Select Harvests Limited Annual Report 2009

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FY2009 Annual Report · Select Harvests Limited

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Contents

OUR MISSION, STRATEGY, ACTIVITIES AND OUTLOOK . . . . . . . . . . . 1

BUSINESS MODEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

KEY FINANCIAL RESULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

FROM THE CHAIRMAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

OUR BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

FROM THE CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

OUR EXECUTIVE TEAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

MARKETING OUR PRODUCTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

OUR ENVIRONMENT AND COMMUNITY . . . . . . . . . . . . . . . . . . . . . . 13

STATISTICAL SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

FINANCIAL REPORT CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

DIRECTORS’ REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

AUDITORS’ INDEPENDENCE DECLARATION . . . . . . . . . . . . . . . . . . . 26

CORPORATE GOVERNANCE STATEMENT . . . . . . . . . . . . . . . . . . . . . . 27

DIRECTORS’ DECLARATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77

INDEPENDENT AUDITOR’S REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . 78

ASX ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

Our mission, strategy,
activities and outlook

Our mission

Our outlook

is to continue to develop and expand our
business, generating sustainable earnings
growth and delivering increased
shareholder value.

Our strategy

is to develop a fully integrated agri-food
company through ongoing diversiﬁ cation
and expansion of our income streams,
leveraging our core strengths – almond
growing and knowledge of edible nuts and
their markets and to develop sustained
earnings growth and reduced volatility from
agricultural risk.

Our activities

include operating our own orchards,
managing orchards for 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. We have
developed over 36,000 acres of new almond
orchards over the last 10 years positioning us
as a major global player.

Global demand for almonds continues to
grow strongly and based on current plantings
will outstrip supply within ﬁ ve years. This
is supportive of upward pressure on prices.
With existing infrastructure and production
capacity in place in Northern Victoria, and
with land and water to support new orchard
developments in Western Australia, Select
Harvests is well positioned to beneﬁ t from
these opportunities.

Shareholder Information

Annual General Meeting

The annual general meeting will be held on
29th October 2009, at the Soﬁ tel Melbourne,
25 Collins Street, commencing at 10.30am.
A separate notice of meeting has been
posted to all shareholders.

2010 Calendar

Feb Announcement of interim results

Apr

Payment of interim dividend

Aug

Announcement of preliminary
full year results

Sept Annual report to shareholders

Oct

Payment of ﬁ nal dividend

Oct Annual general meeting

Select H
Select Harvests Annual Report 2009

1
1

Business model

“We are now positioned as a major
global player in the almond industry
with state of the art production
facilities and a sales and marketing
reach into growing export markets.
Our product quality and cost
competitiveness is supportive of
proﬁ table growth opportunities for
our domestic and export business.”

JOHN BIRD, CEO

SELECT HARVESTS
OPERATING EARNINGS
BEFORE INTEREST AND
TAX (EBIT)

2008: $30.4M
2009: $34.7M

ORCHARD DEVELOPMENT

- NURSERY

- ORCHARD ESTABLISHMENT

EBIT

2008: $2.7M

2009: NIL

INVESTOR ORCHARDS EBIT
2008: $18.7M
2009: $18.4M
ACRES: 35,296

ORCHARD MANAGEMENT

- ALMOND GROWING

- HARVESTING

EBIT
2008: $5.3M
2009: $9.2M

2008 CROP: 15,000 TONNES
2009 CROP: 22,300 TONNES

PROCESSING

- ALMOND
PROCESSING

- VALUE-ADDED
PROCESSING

EBIT
2008: $2.1M
2009: $3.3M

SALES AND MARKETING

- ALMOND
POOL SALES

- VALUE-ADDED
PRODUCT SALES

COMPANY OWNED
ORCHARDS EBIT

2008: $2.8M

2009: $2.7M

ACRES: 3,368

EBIT
2008: $-1.2M
2009: $1.1M

2008 REVENUE: $124M
2009 REVENUE: $132M

Select Harvests Annual Report 2009

Key ﬁ nancial results

A $’000’s

Sales revenue

EBIT

- Management services

- Almond orchards

Almond division

Food division

Operating EBIT

Corporate costs

248,581

27,570

2,706

30,276

4,459

34,735

(3,240)

EBIT - before Timbercorp bad debt provision

31,495

Timbercorp bad debt provision

(4,668)

EBIT - after Timbercorp bad debt provision

26,827

Net proﬁ t after tax

Net proﬁ t after tax excluding Timbercorp
bad debt provision

16,712

19,980

Year ended 30 June 2009

Year ended 30 June 2008

% increase (decrease)

224,655

26,661

2,853

29,514

925

30,439

(3,320)

27,119

18,130

10.7%

3.4%

(5.2)%

2.6%

382%

14.1%

(2.4)%

16.1%

(1.1)%

(7.8)%

10.2%

ORDINARY DIVIDEND PER SHARE

EARNINGS PER SHARE

CENTS

+8%

+26%

+62%

-21%

+41%

-73%

+6%

+18%

+42%

+28%

-34%

-9%

2004

2005

2006

2007

2008

2009

2004

2005

2006

2007

2008

2009

Select Harvests Annual Report 2009

From the Chairman

The year gone

The last year presented a number of
challenges and at the same time saw the
company deliver a solid result and make a
number of positive advancements in the
development of our business.

The appointment of an Administrator to the
Timbercorp Group in April created signiﬁ cant
disruption and threatened both the viability
of the orchards and the continuation of our
management rights. We have steadfastly
worked towards a favourable outcome for
the company since that time.

Whilst a signiﬁ cant event, it should not
eclipse the progress the company made
during the year. Total revenues increased
by over 10% and, excluding the impact of
the Timbercorp bad debt provision (after
tax impact of $3.3 million), earnings before
Interest and Taxes increased by 16%, Net
Proﬁ t after Taxes increased by 10% and
operating cash ﬂ ows improved.

We have also completed a detailed capital
management strategy and successfully
extended our banking facilities to 30
June 2010.

A record crop was produced while managing
severe water restrictions, our new almond
processing facility is operating above
expectations facilitating an early completion
of 2009 crop processing, and a successful
sales program with impressive export market
development was completed. The food
division continues on its path to improved
returns with Net Sales growing by 6%
and Earnings before Interest and Taxes up
signiﬁ cantly from improved margins. We
have purchased land and been granted water
licenses to support our Western Australia
expansion.

Select Harvests Annual Report 2009

“The underlying organic growth of our
business and signiﬁ cant effort by our
management and employees has been
great in this challenging environment.”

•

CURT LEONARD, CHAIRMAN

Secondly, through the development of
our Western Australian project. We have
invested $8 million in land and been
granted water entitlements which is
sufﬁ cient to develop around 4,500 acres
of a 10,000 acre project. This will be
progressed as investment funds become
available.

Orchard management

The cornerstone of our business model
was the development and management
of substantial almond acreage which
placed us as the number two operator
globally. The demise of Timbercorp put at
risk a substantial portion of this portfolio.
Timbercorp was terminally impacted by
the global ﬁ nancial crisis and regulatory
issues in their market sector. However, the
fundamentals of the international almond
market remain strong and Australia’s
international competitiveness remains in
tact. There is strong investor interest in the
Timbercorp almond orchards and we expect
they will be sold and continue to operate
in the future. In our view Select Harvests
is best placed to operate these orchards
successfully and we expect to play a role in
their future management.

Our strategy since the appointment of
administrators has been threefold:

• Minimise the ﬁ nancial impact on Select

Harvests

• Facilitate the retention of tree health and

productive capacity of the orchards

• Engage with prospective investors to

participate in future ownership and/or
management of the orchards

The orchards are in good health and the 2010
crop set indicates potential for a good 2010
crop. We anticipate an outcome as to the
future ownership of the Timbercorp orchards
will be determined by the end of September.

Future growth

We continue to have several areas of growth
available to Select Harvests.

•

Firstly, with continued management of
the Timbercorp orchards, crop production
will grow from 22,300mt this year to
50,000mt in the next ﬁ ve years. This
will generate proportional increases in
harvesting, processing and selling fees.
We also anticipate expansion within
the Food division as a larger volume of
almonds become available.

