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WWWSELECTHARVESTSCOMAU Select Harvests Limited Company Secretary ABN 87 000 721 380 P Chambers Registered Office Select Harvests Limited Solicitors 360 Settlement Road Gadens Lawyers Thomastown Vic 3074 Bankers Postal address Australia and New Zealand Banking PO Box 5 Group Limited Contents Thomastown Vic 3074 Auditors Telephone (03) 9474 3544 PricewaterhouseCoopers Facsimile (03) 9474 3588 Email [email protected] Share Register Our mission, strategy, activities and outlook 01 Directors Computershare Investor Services Pty Limited Our business opportunities 02 M A Fremder (Chairman) pg05 Yarra Falls Our business model 03 J Bird (Managing Director) 452 Johnston Street From the Chairman and Managing Director 04 C G Clark (Non‑Executive Director) Abbotsford VIC 3067 Our board of directors 07 G F Dan O’Brien (Non-Executive Telephone (03) 9415 5040 Director) Facsimile (03) 9473 2562 Our executive team 08 From the Chairman and J C Leonard (Non-Executive Director) Managing Director Our orchard development 09 R M Herron (Non-Executive Director) Our orchard management 11 pg09 Our processing 12 Our primary processing 12 Our added-value processing 13 Our sales and marketing 14 Almond pool sales 14 Our orchard development Added-value product sales 16 Our environment, community and people 17 pg11 Statistical summary 18 Financial contents 19 Financial reports 20 Auditor’s declaration 31
Our orchard management Directors’ declaration 86 Independent audit report 87 pg12 ASX additional information 89
Shareholder Information Annual General Meeting 2007/2008 Calendar Our processing
The annual general meeting will be Feb Announcement of interim results For personal use only use personal For held on Friday, 26 October, 2007, Apr Payment of interim dividend pg14 at the Arthur Streeton Auditorium, Aug Announcement of preliminary Sofitel Melbourne, 25 Collins St, full year results Melbourne, Victoria, commencing Sept Annual report to shareholders at 2:00 pm. A separate notice of Oct Payment of final dividend meeting has been posted to all Oct Annual general meeting Our Sales and Marketing shareholders. www.selectharvests.com.au Our mission is to continue to develop and expand our business, generating sustainable earnings growth and delivering increased shareholder value.
is to develop a fully-integrated agri-food company via ongoing Our strategy diversification and expansion of our income streams, leveraging our core strengths – almond growing and knowledge of edible nuts and their markets – to develop sustained earnings growth and reduced volatility from agricultural risk.
include operating our own orchards, managing orchards for Our activities investors, marketing almonds in domestic and export markets, and processing and marketing an extensive range of nuts and associated health food products to all market sectors. Beginning as a commodity-based almond grower, Select Harvests is now an integrated agri-food business with diversified income streams.
is positive, due to increasing world nut consumption, the Our outlook existence of strong fundamentals in the almond market and continuing investor interest in almonds as a mainstream horticultural investment. A further 5,000 acres of new almond plantings and the development of enhanced processing capacity are planned for 2008 and the years ahead. These developments will be complemented by significant technological and scientific advances, particularly in the area of efficient water usage and yield gains. Our ambitious sales and marketing targets will continue to For personal use only use personal For drive increased consumer demand for almonds and other edible nuts – demand which we will meet with enhanced efficiency and improved product quality.
