “Agriculture” 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) Biological assets

Almond trees

Almond trees are classified as a biological asset and valued in accordance with AASB 141 “Agriculture.”

Developing almond trees are valued at their growing cost until the year they bear their first commercial crop. The value of crop bearing almond trees is measured at fair value 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
An appropriate rental charge is included to represent the use of the developed land on which the trees are planted.

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Nursery trees are grown by the consolidated entity for sale to external almond orchard owners and for use in almond orchards owned by the consolidated entity. Nursery trees are carried at fair value.

Growing almond crop

The growing almond crop is valued in accordance with AASB 141 “Agriculture”. 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. Almond trees are valued as described above once they commence bearing a commercial crop.

(g) Derivatives

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The consolidated entity designates derivatives as either; (1) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or (2) hedges of highly probable forecast transactions (cash flow hedges).

The consolidated entity documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The consolidated entity also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of hedged items.

(i) Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

(ii) Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in equity in the hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the income statement.

Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item will affect profit or loss (for instance when the forecast sale that is hedged takes place). However, when the forecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventory) or a non-financial liability, the gains and losses previously deferred in equity are transferred from equity and included in the measurement of the initial cost or carrying amount of the asset or liability.

When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.

44 Select Harvests Annual Report 2007

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(h) Property, plant and equipment

Cost and valuation

All classes of property, plant and equipment are measured at cost less accumulated depreciation.

The carrying amount of property, 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 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:

Buildings:	25 to 40 years
Leasehold improvements:	5 to 40 years
Plant and equipment:	5 to 20 years
Leased plant and equipment:	5 to 10 years
Plantation land, irrigation systems:	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.

(i) 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 over the term of the lease.

Finance leases

Leases which effectively transfer substantially all the risks and benefits incidental to ownership of the leased item to the consolidated entity 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 income statement.

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.

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(j) Intangibles

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the consolidated entity’s share of the net identifiable assets of the acquired subsidiary/business at the date of acquisition. Goodwill is not amortised. Instead, goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less any accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing.

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. Instead, brand names are tested for impairment annually, or more frequently if events or changes in circumstances indicate that they might be impaired, and are carried at cost less any accumulated impairment losses.

(k) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, and amounts collected on behalf of third parties. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity, the revenue can be reliably measured, and the risks and rewards have passed to the buyer. 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

Dividends are recognised as revenue when the right to receive payment is established.

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 4 and are not recognised as revenue.

As at 30 June 2007 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).

(l) Other income

Almond stocks

Increments or decrements in the net market value of almond stocks are recognised as income or expenses in the income statement 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.

46 Select Harvests Annual Report 2007

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(m) Income tax

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

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 its wholly owned Australian subsidiaries in the tax-consolidated group continue to account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a stand alone taxpayer in its own right.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the group. Details of tax funding agreements are outlined in note 6. Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.

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 balance sheet.

Cash flows are included in the cash flow statement 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 cash flows.

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

(n) Impairment of assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).

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(o) 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 consolidated entity to an employee superannuation fund and are charged as expenses when incurred.

Share-based payments

Share-based compensation benefits are provided to employees via the Select Harvests Limited Executive Share Option Scheme. Information relating to this scheme is set out in note 52.

The fair value of options granted under the Select Harvests Limited Executive Share Option Scheme is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options.

The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

The fair value of the options granted is adjusted to reflect market vesting conditions, but excludes the impact of any nonmarket vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each balance sheet date, the entity revises its estimate of the number of options that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. The impact of the revision to original estimates, if any, is recognised in the income statement with a corresponding adjustment to equity.

(p) Financial instruments

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 34.

48 Select Harvests Annual Report 2007

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Financial liabilities

The bank overdraft is carried at the principal amount. Interest is charged as an expense as it accrues.

Liabilities are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the consolidated entity.

Finance lease liability is accounted for in accordance with AASB 117 “Leases”.

(q) Fair value estimation

The fair value of certain financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

The fair value of financial instruments traded in active markets (such as foreign exchange hedge contracts) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the consolidated entity is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price.

The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the consolidated entity for similar instruments.

(r) Borrowing costs

Borrowing costs, inclusive of all facility fees, bank charges, and interest, are expensed as incurred.

(s) Earnings per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares outstanding during the financial year.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares.

(t) Discontinued operations

A discontinued operation is a component of the consolidated entity that has been disposed of or is classified as held for sale and that represents a separate major line of business and is part of a single co-ordinated plan to dispose of such a line of business. The results of discontinued operations are presented separately on the face of the income statement.

(u) Segment reporting

A business segment is identified for a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different to those of other business segments.

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(v) New accounting standards and UIG interpretations

Certain new accounting standards and UIG interpretations have been published that are not mandatory for 30 June 2007 reporting periods. The Group’s and the parent entity’s assessment of the impact of these new standards and interpretations is set out below:

(a) AASB 7 Financial Instruments: Disclosures and AASB 2005-10 Amendment to Australian Accounting Standards [AASB 132, AASB 101, AASB 114, AASB 117, AASB 133, AASB 139, AASB 1, AASB 4, AASB 1023 & AASB 1038] are applicable to annual reporting periods beginning on or after 1 January 2007. The group has not adopted the standards early. Application of the standard will not affect any of the amounts recognised in the financial statements.
(b) AASB-1 10 Interim Financial Reporting and Impairment is applicable to reporting periods beginning on or after 1 November 2006. The group has not adopted the standards early. Application of the standard will not affect any of the amounts recognised in the financial statements.
(c) AASB 2007-6 Amendments to Australian Accounting Standards arising from AASB 123 is applicable to reporting periods beginning on or after 1 January 2009. The group has not adopted the standards early. Application of the standard will not affect any of the amounts recognised in the financial statements.
(d) AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8 is applicable to reporting periods beginning on or after 1 January 2009. The group has not adopted the standards early. Application of the standard will not affect any of the amounts recognised in the financial statements.
(e) AASB 2007-2 Amendments to Australian Accounting Standards arising from Interpretation 12 is applicable to reporting periods beginning on or after 1 January 2008. The group has not adopted the standards early. Application of the standard will not affect any of the amounts recognised in the financial statements.
(f) AASB 2007-1 Amendments to Australian Accounting Standards arising from AASB Interpretation 11 is applicable to reporting periods beginning on or after 1 March 2007. The group has not adopted the standards early. Application of the standard will not affect any of the amounts recognised in the financial statements.

(w) Provisions

Provisions are recognised when the consolidated entity has a present legal or constructive obligation as a result of past events, it is probable that an outflow or resources will be required to settle the obligation, and the amount has been reliably estimated.

(x) Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. These amounts are unsecured and are usually paid within 30 days of recognition.

(y) Contributed equity

Ordinary shares are classified as equity. The value of new shares or options issued is shown in equity.

(y) Comparatives

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

(aa) 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.

50 Select Harvests Annual Report 2007

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2. Financial risk management

The Consolidated entity’s activities expose it to a variety of financial risks. Risk management procedures focus on the unpredictability of financial markets and seek to minimise potential adverse effects on the financial performance of the consolidated entity.

Risk management is carried out by management pursuant to policies approved by the Board of Directors.

(a) Market risk

(i) Foreign exchange risk

Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the consolidated entity’s functional currency.

The consolidated entity sells both almonds harvested from owned orchards through the almond pool and processed products internationally in United States dollars, and purchases raw materials and other inputs to the manufacturing and almond growing process from overseas suppliers predominantly in United States dollars.

Management and the Board review the foreign exchange position of the consolidated entity and, where appropriate, take out forward exchange contracts, transacted with the consolidated entity’s banker, to manage foreign exchange risk.

(ii) Price risk

The consolidated entity is exposed to commodity price risk. The consolidated entity sells almonds harvested from owned orchards domestically and overseas throughout the year based on an almond price which will fluctuate from time to time due to changes in international market conditions. The consolidated entity has an active and ongoing almond marketing and selling program in place which is continually monitored and adapted for changes in almond prices. The consolidated entity also purchases raw materials and other inputs to the manufacturing and almond growing process domestically and overseas. The price of such inputs will also fluctuate from time to time based on market forces. Where practical, the consolidated entity, through its procurement programs, contracts from time to time to acquire such quantity of inputs as is projected to be required at fixed prices.

(b) Credit risk

The consolidated entity has no significant concentrations of credit risk. The consolidated entity has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history. Derivative counterparties and cash transactions are limited to high credit quality financial institutions.

(c) Liquidity risk

The consolidated entity maintains committed credit facilities in place with financial institutions for the ongoing funding of its activities.

(d) Cash flow interest rate risk

As the consolidated entity has no significant interest-bearing assets, income and operating cash flows are not materially exposed to changes in market interest rates.

The consolidated entity’s interest rate risk arises from borrowings. Borrowings issued at variable rates expose the consolidated entity to cash flow interest rate risk.