• Thirdly, future orchard expansion and/or

acquisition in the Murray/Darling basin
as water supply stabilises.

These options are currently being progressed.

Outlook

The company has renewed borrowing
facilities through to 30 June 2010, which
includes a reduction in the facility of
$10million in December, this is consistent
with our current cash requirements.
We have developed a detailed capital
management plan to guide us through the
current turbulence and also to provide the
framework for future growth.

There is still some uncertainty as to the
ﬁ nal outcome of the Timbercorp orchards
and our participation in their ownership
and management. We therefore took the
difﬁ cult decision to further conserve cash
and not pay a ﬁ nal dividend. The company
expects to resume dividend payments once
cash ﬂ ows are normalised and certainty has
come to ownership and management of
these orchards.

While it is not possible to make speciﬁ c
forecasts with this uncertainty, we remain
conﬁ dent of a growing and proﬁ table future.
Our business model is sound and Select
Harvests has the necessary capabilities and
capacities in place to service our planned
growth.

The demand for almonds globally remains
strong, Australia’s world competitiveness
remains in tact and we continue to market
increased tonnages to premium export
markets. Select Harvests is a world class
grower, processor and marketer, handling
65% of Australia’s almonds.

In my view Select Harvests is in the right
product, in the right place, at the right time.

I would like to take this opportunity to thank
our directors and staff for their efforts
during this challenging and uncertain time.

Our board of directors

CURT LEONARD
Chairman

JOHN BIRD
CEO

MICHAEL CARROLL
Non-Executive Director

Joined the Board on 21 July 2004. Has held
senior management positions with the Mars
group of companies in Australia including
General Manager of Mars Confectionery,
Managing Director of Uncle Ben’s, and
Managing Director of Mars Australia and
New Zealand. In addition, he has served as
President, Asia Paciﬁ c of all Mars businesses,
and a Director of the Managing Board of Mars
Incorporated global business. Is a Director
of Patties Foods Limited. Is Chairman of
the Board, a member of the Audit and Risk
committee and Remuneration Committee.

Became the CEO of Select Harvests
Limited in January 1998. Has had many
years’ experience in the food industry and
international trade. Formerly Managing
Director of Jorgenson Waring Foods.
Appointed Managing Director and joined the
Board in September 2001. Member of the
Nomination Committee.

Joined the board on 31 March, 2009.
He works with a range of agribusiness
companies in a board and advisory capacity,
and has directorships with Meat and
Livestock Australia and the Rural Finance
Corporation. He has 18 years’ experience
in banking and ﬁ nance, having lead and
established the Agribusiness division
within the National Australia Bank. He has
worked for a number of companies in the
agricultural sector including Monsanto
Agricultural Products and a venture capital
biotechnology company. He is Chairman
of the Remuneration Committee, and a
member of the Audit and Risk Committee
and Nomination Committee.

ROSS HERRON
Non-Executive Director

Joined the board on 27 January 2005. A
Chartered Accountant, Mr Herron retired as
a Senior Partner of PriceWaterhouseCoopers
in December 2002. He was a member
of the Coopers & Lybrand (now
PricewaterhouseCoopers) Board of Partners
where he was National Deputy Chairman
and was the Melbourne ofﬁ ce Managing
Partner for six years. He also served on
several international committees within
Coopers & Lybrand. He is a Non-Executive
Director of GUD Holdings Ltd, Heemskirk
Consolidated Ltd, Royal Automobile Club
of Victoria (RACV) Ltd and a major industry
superannuation fund. Chairman of the Audit
and Risk Committee, and member of the
Remuneration and Nomination Committees.

MAX FREMDER
Non-Executive Director

Joined the board in March 1996 and from
that time was Chairman of The Board until
retiring from this position on 15 August,
2008. Formerly a director of IAMA Limited,
and founder of Nufarm, one of Australia’s
largest chemical manufacturers for the
rural industry. Mr Fremder also was a Non-
Executive Director of Tassal Limited between
3 October 2003 and 18 March 2005. Member
of the Remuneration Committee, Audit
and Risk Committee and Chairman of the
Nomination Committee.

Select Harvests Annual Report 2009

From the CEO

JOHN BIRD, CEO

Milestones

In a challenging period for the company
we have successfully reached a number of
operational and strategic milestones:

• Produced a record almond crop up 40%

on the previous year

•

Successfully managed another year of
reduced water supply delivering crop
yields within the normal range

• Operated the new almond processing
plant at anticipated throughputs
facilitating completion of 2009 crop
processing by September

•

Successfully marketed the 2009 almond
crop further developing and expanding
export markets

• Grew domestic consumption of almonds

and increased market share

• Bedded down the consolidation of the
food division on one site in Melbourne

• Achieved a turnaround in food

division earnings

• Acquired land and water licenses to
support 4,500 acres of new almond
developments in Western Australia

Capabilities and Competitive
Position

Select Harvests has grown almonds for over
30 years and has recently driven the growth
of the Australian industry, developing
36,500 acres of new almond orchards. In
parallel with this expansion Select Harvests
has developed capability and capacity to
successfully manage all facets of a large scale
almond operation from the orchard through
to the consumer.

Select Harvests currently manages 38,500
acres of almond orchards which is the second
largest area globally.

Almond farming is highly mechanised and
requires signiﬁ cant investment in farming
and harvesting equipment and processing
capacity. Due to the rapid growth and
the high proportion of non–bearing acres
currently planted in Australia, harvesting
and processing capacities are inadequate
for future requirements. As trees mature
signiﬁ cant investment will be required
to bridge the gap. Select Harvests has
sufﬁ cient harvesting and processing
capacity for the total area currently under
our management and the future tonnages
that will come from these orchards. This
infrastructure represents approximately 60%
of Australia’s future capacity requirements,
representing an investment value of around
$90 million.

Over the last 15 years, Select Harvests has
developed a strong international reputation
and well established export markets.
Our food division provides added value

SELECT HARVESTS ALMOND PRODUCTION FORECAST

S
E
N
N
O
T

60,000

50,000

40,000

30,000

20,000

10,000

2002 2003 2004

2005 2006

2007 2008

2009

2010

2011

2012

2013

2014

SELECT HARVESTS

INVESTORS

Select Harvests Annual Report 2009

capabilities and distribution to retailers, food
manufacturers and other food distributors.
As a result Select Harvests provides a strong
and sustainable outlet for almonds into
the domestic market which will be further
developed as our crop increases.

We believe the above capabilities best
position Select Harvests to provide ongoing
management services to the orchards
we currently manage and to maintain
our leadership position in the further
development of the Australian almond
industry.

2009 Almond Crop

The 2009 crop was a record 22,300 tonnes,
contributing around 65% of Australia’s
almond production. The harvest program
proceeded with minimal interruption and
good kernel size and quality assisted the
selling program.

As a result of orchard maturity and strong
yields from young trees, the crop exceeded
the previous year by 40%. The trees currently
under our management will produce annual
crops of around 50,000 tonnes by 2014.

Orchard Operation

Water restrictions were again in place during
the 2009 crop growing season, necessitating
the purchase of temporary water and
reductions in water applications to around
80% of normal. Irrigation techniques
developed in recent years again delivered
normal yields on less water. While producing
acceptable results in the circumstances,
lower water applications may be limiting
yields. This provides potential upside when
water availability and cost improve. We
continue to collaborate with researchers,
industry and government to deliver improved
irrigation and nutrition efﬁ ciencies and
higher yields.

The cost of producing the 2009 crop was
impacted by spiralling world fertiliser
costs, perfectly timed with our major
application period. Prices have since eased
signiﬁ cantly, which will deliver cost savings
for the 2010 crop.

Despite interruptions caused by the demise
of Timbercorp, the orchards remain in good
health and to date the development of the
2010 crop has progressed well.

Water

Almond Processing

Almond Sales

We have recently commenced a third year
of water restrictions which as previously
outlined has created a cost issue rather
than a supply issue. The operation of the
water market facilitates the transfer of
available water to crops which deliver
higher gross margin per megalitre of water
(such as almonds) and also provides an
attractive return to the seller. Therefore the
consequence of water restrictions has been
an increase in the cost of almond production.

