SELECT HARVESTS LIMITED — Investor Presentation 2021

Feb 25, 2021

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

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Select Harvests Board Click to edit Master title style

• Michael Iwaniw, Chairman, Appointed Chairman November 2011 *

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

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

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

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

• Guy Kingwill, Non-Executive Director, Appointed November 2019  Paul Thompson, Managing Director, Appointed July 2012

• Standing for election

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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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Agenda Click to edit Master title style

• Chairman’s Address

• FY2020 Review

• Strategy Update

• Company and Market Outlook

• Managing Director’s Address

• Sustainability Report

• Almond Division Outlook

• Food Division and Corporate Outlook

• 2020/21 Priorities

• AGM Resolutions

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Virtual Meeting Guidelines Click to edit Master title style

Today’s meeting is being held online via the Lumi platform. This allows Shareholders, Proxies and Guest to attend the meeting virtually. All attendees can watch a live webcast of the meeting. In addition, shareholders and proxies have the ability to ask questions and submit votes.

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Online Attendees – Question Process Click to edit Master title style

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Online Attendees - Voting Process Click to edit Master title style

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Chairman’s Address

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FY2020 Financial Overview

Stable earnings, solid margins and low net debt. Timing of operating cash flows impacted Click to edit Master title style by COVID-19. The company did not receive Job Keeper support.

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$57.8m
23.3% Margin
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Earnings per Share
(Basic)
$25.0m $57.8m 26 cents
Final dividend of 4c fully franked
10.1% Margin 23.3% Margin
DRP with 2.5% discount
Net Debt to Equity Return on Operating Cash Flow
Shareholders Equity
Operating Cash Flow
14.2% $13.2m
6.2%
Timing of cash flows impacted $13.2m
(Excluding lease liabilities) by COVID-19
Timing of cash flows impacted
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• 1 - Non-IFRS measure used by the company are relevant because they are consistent with measures used internally by management and by some in the investment community to Click to edit Master text styles assess the operating performance of the business. The non-IFRS measures have not been subject to audit or review.

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FY2020 Operating Overview

A record almond crop was offset by lower almond prices and higher water costs Click to edit Master title style

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Almond Crop
23,250 MT
Up 560 MT
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Average Almond Price

$7.50/kg

Estimated record US crop and COVID-19 market access issues impacted prices in 2020

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Almond Division EBIT [1]
$41.8m
Targeted horticulture program and
investment in risk mitigation and on-
farm technology is paying off
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Total Almond Production Costs

$5.36/kg

Excluding the impact of higher water costs, total almond production costs per kg were up 6.5%

limited the financial impact

Food Division EBIT[1]

$3.3m

Challenging domestic consumer market. Continue to see strong demand for value-added almonds

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

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Optimise Our Almond Base - Yield Performance

A second consecutive year of yield outperformance across all age cohorts. Immature Click to edit Master title style orchards delivered an additional 2,029 MT above industry standard yields in FY2020

Immature

Mature

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Expand strategically - Orchard Profile Company owned orchards 56% and leased orchards 44% Click to edit Master title style

Piangil Acquisition

Select Harvests Planted Almond Hectares

• 1,566HA of almond orchards

(25% immature)

• 2,499 ML of water entitlements

Update

• Settlement concluded 18[th] Dec 2020 and staff inducted

• Capital upgrades have commenced

• Health and Safety training and systems in place

• Horticultural programs for 2021 commenced

• Financial systems are being implemented

• Harvest has commenced

• Crop volume is forecast to be in

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Balance Sheet

Balance sheet remains in a strong position, with low net bank debt and sufficient Click to edit Master title style headroom for growth

Year Ending Balance Sheet
$ millions	FY2020 FY2019
Click to edit Master text styles Current Assets excl. Cash 215.9 162.1 Cash 1.5 11.6 Right of Use Assets 236.4 - Non-Current Assets 371.1 379.2 Total Assets 824.9 552.9 Current Liabilities (excl. Borrowings) 53.6 55.4 Borrowings 59.0 3.6 Lease Liabilities 264.8 35.4 Non-Current Liabilities (excl. Borrowings) 42.5 42.5 Total Liabilities 419.9 136.9 Total Equity 405.0 416.0 Net Bank Debt (Cash) 57.5 (7.9) Net Bank Debt/Equity 14.2% N/A ROCE1 5.3% 16.5% ROCE (Excl. AASB16 Leases) 1 7.6% 16.5%	215.9 162.1 1.5 11.6 236.4 - 371.1 379.2
	824.9 552.9
	53.6 55.4 59.0 3.6 264.8 35.4 42.5 42.5
	419.9 136.9
	405.0 416.0

