SELECT HARVESTS LIMITED — Interim / Quarterly Report 2022

May 26, 2022

SELECT HARVESTS LIMITED ABN 87 000 721 380 AND CONTROLLED ENTITIES

HALF-YEAR INFORMATION FOR THE SIX MONTHS ENDED 31 MARCH 2022 PROVIDED TO THE ASX UNDER LISTING RULE 4.2A

This half-year financial report is to be read in conjunction with the financial report for the year ended 30 September 2021.

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Rule 4.2A.3

Appendix 4D Half Year Report for the six months to 31 March 2022

Name of entity

Select Harvests Limited

ABN 87 000 721 380

1. Reporting period

Report for the half year ended 31 March 2022

Previous corresponding period is the financial year ended 30 September 2021 and half year ended 31 March 2021

2. Results for announcement to the market

(All amounts in this report are expressed in $’000 unless otherwise stated)

. Results for announcement to the market (Allamounts inthis report are expressed in$’000 unless otherwise stated)	. Results for announcement to the market (Allamounts inthis report are expressed in$’000 unless otherwise stated)	. Results for announcement to the market (Allamounts inthis report are expressed in$’000 unless otherwise stated)
Revenues from continuing ordinary activities_(item 2.1) Down 18.9% to 68,734 Profit from continuing ordinary activities after tax attributable to members (_item 2.2) Net profit after tax attributable to members_(item 2.3)_ Up Up 22.1% 58.0% to to 3,781 2,011
Dividends(item 2.4)	Amount per security	Franked amount per security
Interim dividend	Nil	Nil
Previous corresponding period Interim dividend	Nil	Nil
Record date for determining entitlements to the interim and special dividend (item 2.5) Not applicable Brief explanation of any of the figures reported above necessary to enable the figures to be understood (item 2.6): Please refer to the attached announcement.	Not applicable

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3. Net tangible assets per security (item 3)

Net tangible asset backing per ordinary security

item 3)
Current period*	Previous corresponding period
$3.67	$3.59

• Includes Right-of-Use Assets and lease liabilities in accordance with AASB 16 Leases

4. Details of entities over which control has been gained or lost during the period: (item 4)

Control gained over entities

Name of entities (item 4.1)

Date(s) of gain of control (item - 4.2)

Contribution to consolidated profit (loss) from ordinary activities after tax by the controlled entities since the date(s) in the current period on which control was acquired (item 4.3)

$ -

Profit (loss) from ordinary activities after tax of the controlled entities for the whole of the previous corresponding period* (item 4.3)

$ -

5. Dividends (item 5)

Date of payment Total amount of dividend ($’000) Interim dividend – year ended 30 Not Applicable Nil September 2022 Interim dividend – year ended 30 Not Applicable Nil September 2021

Amount per security

	Amount per security	Franked amount per security at 30 % tax	Amount per security of foreign sourced dividend
Total dividend:Currentyear(interim)	Nil ¢	Nil ¢	Nil ¢
Previousyear(interim)	Nil ¢	Nil ¢	Nil ¢

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Total dividend on all securities

otal dividend on all securities
Ordinary securities_(each class separately) Preference securities(each class separately) Other equity instruments(each class separately)_ Total	Current period $'000	Previous corresponding period $'000
	- - -	- - -
	-	-

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

Not applicable

The last date(s) for receipt of election notices for Not applicable participation in the dividend or distribution reinvestment plan

7. Details of associates and joint venture entities (item 7)

Name of associate or joint venture entity %Securities held N/A

Aggregate share of profits (losses) of associates and joint venture entities

Group’s share of associates’ and joint venture entities’: Profit (loss) from ordinary activities before tax Income tax on ordinary activities Net profit (loss) from ordinary activities after tax Adjustments Share of net profit (loss) of associates and joint venture entities	2020 $	2019 $
	- -	- -
	- -	- -
	-	-

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8. The financial information provided in the Appendix 4D is based on the half year condensed financial report (attached), which has been prepared in accordance with Australian accounting standards.

9. Independent review of the financial report (item 9)

The financial report has been independently reviewed. The financial report is not subject to a qualified independent review statement.

10. Matters relating to a qualified independent review statement

A description of the dispute or qualification in respect of the independent review of the half-year financial report is provided below (item 17)

N/A

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SELECT HARVESTS LIMITED ABN 87 000 721 380

FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 MARCH 2022

SELECT HARVESTS LIMITED ABN 87 000 721 380

FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 MARCH 2022

TABLE OF CONTENTS

	Page
Directors' report	1
Auditor’s independence declaration	6
Financial report for the half-year ended 31 March 2022
Statement of Comprehensive Income	7
Statement of Financial Position	8
Statement of Changes in Equity	9
Statement of Cash Flows	10
Notes to the Financial Statements	11
Directors' declaration	18
Independent auditor’s review report	19

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the Annual Financial Report for the year ended 30 September 2021 and any public announcements made by Select Harvests Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001

Select Harvests Limited and Controlled Entities

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DIRECTORS’ REPORT

The directors present their report together with the financial report of Select Harvests Limited and its controlled entities (referred to hereafter as the “Company”, “the Group” or “the consolidated entity”) for the half-year ended 31 March 2022.