CROP MURRAY
YEAR

ALLOCATION COST OF

AVERAGE

COST
PER ACRE

2007

95%

TEMPORARY
WATER
$80/ML

NIL

2008

43%

$900/ML

$1,680

2009

38%

$305/ML

$690

The Murray system commenced the 2009/10

season with dry catchments and low storage.

Reasonable rains, particularly in August have

improved inﬂ ows and storages are currently

approximately 5% above last year. Recent

inﬂ ows have been the best since 2007 and

follow up rains if they occur will result in

further inﬂ ow responses.

We expect allocations will be at least in line

with last year with potential upside. The

current allocation is 13% (6% last year).

The new almond processing facility came
online late in the 2008 season. This state
of the art plant represents investment of
$35million and has an annual capacity of
around 40,000 tonnes. Together with our
existing processing facility which specialises
in inshell products for the Indian and Chinese
markets (capacity of around 15,000 mt), we
have sufﬁ cient capacity to efﬁ ciently process
future tonnages from orchards currently
under our management.

The new facility consolidates the full
production process from nut receival
to ﬁ nished product despatch. The ﬁ nal
commissioning of the facility was completed
prior to the commencement of the 2009 crop
harvest. The plant has operated efﬁ ciently at
the rated capacity through the season and
has produced high quality almond kernels in
line with our expectations.

The increased processing capacity has
facilitated completion of 2009 crop
processing prior to the end of September
and has enabled us to maximise export
opportunities prior to the commencement
of USA 2009 almond crop shipments.

Our sales team was challenged with a 40%
increase in volume from the 2009 crop and
competition from a record USA crop, which
in turn was contending with the global
ﬁ nancial crisis and slowing demand
particularly from Europe.

Despite these challenges we are currently
completing a successful selling program
having contracted over 90% of the 2009 crop
and shipped 77% by the end of September
assisting cash ﬂ ow and the timing of returns
to investors.

Our export program focuses on growth
markets and particularly markets where
almonds are consumed in the natural form
and Australian quality can be leveraged.

The 2009 crop sales program has
signiﬁ cantly increased penetration in the
key growth markets of India, Middle East
and China and increased export volumes
by 53%. The program has further enhanced
Australia’s reputation in the high end of
the market.

Almond consumption in Australia continues
to grow and during the year we increased
domestic sales volume by 20%. Consistent
with our added value strategy we continue
to develop almond distribution through our
food division and year on year we
have increased volumes by 22% through
this channel.

In conjunction with The Australian Almond
Board we ran successful new season and
almond blossom promotional events
with support from major retailers. These
promotions have delivered signiﬁ cant sales
growth and we plan to develop these themes
as annual promotional events.

Select Harvests Annual Report 2009

USA Almonds

Supply

Following ﬂ at supply from 2002 to 2006
USA produced two large crops on the back
of increased acreage and improved yields
with a record 2008 crop at 1.61 billion lbs
up 16% on the previous year. The 2009
crop is currently being harvested and is
forecasted to be down on the 2008 by
18% at 1.35 billion lbs.

Demand

With a record crop to sell, the USA 2008
crop sales program commenced strongly
but stalled in the last quarter as demand
from Europe (the major export market)
evaporated.

Sales recovered dramatically from February
2009 with consecutive record shipments
driven by emerging markets particularly
India, China and the Middle East.
The 2009 crop season commenced in
August with another record up 20% on
the previous year and double shipments
of the 2006 crop.

USA ﬁ nished the year with record
shipments of 1.380 million up 10% on the
previous year and a continuation of the
growth story from the start of the decade
with the only interruption being supply
restrictions between 2002 to 2005. The
forecasted 2009 crop of 1.350 billion lbs
puts current annual supply and demand in
balance.

Australian Almonds

Supply Position

The Australian almond industry has
long been known for international
competitiveness due to high yields and
product quality. Driven by this competitive
position, the industry experienced a
period of rapid expansion between 2001
and 2007. Now well positioned as a
global player, Australia has more than
67,500 acres of almonds, 65% of which are
currently managed by Select Harvests.

The 2009 Australian almond crop is
estimated at 36,000 metric tonnes, up 38%
on 2008. In excess of 60% of Australia’s
2009 almond production has come from
Select Harvests managed orchards. Future
production increases from newly planted

USA ANNUAL PRODUCTION

)
S
B
L
N
O
I
L
L
I

(

1,800
1,600
1,400
1,200
1,000
800
600
400
200
0

2
8
9
1

3
8
9
1

4
8
9
1

5
8
9
1

6
8
9
1

7
8
9
1

8
8
9
1

9
8
9
1

0
9
9
1

1
9
9
1

2
9
9
1

3
9
9
1

4
9
9
1

5
9
9
1

6
9
9
1

7
9
9
1

8
9
9
1

9
9
9
1

0
0
0
2

1
0
0
2

2
0
0
2

3
0
0
2

4
0
0
2

5
0
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

CROP (MILLION LBS)

BEARING ACRES

KG/ACRE

MONTHLY USA ALMOND SHIPMENTS (DOMESTIC AND EXPORT)

)
S
B
L
N
O
I
L
L
I

(

180

160

140

120

100

AUG

SEP

OCT

NOV

DEC

JAN

FEB

MAR

APR

MAY

JUN

JUL

2006/07

2007/08

2008/09

2009/10

USA ALMOND CROP ANNUAL SHIPMENTS

)
S
B
L
N
O
I
L
L
I

(

1,400.0

1,200.0

1,000.0

800.0

600.0

400.0

200.0

0.0

483

525

520

534 556 536 499

609

468

533 612 573

482

398

304

1389

1261

982 1024 984

1066

914

713 740 821

4
8
9
1

5
8
9
1

6
8
9
1

7
8
9
1

8
8
9
1

9
8
9
1

0
9
9
1

1
9
9
1

2
9
9
1

3
9
9
1

4
9
9
1

5
9
9
1

6
9
9
1

7
9
9
1

8
9
9
1

9
9
9
1

0
0
0
2

1
0
0
2

2
0
0
2

3
0
0
2

4
0
0
2

5
0
0
2

6
0
0
2

7
0
0
2

8
0
0
2

AUSTRALIAN ALMOND PLANTINGS

S
E
R
C
A

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0
1990 1991

1992

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

SELECT HARVESTS

ALMOND INDUSTRY

Select Harvests Annual Report 2009

orchards, will see Australia eclipse Spain as
the number two producing country within
the next six years. At full maturity Australia’s
almond production is expected to reach
80,000 metric tonnes, with Select Harvests
managed orchards to generate more than
50,000 tonnes, 60% of this total.

S
E
N
N
O
T

Market Position

Australia has been exporting almonds to
the major international markets for many
years and market acceptance of our product
has always been strong. The challenge has
been to maintain global relevance with
low volumes historically available. In more
recent years increased tonnages and the
prospect of continuing growth has allowed
us to signiﬁ cantly increase distribution in key
markets and further develop the Australian
origin as a internationally recognised quality
supplier of almonds.

Australia now has a signiﬁ cant presence in
major almond markets around the globe
and is achieving strong sales growth in the
key markets of India, China and the Middle
East, all consumers of natural almonds
which is well aligned to Australia’s quality
advantages.

Interestingly, 2009 almond exports to the
Middle East are likely to surpass Europe,
historically one of Australia’s largest
export markets, emphasising the growing
importance of this developing region.

Global Almonds

Future Supply and Demand

There are limited areas suitable for
commercial almond production. Supply
increases in the last 20 years have been
driven by expansion in USA and more
recently Australia.

New developments have stalled in both
locations and water and land availability
will constrain future orchard development
particularly in the short term.

Almond consumption has grown by 9% per
annum globally over the last 10 years.

Consumption growth of 5% per annum over
the next four years will absorb production
increases as young trees mature applying
pressure to supply and pricing.

The growth rates of emerging markets
suggest 5% is conservative.