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3. Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors.

Critical accounting estimates and assumptions

The consolidated entity makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Almond trees

Almond trees are classified as a biological asset and valued in accordance with AASB 141 “Agriculture”. The consolidated entity’s accounting policies in relation to almond trees are detailed in note 1(f).

In applying this policy, the consolidated entity has made various assumptions. These are detailed in note 17 of the financial statements. As at 30 June 2007, the value of almond trees carried in the financial statements of the consolidated entity is $6.0 million (2006:$5.8 million)

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CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
4. Revenue
Revenue from continuing operations
- -
Total revenue from operating activities 229,498 217,866
Other revenue from continuing operations
- -
Management fees 4,554 3,398
Dividends and distributions
- Controlled entities - - 22,000 25,212
- - - -
- Other corporations
Total dividends and distributions - - 26,554 28,610
Interest
-
- Wholly owned entities 1,029 956
- Other persons/corporations 265 162 218 128
Total interest 265 162 1,247 1,084
Total other revenue from continuing operations 265 162 27,801 29,694
Total revenue 229,763 218,028 27,801 29,694
- -
Revenue from discontinued operations 6,637 5,700
Revenue/Cost of goods sold from almond pool
- -
Revenue from almond pool sales 45,767 33,843
- -
Cost of goods sold from almond pool sales (45,767) (33,843)
- - - -
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*Revenue from almond pool sales includes sales of almonds for externally owned almond orchards, which are sold by the consolidated entity on a pooled basis, the proceeds from which are distributed to the pool participants. This revenue is not included in the review as stated above within revenue from continuing operation.

52 Select Harvests Annual Report 2007

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NOTES CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
5. Expenses
Profit before tax includes the following specific expenses:
Cost of goods & services sold 175,790 165,546 - -
Depreciation of non-current assets
Freehold land and buildings - 1 - -
Buildings 82 68 - -
Plantation land and irrigation systems 411 335 - -
Leased plant and equipment 115 249 17 12
Plant and equipment 3,194 2,933 276 209
Total depreciation of non-current assets 3,802 3,586 293 221
Finance costs
wholly owned entities - - 1,361 440
other persons 800 628 682 463
Total finance costs 800 628 2,043 903
- -
Movement in provisions for doubtful debts (8) (14)
Movement in provision for employee entitlements 721 1,143 130 31
- -
Movement in provision for stock diminution (9) (199)
- -
Operating lease rental minimum lease payments 7,695 5,403
- -
Total operating lease rental 7,695 5,403
Net loss on disposal of property, plant and equipment 9 6 6 10
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6. Income tax (a) Income tax expense Current Tax 11,540 11,287 357 Deferred tax 493 258 (274) Under(over) provided in prior years (117) (87) (117) 11,916 11,458 (34) Income tax expense is attributable to: Profit from continuing operations 11,916 11,411 (34) Profit from discontinued operations - 47 - Aggregate income tax expense 11,916 11,458 (34) Deferred income tax (revenue) expense included in income tax expense comprises: Decrease(increase) in deferred tax assets 16 (288) (341) (274) (Decrease)increase in deferred tax liabilities 24 781 599 - 493 258 (274)	6. Income tax (a) Income tax expense Current Tax 11,540 11,287 357 Deferred tax 493 258 (274) Under(over) provided in prior years (117) (87) (117) 11,916 11,458 (34) Income tax expense is attributable to: Profit from continuing operations 11,916 11,411 (34) Profit from discontinued operations - 47 - Aggregate income tax expense 11,916 11,458 (34) Deferred income tax (revenue) expense included in income tax expense comprises: Decrease(increase) in deferred tax assets 16 (288) (341) (274) (Decrease)increase in deferred tax liabilities 24 781 599 - 493 258 (274)	222 (29) 8
	11,916 11,458 (34)	201
	11,916 11,411 (34) - 47 -	201 -
	11,916 11,458 (34)	201
		(442) 413
	(288) (341) (274)
	781 599 -
	493 258 (274)	(29)

Select Harvests Annual Report 2007 53

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NOTES CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
(b) Numerical reconciliation of income tax expense
to prima facie tax payable
Profit from continuing operations before income tax expense 40,014 37,903 22,048 25,632
- -
Profit from discontinued operations before income tax expense 4,356 4,033
40,014 42,259 22,048 29,665
Tax at the Australian tax rate of 30% (2006 – 30%) 12,004 12,678 6,614 8,899
Tax effect of amounts that are not deductible (taxable) in calculating
taxable income
Rebateable dividends - - (6,600) (7,564)
Other non allowable items 65 109 69 68
Other non assessable items (36) (1,242) - (1,210)
Under/(over) provision of previous year (117) (87) (117) 8
Income tax expense 11,916 11,458 (34) 201
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(c) Tax consolidation legislation

Select Harvests Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation as of 1 July 2003. The accounting policy in relation to this legislation is set out in note 1(m).

On adoption of the tax consolidation legislation, the entities in the tax consolidated group entered into a tax sharing agreement which limits the joint and several liability of the wholly-owned entities in the case of a default by the head entity, Select Harvests Limited.

The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate Select Harvests Limited for any current tax payable assumed and are compensated by Select Harvests Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Select Harvests Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’ financial statements.

The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. The funding amounts are recognised as current intercompany receivables or payables.

7. Discontinued operation

(a) Description

On 23 August 2005 Select Harvests Ltd 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. The transaction was completed on 15 October 2005 with effect from 1 October 2005, and the entity disposed of is reported in this financial report as a discontinued operation.

Financial information relating to the discontinued operation for the period to the date of disposal is set out below. Further information is set out in the segment information.

Select Harvests Annual Report 2007

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(b) Financial performance and cash flow information

The financial performance and cash flow information presented are for the year ended 30 June 2007 and are for the three months ended September 2005 (2006 column).

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CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
Revenue - 937 - -
- - -
Expenses (720)
Profit before income tax - 217 - -
- - -
Income tax expense (47)
Profit after income tax of discontinued operations - 170 - -
Gain on sale of the division before income tax - 4,139 - 4,033
- - - -
Income tax expense
Gain on sale of the division after income tax - 4,139 - 4,033
Profit from discontinued operations - 4,309 - 4,033
- - -
Net cash inflow/(outflow)from operating activities (595)
Net cash inflow/(outflow) from investing activities (2006
- -
includes an inflow of $5,644,650 from the sale of the division) 5,645 5,645
Net cash inflow/(outflow) from financing activities - 595 - -
- -
Net increase in cash generated by the division 5,645 5,645
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(c) Carrying amounts of assets and liabilities

The carrying amounts of assets and liabilities as at 30 September 2005 (2006 column).

Cash - 1 - Property, plant and equipment - 685 - Investments - 20 - Trade receivables - 600 - Inventories - 485 - Other - 4 - Total assets - 1,795 - Trade creditors - (179) - Provision for Tax - 43 - Provision for employee benefits - (153) - Total liabilities - (289) - Net assets - 1,506 - (d) Details of the sale of the division Consideration received or receivable: Cash - 5,645 - Total disposal consideration - 5,645 - Carrying amount of net assets sold - (1,506) - Gain on sale before income tax - 4,139 - Income tax expense - - - Gain on sale after income tax - 4,139 -	Cash - 1 - Property, plant and equipment - 685 - Investments - 20 - Trade receivables - 600 - Inventories - 485 - Other - 4 - Total assets - 1,795 - Trade creditors - (179) - Provision for Tax - 43 - Provision for employee benefits - (153) - Total liabilities - (289) - Net assets - 1,506 - (d) Details of the sale of the division Consideration received or receivable: Cash - 5,645 - Total disposal consideration - 5,645 - Carrying amount of net assets sold - (1,506) - Gain on sale before income tax - 4,139 - Income tax expense - - - Gain on sale after income tax - 4,139 -	1 707 20 1,021 600 56
	- 1,795 -	2,405
	- (179) - - 43 - - (153) -	(269) (275) (142)
	- (289) -	(686)
	- 1,506 -	1,719
	- 5,645 -	5,645
	- 5,645 - - (1,506) -	5,645 (1,612)
	- 4,139 - - - -	4,033 -
	- 4,139 -	4,033

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CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
8. Dividends paid or provided for on ordinary share
(a) Dividends paid during the year
(i ) Interim - paid 2 April 2007 (2006: 3 April 2006)
Fully franked dividend (22.0c per share)
(2006:20.0c per share) 8,802 7,913 8,802 7,913
- -
(ii) Special dividend Fully franked dividend 2007: Nil (2006: 10.0c) 3,956 3,956
8,802 11,869 8,802 11,869
(iii) Final - paid 2 October 2006 (2006: 3 October 2005)
Fully franked dividend (33c per share) (2006:26.0c per share) 13,143 10,211 13,143 10,211
21,945 22,080 21,945 22,080
(b) Dividends proposed and not recognised as a liability
Fully franked dividend payable on 1 October 2007
(35.0c per share, $13,558,666)
(c) Franking credit balance
Franking credits available for the subsequent financial year arising from:
Franking account balance as at the beginning of the financial year 26,639 16,733
Current year tax payment instalments and adjustments 22,585 29,526
Interim Dividends paid (8,802) (11,869)
Franking account balance at end of financial year 40,422 34,390
Current year income tax payable 2,766 5,353
Dividend declared (13,559) (13,104)
Franking account balance after payment of current year tax and dividends 29,629 26,639
9. Cash and cash equivalents
Cash at bank and in hand 924 16,057 529 15,275
Deposits at call 6,000 6,500 6,000 6,500
6,924 22,557 6,529 21,775
(a) Reconciliation to cash at the end of the year
The above figures are reconciled to cash at the end of the financial
year as shown in the statement of cash flow as follows:
Balances as above 6,924 22,557 6,529 21,775
Bank overdrafts (note 20) (1,285) (836) (1,285) (836)
Balances per statement of cash flows 5,639 21,721 5,244 20,939
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(b) Cash at bank and on hand

Details of the interest rates applicable to cash at bank and on hand are detailed in note 36.

