SELECT HARVESTS LIMITED — Investor Presentation 2021

Jul 27, 2021

Click to edit Master title style Select Harvests Limited (ASX:SHV)

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Disclaimer & Basis of Preparation Click to edit Master title style

This presentation is provided for information purposes only and has been prepared using information provided by the company. The information contained in this presentation is not intended to be relied upon as advice to investors and does not take into account the investment objectives, financial situation or needs of any particular investor. Investors should consider their own individual investment and financial circumstances in relation to any investment decision.

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

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

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Select Harvests Overview

One of the worlds largest almond growers, with a geographically diverse 9,262-hectare orchard portfolio Click to edit Master title style

• Listed on the ASX (SHV), with a market capitalisation of A$ 926m (26 July 2021) and 530 employees.

Company Overview

  - Australia’s second largest almond producer and marketer with core capabilities across: Horticulture, Orchard Management, Nut Processing, Sales and Marketing.

  - We supply the retail and industrial markets, exporting almonds globally. Continuing to build relationships in the fast-growing markets of India and China, as well as maintaining established routes to market in Asia, Europe and the Middle East.

  - Geographically diverse almond orchards located in Victoria, South Australia and New South Wales, with a portfolio that includes more than 9,262 hectares of company owned and leased almond orchards and land suitable for planting.

• Orchard  Select Harvests weighted average almond orchard age is 13.6 years, with 98% of current planted hectares cash generative. Almond Profile orchards remain economically viable for +25 years, providing Select Harvests with a solid foundation for long term growth.

  • Our state-of-the-art Carina West processing facility has the capacity to process above 30,000 MT of almonds in the peak season and is capable of meeting the ever-increasing demand for in-shell, kernel and value-added product.

  • The global almond market was valued at U.S.$ 8.6bn in 2020/21. The U.S. (California) accounted for 79% of world production in 2020/21, followed by Australia and Spain at 7% each. Australia has more than doubled its almond production in the last 10 years.

• Almond  The underlying fundamentals of our business remain strong. Demand for almonds, both in their natural form and as a value-added Market food ingredient, in products such as plant-based milks and yogurts, continues to grow.

  • Australian Exports Year on Year (March – May) almond exports are up 67%, with the South/Central Asia (India) market up 306%, Europe up 20% and the Northeast Asia (China) market up 46% during the period.

  • Select Harvests remains well positioned through its low operating costs, ability to deliver large scale value-added production and strong balance sheet to benefit from the growing global demand for almonds.

• Growth  Our investment in greenfield developments and orchard acquisitions, including the December 2020 acquisition of the 1,566-hectare Strategy Piangil Almond Orchard, will platform long term growth.

• We continue to assess opportunities to increase our almond production base through acquisitions, if suitable orchards become available.

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Select Harvests Strategy Select Harvests – in control of our destiny Click to edit Master title style

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Triple Bottom Line Focus Sustainability is embedded in everything we do Click to edit Master title style

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People
Ethics & Integrity, OHS &
Wellbeing, Inclusion &
Diversity, Human Health &
Nutrition, Food Safety,
Sourcing Sustainability
Profit
Positive absolute
Planet
shareholder returns,
Resource Efficiency, 20% or higher EPS
Sustainable Farm CAGR over 3 years, TSR
at or above 75 [th]
Management, Climate
Change & Water, Bee percentile over 3 years,
Stewardship for capital deployment
ROCE> WACC [1]
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www.selectharvests.com.au/sustainability

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Operating Performance

Continue to maintain better than industry standard yields, with a record almond crop estimated for 2021 Click to edit Master title style

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2021 Almond Crop Forecast
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28,250 MT

Continue to maintain better than industry standard yields. Record almond crop, with the inclusion of the Piangil Almond Orchard.

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Almond Processing

Over 70% of the 2021 total crop has been processed to date with no major issues identified. Prior year capital investment in an inshell sorter has paid off, with the 2021 YTD inshell yield higher than the 2020 total.

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Current Market Price

$A 6.75 – 7.25/kg

65% of the 2021 SHV crop contracted for sale 2021 Objective Estimate for the U.S. almond crop has reset price expectations moving forward

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2022 Almond Crop
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The development of Select Harvests’ 2022 crop is progressing well, with good tree health and sufficient chill hours. Focused on Covid-19 related staff safety and management. Industry stakeholder agreement in place for bee delivery

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Currency
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$0.73 AUD/USD
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Over 90% of crop export sales hedged at approx. $0.73

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Piangil Almond Orchard

2021 crop of approximately 4,700MT, inline with expectations. Orders for harvest equipment in place. Fumigation has been upgraded. Still further opportunities to upgrade crop quality.