AUSTRALIAN ALMOND PRODUCTION FORECAST
90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

2000

2001 2002 2003 2004

2005 2006

2007 2008

2009

2010

2011

2012

2013

2014

SELECT HARVESTS

ALMOND INDUSTRY

AUSTRALIAN ALMOND EXPORTS 2008/9

Netherlands 3%

Saudi Arabia 3%

China 3%

Other 10%

India 39%

France 4%

United
Kingdom 4%

Germany 6%

Spain 7%

New Zealand 8%

United Arab Emirates 13%

WORLD ALMOND SUPPLY VS DEMAND

)
S
B
L

N
O
I
L
L
I

(

3,000

2,500

2,000

1,500

1,000

500

5
9
9
1

6
9
9
1

7
9
9
1

8
9
9
1

9
9
9
1

0
0
0
2

1
0
0
2

2
0
0
2

3
0
0
2

4
0
0
2

5
0
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

WORLD PRODUCTION

ANNUAL SUPPLY

DEMAND

CARRY-OUT

Select Harvests Annual Report 2009

4
9
-
R
A
M

4
9
-
P
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5
9
-
R
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5
9
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6
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6
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7
9
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7
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8
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8
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9
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4
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4
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5
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5
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6
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6
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7
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8
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9
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Pricing

ALMOND PRICE AUD/KG NONPAREIL

$14.00

$12.00

$10.00

$8.00

$6.00

$4.00

$2.00

$0.00

While almonds were not immune to the
impact of the global ﬁ nancial crisis the
fundamentals of the international almond
market remain strong with potential for
upward price movement.

The large USA 2008 crop and reduced
demand from Europe (the major buyer of
manufacturing grades) has resulted in an
oversupply of these grades while premium
varieties and grades effectively sold out.

As a result premium grades (particularly
nonpareil variety) have traded at reasonable
prices while manufacturing grades have
traded at record discounts.

The European market has commenced a
slow recovery and with a lower crop and
continued strong demand from emerging
markets we are seeing a reduction in price
differentials for the lower grades which we
expect to continue as the crop year develops.

Food Division

The food division delivered an improved
result for the year as a result of gains across
sales, margin and costs on the back of the
rationalisation and consolidation program.

Decommissioning of the Brisbane facility
and the consolidation of our food division
at the Melbourne processing facility took
place at the commencement of the year. This
was followed by a period of implementation
and integration which is now complete.
The consolidation has reduced overheads
and improved operating efﬁ ciencies which
are delivering lower costs and enhanced
customer service.

Sales grew for the year by 6% and we
achieved a number of distribution and
market share improvements which resulted
in our major brand “Lucky” reaching its
highest market share position since 2006.

The focus on almond sales continues with
volumes increasing by 22% due to increased
sales across a number of market sectors.
Major promotional programs around key
dates on the almond calendar (new season
and almond blossom) have delivered strong
sales results and these themes will be further
developed in the future.

This division operates in a very
competitive environment making margin
management crucial to success. We saw
some improvement during the year and
management continues to focus in this
area. Going forward we will receive some
assistance from lower commodity pricing
and a stronger Australian dollar.

Select Harvests Annual Report 2009

Western Australia Expansion

Cost and availability of land and water in
Australia’s traditional growing areas along
the Murray River prompted the identiﬁ cation
of alternative locations to grow almonds.
Following an extensive review we identiﬁ ed
the Dandaragan plateau in the Northern
wheat belt of Western Australia as suitable
for almond production with a reliable and
cost effective water resource.

The company has spent four years in
investigation and project development which
has culminated in obtaining water licenses to
extract 22,000 megalitres of water annually
for almond production. Select Harvests has
purchased properties suitable for almond
growing which together with the water
licenses will support approximately 4,500
acres of almond development. The company
has received approval from the Western
Australia government to commence
development once funding is available.

We believe that the current land and
water availability in Western Australia
could support 10,000 acres of almond
development providing scale and
diversiﬁ cation to our business.

Our executive team

TIM MILLEN
Horticultural Manager

PETER ROSS
Operations Manager Almond Division

KIM MARTIN
Operations Manager Food Division

Joined Select Harvests in 1996. Tim has
over 18 years’ experience in horticulture.
He has held senior horticultural positions
in operations management, as well as
holding the roles of Technical Ofﬁ cer and
Horticulturist. Prior to commencing with
Select Harvests, Tim was Orchard Manager
for an Australian and New Zealand Nashi,
Stonefruit and Pipfruit operation.

Joined Select Harvests in 1999. Peter
held the position of Plant and then Project
Manager for the processing area of the
Almond Division before being appointed
to his current role in July of this year. Prior
to commencing with Select Harvests, Peter
ran his own maintenance and fabrication
business servicing agriculture, mining and
heavy industry.

Joined Select Harvests in 2007. Kim has
spent the majority of her career with Mars
Confectionery and Masterfoods, part of
Mars Inc. She started her career as an
accountant before moving to manufacturing.
In the last 10 years, Kim has held various
senior manufacturing and supply chain
management roles. Prior to joining Mars, Kim
worked with PriceWaterhouseCoopers in the
Audit division.

LAURENCE VAN DRIEL
Trading Manager

Joined Select Harvests in 2000. Laurence
has over 20 years’ experience in trading
edible nuts and dried fruits. He has a
comprehensive knowledge of international
trade and deep insights into the trading
cultures of the various countries in which
these commodities are sold. He has held
senior purchasing and sales management
positions with internationally recognised
companies.

MATTHEW GRAHAM
Sales & Marketing Manager Food
Division

PAUL CHAMBERS
Chief Financial Ofﬁ cer & Company
Secretary

Joined Select Harvests in August 2007 as
Grocery Channel Manager, and moved into
the Group Manager Sales & Marketing
role in March 2009. Previously to this he
has developed his multi channel FMCG
experience through senior management
roles at both Mars Food, and Nestle
Confectionery. His experience includes
Channel and Customer Management roles
across our major Grocery customers.

Joined Select Harvests in 2007. Paul
is a Chartered Accountant and has over
20 years’ experience in senior ﬁ nancial
management roles in Australian and
European organisations. Most recently,
he was CFO, Henkel ANZ and prior to that
he held corporate positions with the Fosters
Group. He has managed complex change,
acquisition and business integration projects.

CEO: JOHN BIRD

HORTICULTURAL
MANAGER:
TIM MILLEN

OPERATIONS MANAGER
ALMOND DIVISION:
PETER ROSS

OPERATIONS MANAGER
FOOD DIVISION:
KIM MARTIN

TRADING MANAGER:
LAURENCE VAN DRIEL

SALES & MARKETING
MANAGER FOOD DIVISION:
MATTHEW GRAHAM

CFO & COMPANY
SECRETARY:
PAUL CHAMBERS

Select Harvests Annual Report 2009

Marketing our
products

Almonds

Lucky Brand

The Lucky brand has clearly demonstrating
that it is a favourite with Australian
consumers. Lucky has consolidated its
market leadership position having achieving
its highest market share position for over
3 years at 40%+. This strong performance
was generated by a targeted print media
campaign during Christmas and the launch
of a number of new products. Expansion
of our larger ‘snacking’ packs range and
the introduction of Lucky “add nuts” has
answered consumer needs in both the
healthy snacking and value-add cooking
section. Promotional activity at events
such as the Good Food & Wine shows in
Melbourne, Sydney and Brisbane have
assisted in raising brand awareness and
driving distribution through our key
retail partners.

Driving almond consumption is the core focus of
Select Harvests’ marketing program.In partnership
with the Almond Board of Australia (ABA), we
have raised awareness of Australian almonds and
signiﬁ cantly increased consumption growth.

Together with our orchard investors, Select
Harvests are major contributors and supporters
of the ABA’s almond marketing program. This year
we have successfully participated in an expanded
industry program focused on developing a calendar
of annual events and themes in order to showcase
Australian almonds to Australian consumers.

April saw the launch of an annual “New Season”
almond promotion incorporating an eye catching
“almond dress” highlighting Australia’s new season
almonds, encouraging consumers to enjoy the
unique taste of almonds fresh from the tree.

This was followed by a promotion in August
during the spectacular almond blossom season,
celebrating the natural beauty of almond orchards
in bloom. This campaign showcased the natural
goodness of Australian almonds and included
hosting a regional blossom festival at Select
Harvests orchards.