Directors

The directors of the Group in office at any time during or since the end of the half-year are:

M Iwaniw (Chairman) P Thompson (Managing Director) F S Grimwade F Bennett G Kingwill T Dillon (appointed 29 November 2021) N Anderson (retired 25 February 2022)

The directors have been in office, except where specifically indicated, since the start of the financial period to the date of this report.

Review of Continuing Operations

The consolidated profit after tax of the group for the half year amounted to $2.01 million (31 March 2021: $1.27 million).

Consistent with the requirements of Accounting Standard AASB 141 Agriculture, the harvested portion of the 2022 crop has been valued at the estimated fair value less costs to sell. Based on approximately 50% of the crop being harvested at balance date, 50% of the fair value of the 2022 crop has been recognised at 1H FY2022. Following review of the data from the harvested crop, the remaining unharvested crop and contracted sales, the fair value has been calculated assuming a 29,630MT crop at an average sell price of AUD$6.64/kg. This price takes into account that the FY2022 export sales forecast are fully hedged to the USD at $0.72.

Due to the significant volatility in the AUD there is a point in time mark to market adjustment recorded in Other Comprehensive Income. This position unwinds as the crop is sold and hedge contracts mature and is incorporated in the 2022 crop’s fair value calculation.

The 2022 crop experienced good growing conditions through the majority of the cycle. There were some isolated hail events that caused damage to a portion of the crop, however this did not materially impact production estimates. Conditions toward the end of the growing and harvest period were wetter and cooler than average. This has led to an extended harvesting period with completion of the final 15% of acres not expected until mid June 2022. This is likely to lead to some further reduction in volumes (as recognised in the 2022 crop fair value calculation), quality issues and additional drying requirements. Quality levels of the crop that has been processed is being monitored and to date appears to be in line with the 2021 crop however levels of inshell production are lower.

The Company has delivered a consistent yield profile as a result of an ongoing targeted horticultural program, extensive usage of horticultural technology and frost fans mitigating any potential frost impacts. Total growing costs remain well controlled and are lower overall due to the decreased temporary water price. This was partially offset by increased cost recognition for immature orchards as their maturity profile increases. Additionally, there are likely to be increased drying and processing costs related to the delay in harvest activities.

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Select Harvests Limited and Controlled Entities

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The market cost of temporary water rights continued to decline as the 2022 crop year progressed. As a result, Select’s cost of water was over 30% lower than that recognised for the 2021 crop. Additionally, re-negotiated and new water leases were entered into at attractive market rates.

Given the ongoing and forecasted wetter than average conditions, water costs for the 2023 crop are expected to remain at lower than average levels. The exposure to water price variability continues to be minimised through the Company’s diversified water policy of owning, leasing and acquiring water on the annual allocation market.

Processing rates and quality levels continue to achieve strong results following targeted investments in 2021. This is particularly important in a challenging higher moisture environment. The recent investment in the new sorting and packing line has led to increased packing throughput and less quality issues from processed product, as all product can be vacuum sealed. Processing costs for the 2022 crop are higher due to the increased percentage of crop requiring drying and the reduced level of inshell product.

Global almond prices reduced significantly in the first quarter of FY2022 and continued to remain flat in the second quarter. Buyers remained cautious as they wait to see how the high levels of physical inventory are managed out of US ports and storage facilities. Additionally, US growers are needing to convert inventory into cash to fund their 2022 crop, particularly with increased crop input, labour and water costs. The US Department of Agriculture subjective estimate of 2.8B pounds was released on 12[th] May 2022. This was in line with market expectations and pricing remains at current low levels. Pricing for inshell and higher quality product is firming however pricing for pollinators and lower quality product remains at historic lows.

Freight and logistics requirements continue to be monitored closely. Despite longer planning periods, shipments are being completed as required to most major ports. International freight rates have increased considerably, and this is contributing to the lower net almond pricing recognised.

Over the past 12 months the AUD has been volatile against the USD with peaks and dips occurring regularly. Select’s hedging policy ensures the exportable crop value is hedged as total sales value certainty increases. As almonds are traded globally in USD this has ensured that the 2022 crop is hedged at rates close to current market spot levels. The 2022 crop is fully hedged against the USD.

Operational cash flows remain in line with 1H 2021 with ongoing delays in early shipments and lower levels of inshell production (normally commenced shipping in March). Similarly to FY2021 operational cashflows will increase in 2H 2022. This is expected to further improve as working capital is released from the exit of Thomastown. Payments for property, plant and equipment increased due to upgrading of the value-add facility and the installation of the new sorting and packing line at Carina West.