(c) Deposits at call

The deposits are bearing a floating interest rate at 30 June 2007. Details of the interest rates applicable to deposits at call are detailed in note 36.

56 Select Harvests Annual Report 2007

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CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
10. Receivables (current)
Trade debtors 32,674 23,602 - -
Provision for doubtful debts (18) (10) - -
- -
32,656 23,592
Prepayments 803 825 705 703
Other receivables - 25 - 25
33,459 24,442 705 728
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(a) Bad and doubtful trade receivables

The consolidated entity has recognised an expense of $13,216 (2006: $14,332) in respect of bad and doubtful trade receivables during the year ended 30 June 2007. This loss has been included in “other expenses” in the income statement.

(b) Other receivables

These amounts generally arise from transactions outside the usual operating activities of the group.

(c) Effective interest rates and credit risk

All receivables are non-Interest-bearing.

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 consolidated entity operates. Refer to note 2 for more information on the risk management policy of the consolidated entity.

Information concerning the effective interest rate and credit risk of both current and non-current receivables is set out in note 36.

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CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
11. Inventories (current)
Raw materials
Raw materials at cost 8,026 6,793 - -
- -
8,026 6,793
Finished goods
- -
Finished goods at cost 5,803 6,060
Provision for diminution in value 11(a) (9) (267) - -
5,794 5,793 - -
Other inventory
Other inventory at cost 7,309 5,763 - -
7,309 5,763 - -
Almond stocks
- -
Almond stocks at cost (refer to note 1 (f)) 9,040 6,333
9,040 6,333 - -
Total inventories 30,169 24,682 - -
(a) Movements in provision for diminution in value
- -
Beginning of the financial year (267) (517)
- -
Movement during the year 258 250
- -
End of the financial year (9) (267)
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CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
12. Derivative financial instruments (current)
Current assets
Forward exchange contracts – cash flow hedges 431 774 431 774
Total current derivative financial instrument assets 431 774 431 774
Current liabilities
Forward exchange contracts – cash flow hedges 627 44 627 44
Total current derivative financial instrument liabilities 627 44 627 44
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(i) Forward exchange contracts – cash flow hedges

The consolidated 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 consolidated entity against unfavourable exchange rate movements for highly probable contracted and forecasted sales and purchases undertaken in foreign currencies.

The net amount of the foreign currency the consolidated 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 was $15,003,000 (2006: $777,000).

The accounting policy in regard to forward exchange contracts is detailed in note 1(c).

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

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BUY UNITED STATES DOLLARS SELL AUSTRALIAN AVERAGE EXCHANGE RATE
DOLLARS
2007 2006 2007 2006
SETTLEMENT $’000 $’000 $’000 $’000
Less than 6 months 4,960 5,304 0.77 0.74
6 months to 1 year 19 - 0.77 -
- - - -
Greater than 1 year
4,979 5,304
SELL UNITED STATES DOLLARS BUY AUSTRALIAN AVERAGE EXCHANGE RATE
DOLLARS
2007 2006 2007 2006
SETTLEMENT $’000 $’000 $’000 $’000
Less than 6 months 15,302 4,457 0.81 0.61
6 months to 1 year 4,680 70 0.84 0.76
- - - -
1 year to 2 years
19,982 4,527
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58 Select Harvests Annual Report 2007

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(ii) 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 balance sheet 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 at maturity. The credit risk exposure to forward exchange contracts is the net fair value of these contracts.

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

(iii) Interest rate risk exposures

Refer to note 36 for the consolidated entity’s exposure to interest rate risk on derivative financial instruments.

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NOTES CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
13. Receivables (non-current)
Related party receivables
Wholly-owned group
• controlled entities 34(f) - - 51,063 37,355
• - - -
provision for impairment (1,099)
- -
51,063 36,256
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14. Other financial assets (non-current)

Shares •Controlled entities – unlisted - - 9,607 - - 9,607	Shares •Controlled entities – unlisted - - 9,607 - - 9,607	9,607
	- - 9,607	9,607

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NOTES CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
15. Property, plant and equipment
Buildings
At cost 2,809 2,840 - -
-
Accumulated depreciation (411) (329)
- -
15(a) 2,398 2,511
Plantation land and irrigation systems
At cost 25,328 24,934 - -
- -
Accumulated depreciation (1,908) (1,497)
- -
15(a) 23,420 23,437
Total land and buildings 25,818 25,948 - -
Plant and equipment under lease
At cost 609 1,657 103 103
Accumulated amortisation (295) (956) (29) (12)
15(b) 314 701 74 91
Plant & equipment
At cost 37,645 33,242 931 869
Accumulated depreciation (20,170) (16,977) (772) (496)
15(b) 17,475 16,265 159 373
Capital works in progress
At cost 9,973 1,468 43 -
-
15(b) 9,973 1,468 43
Total plant and equipment 27,762 18,434 276 464
Total property, plant and equipment:
Cost 76,364 64,141 1,077 972
Accumulated depreciation and amortisation (22,784) (19,759) (801) (508)
Total written down amount 53,580 44,382 276 464
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NOTES CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
(a) 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 - 232 - -
Additions - - - -
- - -
Depreciation expense (1)
- - -
Disposal through sale of entity (231)
- - - -
Buildings
Carrying amount at beginning 2,511 2,531 - -
Additions - 48 - -
- -
Depreciation expense (82) (68)
-
Disposals (31)
- -
2,398 2,511
Plantation land and irrigation systems
Carrying amount at beginning 23,437 22,985 - -
Additions 468 787 - -
Transfer between classes (74) - -
- -
Depreciation expense (411) (335)
23,420 23,437 - -
Plant and equipment under lease
Carrying amount at beginning 701 1,314 91 -
Additions - 103 - 103
Transfers between classes (272) (467) - -
Depreciation expense (115) (249) (17) (12)
314 701 74 91
Plant and equipment
Carrying amount at beginning 16,265 15,741 373 509
Additions 3,787 3,400 62 90
-
Disposals (108) (214) (53)
- - -
Disposal through sale of entity (453)
Transfers between classes 725 724 - 14
Transfers between entities - - - 22
Depreciation expense (3,194) (2,933) (276) (209)
17,475 16,265 159 373
Capital works in progress
-
Carrying amount at beginning 1,468 1,188 14
Additions 8,884 951 43 -
Transfers between classes (379) (257) - (14)
Reclassification to other accounts - (414) - -
-
9,973 1,468 43
Total written down value 53,580 44,382 276 464
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NOTES CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
16. Deferred tax assets
The balance comprises temporary differences attributable to:
Amounts recognised in profit and loss
Assets at cost (180) (180) - -
Employee benefits 438 384 127 85
Accruals 41 28 41 28
Provisions 329 329 329 329
Doubtful debts 5 3 - -
633 564 497 442
Amounts recognised directly in equity
Cash flow hedges 59 (219) 59 (219)
692 345 556 223
Movements:
-
Opening balance 1 July 345 267 223
Credited/(charged) to income statement 288 341 274 442
Credited/(charged) to equity 59 (219) 59 (219)
- - -
Transfer on sale of discontinued operation (44)
Closing balance at 30 June 692 345 556 223
Deferred tax assets to be recovered after more than 12 months (61) (69) 119 111
Deferred tax assets to be recovered within 12 months 753 414 437 112
692 345 556 223
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62 Select Harvests Annual Report 2007

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17. Biological assets – almond trees

The consolidated entity, as part of its operations, grows, harvests, and sells almonds. Harvesting of almonds occurs from February through to April each year. The almond orchards are located in the Robinvale area of North West Victoria.