• The book value of SHV owned orchards, the Carina West Processing Facility (CWPF) and permanent water rights is significantly below current market values

• The FY2020 book value of SHV owned orchards and the CWPF is $169.8m vs. a September 2019 independent market valuation of $249.7m

• The value of permanent water rights recorded at cost is $37.9m vs. a YE FY2020 market value of $97.7m

• Net bank debt excluding finance leases $57.5m (FY2019 Cash of $7.9m) – due to lower global almond prices and delayed shipping program

• Gearing (net bank debt/equity) is 14.2% (FY2019 N/A)

• Return On Capital Employed (ROCE) reduced due to lower EBIT as a result of reduced global almond pricing and higher water costs

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

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Food Division Review & Restructure

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• Management and the Board undertook an extensive review of the Food Business. This review included assessments on:

• Upgrading the existing Thomastown facility

• Developing a new production facility

• Outsourcing value-added production

• Merging the Carina West and Thomastown facilities

• Segment profitability

• Findings of the review were:

• Thomastown facility is not appropriate for medium term future supply chain requirements

• Majority of profitability relates to almond products

• Consumer branding required significant upfront ongoing investment

• Carina West facility is capable of increasing its value adding capability

 Conclusion

• Restructure and focus on almond value adding

• Kidder Williams has been appointed to seek expressions of interest in the Consumer Branded business and Thomastown plant and equipment

• Further investment will be made in the Carina West Facility to increase almond value adding

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Almond Prices

Almond prices remain subdued with the realisation that the 2020 US crop will exceed Click to edit Master title style 3.0 billion pounds and uncertainty around the upcoming 2021 U.S. almond crop

Almond Prices

Almond Shipments

• An estimated record US almond crop and challenges related to market access issues due to COVID-19 have resulted in a significant softening of almond prices since early 2020

• Market prices remain subdued with the realisation that the 2020 US crop will exceed 3.0 billion pounds and uncertainty around the upcoming 2021 U.S. almond crop, which is currently only at pollination stage

Almond Price Cycle (1990 to 2019)

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• The U.S. accounts for around 80% of global almond production. Recent monthly U.S. almond shipment data shows that global demand for almonds has responded strongly to the historic 10-year low almond prices, with record monthly shipments to key markets like China and India

• Combined Australian and U.S almond exports have been significantly higher over the last 3, 6 and 12 month periods of 2020 vs. the same corresponding periods in 2019

Combined Australian and U.S. Almond Exports

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Source: USDA

Note: USDA data is for the August to July Californian almond crop year. The USDA will release its 2020 almond price in May 2021

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Click to edit Master title style Mike Carroll Retirement

Director 2009 - 2020

• Chair Nominations and

• Remuneration Committee

• Former member of Audit & Risk Committee

• Member of Mergers and Acquisitions Committee

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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 Committed to reporting our sustainability performance bi-annually 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
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www.selectharvests.com.au/sustainability

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Triple Bottom Line Committed to reporting our sustainability performance bi-annually Click to edit Master title style

1. Occupational Health and Safety

2. Food Safety, Product Labelling and Quality

3. Water Management and Stewardship

4. Environment Impact

5. Climate Change

6. Financial Performance and Business Strategy

7. Labour Practices, Human Rights, AANTICorruption, Ethics and Integrity

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www.selectharvests.com.au/sustainability

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Sustainability Scorecard

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PLANET

PEOPLE

PROJECTS

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100% of labour
providers have
complied with Select
Harvests policies
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20% reduction in

lost time injury severity rate

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Launch of probiotic
muesli range with
low sugar content
under the
Sunsol brand
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• Repatriation and
management of wet
areas
• Upgrade dripper lines
with low friction tape
• Composting to increase
irrigation efficiency
• Recycle Carina West
wastewater into
compost
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• On orchard solar energy generation

Re-development of 145 Ha (358 acres) of almonds in July 2019

• Increase renewables purchases

• Change over to

• energy efficient driers and motors

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Almond Division Outlook

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2020/21 Crop Estimate

2021 Crop

 Current estimate is subject to ongoing favorable conditions and includes the Piangil acquisition.

 Favorable water price will deliver YOY savings of $3m.  Harvest matrix has been redesigned to reduce cost per kg.

 All regions have had good growing conditions to date.

 Forecast is to maintain a similar cost per kg to last year.

 Based on historical average yields and the current maturity profile we anticipate a crop in excess of 27,700MT.