Select Harvests Annual Report 2007 1 Our business opportunities
“Select Harvests is positioned to become the world’s largest almond grower. By investing in our core capabilities of farm management and processing and marketing, we are building a sustainable future for our integrated business.” John Bird: Managing Director
Our business Health foods As a diversified agri-food company, Our goal of maximising the retail we have strong growth opportunities distribution of nuts is complemented around the key components of our by our range of associated health food business – the core of which are the products: for example, our market- management of almond orchards and leading ranges of muesli. the marketing of almonds. As our almond harvest increases and Our management services income other tree nut crops come online, our will increase as our trees mature and distribution channels for almonds, edible yields improve. Furthermore, we plan nuts and nut-related health foods will to develop an additional 5,000 acres of deliver incremental sales and profits. new orchards annually. Our sales and marketing focus is clearly aligned to the need to drive increased consumer The core of our business demand for almonds and almond- “is managing both investor- related food products. owned and company-owned Marketing edible nuts almond orchards Supporting our core strength in almonds ” is our leadership role in marketing all edible nuts within Australia. This allows Growing our almond sales is the key driver for our total product portfolio. us to market a comprehensive range of nuts within all the key retail categories. !SSOCIATED We plan to leverage our core orchard (EALTHß&OODS development and management skill set by diversifying into other tree nut crops. %DIBLEß.UTS
This will increase the level at which our For personal use only use personal For business is fully-integrated: i.e. from the orchard to the consumer. !LMONDS
2 Select Harvests Annual Report 2007 Our business model
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Select Harvests Annual Report 2007 3 From the Chairman and Managing Director
We are managing through a period of uncertainty brought “ on by the prolonged drought, while continuing to develop our business framework for future growth.” Max Fremder: Chairman
Key Financial Results Select Harvests’ 2007 net profit after tax for continuing operations exceeded Earnings before interest and taxes $28 million, a 6 % increase on the previous year’s result. Our highlight was the from Continuing Operations almond division, whose earnings rose nearly 15%.
The company’s balance sheet, cash flow and future prospects remain strong, enabling the company to pursue future growth as well as increasing the dividend.
Financials 2007 Year ended Year ended Change (A$’000’s) 30 June 30 June 2007 2006 ´ Sales revenue ($A000) $229,498 $217,866 + 5% Earnings before interest and tax $40,549 $38,369 + 6% Net profit after tax for continuing operations $28,098 $26,492 + 6% Ordinary dividend 57¢ 53¢ + 7.5%
Earnings per share Dividend (ordinary) Net Profit After Tax from Continuing Operations
CENTS CENTS
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4 Select Harvests Annual Report 2007 The year in review Our biggest-ever planting program (11,800 acres of new almond projects, including 1,000 acres of company plantings) increased our acreage by 44%. Our current total acreage of 38,600 acres provides a sound platform for future growth in management services revenue and sales revenue from company orchards. Favourable growing conditions over the year and the maturing of young orchards doubled our almond crop tonnage to 12,000 metric tonnes (6,200 mt in 2006). The increased tonnage from our investors’ (managed) orchards has increased processing and marketing fees for the period. However due to the high Australian dollar and the easing of world almond prices on the back of the USA’s expected large 2007 crop, returns from our company orchards declined. Our food division has protected our key brands through increased investment in arrangements (if the test case is trade spend and marketing activity. This Key issues encountered successful) or under new arrangements heightened activity has been required during the year they may develop. due to difficult trading conditions in the 1. Managed Investment Schemes retail sector, which have applied pressure We have already committed to (MIS) Arrangements to both revenues and margins. developing 4,200 acres of new orchards Despite changes to the Managed for Timbercorp during 2008, as the MIS Investment Schemes (MIS) arrangements arrangements will remain in place for announced in February 2007, Select this year. Harvests’ view is that almonds remain We are also assessing and trialing a good investment due to strong several different approaches to almond fundamentals in international markets investment: and Australia’s production efficiencies and resultant competitiveness. • Developing alternative financial structures and channels for new However, we will need to adjust our almond projects approach to allow for the uncertainty surrounding MIS projects for 2009 • New geographical areas with and beyond. alternative water sources This uncertainty is evident in the • Diversification into other tree nut For personal use only use personal For test case our partner, Timbercorp crops (leveraging our considerable Limited, is running with the ATO in expertise in almonds). relation to MIS arrangements. From our perspective, we plan to continue developing new orchards with our partners, either under MIS
Select Harvests Annual Report 2007 5 2. Water management irrigation trials, adopting a number and operations team are targeting of new technologies aimed at more efficiencies, and we are vigorously Managing water access and usage is efficient and lower water use. defending our key brands and a key issue due to the low storages supporting our almond sales. within the Murray Darling Basin and the We have also taken action to diversify to continuing dry conditions. alternative locations with other water sources. We are progressing a project Our outlook For our company orchards, we hold to develop almond orchards in Western We anticipate that although the entitlements for approximately 120% of Australia and have recently lodged a company faces a period of short-term our 2007/08 requirements. This is due water license application for Stage 1 of challenges, we will continue to to some of these orchards having not this development (approximately 3,000 create growth opportunities in the reached maturity and full water usage. acres). If our application is successful, we future due to: As a result, we will be able to irrigate expect to commence planting in 2009. normally provided we receive at least an • Increased fees from our 80% allocation. If the water restrictions, 3. Increasing our processing capacity increasing acreage of mature as now appears likely, prevent us from (producing) orchards Processing facilities are being receiving an 80% allocation, then we will expanded via the commissioning of Increased tonnages from our company arrange for additional water, at a cost to • our new almond processing plant, orchards over the next seven years our profit. which will cater for our greater Increased added-value sales as our For our investor orchards, we are working output in the years ahead. • total almond tonnage grows closely with the relevant investors 4. Enhancing our management team and project managers to put in place • Development of new orchards, similar strategies. Our food business was reviewed during in Victoria and interstate. the year, and we realigned its core In terms of future water management, We will continue to operate as activities to suit our almond crop first we are investing in a number of responsible environmental corporate and foremost. A new management citizens wherever Select Harvests has a footprint, and we are proud of our community involvement in Thomastown and Robinvale in Victoria and Brisbane. In addition, we are greatly looking forward to new community contributions at our proposed orchards in the West. As always, we thank our staff for their efforts in a challenging environment, and the communities in which we operate for their support.