This annual campaign will be completed with
a third event, ‘New Year New Heart’ in January,
primarily focusing on the ‘healthy heart’ message.
As consumers make New Year resolutions, January
is a great time to promote snacking on healthy
Australian almonds.

Select Harvests participation in these industry-wide
promotional programs, together with our direct
marketing activities has driven signiﬁ cant almond
sales growth. Working together with the Almond
Board of Australia, Select Harvests now intends
to further develop and establish these events and
themes into an annual promotions calendar.

A recently released industry communication “All
About Australian Almonds”, showing Australian
almonds been inserted into this year’s Annual Report.

Select Harvests Annual Report 2009

Our environment
and community

Our environment

Our community

Select Harvests remains committed to
two key environmental issues: water
management and wildlife management.

Select Harvests plays an important role
in supporting a number of community
activities within the Robinvale regions.

We have been proud supporters of the
emerging Mallee Almond Blossom Festival.
This event helps to showcase the beauty
of the Australian almond blossom season
and also the natural goodness of Australian
almonds.

Other community organisations that we
support include the Robinvale Secondary
College Chaplaincy, the Euston Pre-School
and the Wemen progress Association.

Our water management processes revolves
around a continuous improvement plan of
reducing water inputs while maintaining
crop yield. To achieve this objective, water
wastage is minimised and the water used
by the trees, maximised. Select Harvests
continues to invest in important research
trials to take the next step in water
efﬁ ciency.

This emphasis on water management has
made the almond industry one of the most
efﬁ cient water converters in Australia.

In terms of wildlife management, Select
Harvests is committed to ecological
sustainability.

We actively maintain the health of the
wildlife corridors within our orchards that
provides the habitat for native wildlife. These
corridors link feeding and breeding grounds
together.

A major joint environmental research
project with the Charles Sturt University
is progressing. This project, which is also
supported by the Victorian, New South
Wales and South Australian governments,
seeks to understand how to maximise both
production and conservation outcomes.
A case study around the Regent parrot is
central to this project.

Select Harvests Annual Report 2009

Statistical summary

SELECT HARVESTS CONSOLIDATED RESULTS FOR YEARS
ENDED 30 JUNE

2009

2008

2007

2006

2005

2004

248,581

224,655

229,498

217,866

173,864

26,827

23,047

16,712

27,119

40,549

38,369

33,069

25,384

40,014

37,903

18,130

28,098

26,492

31,802

22,104

42.6

16.6

12.0

100

28.2

1.56

7.1

51.9

0.79

46.7

19.3

45.0

100

71.0

29.4

57.0

100

67.1

26.1

53.0

10.0

100

96.4

80.0

1.41

15.6

49.7

0.87

1.57

75.8

1.7

1.32

1.83

82.3

1.3

1.82

56.9

25.1

42.0

100

75.4

1.52

26.2

1.0

1.52

127,381

23,836

22,587

15,225

40.0

19.2

26.0

100

65.7

1.35

19.1

10.2

1.70

(cents)

(%)

(cents)

(%)

(times)

(%)

(times)

81,075

77,014

133,884

118,934

70,983

89,170

72,455

79,421

58,832

32,486

78,676

74,469

214,959

195,948

160,153

151,876

137,508

106,955

102,348

88,162

53,680

39,905

11,735

13,715

10,969

10,490

114,083

101,877

64,649

50,395

38,757

10,656

49,413

19,077

8,610

27,687

100,876

94,071

95,504

101,481

88,095

79,268

46,433

12,949

41,494

100,876

44,375

11,235

38,461

94,071

41,953

11,273

42,278

52,665

46,925

43,940

12,691

36,125

13,766

27,404

14,191

21,137

95,504

101,481

88,095

79,268

(000)

39,519

39,009

38,739

39,708

39,069

38,525

3,296

3,319

2,953

3,369

2,999

2,413

($)

2.16

6.00

11.60

13.02

9.70

6.67

85,361

234,054

449,372

516,998

378,970

256,965

Total sales

Earnings before interest and tax

Operating proﬁ t before tax

Net proﬁ t after tax

Earnings per share (Basic)

Return on shareholders’ equity

Dividend per ordinary share

Special dividend per ordinary share

Dividend franking

Dividend payout ratio

Financial ratios

Net tangible assets per share

Net interest cover

Net debt/equity ratio

Current asset ratio

Balance sheet data as at 30 June

Current assets

Non-current assets

Total assets

Current liabilities

Non-current liabilities

Total liabilities

Net assets

Shareholders’ equity

Share capital

Reserves

Retained proﬁ ts

Total shareholders’ equity

Other data as at 30 June

Fully paid shares

Number of shareholders

Select Harvests’ share price

- close

Market capitalization

$ ‘000 (except where indicated)

Select Harvests Annual Report 2009

Financial report
contents

DIRECTORS’ REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

CORPORATE GOVERNANCE STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

INCOME STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

BALANCE SHEETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

STATEMENT OF CHANGES IN EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

CASH FLOW STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

NOTES TO THE FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

1. Summary of signiﬁ cant accounting policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

2. Financial risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

3. Critical accounting estimates and judgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

4. Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

5. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

6. Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

7. Discontinued Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

8. Dividends Paid or Proposed for on Ordinary Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

9. Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

10. Receivables (Current) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

11. Inventories (Current). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

12. Derivative Financial Instruments (Current) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

13. Receivables (Non Current) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

14. Other Financial Assets (Non current) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

15. Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

16. Deferred Tax Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

17. Biological Assets – Almond Trees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

18. Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

19. Trade And Other Payables (Current) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

20. Interest Bearing Liabilities (Current) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

21. Provisions (Current). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

22. Trade And Other Payables (Non current) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

23. Secured Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

24. Deferred Tax Liabilities (Non Current) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

25. Provisions (Non Current) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

26. Contributed Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

27. Reserves And Retained Proﬁ ts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

28. Reconciliaton Of The Net Proﬁ t After Income Tax

To The Net Cash Flows From Operating Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63

29. Expenditure Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

30. Events Occuring After Balance Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65

31. Earnings Per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65

32. Remuneration of Directors and Key Management Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

33. Remuneration Of Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

34. Related Party Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

35. Segment Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

36. Interest Rate Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

37. Controlled Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

38. Employee Beneﬁ ts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

39. Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

DIRECTORS’ DECLARATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS
OF SELECT HARVESTS LIMITED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

ASX ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

SelSelSelSelee eeecectectectect H H HHaHaHaHaHaHaHaaaH rrvrvrververvestsstsstsstsstsss A A A AnAnAnAnAnAnAnAnnuanuan l Rl Rl Rl Repoepoeportrt rtrt 2002002002000 999
Select Harvests Annual Report 2009

1515155
15

Directors’ Report

The directors present their report together with the ﬁ nancial report of Select Harvests Limited and controlled entities (referred to
hereafter as the “consolidated entity”) for the year ended 30 June 2009.

Directors

The qualiﬁ cations, experience and special responsibilities of each person who has been a director of Select Harvests Limited at any
time during or since the end of the ﬁ nancial year is provided below, together with details of the company secretary as at the year end.
Directors were in ofﬁ ce for this entire period unless otherwise stated.

Names, qualiﬁ cations, experience and special responsibilities

J C Leonard, B.Mktng & Bus. Admin, MBA (Chairman)

Joined the Board on 21 July 2004. Has held senior management positions with the Mars group of companies in Australia including
General Manager of Mars Confectionery, Managing Director of Uncle Bens, and Managing Director of Mars Australia and New
Zealand. In addition, he has served as President, Asia Paciﬁ c of all Mars businesses, and a Director of the Managing Board of Mars
Incorporated global business. Is a Director of Patties Foods Limited. He is Chairman of the Board, a member of the Audit and Risk
Committee, Remuneration Committee and Nomination Committee.

Interest in Shares and Options: 615,628 fully paid shares

M A Fremder (Non – Executive Director)

Joined the board in March 1996 and from that time was Chairman of The Board until retiring from this position on 15 August, 2008.
Formerly a director of IAMA Limited, and founder of Nufarm, one of Australia’s largest chemical manufacturers for the rural industry.
Mr Fremder also was a Non-Executive Director of Tassal Limited between 3 October 2003 and 18 March 2005. Member of the
Remuneration Committee, Audit and Risk Committee, and Chairman of the Nomination Committee.