• Harvest commenced during the week starting 15th Feb 2021.

 Sizing and quality are in line 19% higher than last . Click to edit Master text styles . with expectations year

Crop Marketing Status

 To mitigate the risk of a wet harvest, SHV has entered into an agreement with Rice Growers to dry 30% of the 2021 forecast crop.

• Anticipating a firming in the almond price [#] . Less than 20% of the 2021 crop has been committed at a price of $6.70

• 50% of the forecast 2021 crop has been covered at USD 0.72c.

# refer Appendix

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FY2020 Food & Corporate Division Outlook Management is currently undertaking a comprehensive review of the Food Division Click to edit Master title style

Corporate

Industrial Sales

Consumer Brands

• Capital and cash management remain a key focus. Forecast delayed cashflows have corrected. Anticipate future crop cashflows will be in line with historical cashflows.

• Continued focus on growth opportunities in almonds.

• Demand for industrial products remains strong. Volumes are strengthening as office workplaces return to work.

• Further investments in the Carina West Value-Adding Facility will enhance our capacity to produce industrial almond products.

• Woolworths has agreed to range an additional 16 Lucky products.

• Sunsol sales continue to grow with sales up on the same period last year.

• Commence Food Division restructure:

• Kidder Williams: consumer branded food business.

• Development of Carina West.

People & Culture

Sustainability

• Number one objective is to ensure the safety of our people.

• Publish new SHV Sustainability Report.

• Review and set 2022 Sustainability targets.

• COVID safety remains a priority.

• Establish carbon footprint.

• Recent culture survey results has highlighted opportunity to improve collaboration across the business.

• Work on increasing value of coproducts.

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FY2021 Top Priorities

Continue to execute on our growth strategy, underpinned by a world class portfolio of almond assets Click to edit Master title style

1. Safety and Wellbeing - Ensure the safety and wellbeing of our employees

2. Horticultural Program – Deliver optimal tree health and production and set a strong base for the 2022 crop

3. Cost Reductions - Continue to reduce cost per kg across all production stages

4. Piangil Almond Orchard - Invest in P&E to improve yield quality, harvest risk mitigation and irrigation efficiency

5. 2021 Harvest & Marketing Program – Maximise the value of the 2021 almond crop

6. Manage Cash Position – Manage cash, working capital and capital

7. Strategic Growth – Assess organic and inorganic options to deliver additional growth

8. Almond Product Sales – Continue to capitalise on the growing global demand for value-added almonds

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9. Capital Investment – Prioritise investment to deliver improved quality and efficiency outcomes

10. Food Division Restructure – Manage redevelopment of supply chain Click to edit Master text styles

and review of Consumer brand options

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Annual General Meeting 26 February 2021

Consideration of The Financial Statements & Reports

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Q&A Session

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Resolution #1: Remuneration Report

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Resolution #1: Remuneration Report

For:	66,922,116
Against:	819,947
Open-Usable:	571,121

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Resolution #2: Director Elections

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Resolution #2(a): Click to edit Master title style

Election of Michael Iwaniw

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Resolution #2(a): Election of Michael Iwaniw

For:	68,132,669
Against:	305,574
Open-Usable:	671,068

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Click to edit Master title style Resolution #2(b):

Election of Fred Grimwade

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Resolution #2(b): Election of Fred Grimwade

For:	46,534,923
Against:	22,139,733
Open-Usable:	674,534

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Resolution #3: Approval of issued securities

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Resolution #3: Approval of issued securities

For:	46,585,627
Against:	547,519
Open-Usable:	610,220

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Click to edit Master title style Resolution #4:

Remuneration Arrangements for the Managing Director

Participation by the Managing Director in the Long Term Incentive Plan

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Resolution #4: Remuneration Arrangements for the Click to edit Master title style

Managing Director

Participation by the Managing Director in the Long Term

Incentive Plan

For:	67,095,504
Against:	1,323,881
Open-Usable:	614,081

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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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FY2020 Results in Context

Higher volumes and contained production costs per kg enabled a strong ‘through the Click to edit Master title style cycle’ FY2020 performance

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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Group EBIT Movement FY2020 Group EBIT impacted by lower almond prices and higher water costs Click to edit Master title style

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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 Shipments Update

Shipments have responded strongly to lower almond prices Click to edit Master title style