For personal use only use personal For MAX FREMDER Chairman
JOHN BIRD Managing Director
6 Select Harvests Annual Report 2007 Our board of directors
M A Fremder C G (Sandy) Clark, B.Comm, G F Dan O’Brien, B.Sc, R M Herron, (Chairman) Dip.Ag.Econ B.VMS, MBA FCA & FAICD (Non-Executive Director) (Non-Executive Director) (Non-Executive Director) Joined the board in March 1996. Formerly a director Joined the board in January Joined the Board in March Joined the Board in of IAMA Limited, and 1998. Is currently Chairman, 2004. Dan is the principal January 2005. A Chartered founder of Nufarm, one of Aviva Australia Holdings of Dromoland Capital, a Accountant, Mr Herron Australia’s largest chemical Limited; Chairman, The Myer private equity group, non- retired as a Senior Partner manufacturers for the Family Office Limited; Director, executive director of Thomas of PricewaterhouseCoopers rural industry. Mr Fremder Southern Cross Broadcasting & Coffey Limited, and Coates in December 2002. He also was Non-Executive Australia Ltd; Director, The Hire Limited, and is also was a member of the Director of Tassal Limited Myer Foundation; Trustee, The an executive director of Coopers & Lybrand (now between October 2003 and William Buckland Foundation; Hexima Limited. Mr O’Brien PricewaterhouseCoopers) March 2005. Member of the Chairman of Council, has significant commercial Board of Partners where he Remuneration Committee, and Melbourne Grammar School; experience having held CEO was National Deputy Chairman the Nomination Committee. and a director of a number of positions for BIL Australia and was the Melbourne office private companies. Member of Limited, Mattel Asia Pacific, Managing Partner for six years. the Audit and Risk Committee, and The King Island Company. He also served on several and the Nomination He holds an MBA, having international committees Committee, and Chairman of graduated with distinction within Coopers & Lybrand. He the Remuneration Committee. from Harvard Business School is a Non-Executive Director of and is a qualified veterinary GUD Holdings Ltd, Heemskirk surgeon. Member of the Consolidated Ltd and a major Audit and Risk Committee, industry superannuation Remuneration Committee, fund. He is also a Director of J C Leonard, B.Mktng & Bus. and Nomination Committee. Variety Club Inc. He was a non- Admin, MBA Mr O’Brien was a director Executive Director of National (Non-Executive Director) of SPC Ardmona Limited Telecoms Group Ltd from July Joined the Board in July 2004. between January 2002 and 2001 to June 2003. Chairman March 2005. of the Audit and Risk Has held senior management J Bird Committee, and member of positions with the Mars group (Managing Director) of companies in Australia the Nomination Committee. including General Manager of Joined the board in Mars Confectionery, Managing September 2001. Has had Director of Uncle Bens, and many years experience in the
For personal use only use personal For Managing Director of Mars food industry and international Australia and New Zealand. trade. Formerly Managing In addition, he has served as Director of Jorgenson Waring President, Asia Pacific of all Foods, John has been the CEO Mars businesses, and a Director of Select Harvests Limited since of the Managing Board of Mars January 1998. Member of Incorporated global business. the Nomination Committee. Member of the Audit and Risk Committee, and Nomination Committee. Select Harvests Annual Report 2007 7 Our executive team
Tim Millen Kim Martin Laurence Van Driel Kevin Bush Paul Chambers Dip Hort (Distinction) B. Bus ( Accounting) B.Bus & Comm (Marketing) Bsc Hons, ACA