The lower almond price impacted the contribution from Select’s value add activity. 2020 and 2021 crop was committed to the facility at higher than current market pricing therefore reducing margins. Additionally, there has been a period of commissioning following the implementation of new equipment and supporting infrastructure. This process is now complete, and throughput, efficiency and yield recovery levels are delivering to expectations.

Retail production at the Thomastown facility has ceased and industrial production will finish by late May. Select is on track to exit the Thomastown facility by 30[th] June 2022.

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Select Harvests Limited and Controlled Entities

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The Company’s balance sheet remains in a strong position. Inventory levels remain higher than the same period last year as the sales program slowed resulting in higher levels of 2021 crop being held and reduced 2022 inshell sales. The reported comparable inventory balance is high, in line with half year timing, as a result of capitalising a majority of the growing costs of the 2022 crop. The inventory will be unwound as the crop is sold in 2H FY2022. Property, plant and equipment has increased by a net $15M ($19M of additions) due to the purchase of new horticultural related equipment and investments made in the value-add facility to increase capacity and capability following the closure of the Thomastown facility.

The Company maintains its policy of recording land and water assets at their cost of acquisition. As at 31 March 2022, the market value of the Company’s land and water assets remains significantly higher than the book value reflected in the Balance Sheet, as detailed in the FY2021 financial statements. The Company is currently in the process of obtaining valuations for its land and water assets and this will be detailed in the FY2022 financial statements.

Debt levels as at 31 March 2022 are close to their seasonal peak. With almond prices at their current level, and a delayed sales profile, debt balances are expected to peak in May 2022 and decrease during the final quarter of FY2022.

Despite the lower H1 2022 earnings all banking covenants have been met with headroom remaining. Debt levels remain well managed and current facilities remain adequate for operations moving forward.

A Sustainability Committee has been formed by the Board. The Company continues to increase its focus on Sustainability, Environment, Social and Governance (ESG). Detailed focus areas and targets are currently being set and will be further detailed in the FY2022 financial statements. The Company has had zero environmental incidents during the current reporting period.

Based on our Annual Moving Total (MAT), the Lost Time Injury Frequency Rate (LTIFR) has reduced over the past 6 months from 11.8 at the end of FY2021 to 10.8 in March 2022, with both measures being below our annual LTIFR MAT target of 12. There were zero recorded Lost Time Injuries in November and December contributing to this improved measure as compared to the same period for the previous year. Our Medically Treated Injury Frequency Rate (MTIFR) MAT reduced from 9.6 in October 2021 to 6.9 in March 2022. Pleasingly both results are below our annual MTIFR MAT target of 11. Overall, our Total Recordable Incident Frequency Rate (TRIFR) MAT reduced from 66.3 at the end of FY2021 to 46.3, with our March 2022 result being below our TRIFR MAT target of 54. These results reflect our ongoing efforts to achieve zero harm and improved wellbeing.

Business Outlook

Since the end of FY2021 the global almond price has declined to its current historic low levels. A number of factors have led to the current price position:

• A record US 2020 3.1B pound crop followed up by a 2021 2.89B pound crop has led to a significant amount of almonds moving through the US and global supply chain. With the major logistics issues currently being faced in the Californian ports, the levels of physical inventory held has increased. This has disrupted the global almond supply chain leading to sellers becoming more impatient to sell, at lower prices, and buyers delaying purchase decisions due to uncertainty and belief that prices will decrease further.

• The ongoing impact of Covid-19 has temporarily altered the buying patterns on consumers (e.g. on-line) leading to decreased consumption of snacking nuts, almond ingredient products and hospitality related products.

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Select Harvests Limited and Controlled Entities

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Recently we are starting to see an increase in prices for premium product, namely Nonpareil inshell and high quality Nonpareil kernel. Lower quality product, of which there remains a large amount of physical stock, remains at historically low pricing levels.

The 2022 crop harvest is forecasted to complete in June 2022. Ongoing wetter than average conditions continue to hamper the completion of harvest, increasing quality risk and operational costs. The Company is currently processing harvested product through its Carina West processing facility and closely managing stock stored on stock pads and on farm due to the wetter than average conditions. With the major global markets starting to become increasingly active the Company’s focus remains on selling the remainder of the 2022 crop. Without an improvement in almond pricing, it is anticipated that the second half result will be similar to the reported first half result.