Interest in Shares and Options: 5,777,234 fully paid shares.

J Bird (Managing Director)

Became the CEO of Select Harvests Limited in January 1998. Has had many years’ experience in the food industry and international
trade. Formerly Managing Director of Jorgenson Waring Foods. Appointed Managing Director and joined the Board in September 2001.
Member of the Nomination Committee.

Interest in Shares and Options: 619,522 fully paid shares.

G F Dan O’Brien, B Sc, B VMS, MBA (Non-Executive Director)

Joined the Board on 29 March 2004. Dan is the principal of Dromoland Capital, a private equity group, non-executive director of
Thomas & Coffey Limited, and is also the Chairman of Hexima Limited. Mr O’Brien has signiﬁ cant commercial experience having
held CEO positions for BIL Australia Limited, Mattel Asia Paciﬁ c, and The King Island Company. He holds an MBA, having graduated
with distinction from Harvard Business School and is a qualiﬁ ed veterinary surgeon. Member of the Audit and Risk Committee,
Remuneration Committee, and member of the Nomination Committee. Mr O’Brien was a director of SPC Ardmona Limited between 9
January 2002 and 4 March 2005, and a director of Coates Hire Limited between 15 September 2003 and 9 January 2008.

Interest in Shares and Options: 59,349 fully paid shares.

Resigned as a Director on 23 June 2009

R M Herron, FCA & FAICD (Non-Executive Director)

Joined the Board on 27 January 2005. A Chartered Accountant, Mr Herron retired as a Senior Partner of PricewaterhouseCoopers in
December 2002. He was a member of the Coopers & Lybrand (now PricewaterhouseCoopers) Board of Partners where he was National
Deputy Chairman and was the Melbourne ofﬁ ce Managing Partner for six years. He also served on several international committees
within Coopers & Lybrand. He is a Non-Executive Director of GUD Holdings Ltd, Heemskirk Consolidated Ltd, Royal Automobile Club
Of Victoria (RACV) Ltd and a major industry superannuation fund. Chairman of the Audit and Risk Committee,
and a member of the Remuneration Committee and Nomination Committee.

Interest in Shares and Options: 18,772 fully paid shares.

M Carroll, BSC, MBA (Non- Executive Director)

Joined the board on 31 March, 2009. He works with a range of agribusiness companies in a board and advisory capacity, and has
directorships with Meat and Livestock Australia and the Rural Finance Corporation. He has 18 years’ experience in banking and ﬁ nance,
having lead and established the Agribusiness division within the National Australia Bank. He has worked for a number of companies in
the agricultural sector including Monsanto Agricultural Products and a venture capital biotechnology company. He is Chairman of the
Remuneration Committee, and a member of the Audit and Risk Committee and Nominations Committee.

Interest in Shares and Options: 0 fully paid shares.

Select Harvests Annual Report 2009

Directors’ Report

P Chambers, BSc Hons, ACA (Chief Financial Ofﬁ cer and Company Secretary)

Joined Select Harvests as Chief Financial Ofﬁ cer and Company Secretary in September 2007. He is a Chartered Accountant and
has over 20 years’ experience in senior ﬁ nancial management roles in Australian and European organisations, including corporate
positions with the Fosters Group. Most recently, was CFO of Henkel Australia and New Zealand.

Interest in shares and options: 0 fully paid shares.

Corporate Information

Nature of operations and principal activities

The principal activities during the year of entities within the consolidated entity were:

Processing, packaging, marketing and distribution of edible nuts, dried fruits, seeds, and a range of natural health foods, and

The growing, processing and sale of almonds to the food industry from company owned almond orchards, the provision of
management services to external owners of almond orchards, including orchard development, tree supply, farm management,
land rental and irrigation infrastructure, and the marketing and selling of almonds on behalf of external investors.

There were no other signiﬁ cant changes in the nature of the activities of the consolidated entity in the ﬁ nancial year.

Employees
The consolidated entity employed 366 full time employees as at 30 June 2009 (2008: 340 employees).

Review and results of operations
Proﬁ t attributable to the members of Select Harvests Limited for the year ended 30 June 2009 was $16.7 million compared to $18.1
million in 2008. 2009 includes before tax provisions of $4.7 million for the impact of lost revenues pertaining to the administration
of Almond Management Pty Ltd, a subsidiary of Timbercorp Limited.

For additional information refer to the announcement lodged with the ASX and the report before the Appendix 4E.

Signiﬁ cant changes in the state of affairs
No signiﬁ cant changes in the state of affairs of the consolidated entity occurred during the ﬁ nancial year.

Signiﬁ cant events after the balance date
On 28 August 2009, the Directors resolved that no ﬁ nal dividend will be paid in relation to the ﬁ nancial year ended 30 June 2009.
This decision was made to preserve cash in the context of current uncertainties pertaining to the liquidation of Timbercorp. On
8 July 2009 the approval was granted for the extension of bank debt facilities until the next review date on 30 June 2010. An
undertaking of this facility is that a repayment of $10 million is made by 15 December 2009. The Board is conﬁ dent that through
a range of capital management initiatives, the undertaking to reduce debt and meet banking covenants can be achieved. Since
the 30 June 2009, the company has been involved in extensive discussions with the liquidator of Timbercorp relating to the future
management of the Timbercorp almond orchards. The Board is conﬁ dent that agreement will soon be reached to secure future
management rights over these orchards through a restructured ownership model. No other matters or circumstances have arisen
since the end of the ﬁ nancial year which signiﬁ cantly affected or may signiﬁ cantly affect the operations of the consolidated entity,
the results of those operations, or the state of affairs of the consolidated entity in future ﬁ nancial years.

Likely developments and expected results
For comments on the outlook period refer to the announcement lodged with the ASX and the report before Appendix 4E.

Environmental regulation and performance
The consolidated entity’s operations are subject to environmental regulations under laws of the Commonwealth or of a State or
Territory. Details of the consolidated entity’s performance in relation to such environmental regulations follow:

The consolidated entity holds licences issued by the Environmental Protection Authority which specify limits for discharges to the
environment which are the result of the consolidated entity’s operations. These licences regulate the management of discharge to
the air and stormwater run off associated with the operations. There have been no signiﬁ cant known breaches of the consolidated
entity’s licence conditions.

Select Harvests Annual Report 2009

Directors’ Report

The company takes its environmental responsibilities seriously, has a good record in environmental management to date, and adheres to
environmental plans that preserve the habitat of native species. Almond developments have had a positive environmental impact. The change
in land use and the increase in food source have seen a rejuvenation of remnant native vegetation and an increase in the wildlife population,
in particular bird species. The company has committed funding to the monitoring of Regent parrot populations around our orchards and the
effectiveness of protecting native vegetation corridors in preserving wildlife.

Remuneration Report

A. Principles used to determine the nature and amount of remuneration

Remuneration levels are set to attract and retain appropriately qualiﬁ ed and experienced directors and senior executives. The Remuneration
Committee may obtain independent advice on the appropriateness of remuneration packages, given trends in the marketplace. Remuneration
packages include a mix of ﬁ xed remuneration, performance based remuneration and equity based remuneration. Non-executive directors
receive fees and do not receive options or bonus payments.

(i) Short-term incentives

Executive directors and senior executives may receive short term incentives based on achievement of speciﬁ c business plans and performance
indicators, which include ﬁ nancial and operational targets relevant to performance at the consolidated entity level, divisional level, or
functional level, as applicable, for the ﬁ nancial year. The Remuneration Committee is responsible for assessing whether the KPIs are met based
on detailed reports on performance prepared by management.

(ii) Long-term incentives

In addition, the company offers executive directors and senior executives the opportunity to participate in the long-term incentive scheme
involving the issue of options to the employee under the executive share option scheme. The executive share option scheme provides for the
offer of a parcel of options to participating employees on an annual basis, with a three-year expiry period, exercisable at the market price set at
the time the offer was made. The options are granted annually, with 3 consecutive vesting periods, upon achievement of a 10% increase in EPS.
The Remuneration Committee is responsible for assessing whether the targets are met based on reports prepared by management.