(Group Horticultural (Group Operations (Group Trading (Group Sales & (Chief Financial Officer Manager) Manager) Manager) Marketing Manager) & Company Secretary) Joined Select Harvests Joined Select Harvests Joined Select Harvests Joined Select Harvests Joined Select Harvests in 1996. Tim has over in 2007. Kim has in 2000. Laurence in 2006. Kevin has had in 2007. Paul is a 18 years experience spent the majority has over 20 years many years experience Chartered Accountant in horticulture. He of her career with experience in trading in the FMCG industry. and has over 20 years has held senior Mars Confectionary edible nuts and He has held senior sales experience in senior horticultural positions and Masterfoods, dried fruits. He has management positions financial management in operations part of Mars Inc. She a comprehensive in Australia for 16 years roles in Australian and management, as started her career knowledge of with Masterfoods, European organisations. well has holding the as an accountant international trade part of Mars Inc. Prior Most recently, he was roles of Technical before moving to and deep insights into to this, Kevin worked CFO, Henkle ANZ and Officer and manufacturing. During the trading cultures of in the UK for Duracell prior to that he held Horticulturist. Prior the last ten years, the various countries Batteries Ltd and corporate positions to commencing with Kim has held various in which these Tesco PLC. with the Fosters Select Harvests, Tim senior manufacturing commodities are sold. Group. He has was Orchard Manager and supply chain He has held senior managed complex for an Australian and management roles. purchasing and sales change, acquisition New Zealand Nashi, Prior to joining Mars, management positions and business Stonefruit and Kim worked with with internationally integration projects. Pipfruit operation. PriceWaterhouse in the recognised companies. Audit division. #%/
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8 Select Harvests Annual Report 2007 Orchard Development
Orchard Management
Processing Primary Processing Added-Value processing
Sales & Marketing Our orchard development Almond Pool Sales Added-Value Product Sales
At the same time, we are evaluating During the year, Select Harvests Our key activities alternative investment structures continued the development plans of an • Tree supply and channels. almond project in the Midwest region of Western Australia. • Orchard feasibility studies Given our expertise in orchard development and management, we are Subject to the success of obtaining water • Land acquisition also exploring the opportunity to expand licences, we have a three-stage program • Orchard design our activities into other tree nut crops. to develop over 12,000 acres • Irrigation installation of almond orchards. • Land preparation Expanding into We expect Stage 1 planting to • Tree Planting Western Australia commence in 2009 once our water license application is approved. The Murray Darling Basin on which Robinvale relies, remains under The first 3,000 acres to be developed Select Harvests completed its largest significant pressure. Accordingly, will be at Dandaragan. ever planting program in 2007 – lifting Select Harvests is seeking other growing our acreage by a massive 44% during areas with alternative water sources for the year with the development of 11,800 future planting. new acres of almond orchards. This has consolidated our position as the biggest Orchard Development (acres) almond grower in Australia, and one of the largest in the world. Future Developments We are a competitive almond grower with significant advantages in crop yield and product quality, allowing us to compete effectively in global markets. Almond farming is highly mechanised and requires scale and capital to maximise efficiencies. The development of corporate farming in recent years has provided this investment and currently accounts for over 50% of Our proposed Western Australian project in the Twin Hills, Australia’s orchards. Dandargan and Badgingarra irrigation districts. We are confident that almonds are an %.%!""! attractive long-term investment. We will $!.$!2'!. continue to develop and manage new 47).ß(),,3 almond orchards in the future, and to provide development and management services to our existing partners as they 7! For personal use only use personal For .4 restructure their investment products to 1,$ take account of the likely changes in "!$').'!22! 7! MIS arrangements. 3! .37 0ERTH0%24( In this way, we are committed to 2OBINVALE !#4 developing 4,200 acres of new orchards 6)# for Timbercorp Limited next year.