Other relevant factors are:

• Harvest activities are expected to be completed in June 2022 with higher operational costs partly offset by lower 2022 crop growing costs. Despite the wetter and more humid conditions, volumes and quality are forecasted to be in line with expectations (however inshell levels will be lower)

• 51% of the 2022 crop has been contracted for sale (including internal commitments) at or above rates assumed in the 1H FY2022 results

• The Carina West processing facility is at full production levels following the hull fire in December 2021

• Over 38% of the 2022 crop has been processed to date with no major issues identified (other than lower inshell production)

• The 2022 crop is fully hedged to the USD (almond sales are transacted in USD) at USD0.72

• Tree health for the 2023 crop is positive following strong 2022 vegetative growth and high bud load

• 2022 growing costs per kg (excluding water) are approximately 10% higher than the 2021 crop due to higher labour, crop input and electricity costs. Additionally, the impact of earlier season hailstorms and the delayed harvest has reduced the 2022 crop volume

• 2023 growing costs are expected to increase due predominantly to the higher costs of fertiliser and agricultural chemicals. Additionally recognised lease costs will increase as a number of orchards have reached their full maturity profile

• 2022 crop water commitments have completed with lower costs per kg achieved. Forecasted weather conditions are favourable and the cost of water for the 2023 crop is expected to remain at current low levels

• 2H FY2022 hull volume sales will remain consistent, with forward volumes contracted. Market prices are forecast to increase as a result of the extreme weather conditions that have/are impacting Queensland and Northern NSW

• The Thomastown processing facility will be closed by the 30[th] of June 2022 with costs lower than those provisioned in FY2021

• The value-add activity has installed new equipment and implemented new processes resulting in increased production and efficiency levels

• Debt levels are forecast to increase in May 2022 due to the delayed 2021 and 2022 sales program and will reduce by Q4 of FY2022

The ongoing impacts of Covid-19 and geopolitical conflicts on global supply chains has continued to disrupt the demand and supply fundamentals of the industry. The Company closely monitors this situation and manages its export program based on accessibility, freight rates and associated costs. Constant dialogue with global and domestic customers continues to ensure current contracts are completed and uncommitted volumes are contracted.

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Select Harvests Limited and Controlled Entities

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The Company continues to focus on:

• Selling the 2022 crop to achieve an optimal net sell price

• Benefiting from productivity gains related to its investment in new sorting and packing technology

• Opportunities to manage operating costs and improve quality across all areas of the production cycle

• Maintaining the strength of the balance sheet

• Identifying growth opportunities, particularly those that will increase the almond base

• • Optimising its investment in state of the art value adding technology. This remains a key area to add significant value to the Company with strong global demand growth continuing across numerous categories.

• Further investment in sustainability, including understanding our carbon footprint and co-waste recycling opportunities.

• Growing into new markets such as the Middle East

The Company remains well positioned through its continued low operating costs, ability to deliver large scale value-add production and strong balance sheet to benefit from a future increase in almond prices. The company remains in a unique market position where its assets are recognized on its balance sheet at cost with their related market values significantly higher.

Interim Dividend

Due to the current unfavourable market conditions and delayed harvest completion no dividend has been declared for the interim financial period.

Subsequent Events

No significant events have occurred subsequent to the reporting date.

Auditor’s Independence Declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 6.

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 Corporations (Rounding in Financial/ Directors’ Reports) Instrument 2016/191. The Company is an entity to which the Class Order applies.

Signed in accordance with a resolution of the directors:

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Michael Iwaniw Chairman Dated 27 May 2022

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Auditor’s Independence Declaration

As lead auditor for the review of Select Harvests Limited for the half-year ended 31 March 2022, 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 review; and

• (b) no contraventions of any applicable code of professional conduct in relation to the review.

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

Alison Tait Partner PricewaterhouseCoopers

Melbourne 27 May 2022

2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001

PricewaterhouseCoopers, ABN 52 780 433 757 T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

Select Harvests Limited and Controlled Entities

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STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 MARCH 2022

Note Continuing operations Revenue Sales of goods and services Other revenue Total revenue Other income Fair value adjustment of biological assets 3.1 Gain on sale of assets Total other income Expenses Cost of sales Distribution expenses Occupancy expenses Administrative expenses Finance costs Others Profit/ (Loss) before income tax Income tax expense 2.2 Profit/ (Loss) from continuing operations Profit/ (Loss) from discontinued operations 5.2 Profit/ (Loss) for the half-year attributable to members of Select Harvests Limited Other Comprehensive Income Items that may be reclassified to profit or loss Changes in fair value of cash flow hedges, net of tax Other Comprehensive Income for the period Total Comprehensive Income Attributable to Members Of Select Harvests Limited Total Comprehensive Income Attributable to Members of Select Harvests Limited arises from: Continuing operations Discontinued operations Earnings per share for profit from continuing operations attributable to the ordinary equity holders of the company: Basic earnings per share (cents per share) Diluted earnings (cents per share) Earnings per share for profit attributable to the ordinary equity holders of the company: Basic earnings per share (cents per share) Diluted earnings (cents per share)

31 March 2022 $’000 31 March 2021 $’000 68,582 84,586 151 164 68,734 84,750 4,052 (8,675) 281 453 4,333 (8,222) (57,593) (63,021) (230) (350) (73) (72) (8,278) (7,186) (1,665) (1,150) 174 (317) 5,402 4,423 (1,621) (1,327) 3,781 3,096 (1,770) (1,823) 2,011 1,273 7,626 (568) 7,626 (568) 9,637 705 11,407 2,528 (1,770) (1,823) 9,637 705 3.1 2.6 3.1 2.6 1.7 1.1 1.7 1.1