As at 30 June 2007 the consolidated entity owned and managed a total of 1,863 acres of almond orchards (2006: 1,863 acres) and leased and managed a total of 505 acres of almond orchards (2006: 505 acres).

During the year ended 30 June 2007, 2,400 metric tonnes of almonds were harvested from these orchards (2006: 1,566 metric tonnes). These almonds had a fair value less estimated point of sale costs of $15.5 million (2006: $12.5 million).

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CONSOLIDATED
2007 2006
$’000 $’000
Carrying amount at 1 July 5,799 5,516
Additions 107 198
Almond Tree fair value adjustment 92 85
Carrying amount at 30 June 5,998 5,799
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Developing almond trees are valued at their growing cost until the year they bear their first commercial crop. The value of crop bearing almond trees is 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
An appropriate rental charge is included to represent the use of the developed land on which the trees are planted.

(a) Financial risk management strategies

The consolidated entity is exposed to financial risks arising from changes in the price of almonds. The consolidated entity reviews its outlook for almond prices regularly in considering the need for active financial risk management.

(b) Non-current assets pledged as security

Refer to note 23 for information on biological assets whose title is restricted and the carrying amounts of any biological assets pledged as security by the parent entity or its subsidiaries.

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18. Intangibles

18. Intangibles	18. Intangibles	18. Intangibles
CONSOLIDATED GOODWILL BRAND NAMES TOTAL $’000 $’000 $’000*
Year ended 30 June 2006 Opening net book amount Additions Closing net book amount Year ended 30 June 2007 Opening net book amount Additions Closing net book amount	25,981 2,900 14 -	28,881 14
	25,995 2,900	28,895
	25,995 2,900 - 5	28,895 5
	25,995 2,905	28,900

* Brand name assets relate to the “Lucky” brand, which has been assessed as having an indefinite useful life. This assessment was based on the Lucky brand having been sold in the market place for over 50 years, is a clear market leader in the cooking nuts category and remains a heritage brand.

(a) Impairment tests for goodwill

Goodwill is allocated to the consolidated entity’s cash-generating units (CGU) identified according to the business segment. The total value of goodwill relates to the Food Products CGU. The recoverable amount of the CGU is determined based on value-in-use calculations. These calculations use cash flow projections based on financial projections by management covering a five year period assuming a growth rate based on projected crop increases and other growth rates based on past performance and it’s expectations for the future. These do not exceed the long-term growth rate for the business in which the Food Products Division operates in. A weighted average cost of capital (12.2%) has been used to discount the cash-flow projections.

(b) Impact of possible changes to key assumptions

The recoverable amount of the goodwill in the Food Products Division exceeds the carrying amount of goodwill at 30 June 2007. If a pre-tax discount rate of 13.2% was used instead of 12.2% the recoverable amount of goodwill in the Food Products Division would still exceed the carrying amount of goodwill at 30 June 2007.

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NOTES CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
19. Payables (current)
Trade creditors 7,899 8,668 140 2
Other creditors 38,507 25,739 297 406
46,406 34,407 437 408
20. Interest-bearing liabilities (current)
Secured
Bank overdraft 23(a) 1,285 836 1,285 836
Lease liability 29 114 117 17 16
Total secured current borrowings 1,399 953 1,302 852
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64 Select Harvests Annual Report 2007

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(a) Security

Details of the security relating to each of the secured liabilities and further information on the bank overdrafts and bank loans are set out in note 23.

(b) Interest rate risk exposures

Details of the consolidated entity’s exposure to interest rate changes on borrowings are set out in note 36.

(c) Fair value disclosures

Details of the fair value of borrowings for the consolidated entity are set out in note 23.

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NOTES CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
21. Provisions (current)
Employee benefits 25 (a) 2,482 2,207 306 199
2,482 2,207 306 199
22. Payables (non-current)
Aggregate amounts payable to related parties
- -
- wholly owned companies 16,904 7,964
- -
16,904 7,964
23. Interest-bearing liabilities (non- current)
Secured
Lease liability 29 237 350 58 75
Total secured non-current borrowings 237 350 58 75
(a) Total secured liabilities
Bank overdraft 1,285 836 1,285 836
Lease liability 29 351 467 75 91
Total secured liabilities 1,636 1,303 1,360 927
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(b) Assets pledged as security:

The bank overdraft and bills of exchange of the parent entity and subsidiaries are secured by the following:

(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.

Lease liabilities are effectively secured as the rights to the leased assets recognised in the financial statements revert to the lessor in the event of a default.

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NOTES CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
The carrying amounts of assets pledged as security
for current and non-current borrowings are:
Current
Floating charge
Cash and cash equivalents 6,924 22,557 6,529 21,775
Receivables 33,459 24,442 705 728
Inventories 30,169 24,682 - -
Derivative financial instruments 431 774 431 774
Total current assets pledged as security 70,983 72,455 7,665 23,277
Non-current
Floating charge
Receivables - - 51,063 36,256
Other financial assets - - 9,607 9,607
Property, plant and equipment 53,580 44,382 276 464
- -
Biological assets – almond trees 5,998 5,799
Total non-current assets pledged as security 59,578 50,181 60,946 46,327
Total assets pledged as security 130,561 122,636 68,611 69,604
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(c) Financing arrangements

The consolidated entity and the Company have bank overdraft facilities available to the extent of 1,000,000 Australian dollars and 3,000,000 United States dollars (2006: AUD2,000,000 & USD3,000,000).

As at 30 June 2007 the consolidated entity and company have used AUD Nil and USD 703,128 (2006: AUD Nil & USD 578,503) of the facility.

The consolidated entity and the Company have a commercial bill facility available to the extent of $28,000,000 (2006: $28,000,000). As at 30 June 2007 the consolidated entity and Company have used $Nil (2006: $Nil).

The current interest rates are 6.57% on the commercial bill facility, 10.35% on the Australian dollar bank overdraft facility, and 6.47% on the United States dollar bank overdraft facility.

(d) Interest rate risk exposures

Details of the consolidated entity’s exposure to interest rate risk are set out in note 36.

(e) Fair value disclosures

The fair value of borrowings at balance date is equal to the carrying amounts set out in part (a) above.

66 Select Harvests Annual Report 2007

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NOTES CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
24. Deferred tax liabilities (non-current)
The balance comprises temporary differences attributable to:
Amounts recognised in profit and loss
- -
Inventory 1,816 1,233
Assets at cost 8,538 8,487 - -
- -
Employee benefits (648) (508)
Accruals (64) (396) - -
- -
Intangibles 870 870
- -
Operating leases (334) (289)
- -
10,178 9,397
Amounts recognised directly in equity
Cash flow hedges - 321 - -
- -
10,178 9,718
Movements:
-
Opening balance 1 July 9,718 9,920 709
-
Credited / (charged) to income statement 781 599 413
-
Credited / (charged) to equity (321) (801) (1,122)
- -
Closing balance at 30 June 10,178 9,718
Deferred tax liabilities to be settled after more than 12 months 9,142 9,068 - -
Deferred tax liabilities to be settled within 12 months 1,036 650 - -
- -
10,178 9,718
25. Provisions (non-current)
Employee entitlements 554 422 93 71
(a) Aggregate employee entitlements liability 3,036 2,629 399 270
(b) Number of full time employees at year end 340 297 16 11
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NOTES	CONSOLIDATED PARENT ENTITY	CONSOLIDATED PARENT ENTITY
26. Contributed equity (a) Issued and paid up capital Ordinary shares fully paid	2007 2006 2007 $’000 $’000 $’000 41,953 52,665 41,953	2006 $’000 52,665
	41,953 52,665 41,953	52,665
(b) Movements in shares on issue Beginning of the financial year Issued during the year: Dividend reinvestment scheme Employee share scheme Share buy back End of Financial year	2007 2006 NUMBER OF SHARES $’000 NUMBER OF SHARES 39,707,757 52,665 39,069,120 299,128 3,531 322,037 164,867 1,288 316,600 (1,432,705) (15,531) - 38,739,047 41,953 39,707,757	$’000 46,925 4,305 1,435 - 52,665

(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, 171,101 options (2006: 237,700 options) have been granted under this scheme (refer note 38 and Directors’ Report for further details). The market value of ordinary Select Harvests Limited shares closed at $11.60 on 30 June 2007 ($13.02 on 30 June 2006).