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Select Harvests Annual Report 2007 9 Ensuring our tree supply 3. Budwood site and nursery Our ambitious growth plans have Managing a high health isolation demanded that we take strategic program at our budwood site to grow steps towards securing a reliable tree almond buds that will be free of disease supply to meet the needs of future and viruses. These buds are grafted onto planting programs. the rootstock growing in our nursery. Our objectives have been to enhance 4. Orchard planting our independence, sustainability, Planting the new trees in the orchards. quality and efficiency. Naturally, all expertise gained through This program involves this program enhances our intellectual capital and our ability to apply this 1. Tissue culturing laboratory skill set to growing other tree nut crops The development of alternative root in new projects. stock via tissue culturing techniques. 2. Rootstock seedlings Planting the rootstock in our nursery and growing them into seedlings.
Ensuring our tree supply – meeting the needs of future planting programs
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10 Select Harvests Annual Report 2007 Orchard Development
Orchard Management
Processing Primary Processing Added-Value processing
Sales & Marketing Our orchard management Almond Pool Sales Added-Value Product Sales
Water Management In addition, we have embarked upon Our key activities a benchmark study, comparing our • Irrigation and nutrition As noted previously in this report, water processes, product and other aspects is one of our most important resources. • Pest and disease management of our business with the leading During the past year, we developed almond growers, processors and • Tree care and pruning a number of scenarios to assist us marketers in California. • Bee supply in handling potential reduced water availability in 2008 and beyond. • Harvesting Working with horticultural experts, we • Environmental management commenced a number of trials targeting significant reductions in water usage – Select Harvests enjoyed its biggest crop with no impact on orchard productivity. ever in 2007, harvesting some 12,000 We are aiming to achieve 20% tonnes of almonds. efficiencies in water usage over the Obtaining good yields, year after year, next three years, while maintaining is a complex task, and one which we current yield levels. achieve at world’s best standards. To ensure we continue to glean every Our orchards account for 60% tonne of almonds possible from our “of Australia’s almond acreage. increasing acreage, we enhanced our technical team during 2007. ”
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Select Harvests Annual Report 2007 11 Orchard Development
Orchard Management
Processing Primary Processing Added-Value processing
Sales & Marketing Almond Pool Sales Our primary processing Added-Value Product Sales
Primary processing The site has the capacity to upgrade in Future almond tonnage stages to a maximum of 90,000 tonnes, This refers to the processing required dependent upon our future processing from existing trees to convert a crop from its raw, requirements. Our almond crop will grow to 40,000 “straight-from-the-tree” harvested tonnes by 2011, which is more than state to a saleable primary product. Almond quality triple our 2007 crop. In the case of almonds this involves removing each almond’s hull and Our new facility will introduce additional shell, and delivering a complete raw sorting technology to ensure best Our new processing facility almond kernel ready for packaging possible results in almond grading. at“ Robinvale will incorporate the or further added-value processing. In addition, the introduction of pasteurisation technology will ensure latest proven packaging and Our new facility that we continue to deliver high levels of food safety and quality. processing technologies. During 2008 we will complete and ” commission Stage 1 of a new processing facility in Robinvale at a cost of $32 Future Tonnage from Existing Trees
million. This large-scale facility will incorporate the latest proven packaging and processing technologies, and will deliver significant economies and efficiencies. It will combine both the processing and packing elements of the process on the single site, as well as
provide storage for field stock, raw kernel and finished goods. This first stage
of the development will enable us to process 40,000 tonnes of almonds.
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Stage 1 of our state-of-the-art almond processing plant at Carina West in Robinvale, Victoria.