The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

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Select Harvests Limited and Controlled Entities

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2022

Note CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories Biological assets 3.1 Current tax receivable Derivative financial instruments Total Current Assets NON-CURRENT ASSETS Other receivables Property, plant and equipment Right-of-use assets 3.2 Intangible assets 3.3 Total Non-Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Borrowings 3.4 Lease liabilities 3.5 Derivative financial instruments Deferred gain on sale Provisions Total Current Liabilities NON-CURRENT LIABILITIES Other Payables Borrowings 3.4 Lease liabilities 3.5 Deferred tax liabilities Deferred gain on sale Provisions Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity 4.1 Reserves Retained profits TOTAL EQUITY	31 March 2022 $’000 30 September 2021 $’000 1,120 1,995 35,945 84,842 140,208 114,316 65,754 51,321 392 5,286 4,077 78
	247,496 257,838
	1,825 1,825 452,598 437,607 211,436 222,550 86,801 83,985
	752,660 745,967
	1,000,156 1,003,805
	46,920 64,967 21,947 5,063 30,710 31,661 - 3,626 175 175 8,754 10,558
	108,506 116,050
	1,902 2,761 105,000 95,000 212,211 221,494 38,851 38,851 2,189 2,277 405 416
	360,558 360,799
	469,064 476,849
	531,090 526,956
	401,164 397,343 15,583 7,657 114,343 121,956
	531,090 526,956

The above Statement of Financial Position should be read in conjunction with the accompanying notes.

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Select Harvests Limited and Controlled Entities

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STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 MARCH 2022

Balance at 1 October 2020 Profit for the period Other Comprehensive Income Total comprehensive income for the half year Transactions with equity holders in their capacity as equity holders: - Contributions of equity, net of transaction costs and deferred tax (note 4.1) - Dividend paid (note 2.3) - Employee performance rights reserve - Placement and Share Purchase Plan - net of transaction cost and deferred tax Balance at 31 March 2021 Balance at 1 October 2021 Profit for the period Other Comprehensive Income Total comprehensive income for the half year Transactions with equity holders in their capacity as equity holders: - Contributions of equity, net of transaction costs and deferred tax (note 4.1) - Dividend paid (note 2.3) - Employee performance rights reserve Balance at 31 March 2022	Contributed Equity $’000 Reserves $’000 Retained Earnings $’000 Total $’000 279,096 14,280 111,634 405,010 - - 1,273 1,273 - (568) - (568)
	- (568) 1,273 705
	1,962 - - 1,962 - - (4,794) (4,794) - 150 - 150 116,752 - - 116,752
	397,810 13,862 108,113 519,785
	397,343 7,657 121,956 526,956 - - 2,011 2,011 - 7,626 - 7,626
	- 7,626 2,011 9,637
	3,821 - - 3,821 - - (9,624) (9,624) - 300 - 300
	401,164 15,583 114,343 531,090

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

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Select Harvests Limited and Controlled Entities

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STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 MARCH 2022

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Interest paid Income tax received/ (paid) Net cash inflow/ (outflow) from operating activities CASH FLOW FROM INVESTING ACTIVITIES Proceeds from government grant Proceeds from sale of property, plant and equipment Proceeds from sale of water rights Payment for water rights Payment for property, plant and equipment Payment for license Payment for orchard acquisitions Payment for tree development costs Net cash (outflow) from investing activities CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issue of shares Proceeds from borrowings Repayments of borrowings Principal elements of lease payments Dividend payment on ordinary shares, net of Dividend Reinvestment Plan Net cash inflow from financing activities Net increase/ (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the half-year Cash and cash equivalents at the end of the half-year Reconciliation to cash at the end of the period: Cash and cash equivalents Bank overdraft

31 March 2022 $ ‘000 31 March 2021 $ ‘000 134,484 133,945 (115,446) (114,398) 19,038 19,547 5 23 (7,807) (7,691) 4,032 (5,612) 15,267 6,267 5 - 1,023 787 369 - (3,422) (17,857) (19,331) (10,870) (49) - - (124,872) (4,732) (10,109) (26,137) (162,921) - 115,382 71,750 179,590 (41,750) (116,920) (11,086) (10,948) (5,803) (2,832) 13,111 164,272 2,241 7,618 (3,068) (4,784) (827) 2,834 1,120 2,834 (1,947) - (827) 2,834

The above Statement of Cash Flows includes both continuing and discontinued operations and should be read in conjunction with the accompanying notes. Amounts related to discontinued operations are disclosed in Note 5.2

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SELECT HARVESTS LIMITED AND CONTROLLED ENTITIES ABN 87 000 721 380

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1. BASIS OF PREPARATION

1.1 Basis of preparation of half-year report

This general purpose financial report for the half-year ended 31 March 2022 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001 .

