Select Harvests Limited · ASX:SHV
Select Harvests — H1 2011 Earnings Presentation
27 slides from Select Harvests's earnings presentation, Feb 21, 2011
Slide 1: 1H11 Results Presentation for 6 months ended 31 December 2010
SELECT HARVESTS 1H11 Results Presentation for 6 months ended 31st December 2010 21st February 2011
Slide 2: Agenda
Agenda Introduction 1H11 Results Industry Fundamentals Strategy Outlook 2
Slide 3: Overview
Overview 1H11 performance in line with company expectations FY11 NPAT on track to exceed FY10 based on current crop estimates, FINANCIAL HIGHLIGHTS current almond pricing and normal harvesting conditions 10c interim fully franked dividend Company Orchards more than doubled from 3,400 to 9,30
Slide 4: Agenda
Agenda Introduction 1H11 Results Industry Fundamentals Strategy Outlook 4
Slide 5: 1H11 Results
1H11 Results NPAT $10.1m (1H10: $10.1m) EBIT $13.5m (1H10: $15.6m) Managed Orchards EBIT $6.0m (1H10: $9.2m) Company Orchards EBIT $5.8m (1H10: $4.9m) includes $2.0m contribution from the fair value of Company Orchards arising from acquisitions during the period Food Division EBIT $3.5m (1
Slide 6: Earnings Summary
Earnings Summary Increase/ (A$m) 1H10 1H11 decrease Sales Revenue 124.1 132.7 + 7% EBIT Managed Orchards 9.2 6.0 - 34% Company Orchards 4.9 5.8* +18% Almond Division 14.1 11.8 -16% Food Division 3.2 3.5 +7% Corporate (1.8) (1.8) EBIT 15.6 13.5 -14% Interest Expense (1.2) (1.6) Net Profit before tax
Slide 7: Strong balance sheet
Strong balance sheet Balance Sheet as at 31 December 2010 (A$m) H110 FY10 1H11 70.8 Current Assets 67.4 72.9 13.2 Cash 1.8 4.4 145.7 Non Current Assets 134.1 172.2 229.7 Total Assets 203.3 249.5 40.3 Current Liabilities 43.3 29.5 58.2 Borrowings 35.0 35.0 17.5 Non Current Liabilities 14.7 19.6 116.0
Slide 8: Cash flow
Cash flow (A$m) 1H10 1H11 EBITDA 17.9 13.9* H1 working capital largely Working Capital 9.3 (17.1) (increase)/decrease reflects expansion of Company Taxes (paid)/received (3.7) 1.5 Orchards Interest paid (1.6) (1.6) Operational cashflows 21.9 (3.3) 2011 growing crop fully funded Investing cashflo
Slide 9: Investing cashflows in H1
Investing cashflows in H1 Lake Powell acquisition $3.8 m Western Australia greenfield development $6.6 m Capital investment in Company Orchards $4.5 m Processing plant capacity upgrade $3.1 m Capital equipment (to be leased) $4.9 m Total $22.9 m 9
Slide 10: Almond division – Managed Orchards
Almond division – Managed Orchards 1H11 EBIT $6.0m (1H10: $9.2m): rebased management services fee structure higher processing costs due to wet harvest no incentives achieved, potential to earn incentives in future Expected to benefit from increased processing volumes during 2H11 2011 Man
Slide 11: Almond division – Managed Orchards
Almond division – Managed Orchards Total 34,000 acres of Managed Orchards All farm programs now restored to full horticultural programs, including water applications following transition of ownership Managed Orchards expected to return to normal industry yields over time, with increased maturi
Slide 12: Almond division – Company Orchards
Almond division – Company Orchards Underlying EBIT of $3.8m (1H10: $4.9m) 1H10 EBIT of $4.9m was based on higher prevailing almond price at that time FY10 EBIT of $6.8m reflected the annualised almond price for the FY10 crop which was lower than the estimate at the half year $2.0m gain from
Slide 13: Almond division – Company Orchards
Almond division – Company Orchards Significant progress in strategy to expand Company Orchards: $1.0m acquisition of 116 acres in Bannerton Park, near Robinvale $3.8m acquisition of 530 acres at Lake Powell, near Robinvale completed December 2010 Investment in Capex (tree development) and wo
Slide 14: Food division
Food division EBIT increased 7% to $3.47m Continued growth in Value Added product EBIT up 59 % to $2.25m Annualised through put of almonds is 4,600mt up 10% Continue to realise benefits from business rationalisation Momentum driven by successful range extensions of the “Lucky” brand e.g. S
Slide 15: Agenda
Agenda Introduction 1H11 Results Industry Fundamentals Strategy Outlook 15
Slide 16: Almond sales – monthly US shipments
Almond sales – monthly US shipments Source: Almond Board of Australia 2010 16
Slide 17: Stable almond price
SELECT HARVESTS Almond Price AUD/KG Nonpareil (Mar 93 - Dec 10) $14.00 $12.00 $10.00 $8.00 $2.00 Stable almond price $0.00 o}-unr Ty 60-des | OL-unr 0-000 20-1e | 60-des zo-une 90-des ; 80°90 so00q SOUR ; 804 vo-unr a £0-des | Zo-unr a z0200 do a ZO-eIN + 90-GeS 2 bo-unr Zz 00-des + S0998q a 66-090
Slide 18: Australian almond industry
Australian almond industry Australia is set to become the world’s no.2 global almond producer by 2015 Advantageous natural environment Premium quality crop – 50% of Australia’s crop is the premium nonpareil variety Well positioned to serve increasing demand from emerging markets e.g. India, Ch
Slide 19: Agenda
Agenda Introduction 1H11 Results Industry fundamentals Strategy Outlook 19
Slide 20: Select Harvests' almond strategy
Select Harvests’ almond strategy Expand Company Orchards, geographic diversification : COMPANY Acquire or lease established orchards across established growing ORCHARDS regions (e.g. Hillston, Lake Powell, Bannerton Park) (WA, VIC, NSW) Develop orchards in WA where new plantings are economical
Slide 21: Select Harvests' drivers of growth
Select Harvests’ drivers of growth Volume growth from existing orchards reaching full maturity 43,300 acres under management, including 9,300 acres Company Orchards Expected to generate 52,000 mt at full maturity based on industry average yield projections Expand company orchards Acquire and l
Slide 22: Expanded footprint in Victoria and NSW
Expanded footprint in Victoria and NSW Continue to evaluate opportunities to lease or buy established orchards $1m acquisition of 116 acres at Bannerton Park, Victoria $3.8m acquisition of 530 acres at Lake Powell, Victoria Expanded footprint in NSW via long lease agreements with Rural Funds
Slide 23: Growth in Western Australia
Growth in Western Australia Stage 1 development of 2,000 acres of greenfield orchards: Planting completed winter 2010 Dandaragan Trees growing well with first crop expected 2013; full Plateau maturity expected in 2017 Stage 2 planting scheduled for winter 2011: 2,300 acres Water license
Slide 24: Western Australia orchards – Stage 1
Western Australia orchards – Stage 1
Slide 25: Agenda
Agenda Introduction 1H10 Results Industry Fundamentals Strategy Outlook 25
Slide 26: Outlook
Outlook Improved performance from Company Orchards in the second half expected to offset lower fee income from Managed Orchards Based on current crop estimates, current almond prices and normal harvest conditions this should result in an improved FY11 net profit after tax over FY10* Fundamenta
Slide 27: Questions
\\ Questions SELECT HARVESTS 27