U.S. and Australian Almond Shipments

U.S Shipments: Carry-in from 2019 crop Estimated 2020 crop size1 Less 2% loss/exempt1 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 Jan 2021 450 3,080 62 245 186 3 3 -46 390 200 32 258 366 157 74 1,088 932 1,058	2019/20 Crop YTD (Million Lbs.) Aug 2019 to Jan 2020 318 2,520 50 230 171 3 3 -38 369 158 22 164 336 160 63 903 599 917	% Change
			41.4%
			22.2%
			24.0%
			6.6%
			9.0%
			(8.5%)
			(24.8%)
			20.0%
			5.9%
			27.0%
			45.7%
			57.0%
			9.1%
			(1.8%)
			17.1%
			20.4%
			55.5%
			15.3%

Click to edi 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	~~t Master text s~~ 2020/21 Crop YTD (MT) Mar 2020 to Dec 2020 25,658 7,933 11,636 15,735 4,280 6,736 71,978	~~tyles~~ 2019/20 Crop YTD (MT) Mar 2019 to Dec 2019 40,275 4,280 8,732 13,387 3,679 3,839 74,192	% Change
			(36.3%)
			85.4%
			33.3%
			17.5%
			16.3%
			75.5%
			(3.0%)

Source: Almond Board of California and Almond Board of Australia

Points to Note

• Shipments and forward commitments have responded strongly to the lower pricing environment and record estimated U.S. almond crop of 3.1 billion pounds[1] .

• U.S. domestic shipments are up 5.9% for the 2020/21 Crop Season YTD. Value-added manufacturing almonds shipments are up 9.0%, as consumers increase at home consumption due to COVID-19 related restrictions.

• U.S exports are up 20.4%, with very strong demand seen from the Asian Markets, with shipments up 42.4%.

• Lower almond pricing appears to have softened the impact of Chinese tariffs on U.S almonds, with U.S shipments to China up 50.2%.

• Australian export shipments are down 3% for the 2020/21 Crop Season YTD. The second half of the 2020/21 Crop Season (Sep to Dec) has seen record monthly shipments, up 15,862 MT (87.5%) vs. last season.

1 Estimates sourced from Derco Foods Jan 2021 and Jan 2020 Almond Reports

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Tree Nut Pricing Almonds are the best value of the major tree nuts Click to edit Master title style

Selected Tree Nut Pricing

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Source: Select Harvest Company Data

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Almond Prices

Almond prices remain subdued with the realisation that the 2020 US crop will exceed Click to edit Master title style 3.0 billion pounds and uncertainty around the upcoming 2021 U.S. almond crop

Almond Prices

• An estimated record US almond crop and challenges related to market access issues due to COVID-19 have resulted in a significant softening of almond prices since early 2020.

• Market prices remain subdued with the realisation that the 2020 US crop will exceed 3.0 billion pounds and uncertainty around the upcoming 2021 U.S. almond crop, which is currently only at pollination stage.

Almond Prices (USD/lb)[1]

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NPS 23/25 Cal SSR 27/30 AOL BSU5%
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• (1) Source: Derco Foods (2) Source: Almond Board of California & Derco Foods (Estimated Crop and Less 2% loss/exempt)

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Company and Market Outlook

Plant based foods and especially almond consumption continues to grow Click to edit Master title style

Global Supply

Global Demand & Pricing

Select Harvests

• Large US and Spanish crops are well sold.

• Northern hemisphere crops are at pollination stage, too early to determine 2021 crop.

• Californian snowpack and rainfall well below historical averages.

• Old orchards in California are being removed.

• Impact of Sustainable Ground Water Management ACT (SGMA) is just starting.

• Despite market assess issues demand has continued to grow with record global shipments being recorded.

• High growth continues in value added products such as milks, confectionary and butters.

• Demand in India continues to grow. Tariffs are constraining the big opportunity in China.

• Pricing remains at historical ten year lows.

• We will pursue value accreditive almond orchards acquisitions of scale.

• We are looking to invest in our drying, value adding and sorting capacity to match our Hulling and Shelling capacity.

• Creating value from our coproducts remains an exciting opportunity.

• Cost reduction remains a priority as does improving our quality and price realisation.

• A $0.50/kg price increase equals a $14m EBIT uplift based on this year’s crop forecast.

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Grow Our Brands – Sunsol Click to edit Master title style Sunsol Muesli sales in the Australian grocery segment grew strongly in F2020 supported by product innovation and brand advertising.

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AU Grocery scan
Total Sunsol
Dollars (000s) Active Products Share of Total Muesli/Cluster/Granola
3000.0 4.5
4.0
2500.0
3.5
2000.0 3.0
2.5
1500.0
2.0
1000.0 1.5
1.0
500.0
0.5
0.0 0.0
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*Source: IRI MarketEdge | QTR to 25/10/2020

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