This half-year financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual financial report for the year ended 30 September 2021 and any public announcements made by Select Harvests Limited during the half-year reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 .

The accounting policies adopted are consistent with those of the previous annual financial report, except for the policies stated below.

New or amended Accounting Standards and Interpretations adopted during the financial year

The Group has adopted all relevant new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period. These do not have a material effect on the Group’s financial statements.

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Rounding

The amounts contained in this half year financial report have been rounded to the nearest $1,000 (where rounding is applicable) under the option available to the Company under ASIC Corporations (Rounding in Financial/ Directors’ Reports) Instrument 2016/191. The Company is an entity to which the Class Order applies.

1.2 Comparative Information

The Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows provide comparative information for the half-year ended 31 March 2021. The Statement of Financial Position provides comparative information as at 30 September 2021.

Where necessary, the comparatives have been reclassified and repositioned to be consistent with the current year disclosures.

1.3 Critical Accounting Estimates and Assumptions

The consolidated entity makes estimates and assumptions concerning the future. The resulting accounting estimates may not equal the related actual results. In addition to those critical accounting estimates and assumptions disclosed in the Group's previous annual financial report, the estimates and assumptions that have a risk of causing a material adjustment to the carrying amounts of assets and liabilities within the current and next financial year are discussed below.

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SELECT HARVESTS LIMITED AND CONTROLLED ENTITIES ABN 87 000 721 380

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Inventory - Prior Year’s Almond Crop

As at 31 March 2022 the Company held stock related to the 2021 almond crop. These almond stocks have been subject to both price and volume variations from estimates previously reflected in the Company’s accounts. The prior year stock values as at 31 March 2022 are:

2021 crop year $29.7M

At the date of this report the majority of the 2021 crop year stock balance is forecast to be sold in the domestic and export markets as well as being used internally.

Inventory - Current Year Almond Crop

A portion of the current year almond crop is classified as a biological asset and valued in accordance with AASB 141 "Agriculture". In applying this standard, the consolidated entity has made various assumptions at the interim balance date as approximately 50% of the current year’s almond crop has been harvested and 16% processed. The actual crop yield will not be known until it is completely harvested, processed and sold. The assumptions are the estimated average almond selling price at the point of harvest of $6.64 per kg and almond yield based on a crop estimate for Company Orchards of 29,630 metric tonnes. This gives a fair value adjustment made during the half year, at 50% amounting to $15.5M.

Carrying value of intangible assets

The Company has one cash generating unit (CGU) for which impairment testing is completed in accordance with the accounting policy stated in Note 3.7 of the FY2021 Annual report. Goodwill is not amortised but tested annually for impairment or more frequently if events or changes in circumstances indicate that it might be impaired.

As at 31 March 2022 the reduction of the global almond price and forecasted increases in fertiliser and crop chemical costs for the 2023 and 2024 crops were considered by the Company as indicators of impairment, resulting in the completion of impairment testing as at 31 March 2022. Impairment testing concluded that the recoverable amounts of the cash generating unit exceeded the carrying value.

Key assumptions and sensitivities are disclosed in Note 3.3.

Discontinued Operations

The Company disposed of the Consumer Brands section of the business on 30 September 2021. As part of the sale agreement of the Consumer Brands, the Company entered into a 6 month copacking agreement to produce Lucky and Sunsol products on behalf of Prolife Foods Pty Ltd . As the co-packing agreement is a result of the sale of the Consumer brands business, the associated revenue and expenses have been disclosed as discontinued operations in note 5.2.

The Thomastown factory is in a staggered approach to winding down operations with production levels decreasing in line with contracts and managing current employees through redundancy and re-deployment options. The Company will have fully exited from the Thomastown site by 30 June 2022.

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SELECT HARVESTS LIMITED AND CONTROLLED ENTITIES ABN 87 000 721 380

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RESULTS FOR THE HALF-YEAR

2.1 Segment Information

Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer.

Segment products and locations

Following the sale of the Consumer Foods Branded business, the reporting and operational information internally presented to the Chief Executive Officer has been adjusted. The Chief Executive Officer and Executive Management now assess the performance of the Group on an integrated and consolidated basis.

The Group grows, processes and value-adds to almonds from company owned and leased almond orchards. Raw and processed product is exported or sold domestically to consumers and Business to Business for industrial related almond products. The Group operates predominantly within the geographical area of Australia. The total of the reportable segment results, profit, assets and liabilities is the same as that of the Consolidated Group as a whole and as disclosed in the Statement of Comprehensive Income and the Statement of Financial Position.