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Recent Performance in Context

The company remains focused on factors within its control such as almond volume, Click to edit Master title style quality and production costs

Almond Volume

Almond Price

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Total Almond Production Cost

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NPAT

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5 Yr Average
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2021/22 Focus Areas

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Co-Waste Commercialisation
Seeking a license to sell surplus
compost to third parties
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Water Efficiency
100% of our orchards use drip
irrigation tree and soil monitoring
systems
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Planet
People
Profit
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Sustainability

Develop sustainability targets to build on 2020 Sustainability Report

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HRIS System
HRIS System to be implemented over
the next 12 months
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Investment in Skills

Securing & Protect Labour

Commenced securing harvest labour for 2022. Ensuring a Covid safe workplace for all employees.

Graduate program and ongoing career development in place

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Carina West Investment

Water Costs

Increase the volume and range of value-added almond products to integrate Thomastown capacity

Lower water costs to flow into FY 2022, with estimated savings of $6m to $8m due to favourable carryover rates

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Almond Market

Significant growth in global demand across all markets

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• Almond shipments are occurring at an unprecedented pace, with historic monthly U.S. shipment records being set in 10 out of the 11 months of the season to date (August 2020 to June 2021)

• Combined Australian and U.S almond export shipments were significantly higher over the last 3, 6 and 12 month periods of 2020/21 vs. the same corresponding periods in 2019/20.

• Latest monthly export figures show Australian export sales up 87% in May 2021 vs. May 2020, with June 2021 U.S. shipments up 26% vs. June 2020

• Growing consumer demand for healthy snacking and plant-based & vegan diets in all markets will continue to underpin strong global demand growth.

• Almonds remain the leading nut type for introductions into new consumer food products such as milks, confectionary and butters. This is resulting in increasing demand for value added manufactured almonds.

• According to Innova Market Insights, there were approximately 12,000 new global almond product instruction in CY 2020, with Australian almond introductions increasing by 20% CAGR between 2010 and 2020, reaching 386 new products in 2020.

Combined Australian and U.S. Almond Exports

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Click to edit Master title style Thank You

Please direct any queries to:

Paul Thompson Brad Crump Andrew Angus Managing Director CFO and Company Secretary Investor Relations +61 3 9474 3544 +61 3 9474 3544 +61 402 823 757

Investor Relations

Please note that background material/data regarding the global almond industry can be found on the Select Harvests Limited website.

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Orchard Portfolio

One of the worlds largest almond growers, with a geographically diverse 9,262 hectare Click to edit Master title style orchard portfolio

Select Harvests Orchard Map[1]

Benefits of Geographic Diversity & Scale

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• Geographic diversity limits exposure to:

• Weather

• Disease spread

• Insect infestation

• Positions the company to maximise harvest volume and reduce variance

• Enables sequential progression of harvest period across regions for better utilization of:

• Farm equipment

• Processing

• Labour

• Secure access to diverse water sources:

• River Water

• Aquifers

• Maximises economies of scales to achieve

• Global bottom quartile almond farming and processing costs

• Scalable adoption of proven on-farm technologies and processes

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Orchard Profile

2.6x growth in planted hectares since 2012[1] Click to edit Master title style

Select Harvests Orchard Profile

Select Harvests Planted Almond Hectares[1]

Select Harvests		Total Planted
Almond orchard portfolio	(as at	30 September 2020)
	hectares	acres
Central Region
Company Owned	1,693	4,183
Piangil Orchard	1,566	3,870
Leased	1,385	3,422
Total	4,644	11,475
Northern Region
Company Owned	727	1,797
Leased	1,221	3,017
Total	1,948	4,814
Southern Region
Company Owned	1,120	2,769
Leased	1,549	3,828
Total	2,670	6,597
Total
Company Owned	5,107	12,619
Leased	4,155	10,267
Total	9,262	22,886

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1 Excludes West Australia orchards which were sold by Select Harvests in 2016

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Orchard Age

Following the Piangil Almond Orchard acquisition, Select Harvests weighted average Click to edit Master title style orchard age is 13.6 years, with 98% of current planted hectares cash generative

Age Profile of Select Harvests Almond Orchards[1]

(98% of current planted hectares are cash generative)

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1 Tree age is in reference to the 2021 crop

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Volume Growth

Our investment in greenfield developments and orchard acquisitions will platform long Click to edit Master title style term growth

Select Harvests Theoretical Harvest Volume (2021 – 2028)[1]

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1 The almond crop is biennial in nature with expected +/- 10% per annum variation in tonnage 2 Assuming a 3.3MT per ha (1.35MT per acre) maturity profile for Select Harvests’ orchards and immature yields based on the average of the 2019 and 2020 crops Click to edit Master text styles