12 Select Harvests Annual Report 2007 Orchard Development
Orchard Management
Processing Primary Processing Added-Value processing
Sales & Marketing Almond Pool Sales Our Added-Value Processing Added-Value Product Sales
Added-value processing Our outlook Adding value in the processing phase • We will look to migrate from a refers to the further processing of raw manufacturing focus to a supply- materials to provide our customers chain focus to ensure that we drive (who may be manufacturers or the cost efficiencies. We will enhance end-consumer) with a nut or our position as a low cost processor. associated health food in a form Innovation, both in production that meets their quality, convenience • techniques and product development, and taste requirements. will be a key driver of demand Today, Select Harvests has the capability growth and delivering on to provide the following added-value consumer expectations. processing to our almonds and other We foresee a consistent increase in edible nuts, as well as to our associated • our use of technology and automation health food products: in the future, ensuring we stay cost • Electronic sorting competitive and continue to meet (foreign material removal) consumer and customer expectations. • Blanching (skin removal) • Cooking (roasting & frying) • Flavouring (seasoning, salting, spicing) • Cutting (dicing, flaking, slivering & grinding) • Paste-making • Blending • Packaging (to satisfy a number of retail and industrial formats). New equipment The introduction of two new packaging technologies – an edge-seal, stand-up pack and a re-sealable tub pack – will provide us with contemporary packaging solutions for consumers. It will also give us a new platform for increased capacity and productivity.
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Select Harvests Annual Report 2007 13 Orchard Development
Orchard Management
Processing Primary Processing Added-Value processing
Sales & Marketing Almond Pool Sales Our Sales and Marketing Added-Value Product Sales Almond pool sales
Our market position Select Harvests will contribute World almond producers, showing Australia’s 12,000 metric tonnes (48%) of Australia’s share of world almond production We continue to enhance our position as 2007 crop, from 6,200 metric tonnes one of the leading almond growers and (38%) in 2006. !USTRALIA marketers in the world. This significantly larger almond pool has Australia’s 2007 crop is estimated at required an increased export focus with !USTRALIA 25,000 metric tonnes (16,000 tonnes export percentages likely to increase 'REECE in 2006) contributing 3% of world from 40% to 60% when the sales are production. Australia will challenge complete. Approximately 80% of the )NDIA Spain as the number 2 producer in the 2007 crop has been contracted to date )TALY years ahead. with over 60% packed and shipped. 3PAIN We continue to trade strongly within the context of a higher Australian dollar 4URKEY and an easing of the world almond price. #ALIFORNIA Almond Price AUD/KG #ALIFORNIA &EB &EB &EB &EB &EB &EB &EB &EB &EB &EB &EB &EB !UG &EB &EB !UG !UG !UG !UG !UG !UG !UG !UG !UG !UG !UG !UG !UG !UG
Select Harvests will contribute 12,000“ metric tonnes (48%) of Australia’s 2007 crop, from 6,200
metric tonnes (38%) in 2006.” For personal use only use personal For
14 Select Harvests Annual Report 2007 After a number of years of stagnant Our outlook This is being driven by an increasing supply, the USA is forecasting a record awareness of the health benefits of crop in 2007 providing the opportunity to The fundamentals of the world regularly eating almonds. meet increasing consumer demand. almond market remain strong, particularly in Australia. Australia will play a more significant role Record shipments in the 2006 crop year in meeting this increasing world demand have continued at the start of the 2007 We are globally competitive in our cost for almonds as our production grows season. The increased supply has resulted of production, and due to favourable from 25,000 metric tonnes this year to in some price easing but prices remain at growing conditions, such as reduced 70,000 metric tonnes by 2014. the high end of historical levels. exposure to insect damage, we produce high quality almonds. Select Harvests, being one of the largest almond growers in the world, The almond market is also experiencing will be the leader in both our domestic continuous growth in consumer demand. and export markets.
USA Annual Almond Production
#ROPßMILLIONßLBS "EARINGßACRES KGACRE
2007 crop numbers are estimates.