(d) Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

68 Select Harvests Annual Report 2007

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NOTES CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
27. Reserves and retained profits
Capital reserve 27(a) 3,270 3,270 3,270 3,270
Cash flow hedge reserve 27(a) (137) 1,258 (137) 512
- - - -
Interest rate swap reserve 27(a)
Asset revaluation reserve 27(a) 7,645 7,645 - -
Options reserve 27(a) 495 518 495 518
11,273 12,691 3,268 4,300
Retained profits 27(c) 42,278 36,125 1,092 955
(a) Movements
Capital reserve
Balance at beginning of year 3,270 3,270 3,270 3,270
- - - -
Surplus on revaluation
Balance at end of year 3,270 3,270 3,270 3,270
Cash flow hedge reserve
Balance at beginning of year 1,258 2,633 512 2,633
Currency translation differences arising during the year (1,395) (1,375) (649) (2,121)
Balance at end of year (137) 1,258 (137) 512
Interest rate swap reserve
Balance at beginning of year - (15) - (15)
Swap translation differences arising during the year - 15 - 15
- - - -
Balance at end of year
Asset revaluation reserve
- -
Balance at beginning of year 7,645 7,645
- - - -
Surplus on revaluation
- -
Balance at end of year 7,645 7,645
Options reserve
Balance at beginning of year 518 233 518 233
Option expense 174 358 174 358
Transfer to share capital (options exercised) (197) (73) (197) (73)
Balance at end of year 495 518 495 518
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(b) Nature and purpose of reserves

(i) Capital reserve

The capital reserve is used to isolate realised capital profits from disposal of non-current assets.

(ii) Asset revaluation 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.

(iii) Share based payments reserve

The share based payments reserve is used to recognise the fair value of options issued but not exercised.

(iv) Cash flow hedge reserve

The cash flow hedge reserve is used to record gains or losses on foreign exchange contracts in a cash flow hedge that are recognised directly in equity.

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CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
(c) Retained profits
Balance at the beginning of year 36,125 27,404 955 (6,432)
Adjustment on adoption of AASB 132 and AASB 139, net of tax - - - 3
Profit attributable to members of Select Harvests Limited 28,098 30,801 22,082 29,464
Total available for appropriation 64,223 58,205 23,037 23,035
Dividends paid (21,945) (22,080) (21,945) (22,080)
Balance at end of year 42,278 36,125 1,092 955
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70 Select Harvests Annual Report 2007

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CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
28. Cash flow statement
Reconciliation of the net profit after tax to the net cash
flows from operations
Net profit 28,098 30,801 22,082 29,464
Non-cash Items
Depreciation and amortisation 3,802 3,571 291 230
Almond stock fair value adjustment 1,071 467 - -
Almond trees fair value adjustment 92 85 - -
Net (profit)/loss on disposal of property, plant and equipment 6 6 - 10
- -
Net (profit) on disposal of discontinuing operation (4,139) (4,033)
Dividends received from controlled entities - - (22,000) (25,212)
Interest received - - (1,247) (516)
- -
Management fees received (4,554) (3,398)
Changes in assets and liabilities
- -
(Increase)/decrease in trade receivables (9,064) 1,244
(Increase)/decrease in inventory (5,487) 114 - -
(Increase)/decrease in receivables and other assets (1,712) 2,150 22,195 (4,831)
(Decrease)/increase in trade and other creditors 11,999 1,420 29 (5,983)
(Decrease)/increase in income tax payable 472 (945) 472 (945)
-
(Decrease)/increase in deferred income tax liability 460 (533) (709)
(Increase)/decrease in tax assets (347) (68) (332) (223)
(Decrease)/increase in employee entitlements 407 209 129 31
Net cash flow from operating activities 29,791 34,382 17,065 (16,115)
(a) Reconciliation of cash
Cash balance comprises:
Cash at bank 6,924 22,557 6,529 21,775
Bank overdraft (1,285) (836) (1,285) (836)
Closing cash balance 5,639 21,721 5,244 20,939
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Select Harvests Annual Report 2007 71

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(b) Acquisition of entities and businesses

There were no acquisitions of entities during the year.

During the 2006 year the consolidated entity paid $500,000 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 2005.

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CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
Details of these transactions are:
Purchase consideration - 500 - -
Cash consideration - 500 - -
Goodwill on consolidation - 500 - -
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29. Expenditure commitments

Lease commitments – Group company as lessee Commitments in relation to leases contracted for at the eporting date but not recognised as liabilities, payable: •Within one year 8,801 6,202 - •Later than one year but not later than five years 33,005 23,130 - •Later than five years 36,461 14,917 - 78,267 44,249 - i) Operating leases (non-cancellable): Minimum lease payments •Not later than one year 8,076 5,577 - •Later than one year and not later than five years 29,544 19,857 - •Later than five years 10,935 12,129 - •Aggregate lease expenditure contracted for at reporting date 48,555 37,563 - Aggregate expenditure commitments comprise: Aggregate lease expenditure contracted for at reporting date 48,555 37,563 -	Lease commitments – Group company as lessee Commitments in relation to leases contracted for at the eporting date but not recognised as liabilities, payable: •Within one year 8,801 6,202 - •Later than one year but not later than five years 33,005 23,130 - •Later than five years 36,461 14,917 - 78,267 44,249 - i) Operating leases (non-cancellable): Minimum lease payments •Not later than one year 8,076 5,577 - •Later than one year and not later than five years 29,544 19,857 - •Later than five years 10,935 12,129 - •Aggregate lease expenditure contracted for at reporting date 48,555 37,563 - Aggregate expenditure commitments comprise: Aggregate lease expenditure contracted for at reporting date 48,555 37,563 -	- - -
	78,267 44,249 - 8,076 5,577 - 29,544 19,857 - 10,935 12,129 -	- - - -
	48,555 37,563 -	-
	48,555 37,563 -	-

The orchard leases are able to be renewed for a further five years. The company also has the right to refusal to purchase the properties in the event that the lessor wished to sell. Other leases within Select have renewal and first right of refusal clauses.

Operating lease payments are for rental of premises, farming and factory equipment.

72 Select Harvests Annual Report 2007

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CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
(ii) Finance leases:
• Not later than one year 133 149 24 24
• Later than one year and not later than five years 260 384 60 83
• Total minimum lease payments 393 533 84 107
•
Future finance changes (42) (66) (9) (15)
• Lease liability 351 467 75 92
Current liability 20 114 117 17 16
Non-current liability 23 237 350 58 76
351 467 75 92
Finance leases are for various items of plant & equipment
(iii) Almond orchard lease:
Minimum lease payments
• Not later than one year 1,662 625 - -
• Later than one year and not later than five years 9,403 3,273 - -
• Later than five years 55,570 2,788 - -
• Aggregate lease expenditure contracted for at reporting date 66,635 6,686 - -
Aggregate expenditure commitments comprise:
- -
Aggregate lease expenditure contracted for at reporting date 66,635 6,686
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The almond orchard lease comprises the lease of a 512 acre almond orchard and a 1,002 acre lease from Sandhurst Trustees Limited in which the consolidated entity has the right to harvest the almonds from the trees owned by the lessor for the term of the agreement. During the year ended 30 June 2007 the company took up the renewal clauses for an additional 10 years on the 512 acre orchard. Although the 1,002 acre lease agreement was entered into on July 1 2007 this has been disclose as a lease commitment in the disclosure above.

30. Events occuring after balance date

On 1 July 2007 a lease was entered into for the lease of a 1,002 acre almond orchard from Sandhurst Trustees Limited in which the consolidated entity has the right to harvest the almonds from the trees owned by the lessor for the term of the agreement. This lease has been disclosed as a lease commitment in note 29.

There has been no other matter or circumstance, which has arisen since 30 June 2007 that has significantly affected or may significantly affect:

(a) the operations, in financial years subsequent to 30 June 2007, of the consolidated entity, or
(b) the results of those operations, or
(c) the state of affairs, in financial years subsequent to 30 June 2007, of the consolidated entity.

Select Harvests Annual Report 2007

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CONSOLIDATED

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2007 2006
$’000 $’000
31. Earnings per share
The following reflects the income and share data used in the
calculations of basic and diluted earnings per share:
Profit from continuing operations 28,098 26,492
Profit from discontinued operation - 4,309
Profit attributable to equity holders of the company used in calculating basic
earnings per share 28,098 30,801
Diluted earnings per share:
Profit from continuing operations 28,098 26,520
Profit from discontinued operation - 4,309
Profit attributable to equity holders of the company used in calculating
diluted earnings per share 28,098 30,829
NUMBER OF SHARES
2007 2006
Weighted average number of ordinary shares used in calculating basic
earnings per share 39,556,731 39,458,133
Effect of dilutive securities:
Share options 121,994 126,363
Adjusted weighted average number of ordinary shares used in calculating
diluted earnings per share 39,678,725 39,584,496
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32. Remuneration of directors and key management personnel

Principles used to determine the nature and amount of remuneration

Remuneration levels are set to attract and retain appropriately qualified and experienced directors and key management personnel. 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 key management personnel 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 consolidated entity level, divisional level, or functional level, as applicable, for the financial year. In addition, the consolidated entity offers executive directors and key management personnel 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 $50,000 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.