B. Details of remuneration

Details of the remuneration of the directors and the key management personnel as deﬁ ned in AASB 124 Related Party Disclosures of Select
Harvests Limited and the consolidated entity are set out in the following tables.

The key management personnel of the consolidated entity includes the directors as listed above and the following executive ofﬁ cers, which
also includes the 5 highest paid executives of the consolidated entity:

Name

P Ross

K Martin

T Millen

Position

Employer

Operations Manager Almond Division

Kyndalyn Park Pty Ltd

Operations Manager Food Products Division

Select Harvests Limited

Group Horticultural & Farm Operations Manager

Kyndalyn Park Pty Ltd

L Van Driel

Group Trading Manager

Select Harvests Food Products Pty Ltd

P Chambers

Chief Financial Ofﬁ cer & Company Secretary

Select Harvests Limited

M Graham

Sales & Marketing Manager

Select Harvests Food Products Pty Ltd

Select Harvests Annual Report 2009

Directors’ Report

The nature and amount of each major element of the remuneration of each director of the Company and each of the key management
personnel of the company and the consolidated entity for the ﬁ nancial year is detailed below. It should be noted that “share based payments”
referred to in the remuneration details set out in this report comprise a proportion of share options which may be granted in the future under
the terms of the long term incentive plan, and are not reﬂ ective of actual options granted or exercised in the ﬁ nancial year.

Remuneration of directors of Select Harvests Limited

2009

ANNUAL REMUNERATION

LONG TERM REMUNERATION

SHORT
TERM
INCENTIVES
$

NON CASH
BENEFITS
$

SUPER
CONTRI-
BUTIONS
$

LONG
SERVICE
LEAVE
ACCRUED
$

NUMBER

VALUE
$

TOTAL
$

SHARE BASED
PAYMENTS

4,950

10,725

1,530

5,850

82,658

59,950

129,892

18,531

70,850

BASE
FEE
$

82,658

55,000

119,167

17,001

65,000

560,806

80,000

30,133

57,673

17,047

21,821

22,258

767,917

Non Executive

M A Fremder

G F Dan O’Brien*

J C Leonard

M Carroll**

R M Herron

Executive

J Bird

* Resigned from the role of Director 23 June 2009 ** Appointed as a Director on 31 March, 2009

2008

ANNUAL REMUNERATION

LONG TERM REMUNERATION

BASE
FEE
$

SHORT
TERM
INCENTIVES
$

NON CASH
BENEFITS
$

SUPER
CONTRI-
BUTIONS
$

LONG
SERVICE
LEAVE
ACCRUED
$

NUMBER

VALUE
$

TOTAL
$

SHARE BASED
PAYMENTS

109,000

29,167

50,000

2,625

4,500

109,000

31,792

54,500

532,457

98,000

36,737

56,538

23,334

56,867

72,799

819,865

Non Executive

M A Fremder

C G Clark*

G F Dan O’Brien

J C Leonard

R M Herron

Executive

J Bird

*Resigned from the role of Director 31 January 2008.

Select Harvests Annual Report 2009

Directors’ Report

Remuneration of the key management personnel of the Company and the Consolidated Entity

2009

ANNUAL REMUNERATION

LONG TERM REMUNERATION

BASE
FEE
$

182,659

177,353

214,450

203,784

174,451

237,804

250,000

SHORT
TERM
INCENTIVES
$

NON CASH
BENEFITS
$

SUPER
CONTRI-
BUTIONS
$

30,000

40,000

20,000

19,797

10,406

39,848

10,793

15,829

15,962

19,300

20,832

15,701

23,202

SHARE BASED
PAYMENTS

NUMBER

5,208

4,698

4,902

5,515

5,106

VALUE
$

5,313

4,792

5,000

5,625

5,208

LONG
SERVICE
LEAVE
ACCRUED
$

5,135

5,350

7,426

10,108

5,987

M Bartholomew*

M Graham

K Martin

L Van Driel

T Millen

P Chambers

P Ross

* Resigned 9 April 2009

2008

ANNUAL REMUNERATION

LONG TERM REMUNERATION

SHARE BASED
PAYMENTS

SHORT
TERM
INCENTIVES
$

NON CASH
BENEFITS
$

SUPER
CONTRI-
BUTIONS
$

LONG
SERVICE
LEAVE
ACCRUED
$

NUMBER

12,250

30,000

20,000

5,172

45,694

6,053

2,415

22,158

18,745

14,541

17,890

33,670

4,337

584

5,350

5,322

4,491

4,499

6,856

8,767

5,533

BASE
FEE
$

26,833

233,945

181,696

142,648

198,777

243,431

57,949

VALUE
$

12,045

8,037

M Bartholomew*

K Martin

L Van Driel

T Millen

P Chambers**

K Bush***

R Palmaricciotti****

TOTAL
$

198,488

218,247

244,413

277,240

285,108

303,411

255,208

TOTAL
$

29,832

273,703

252,980

235,231

221,166

303,957

68,339

* commenced 20 May, 2008 ** commenced 9 September, 2007 *** Resigned 20 May, 2008 **** Resigned 9 September, 2007

Notes

The elements of remuneration have been determined on the basis of the cost to the company and the consolidated entity.

Options granted as part of remuneration have been valued using the Black-Scholes option pricing model, which takes account of factors such
as the option exercise price, the current level and volatility of the underlying share price and the time to maturity of the option.

Key management personnel are those directly accountable and responsible for the operational management and strategic direction of the
Company and the consolidated entity.

C. Service arrangements

Service arrangements between the consolidated entity and executive directors and key management personnel are on a continuing basis
and include, in certain cases, relevant notice periods. There are no speciﬁ c termination beneﬁ ts applicable to the service arrangements.

J Bird, Managing Director

Term of Agreement – on-going agreement

- Base salary, inclusive of superannuation for the year ended 30 June 2009 of $641,000.

Select Harvests Annual Report 2009

Directors’ Report

M Graham, Sales and Marketing Manager

Term of Agreement – on-going agreement, with 3 month notice period

- Base salary, inclusive of superannuation for the year ended 30 June 2009 of $225,000

K Martin, Operations Manager, Food Products Division

Term of Agreement – on-going agreement, with 3 month notice

- Base salary, inclusive of superannuation for the year ended 30 June 2009 of $255,000.

T Millen, Group Horticultural and Farm Operations Manager

Term of Agreement – on-going agreement

- Base salary, inclusive of superannuation for the year ended 30 June 2009 of $230,000.

P Chambers, Chief Financial Ofﬁ cer & Company Secretary

Term of Agreement – on-going agreement, with 3 month notice period

- Base salary, inclusive of superannuation for the year ended 30 June 2009 of $270,000.

L Van Driel, Group Trading Manager

Term of Agreement – on-going agreement

- Base salary, inclusive of superannuation for the year ended 30 June 2009 of $230,000.

P Ross, Operations Manager, Almond Division

Term of Agreement – on going agreement

- Base salary, inclusive of superannuation for the year ended 30 June 2009 of $250,000.

D. Share-based compensation

(i) Executive Share Option Scheme

The current executive share option scheme provides for the offer of a parcel of options to participating employees on an annual basis, with
a three year expiry period, exercisable at the market price at the time the offer was made.

Individual parcels of options offered to participating employees are based on a percentage of ﬁ xed remuneration. The options are granted
annually in three tranches on achievement of a 10% increase in EPS. Options granted as remuneration are subject to continuing service with
the consolidated entity. Options granted as remuneration are valued at grant date in accordance with AASB 2 Share-based Payments. Options
previously granted as remuneration, (62,534 shares) valued at $107,558 have lapsed during the year.

The assessed fair value at offer date is determined using a Black-Scholes option pricing model that takes into account the exercise price, the
term of the option, the impact of dilution, the share price at offer date and expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the option.