USA Almond Production vs. Shipments
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Select Harvests Annual Report 2007 15 Orchard Development
Orchard Management
Processing Primary Processing Added-Value processing
Sales & Marketing Almond Pool Sales Our Sales and Marketing Added-Value Product Sales Added-Value product sales
Our added-value product sales includes all We have invested in our core heritage almonds, other edible nuts and associated of cooking nuts as well as in the rapidly health food products that we sell to our growing, healthy snacking segment. retail and wholesale customers as well Our future growth will also be driven by as to our food manufacturers and food the increasing consumer awareness of service customers. the health benefits of almonds and other These customers give us strong edible nuts. channels of distribution for our increasing almond crop. Health benefit initiatives Our market position We are proud supporters of two industry initiatives to raise consumer awareness We have maintained our market of these health benefits. leading positions in our key categories, namely cooking nuts and muesli, albeit through increased trade New edge packaging for our Lucky range and promotional investment. Our leadership in marketing all Our outlook edible nuts has strengthened our role We anticipate that we will grow our as a supplier of premium private label added-value product sales in the nut products. year ahead. The Nuts for Life program focuses on We continue to grow our sales outside of One of the drivers of this growth will be informing health professionals as to the the major supermarkets by supporting the relaunch of our largest brand: Lucky. latest health research on nuts. our health food store customers. Lucky is the market leading nut brand The Almond Board of Australia is actively Our strategies for within the supermarket dried fruit and communicating with consumers to the year ahead include: nut category. Lucky has a proud 50 year encourage them to eat ‘a handful of heritage in this segment. almonds everyday’. Re-aligning our focus to nuts in • In September 2007, Lucky will be There are great heart health benefits to general, and almonds in particular relaunched with new packaging and a eating a handful of almonds a day. • Maximising the opportunities to add new look. value to the almonds available from The two new packaging styles – stand-up our almond pool edge seal packs and resealable tub packs • Consolidating our sales force to – have been chosen to deliver greater improve efficiency and effectiveness consumer convenience and freshness. • Continuing to grow our distribution channels outside of the key supermarket retailers, and
• Developingonly use personal For export markets for packaged and processed almonds.
New tubs packs for the Lucky healthy snacking range
16 Select Harvests Annual Report 2007 Our environment, community and people
Our environment Our community Our people We are leading in the care for our As well as working to improve our Many of our employees are currently environment in Robinvale, Victoria, environment, we are also proud of undertaking a range of training courses through the creation of our Wildlife our work in developing both the including: horticulture certificates, Management Plan. This plan is being communities in which we work horticulture diplomas, administration developed in consultation with the and our people. certificates, engineering & fabrication Victorian Government Department As the largest employer in the certificates and irrigation courses. of Sustainability and Environment. Robinvale area, we are proud to support Once completed, we expect that it Thirty-one staff in our orchard a number of different community and will become a benchmark for all operations received certificates sporting programs. horticulture in the State. after successfully completing a Through the continued support of Certified Irrigation Managers course. The key objectives of this plan are: Select Harvests, the Robinvale Secondary The Sunraysia Institute of TAFE • To protect endangered and College Chaplaincy offers staff and in association with the Irrigation threatened wildlife students with a comprehensive Association of Australia formed a counselling program. This program partnership to deliver the training. We To minimise harm to other • helped identify students with dyslexia are the first agri-business to receive wildlife, and and in the wake of the Kerang rail multiple Certified Irrigation Manager • To ensure compliance with relevant disaster, offered teachers and students certificates as part of our continued ISA and Australian Standards for intensive counselling. workplace training initiative. environmental management. We were also pleased to support the This plan seeks to integrate best Robinvale Football Club, Euston Football practice wildlife management Club, Robinvale Netball Association, throughout our operations, and to Robinvale Tennis Club, Robinvale align wildlife management as a core Rowing Club, Robinvale/Euston Cricket component of our business. Association, Robinvale Swimming and Diving Associaton, Robinvale District We have also committed to sponsoring Harness Racing Association through a major ecological research project financial donations and donations of with Charles Sturt University to our products. understand how a native species, the Regent Parrot, can thrive in our agricultural environment. This study will look at opportunities to redesign our agricultural operations to minimise any detrimental impact to native species without compromising production or efficiency.
As we grow, so do the com- For personal use only use personal For “munities where we operate – and we are actively supporting people, services, schools and other community groups in Robinvale, Victoria and elsewhere.”