74 Select Harvests Annual Report 2007

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(a) Directors

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

(i) Chairman – non-executive

M A Fremder

(ii) Executive director

J Bird, Managing Director

(iii) Non-executive directors

C G Clark

G F Dan O’Brien

J C Leonard

R M Herron

(b) Other key management personnel

The following persons also had authority and responsibility for planning, directing, and controlling the continuing activities of the consolidated entity, directly or indirectly, during the financial year:

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Name Position Employer
K Bush Group Manager Sales & Marketing Select Harvests Food Products Pty Ltd
K Martin Group Operations Manager Select Harvests Limited
T Millen Group Horticultural & Farm Operations Manager Kyndalyn Park Pty Ltd
L Van Driel Group Trading Manager Select Harvests Food Products Pty Ltd
R Palmaricciotti Chief Financial Officer & Company Secretary Select Harvests Limited
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All of the above persons were also key management persons during the year ended 30 June 2006, except for K Bush who commenced employment with the consolidated entity on 25 September 2006; R Palmaricciotti who commenced employment with the consolidated entity on 15 December 2006; and, K Martin who commenced employment with the consolidated entity on 16 January 2007. Marcello Mattia was a key management person in the year ended 30 June 2006 and ceased employment with the consolidated entity on 31 December 2006.

(c) Key management personnel compensation

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CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
Short term employment benefits 1,854,293 2,323,092 1,273,792 1,366,049
- -
Post employment benefits 179,980 89,633
Share based payments 158,591 145,313 132,809 106,785
2,012,884 2,648,385 1,406,601 1,562,467
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The company has taken advantage of the relief provided by the Corporations Regulations 2M.6.04 and has transferred the detailed remuneration disclosures to the Directors’ Report. The relevant in formation can be found in sections A to C of the remuneration report on pages: 22 to 26.

Select Harvests Annual Report 2007 75

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(d) Equity instrument disclosures relating to key management personal

Number of options held by directors and key management personnel

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

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2007 HELD AT GRANTED AS EXERCISED HELD AT VESTED AND
1 JULY 2006 REMUNERATION 30 JUNE EXERCISABLE AT
2007 30 JUNE 2007
Directors
J Bird 92,200 86,067 87,600 90,667 90,667
Key management personnel
K Bush (Group Manager
- - - - -
Sales & Marketing)
- - - - -
K Martin (Group Operations Manager)
T Millen (Group Horticultural
& Farm Operations Manager) 5,600 7,333 5,400 7,533 7,533
L Van Driel (Group Trading Manager) 4,100 12,667 3,900 12,867 12,867
R Palmaricciotti (CFO and Company
- - - - -
Secretary)
M Mattia (Chief Financial Officer &
- - -
Company Secretary) 26,200 26,200
R. Tanti (Sales Manager – Food Products) 7,400 13,867 21,267 - -
W Turner (General Manager – Almond
- - -
Division) 18,600 18,600
2006 HELD AT GRANTED AS EXERCISED HELD AT VESTED AND
1 JULY 2005 REMUNERATION 30 JUNE EXERCISABLE AT
2006 30 JUNE 2006
Directors
J Bird 132,800 114,800 (155,400) 92,200 92,200
Key management personnel
T Millen (Group Horticultural & Farm 9,200 7,500 (11,100) 5,600 5,600
Operations Manager)
L Van Driel (Group Trading Manager) 11,200 15,300 (22,400) 4,100 4,100
M Mattia (Chief Financial Officer &
- -
Company Secretary) 8,800 19,500 (28,300)
R. Tanti (Sales Manager – Food Products) - 7,400 - 7,400 7,400
W Turner (General Manager – Almond
- -
Division) 7,000 14,400 (21,400)
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No options held by directors or key management personnel are vested but not exercisable

76 Select Harvests Annual Report 2007

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Number of shares held by directors and key management personnel

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

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2007 HELD AT RECEIVED AS RECEIVED ON OTHER - DRP, TOTAL
1 JULY 2006 REMUNERATION EXERCISE OF SALES &
OPTIONS PURCHASES
Directors - non-executive
M A Fremder 5,662,365 - - 114,869 5,777,234
J C Leonard 455,932 - - 28,865 484,797
C G Clark 23,892 - - - 23,892
R M Herron 5,000 - - - 5,000
G F Dan O’Brien 50,000 - - 1,090 51,090
Directors – executive
J Bird 426,522 - 87,600 4,000 518,122
Key management personnel
K Bush (Group Manager Sales &
- - - - -
Marketing)
- - - - -
K Martin (Group Operations Manager)
T Millen (Group Horticultural & Farm
Operations Manager) 34,044 - 5,400 - 39,444
R Palmaricciotti (CFO and Company
- - - - -
Secretary)
- -
L Van Driel (Group Trading Manager) 38,700 3,900 42,600
2006 HELD AT RECEIVED AS RECEIVED ON OTHER - DRP, TOTAL
1 JULY 2005 REMUNERATION EXERCISE OF SALES &
OPTIONS PURCHASES
Directors - non-executive
M A Fremder 5,598,352 - - 64,013 5,662,365
J C Leonard 413,091 - - 42,841 455,932
C G Clark 22,927 - - 965 23,892
R M Herron 5,000 - - - 5,000
G F Dan O’Brien 50,000 - - - 50,000
Directors – Executive
J Bird 271,122 - 155,400 - 426,522
Key management personnel
M Mattia (Chief Financial Officer &
Company Secretary) 2,000 - 28,300 - 30,300
- - -
M Ciobo (General Manager - Meriram) 35,728 35,728
W Turner (General manager – Almond
- - -
Division) 21,400 21,400
L Van Driel (Group Trading Manager) 20,500 - 22,400 (4,200) 38,700
T Millen (Group Horticultural & Farm
Operations Manager) 22,944 - 11,100 - 34,044
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(e) Other transactions with directors and key management personnel

Transactions with directors and key management personnel that require disclosure in accordance with AASB 124 for the year ended 30 June 2007 are detailed in note 34.

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NOTES CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
33. Remuneration of auditors
During the year the following fees were paid of payable for services
provided by the auditor of the parent entity, its related practices and
non-related audit firms:
Amounts received or due and receivable by
PricewaterhouseCoopers for:
• An audit or review of the financial report of the entity and any other
entity in the consolidated entity 154,632 110,000 154,632 110,000
• Other financial services (a) 30,140 29,225 30,140 29,225
184,772 139,225 184,772 139,225
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(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:

PricewaterhouseCoopers: Taxation compliance and advice 18,170 6,855 18,170 FRS advice - 10,000 - Sale of Pesticide products - 12,370 - Other 11,970 - 11,970 30,140 29,225 30,140	6,855 10,000 12,370 -
	29,225

78 Select Harvests Annual Report 2007

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34. Related party disclosures

(a) Parent entity

The parent entity within the consolidated entity is Select Harvests Limited.

(b) Subsidiaries

Interests in subsidiaries are set out in note 37.

(c) Key management personnel

Disclosures relating to key management personnel are set out in note 32.

CONSOLIDATED PARENT ENTITY 2007 2006 2007 2006 $’000 $’000 $’000 $’000 (d) Wholly owned group transactions Dividend revenue Subsidiaries - - 22,000 25,212 Interest income Subsidiaries - - 1,029 956 Tax consolidation legislation Current tax payable assumed from wholly-owned tax consolidated entities - - - 2,090 Other transactions Management fees - - 4,554 3,398	CONSOLIDATED PARENT ENTITY 2007 2006 2007 2006 $’000 $’000 $’000 $’000 (d) Wholly owned group transactions Dividend revenue Subsidiaries - - 22,000 25,212 Interest income Subsidiaries - - 1,029 956 Tax consolidation legislation Current tax payable assumed from wholly-owned tax consolidated entities - - - 2,090 Other transactions Management fees - - 4,554 3,398	CONSOLIDATED PARENT ENTITY 2007 2006 2007 2006 $’000 $’000 $’000 $’000 (d) Wholly owned group transactions Dividend revenue Subsidiaries - - 22,000 25,212 Interest income Subsidiaries - - 1,029 956 Tax consolidation legislation Current tax payable assumed from wholly-owned tax consolidated entities - - - 2,090 Other transactions Management fees - - 4,554 3,398
	- - 1,029	956
	- - -	2,090
	- - 4,554	3,398

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

(e) 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 a 25 year period. The consolidated entity received an amount of $1,444,439 (2006: $996,691) 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.

Select Harvests Limited also has an Almond Orchard Management Agreement with Almas Almonds Pty Ltd, a company which manages the Almas Almonds Partnership in which both Mr M A Fremder and Mr J C Leonard have an indirect interest. Under the terms of the agreement, Select Harvests Limited is developing and shall manage 1,753 acres of almond orchard on a fee basis for Almas Almonds Pty Ltd.

In addition, Select Harvests Limited will process and sell the entire production of the orchard for the entire 30 year life of the orchard. The consolidated entity received an amount of $4,119,581 (2006: $187,380) 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.