2.2 Numerical Reconciliation Of Income Tax Expense To Prima Facie Tax Payable

Profit from continuing operations Tax at the Australian tax rate of 30% (2021 – 30%) Income tax expense	31 March 2022 $’000 31 March 2021 $’000 5,402 4,423 (1,621) (1,327)
	(1,621) (1,327)

2.3. Dividends

2.3. Dividends
	31 March 2022	31 March 2021
	$’000	$’000
(a) Dividends paid during the half-year
Total dividends paid during the half-year	9,624	4,794

(b) Dividends not recognised at the end of the half-year:

In addition to the above dividends, since the end of the half-year the directors have not declared an interim dividend (31 March 2021: Nil cents fully franked per fully paid ordinary share). The aggregate amount of the declared dividends but not recognised as a liability at the end of the half-year, is:

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SELECT HARVESTS LIMITED AND CONTROLLED ENTITIES ABN 87 000 721 380

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ASSETS AND LIABILITIES

3.1 Biological Assets

	31 March	30 September
	2022	2021
	$’000	$’000
Growing almond crop	65,754	51,321
Reconciliation of changes in carrying amount of biological assets
Opening balance	51,321	42,432
Increases due to purchases/ growing costs	80,187	171,298
Decreases due to harvest (i)	(81,220)	(195,433)
Gain arising from changes in fair value (ii)	15,466	33,024
Closing balance	65,754	51,321

(i) Includes biological assets reclassified as inventory at the point of harvest

• (ii) Includes physical changes as a result of biological transformation such as growth. Net increments in the fair value of the growing assets are recognised as income in the Statement of Comprehensive Income.

Fair value adjustment of biological assets recognised in the Statement of Comprehensive Income relates to:

• the recognition of 2022 crop fair value margin throughout growth, accrued evenly between harvests and taking into account major cash outflows (31 March 2021: 2021 crop fair value margin)

• the unwinding of 2020 and 2021 crop fair value margin previously recognised, at the point of sale (31 March 2021: 2020 crop fair value margin)

The movement is disclosed as follows:

The movement is disclosed as follows:
	31 March	31 March
	2022	2021
	$’000	$’000
Fair value margin recognised on 2022 almond crop (31 Mar
2021: 2021 almond crop)	15,466	6,270
Unwinding of fair value margin recognised on 2020 and 2021
crop upon sales (31 Mar 2021: 2021 and 2020 crop)	(11,414)	(14,945)
	4,052	(8,675)

3.2. Right-Of-Use Assets

Property Plant and equipment Orchards	31 March 2022 $’000 30 September 2021 $’000 219 599 7,747 9,668 203,470 212,283
	211,436 222,550

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SELECT HARVESTS LIMITED AND CONTROLLED ENTITIES ABN 87 000 721 380

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3.3 Intangibles

Intangibles include goodwill ($26.0M), permanent water rights ($58.3M) and software ($2.5M).

(a) Impairment tests for goodwill

In accordance with AASB 136 Impairment, the Company undertook an annual impairment assessment at 30 September 2021. The recoverable amount of the cash-generating unit (CGU) was determined based on a value-in-use calculation which uses cash flow projections based on financial budgets and forecasts approved by management and the Board covering a five-year period. The cash flow projections take into account past performance and the Company’s expectations for the future.

The standard also requires the Company to assess at each reporting period whether there is any indication that an asset may be impaired. At 31 March 2022, the Company had observed that two of its key assumptions used in the value-in-use calculations for impairment assessment, being the decline in almond price and increase in growing crop costs, had observable indications that the asset’s value might be impaired.

Based on the revised assumptions used for the impairment assessment at 31 March 2022, the Company’s implied value-in-use was above the carrying value of its assets. Therefore, no impairment adjustments were necessary.

(b) Impact of possible changes to key assumptions

Based on impairment testing performed at 31 March 2022, the recoverable amount of the goodwill exceeds its carrying amount. The Directors and management have considered and assessed reasonably possible changes in key assumptions. The recoverable amount of the CGU would equal its carrying amount if the key assumptions were to change as follows:

• Almond price growth between FY23 – FY26 reduced from 15.71% to 15.26%

• Post-tax discount rate increase from 7.5% to 7.57%

These changes would be considered reasonably possible changes to the key assumptions.

3.4 Borrowings

3.4 Borrowings
Current- Secured Bank overdraft Borrowings Non-Current- Secured Borrowings	31 March 2022 $’000 30 September 2021 $’000 1,947 5,063 20,000 -
	21,947 5,063
	105,000 95,000

The facility on the bank overdraft has a credit limit of USD5m. At 31 March 2022, the undrawn overdraft facility amounted to USD3.54m.