Select Harvests Annual Report 2007 17 Statistical Summary
select harvests consolidated results for years ended 30 June 2007 2006 2005 2004 2003 2002
Total sales 229,498 217,866 173,864 127,381 80,994 78,327 Earnings before interest and tax 40,549 38,369 33,069 23,836 17,421 14,749 Operating profit before tax 40,014 37,903 31,802 22,587 16,110 12,803 Net profit after tax 28,098 26,492 22,104 15,225 10,962 8,554 Earnings per share (Basic) (cents) 71.0 67.1 56.9 40.0 31.3 25.4 Return on shareholders’ equity (% pa) 29.4 26.1 25.1 19.2 18.3 17.3 Dividend per ordinary share (cents) 57.0 53.0 42.0 26.0 18.5 13.5 Special dividend per ordinary share (cents) - 10.0 - - - - Dividend franking (% pa) 100 100 100 100 100 100 Dividend payout ratio (%) 80.0 80.0 75.4 65.7 62.8 54.5 Financial ratios Net tangible assets per share ($) 1.72 1.83 1.52 1.35 1.08 0.77 Net interest cover (times) 75.8 82.3 26.2 19.1 13.3 7.6 Debt/equity ratio (%) 1.7 1.3 1.0 10.2 15.4 38.9 Current asset ratio (times) 1.32 1.82 1.52 1.70 1.61 1.30 Balance sheet data as at 30 June Current assets 70,983 72,455 58,832 32,486 25,077 22,599 Non-current assets 89,170 79,421 78,676 74,469 60,672 63,090 Total assets 160,153 151,876 137,508 106,955 85,749 85,689 Current liabilities 53,680 39,905 38,757 19,077 15,581 17,381 Non-current liabilities 10,969 10,490 10,656 8,610 10,162 18,971 Total liabilities 64,649 50,395 49,413 27,687 25,743 36,352 Net assets 95,504 101,481 88,095 79,268 60,006 49,337 Shareholders’ equity Share capital 41,953 52,665 46,925 43,940 36,206 34,199 Reserves 11,273 12,691 13,766 14,191 9,458 9,458 Retained profits (accumulated losses) 42,278 36,125 27,404 21,137 14,342 5,680 Total shareholders’ equity 95,504 101,481 88,095 79,268 60,006 49,337 Other data as at 30 June
Fullyonly use personal For paid shares (000) 38,739 39,708 39,069 38,525 35,455 34,585 Number of shareholders 2,953 3,369 2,999 2,413 2,054 1,610 Select Harvests’ share price – close ($) 11.60 13.02 9.70 6.67 4.80 3.10 Market capitalisation 449,372 516,998 378,970 256,965 170,184 107,214
$‘000 (except where indicated)
18 Select Harvests Annual Report 2007 Select Harvests Limited Company Secretary ABN 87 000 721 380 P Chambers Registered Office Select Harvests Limited Solicitors 360 Settlement Road Gadens Lawyers Thomastown Vic 3074 Bankers Postal address Australia and New Zealand Banking PO Box 5 Group Limited Contents Thomastown Vic 3074 Auditors Telephone (03) 9474 3544 PricewaterhouseCoopers Facsimile (03) 9474 3588 Email [email protected] Share Register Our mission, strategy, activities and outlook 01 Directors Computershare Investor Services Pty Limited Our business opportunities 02 M A Fremder (Chairman) pg05 Yarra Falls Our business model 03 J Bird (Managing Director) 452 Johnston Street From the Chairman and Managing Director 04 C G Clark (Non‑Executive Director) Abbotsford VIC 3067 Our board of directors 07 G F Dan O’Brien (Non-Executive Telephone (03) 9415 5040 Director) Facsimile (03) 9473 2562 Our executive team 08 From the Chairman and J C Leonard (Non-Executive Director) Managing Director Our orchard development 09 R M Herron (Non-Executive Director) Our orchard management 11 pg09 Our processing 12 Our primary processing 12 Our added-value processing 13 Our sales and marketing 14 Almond pool sales 14 Our orchard development Added-value product sales 16 Our environment, community and people 17 pg11 Statistical summary 18 Financial contents 19 Financial reports 20 Auditor’s declaration 31
Our orchard management Directors’ declaration 86 Independent audit report 87 pg12 ASX additional information 89
Shareholder Information Annual General Meeting 2007/2008 Calendar Our processing
The annual general meeting will be Feb Announcement of interim results For personal use only use personal For held on Friday, 26 October, 2007, Apr Payment of interim dividend pg14 at the Arthur Streeton Auditorium, Aug Announcement of preliminary Sofitel Melbourne, 25 Collins St, full year results Melbourne, Victoria, commencing Sept Annual report to shareholders at 2:00 pm. A separate notice of Oct Payment of final dividend meeting has been posted to all Oct Annual general meeting Our Sales and Marketing shareholders. www.selectharvests.com.au 3ELECTß(ARVESTSß,IMITED3 !".ßßßß!".ß
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