A non-executive Director of the Company, Mr Dan O’Brien, acquired from Select Harvests, via an associated entity, $64,945 worth of Almond Hull suitable for livestock feed. This was purchased at market prices.

Select Harvests Annual Report 2007

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(f) Outstanding balances

The following balances are outstanding at the reporting date in relation to transactions with related parties:

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CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
Non-current receivables
Subsidiaries - - 51,063 36,256
Non-current payables
Subsidiaries - - 16,094 7,964
(g) Loans to/from related parties
Loans to/from subsidiaries
- -
Beginning of the year 28,292 30,703
Loans advanced - - 276,538 253,223
- -
Loan repayments received (271,670) (256,590)
Interest charged - - 1,029 956
Interest received - - - -
End of year - - 34,159 28,292
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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.

35. Segment information

Segment products and locations

The consolidated 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 orchard development, tree supply, farm management, land rental and, irrigation infrastructure; and the sale of almonds on behalf of external investors.

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

80 Select Harvests Annual Report 2007

Note 35: Segment Information (cont’d)

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FOOD PRODUCTS ALMOND TOTAL CONTINUING DISCONTINUED ELIMINATIONS AND CONSOLIDATED
OPERATIONS OPERATIONS OPERATIONS CORPORATE ENTITY
2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Operating
Revenue
Sales of goods
& services to
customers
outside the
consolidated entity 138,298 152,549 91,200 65,317 229,498 217,866 0 936 0 0 229,498 218,802
Intersegment
revenue 83 1,145 25,660 24,605 25,743 25,750 0 16 (25,743) (25,766) 0 0
Sale of Almonds to
customers outside
the consolidated
entity on behalf of
managed orchard
owners (Note a) 0 0 27,659 17,444 27,659 17,444 0 0 0 0 27,659 17,444
Less Cost of
Almonds sold by
the consolidated
entity on behalf of
managed orchard
owners (Note a) 0 0 (45,767) (33,843) (45,767) (33,843) 0 0 18,108 16,399 (27,659) (17,444)
Other revenue 47 32 1,164 552 1,211 584 0 1 0 0 1,211 585
Total revenue 138,428 153,726 99,916 74,075 238,344 227,801 0 953 (7,635) (9,367) 230,709 219,387
Operating profit
before interest,
tax, and internal
charges 7,422 9,212 36,827 32,075 44,249 41,287 0 4,356 (3,700) (2,918) 40,549 42,725
Segment assets
(excluding
inter-company
debts) 70,638 71,324 85,771 64,230 156,409 135,554 0 0 3,744 16,322 160,153 151,876
Segment liabilities
(excluding
inter-company
debts) 9,022 13,478 48,555 35,385 57,577 48,863 0 0 7,072 1,211 64,649 50,074
Acquisition of
non-current
segment assets 1,025 923 12,009 4,633 13,034 5,556 0 17 105 90 13,139 5,663
Depreciation and
amortisation of
segment assets 1,434 1,586 2,093 1,743 3,527 3,329 0 37 275 220 3,802 3,586
Profit on sale
of discountinued
segment assets
operations
before tax 0 0 0 0 0 0 0 4,139 0 0 0 4,139
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Note a- The consolidated entity provides a range of management and other services to externally owned or third party orchards. In addition to these services, the consolidated entity sells the crop of almonds harvested from the orchards of the external owners. These almonds are sold by the consolidated entity on a pooled basis, the proceeds from which are distributed to the pool participants. The consolidated entity earns a marketing fee for providing this service. Segment revenues, expenses and results include transfers between segments. Such transfers are priced on an “arms-length” basis and are eliminated on consolidation.

Select Harvests Annual Report 2007

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36. Interest rate risk

(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:

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TOTAL
CARRYING
FIXED INTEREST RATE MATURING IN: AMOUNT
AS PER THE WEIGHTED
STATEMENT AVERAGE
FINANCIAL FLOATING OVER 1 TO 5 MORE THAN 5 NON INTEREST OF FINANCIAL EFFECTIVE
INSTRUMENTS INTEREST RATE 1 YEAR OR LESS YEARS YEARS BEARING POSITION INTEREST RATE
2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 % %
(i) Financial
assets
Cash 924 16,057 6,000 6,500 - - - - 2 6,924 22,557 6.2 4.0
Trade and other
receivables - - - - - - - - 33,459 24,442 33,459 24,442 - -
Total financial
assets 924 16,057 6,000 6,500 - - - 33,459 24,444 40,383 46,999
(ii) Financial
liabilities
Bank overdraft
– USD 1,021 784 - - - - - - - - 1,021 784 6.5 6.7
Bank overdraft
- AUD 262 52 - - - - - - - - 262 52 10.4 9.6
Trade creditors - - - - - - 7,899 8,668 7,899 8,668 - -
Other creditors - - - - - - 38,507 25,739 38,507 25,739 - -
Finance lease
liability - - 114 117 237 350 - - - - 351 467 7.0 7.0
-
Foreign
exchange
contracts 15,003 (777) - - - - - - - - - - - -
Total financial 16,286 59 114 117 237 350 - - 46,500 34,407 48,040 35,710
liabilities
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82 Select Harvests Annual Report 2007

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37. Controlled entities

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COUNTRY OF
INCORPORATION PERCENTAGE OWNED (%)
2007 2006
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Parent Entity:
Select Harvests Limited	Australia	100	100
Subsidiaries of Select Harvests Limited:
Allinga Farms Pty Ltd (Deregistered)	Australia	0	100
Kyndalyn Park Pty Ltd	Australia	100	100
Select Home Garden Pty Ltd
(Deregistered 10 December 2006)	Australia	0	100
Select Harvests Food Products Pty Ltd^	Australia	100	100
Subsidiaries of Select Harvests Food Products Pty Ltd^:
Meriram Pty Ltd	Australia	100	100
Kibley Pty Ltd	Australia	100	100

^Select Harvests Food Products Pty Ltd (Formerly Select Harvests Marketing Pty Ltd).

(a) Controlled entities acquired

No controlled entities were acquired during the financial year ended 30 June 2007.

38. Employee benefits

(a) Executive share option scheme

The consolidated entity has in place an executive share option 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 consolidated 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.

Select Harvests Annual Report 2007

PROCEEDS RECEIVED NUMBER OF SHARES ISSUED FAIR VALUE PER SHARE FAIR VALUE AGGREGATE	173,600 31,000 7.82 242,420 173,600 31,000 11.70 362,700 294,560 52,600 13.15 691,690 57,572 7,400 11.70 86,580 198,390 25,500 13.15 335,325 191,905 17,367 13.15 228,376	PROCEEDS RECEIVED NUMBER OF SHARES ISSUED FAIR VALUE PER SHARE FAIR VALUE AGGREGATE
OPTIONS AT F YEAR VESTED	- - - 39,900 41,900 -	OPTIONS AT F YEAR VESTED
NUMBER OF END O ON ISSUE	27/08/2004 27/08/2004 01/11/2006 $5.60 31,000 - - 31,000 - 24/08/2005 24/08/2005 01/11/2006 $5.60 31,000 - - 31,000 - 28/08/2006 28/08/2006 01/11/2006 $5.60 - 52,600 - 52,600 - 24/08/2005 24/08/2005 20/10/2007 $7.78 47,300 - - 7,400 39,900 28/08/2006 28/08/2006 20/10/2007 $7.78 - 67,400 - 25,500 41,900 28/08/2006 28/08/2006 31/10/2008 $11.05 - 51,101 - 17,367 33,734	NUMBER OF END O ON ISSUE
2007 GRANT DATE EXERCISE DATE ON OR AFTER EXPIRY DATE EXERCISE PRICE NUMBER OF OPTIONS AT BEGINNING OF YEAR OPTIONS GRANTED OPTIONS LAPSED OPTIONS EXERCISED		2006 GRANT DATE EXERCISE DATE ON OR AFTER EXPIRY DATE EXERCISE PRICE NUMBER OF OPTIONS AT BEGINNING OF YEAR OPTIONS GRANTED OPTIONS LAPSED OPTIONS EXERCISED

84 Select Harvests Annual Report 2007

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38. Employee benefits (cont’d)

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

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2007 2006
$’000 $’000
Issued and Paid up Capital 1,090 1,360
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(b) Expenses arising from share-based payment transactions

Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expense were as follows:

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CONSOLIDATED PARENT ENTITY
2007 2006 2007 2006
$’000 $’000 $’000 $’000
Options issued under employee option plan 174 358 187 109
174 358 187 109
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39. Contingent liabilities

Cross guarantees given by the entities comprising the consolidated entity are detailed in note 23.