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SELECT HARVESTS LIMITED AND CONTROLLED ENTITIES ABN 87 000 721 380

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3.5. Lease Liabilities

3.5. Lease Liabilities
Current Lease liabilities Non-Current Lease liabilities	31 March 2022 $’000 30 September 2021 $’000 30,710 31,661
	212,211 221,494

4. CAPITAL STRUCTURE

4.1. Equity Securities Issued

31 March 2022 Shares No 31 March 2021 Shares No Issues of ordinary shares during the half-year Placement and Share Purchase Plan - net of transaction cost and deferred tax(i) - 23,082,383 Dividend reinvestment scheme issues 649,953 379,116 Long term incentive plan – tranche vested 76,495 125,858 Contributions to equity	31 March 2022 $’000 31 March 2021 $’000 - 116,752 3,821 1,962 - -
	3,821 118,714

(i) Capital raising completed in October 2020 as part of the Piangil acquisition.

5. Other information

5.1. Asset Acquisitions

(a) Summary of Acquisitions

On 18 December 2020, Select Harvests completed the acquisition of Piangil Almond Orchard (which was previously announced on 1 October 2020) for $129 million. The acquisition amount comprised of 3,870 acres of almond orchards, 1,584 acres of unplanted land, 2,499ML of permanent water and farm equipment.

The final fair values of assets recognised as a result of the acquisitions, which are unchanged from FY2021 reporting, are as follows:

Plantation land and irrigation systems Buildings Bearer Plants Plant and equipment Permanent water rights Net identifiable assets Net cash outflow on acquisition Total purchase consideration	$’000 30,641 806 84,267 152 13,134
	129,000
	129,000
	129,000

The above amount excludes stamp duty and transaction costs which amounted to $9.31 million and were capitalised proportionately to the above asset base.

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SELECT HARVESTS LIMITED AND CONTROLLED ENTITIES ABN 87 000 721 380

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5.2. Discontinued Operation

(a) Description

On 30 September 2021, the sale of the Consumer Brands was completed. As part of the sale agreement of the Consumer Brands, the Company entered into a 6 month co-packing agreement to produce Lucky and Sunsol products on behalf of Prolife Foods Pty Ltd . As the co-packing agreement is a result of the sale of the Consumer brands business, the associated revenue and expenses have been disclosed as discontinued operations.

(b) Financial performance and cash flow information

Revenue Expenses Underlying EBIT Interest expense Restructuring expense (Loss) before income tax Income tax benefit (Loss) after income tax Net cash inflow/ (outflow) from ordinary activities Net cash inflow/ (outflow) from investing activities Net increase/ (decrease) in cash generated by the business Basic (loss) per share from discontinued operations Diluted (loss) per share from discontinued operations	31 March 2022 $’000 31 March 2021 $’000 27,167 31,303 (29,673) (33,897)
	(2,506) (2,594)
	(23) (11) - -
	(2,529) (2,605) 759 782
	(1,770) (1,823)
	5,496 (2,858) - (176)
	5,496 (3,034)
	31 March 2022 Cents 31 March 2021 Cents (1.5) (1.6) (1.5) (1.6)

5.3. Events Occurring After The Balance Sheet Date

No significant events have occurred subsequent to reporting date.

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SELECT HARVESTS LIMITED AND CONTROLLED ENTITIES ABN 87 000 721 380

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DIRECTORS’ DECLARATION

In the directors’ opinion:

• a) the financial statements and notes set out on pages 7 to 17 are in accordance with the Corporations Act 2001 including:

• i) complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

• ii) giving a true and fair view of the consolidated entity’s financial position as at 31 March 2022 and of its performance for the half-year ended on that date; and

• b) there are reasonable grounds to believe that Select Harvests Limited will be able to pay its debts as and when they become due and payable.

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

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Michael Iwaniw Chairman Dated 27 May 2022

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Independent auditor's review report to the members of Select Harvests Limited

Report on the half-year financial report

Conclusion

We have reviewed the half-year financial report of Select Harvests Limited (the Company) and the entities it controlled during the half-year (together the Group), which comprises the consolidated statement of financial position as at 31 March 2022, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, significant accounting policies and explanatory notes and the directors' declaration.

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the accompanying half-year financial report of Select Harvests Limited does not comply with the Corporations Act 2001 including:

1. giving a true and fair view of the Group's financial position as at 31 March 2022 and of its performance for the half-year ended on that date

2. complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

Basis for conclusion

We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity (ASRE 2410). Our responsibilities are further described in the Auditor’s responsibilities for the review of the half-year financial report section of our report.

We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to the audit of the annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

Responsibilities of the directors for the half-year financial report

The directors of the Company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that gives a true and fair view and is free from material misstatement whether due to fraud or error.

Auditor's responsibilities for the review of the half-year financial report

Our responsibility is to express a conclusion on the half-year financial report based on our review. ASRE 2410 requires us to conclude whether we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including giving a true

PricewaterhouseCoopers, ABN 52 780 433 757 2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001 T: 61 3 8603 1000, F: 61 3 8603 1999

Liability limited by a scheme approved under Professional Standards Legislation.

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and fair view of the Group's financial position as at 31 March 2022 and of its performance for the halfyear ended on that date, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

PricewaterhouseCoopers

Alison Tait Partner

Melbourne 27 May 2022