3 Assuming a 3.5MT per ha (1.4MT per acre) maturity profile for Piangil Almond Orchard.

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Almond Shipment Update

U.S. and Australian almond shipments have responded strongly to lower almond prices Click to edit Master title style

U.S Shipments: Carry-in from 2019 crop Estimated 2020 crop size Less 2% loss/exempt Less shipments to date: US Domestic: Shelled Manufactured Products Inshell Internal Industry Activity Total Domestic Export: North East Asia (inc. China) Sth East Asia (inc. Vietnam) Sth Asia (inc. India) Europe Mid East/Africa Others Total Export Less Commitments Remaining Unsold Supply**	2020/21 Crop YTD (Million Lbs.) Aug 2020 to June 2021 450 3,110 62 493 344 6 3 -110 737 327 61 366 717 334 127 1,932 496 333	2019/20 Crop YTD (Million Lbs.) Aug 2019 to June 2020 318 2,534 51 464 325 6 5 -95 706 238 38 254 596 255 106 1,486 370 239	% Change
			41.4%
			22.7%
			21.6%
			6.3%
			5.9%
			2.3%
			(36.4%)
			16.5%
			4.4%
			37.6%
			62.8%
			44.0%
			20.3%
			31.2%
			18.9%
			30.0%
			34.0%
			39.6%

Australian Shipments: Exports: Nth East Asia (inc. China) Sth East Asia (inc. Vietnam) Sth/Central Asia (inc India) Europe Mid East/Africa Others Total Exports	2020/21 Crop YTD (MT) Mar 2021 to May 2021 7,472 1,642 4,295 2,538 1,396 768 18,111	2019/20 Crop YTD (MT) Mar 2020 to May 2020 5,102 442 1,059 2,110 700 1,431 10,844	% Change
			46.5%
			271.5%
			305.6%
			20.3%
			99.4%
			(46.3%)
			67.0%

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Source: Almond Board of California and Almond Board of Australia 1 Estimates sourced from Derco Foods April 2021 and April 2020 Almond Reports

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California Drought Monitor

95% of California is currently in a Severe Drought, with 86% of the state in Extreme Drought and Click to edit Master title style 33% in Exceptional Drought

U.S. Drought Monitor California (July 20, 2021)

July 20, 2021

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July 20, 2020

Points to Note

• 86% of California is currently experiencing Extreme Drought, with the state on track for one of the driest years in modern history.

• Almonds are relatively tolerant to drought from a survival standpoint; however, yields are impacted when water applications are reduced.

Water shortages caused by the drought could lead to lower yields and smaller nut sizes distribution for both the 2021 and 2022 Californian almond crops.

High water costs due to the Extreme Drought and the impact of California’s Sustainable Groundwater Management Act (SGMA)* are leading some Californian almond growers to accelerate the removal of planted acres and reduce new plantings.

SGMA requires governments and water agencies of high and medium priority basins to halt overdraft and bring groundwater basins into balanced levels of pumping and recharge.

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Source: National Centres for Environmental Information, North American Drought Monitor

• www.water.ca.gov/programs/groundwater-management/sgma-groundwater-management

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Global Almond Product Introductions

Almonds remain the leading nut type for introductions into new consumer food products globally. Click to edit Master title style This is resulting in increasing demand for value-added manufactured almonds.

Global New Nut Introductions by Type (2013 to 2020)

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Source: Innova Market Insights, May 2021

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Australian Almond Product Introductions

Australian almond introductions increased by 20% CAGR between 2010 and 2020, reaching 386 Click to edit Master title style new products in 2020

Australian New Almond Introductions (2010 to 2020)

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Source: Innova Market Insights, May 2021

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Useful Almond Industry Websites

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Industry Associations

• Californian Almond Board

www.almondboard.com

• Almond Board of Australia

www.australianalmonds.com.au

Industry Reports

• US Crop Forecasts (Subjective, Objective)

• Monthly Almond Position Reports

• Almond Almanac

• UC Davis Almond Development Costings

https://www.almonds.com/tools-and-resources/crop-reports https://www.almonds.com/tools-and-resources/crop-reports/position-reports https://www.almonds.com/tools-and-resources/crop-reports/almond-almanac https://coststudies.ucdavis.edu/en/current/commodity/almonds/

Almond Companies

• Blue Diamond Growers

www.bluediamond.com

• Blue Diamond Ingredients

• Almond Insights

• Derco Foods

• RPAC Almonds

• Wonderful Pistachios & Almonds

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

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

www.wonderfulpistachiosandalmonds.com/#ourdifference

Definition & Explanations

1EBITDA, EBIT & ROCE are Non-IFRS measures used by the company are relevant because they are consistent with measures used internally by management and by some in the investment community to assess the operating performance of the business. The non-

IFRS measures have not been subject to audit or review. Click to edit Master text styles

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