Select Harvests Annual Report 2007

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Directors’ Declaration

In the directors’ opinion:

(a) the financial statements and notes set out on pages 38 to 85 are in accordance with the Corporations Act 2001 , including: (i) complying with accounting Standards, the Corporations Regulations 2001, and other mandatory professional reporting requirements; and
(ii) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2007 and of their performance for the financial year ended on that date; and
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and
(c) the audited remuneration disclosures set out in the directors’ report comply with Accounting Standards AASB 124 Related Party Disclosures and the Corporations Regulations 2001, ; and

The directors have been given the declarations required under section 295A of the Corporations Act 2001 from the Managing Director and Chief Financial Officer.

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

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M A Fremder

Chairman

Melbourne, 27 August 2007

86 Select Harvests Annual Report 2007

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Independent audit report to the members of Select Harvests Limited

Report on the financial report and the AASB 124 Remuneration disclosures contained in the directors’ report

We have audited the accompanying financial report of Select Harvests Limited (the company), which comprises the balance sheet as at 30 June 2007, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration for both Select Harvests Limited and the Select Harvests Group (the consolidated entity). The consolidated entity comprises the company and the entities it controlled at the year’s end or from time to time during the financial year.

We have also audited the remuneration disclosures contained in the directors’ report. As permitted by the Corporations Regulations 2001, , the company has disclosed information about the remuneration of directors and executives (remuneration disclosures), required by Accounting Standard AASB 124 Related Party Disclosures, under the heading “remuneration report” in pages 22 to 26 of the directors’ report and not in the financial report.

Directors’ responsibility for the financial report and the AASB 124 Remunerations disclosures contained in the directors’ report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 . This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards.

The directors of the company are also responsible for the remuneration disclosures contained in the directors’ report.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. Our responsibility is to also express an opinion on the remuneration disclosures contained in the directors’ report based on our audit.

Liability limited by a scheme approved under Professional Standards Legislation.

Select Harvests Annual Report 2007

Independent audit report to the members of Select Harvests Limited (cont’d)

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report and the remuneration disclosures contained in the directors’ report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report and the remuneration disclosures contained in the directors’ report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report and the remuneration disclosures contained in the directors’ report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report and the remuneration disclosures contained in the directors’ report.

Our procedures include reading the other information in the Annual Report to determine whether it contains any material inconsistencies with the financial report.

For further explanation of an audit, visit our website http://www.pwc.com/au/financialstatementaudit.

Our audit did not involve an analysis of the prudence of business decisions made by directors or management.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 .

Auditor’s opinion on the financial report

In our opinion:

(a) the financial report of Select Harvests Limited is in accordance with the Corporations Act 2001 , including:
(i) giving a true and fair view of the company’s and consolidated entity’s financial position as at
30 June 2007 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001, and
(b) the financial statements and financial report also comply with International Financial Reporting Standards as disclosed in Note 1.

Auditor’s opinion on the AASB 124 Remuneration disclosures contained in the directors’ report

In our opinion, the remuneration disclosures that are contained in pages 22 to 26 of the directors’ report comply with Accounting Standard AASB 124.

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PricewaterhouseCoopers

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Andrew Mill Partner PricewaterhouseCoopers

Melbourne 27 August 2007

88 Select Harvests Annual Report 2007

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ASX additional information

Additional information required by the Australian Stock Exchange Limited and not shown elsewhere in this report is as follows. The information is current as at 31 July 2007.

(a) Distribution of equity securities

The number of shareholders, by size of holding, in each class of share are:

NUMBER OF ORDINARY SHARES NUMBER OF SHAREHOLDERS	NUMBER OF ORDINARY SHARES NUMBER OF SHAREHOLDERS NUMBER OF ORDINARY SHARES
1 to 1,000 1,185 1,001 to 5,000 1,143 5,001 to 10,000 275 10,001 to 100,000 269 100,001 and over 40
	The number of shareholders holding less than a marketable parcel of shares are: 83 1,318

(b) Twenty largest shareholders

The names of the twenty largest holders of quoted shares are:

LISTED ORDINARY SHARES

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NUMBER OF SHARES PERCENTAGE OF ORDINARY
1 Maxdy Nominees Pty Ltd 5,777,234 14.9
2 Almonds Australia Pty Ltd 4,500,000 11.6
3 HSBC Custody Nominees (Australia) Limited 2,506,788 6.4
4 M F Custodians Ltd 1,930,226 4.9
5 AMP Life Limited 1,077,609 2.7
6 Thurston Investments Pty Ltd 692,500 1.7
7 Invia Custodian Pty Ltd (Black A/C) 687,838 1.7
8 National Nominees Limited 675,419 1.7
9 Tom Hadley Enterprises Pty Ltd 600,000 1.5
10 John Bird 518,122 1.3
11 Ellise Investments Pty Ltd 484,797 1.3
12 Mr Petrus Cornelius Nicolaas Middendorp 460,767 1.1
13 Mid Manhattan Pty Ltd 450,442 1.1
14 Longo Pty Ltd 429,913 1.1
15 UBS Nominees Pty Ltd 408,943 1.0
16 UBS Wealth Management Australia Nominees Pty Ltd 363,477 0.9
17 Invia Custodia Pty Ltd (Wilson INVMT Fund Ltd A/C) 343,241 0.8
18 Mirrabooka Investments Limited 300,000 0.7
19 Mutual Trust Pty Ltd (Charles Baillieu A/C) 300,000 0.7
20 Cogent Nominees Pty Ltd (SMP Accounts) 228,010 0.5
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Select Harvests Annual Report 2007

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(c) Substantial shareholders

The names of substantial shareholders are:

	NUMBER OF SHARES
Maxdy Nominees Pty Ltd	5,777,234
Almonds Australia Pty Ltd	4,500,000
HSBC Custody Nominees (Australia) Limited	2,506,788

(d) Voting rights

All ordinary shares (whether fully paid or not) carry one vote per share without restriction.

(e) The Company is listed on the Australian Stock Exchange. The home exchange is Melbourne.

Select Harvests Annual Report 2007

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Select Harvests Annual Report 2007

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Select Harvests Annual Report 2007

Select Harvests Limited ABN 87 000 721 380

360 Settlement Road Thomastown Vic 3074

PO Box 5 Thomastown Vic 3074 Telephone (03) 9474 3544 Facsimile (03) 9474 3588 Email [email protected]

M A Fremder (Chairman) J Bird (Managing Director) C G Clark (Non‑Executive Director) G F Dan O’Brien (Non‑Executive Director)

P Chambers

Gadens Lawyers

Australia and New Zealand Banking Group Limited

PricewaterhouseCoopers

Computershare Investor Services Pty Limited

Yarra Falls 452 Johnston Street Abbotsford VIC 3067

Telephone (03) 9415 5040 Facsimile (03) 9473 2562

J C Leonard (Non‑Executive Director) R M Herron (Non‑Executive Director)

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Select Harvests Limited ABN 87 000 721 380

360 Settlement Road Thomastown Vic 3074

PO Box 5 Thomastown Vic 3074

Telephone (03) 9474 3544 Facsimile (03) 9474 3588

Email: [email protected]

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AI assistant

SELECT HARVESTS LIMITED — Annual Report 2007

65792_rns_2007-10-04_8b835650-c085-4a4d-bd01-73ca5cae1b43.pdf

Building a Sustainable Future

Contents

Shareholder Information

Annual General Meeting

2007/2008 Calendar

Our mission

Our strategy

Our activities

Our outlook

Our business opportunities

Our business

Marketing edible nuts

Health foods

“

Our business model

From the Chairman and Managing Director

“

Key Financial Results

Earnings per share

The year in review

Key issues encountered during the year

1. Managed Investment Schemes (MIS) Arrangements

2. Water management

3. Increasing our processing capacity

4. Enhancing our management team

Our outlook

Our board of directors

Our executive team

Orchard Development

Our orchard development

Our key activities

Future Developments

Expanding into Western Australia

Orchard Development (acres)

Ensuring our tree supply

This program involves

1. Tissue culturing laboratory

2. Rootstock seedlings

3. Budwood site and nursery

4. Orchard planting

Ensuring our tree supply – meeting the needs of future planting programs

Orchard Management

Our orchard management

Our key activities

Water Management

Investor and Company Orchards

Processing

Our primary processing

Primary processing

Our new facility

Future almond tonnage from existing trees

Almond quality

“

Future Tonnage from Existing Trees

Processing

Our Added-Value Processing

Added-value processing

Our outlook

New equipment

Our Sales and Marketing Almond pool sales

Our market position

Almond Price AUD/KG

Our outlook

USA Annual Almond Production

Sales & Marketing Almond Pool Sales Added-Value Product Sales

Our Sales and Marketing Added-Value product sales

Health benefit initiatives

Our market position

Our outlook

Our strategies for the year ahead include:

Our environment, community and people

Our environment

Our people

Our community

Statistical Summary

Financial Contents

Directors’ Report

SELECT HARVESTS LIMITED Annual Report 2007