The model inputs for options offered during the year ended 30 June 2009 included:

a) options are granted for no consideration, have a three year life, and one third of the options offered vest in each year, subject to meeting

EPS hurdles

b) exercise price: $5.15 (2008 - $9.74)

c) offer date: 20 September 2008 (2008 – 21 September 2007)

d) expiry date: 28 October 2011 (2008 – 28 October 2010)

e) Volume weighted average share price at offer date: $5.44 (2008 – $9.43)

f) expected price volatility of the company’s shares: 34% (2008 – 28%)

g) expected dividend yield: 7.5% (2008 – 5.8%)

h) risk free interest rate: 5.76% (2008 – 6.19%)

Select Harvests Annual Report 2009

Directors’ Report

E
M
P
L
O
Y
E
E
S

P
A
R
T
C
P
A
T
N
G

O
P
T
O
N

G
R
A
N
T
D
A
T
E

V
A
L
U
A
T
O
N
A
T

E
X
E
R
C
I
S
E
P
R
C
E

N
O
O
F

G
R
A
N
T
E
D

O
P
T
O
N
S

G
R
A
N
T
E
D

O
P
T
O
N
S

E
M
P
L
O
Y
E
E
S

T
O
E
X
I
S
T
N
G

D
A
T
E

E
X
P

R
Y

Y
E
A
R

D
U
R
N
G

E
X
E
R
C
I
S
E
D

Y
E
A
R

D
U
R
N
G

F
O
R
F
E
I
T
E
D

B
A
L
A
N
C
E

2006
Offer

2007
Offer

2008
Offer

Total

$3.57

$13.13

68,095

57,798

31/10/09

$1.48

$9.74

238,429

210,557

28/10/10

$1.02

$5.15

362,379

28/10/11

668,903

630,734

57,798

210,557

362,379

630,734

(ii) Options Granted

During or since the end of the ﬁ nancial year, the Company granted options over unissued ordinary shares to the executive director and the
following key management personnel of the Company as part of their remuneration.

Director

J Bird

Key management personnel

L Van Driel

K Martin

P Chambers

P Ross

T Millen

NUMBER OF OPTIONS
GRANTED IN FY 2009

NUMBER OF OPTIONS
GRANTED IN FY 2008

157,114

33,824

37,500

39,706

36,765

35,294

103,125

20,270

25,845

26,351

20,270

(iii) Shares Issued on Exercise of Options

Details of ordinary shares in the company provided as a result of the exercise of remuneration options to each director of the consolidated
entity and other key management personnel are set out below.

Director

J Bird

Key management personnel

L Van Driel

T Millen

NUMBER OF SHARES
ISSUED ON EXERCISE
OF OPTIONS FY 2009

NUMBER OF SHARES
ISSUED ON EXERCISE
OF OPTIONS FY 2008

101,400

12,300

6,000

The amounts paid per ordinary share by each director and other key management personnel on the exercise of options at the date of exercise
were as follows.

In ﬁ nancial year ended 30 June 2008

NUMBER OF SHARES

AMOUNT PAID ON EACH SHARE

119,700

$7.78

No options were exercised in the ﬁ nancial year ended 30 June 2009.There were no amounts unpaid on the shares issued.

Select Harvests Annual Report 2009

Directors’ Report

E. Additional information

(i) Principles used to determine the nature and amount of remuneration: relationship between remuneration and company performance

The overall level of executive reward takes into account the performance of the consolidated entity over a number of years, with greater
emphasis given to the current year. Over the past 5 years, the consolidated entity’s proﬁ t from ordinary activities after income tax has grown
at an average rate of 5% per annum and the EPS has grown at an average rate of 5% over the last 5 years.

(ii) Details of remuneration: cash bonuses and options

For each cash bonus and grant of options included above, the percentage of the available bonus or grant that was paid, or that vested, in the
ﬁ nancial year, and the percentage that was forfeited because the person did not meet the service and performance criteria is set out below.
No part of the bonuses is payable in future years. No options will vest if the conditions are not satisﬁ ed hence the minimum value of the
option yet to vest is nil. The maximum value of the options yet to vest has been calculated based on the option price.

NAME

CASH BONUS

OPTIONS

PAID %

FORFEITED %

YEAR
GRANTED

VESTED % FORFEITED %

FINANCIAL YEARS
IN WHICH OPTIONS
MAY VEST

MINIMUM
TOTAL VALUE
OF GRANT YET
TO VEST ($)

MAXIMUM
TOTAL VALUE
OF GRANT YET
TO VEST ($)

J Bird

100

L Van Driel

100

T Millen

100

K Martin

100

P Chambers

100

P Ross

N/A

(iii) Share based compensation: options

2006

2007

2008

2006

2007

2008

2006

2007

2008

2007

2008

2007

2008

2009

2010

2011

2009

2010

2011

2009

2010

2011

2010

2011

2010

2011

131,251

152,625

160,256

27,000

30,000

34,500

27,838

30,000

36,000

38,251

38,250

39,000

40,500

37,500

NAME

Directors

J Bird

Key Management Personnel

T Millen

L Van Driel

K Martin

P Chambers

P Ross

REMUNERATION
CONSISTING OF
OPTIONS

VALUE GRANTED

VALUE EXERCISED

VALUE LAPSED

2.9%

160,256

1.8%

2.2%

1.9%

2.0%

36,000

34,500

38,250

40,500

37,500

79,350

12,154

16,054

Select Harvests Annual Report 2009

Directors’ Report

A – The percentage of the value of remuneration consisting of options, based on the value at grant date set out in column B

B – The value at grant date calculated in accordance with AASB2 Share-based payments of options granted during the year as part

of remuneration.

C – The value at exercise date of options that were granted as part of remuneration and were exercised during the year.

D – The value at lapsed date of options that were granted as part of remuneration and that lapsed during the year.

(iv) Loans to directors and executives

Information on loans to directors and executives (if any), are set out in Note 34.

(v) Share options granted to directors and the most highly remunerated ofﬁ cers

Options over unissued ordinary shares of Select Harvests Limited granted and not exercised during or since the end of the ﬁ nancial year to the
ﬁ ve most highly remunerated ofﬁ cers of the company as part of their remuneration were as follows:

No options have been granted since the end of the ﬁ nancial year.

(vi) Unissued Ordinary shares Under Option

At the date of this report there are 630,734 unissued ordinary shares of the company under option.

Dividends – Select Harvests Limited

DIVIDENDS

Interim for the year

- on ordinary shares

Final for 2008 shown as recommended in the 2008 report (payable on 1 October, 2008)

- on ordinary shares

CENTS

12.0

2009
$

4,706,727

23.0 8,972,053

Indemniﬁ cation and insurance of directors and ofﬁ cers
During the year the Company has paid a premium of $22,776 in respect to an insurance contract to indemnify directors and ofﬁ cers against
liabilities that may arise from their position as directors and ofﬁ cers of the Company and its controlled entities.

Ofﬁ cers indemniﬁ ed include the Company Secretary, all directors, and executive ofﬁ cers participating in the management of the Company
and its controlled entities.

Directors’ meetings
The number of meetings of directors (including meetings of committees of directors) held during the ﬁ nancial year and the number of
meetings attended by each director was as follows:

DIRECTORS’ MEETINGS

AUDIT AND RISK

MEETINGS OF COMMITTEES
REMUNERATION

NOMINATION

M A Fremder

J Bird

G F Dan O’Brien*

J C Leonard

R M Herron

M Carroll

NUMBER
ELIGIBLE TO
ATTEND

NUMBER
ATTENDED

NUMBER
ELIGIBLE TO
ATTEND

NUMBER
ATTENDED

NUMBER
ELIGIBLE TO
ATTEND

NUMBER
ATTENDED

NUMBER
ELIGIBLE TO
ATTEND

NUMBER
ATTENDED

* Resigned as a Director on 23 June, 2009.

Select Harvests Annual Report 2009

Directors’ Report

Committee membership
During or since the end of the ﬁ nancial year, the company had an Audit and Risk Committee, a Remuneration Committee, and a
Nomination Committee comprising members of the Board of Directors.

Members acting on the committees of the Board during or since the end of the ﬁ nancial year were:

Audit and Risk

Remuneration

Nomination

R M Herron (Chairman)

M Carroll (Chairman)

M A Fremder (Chairman)

G F Dan O’Brien*

M A Fremder

J Bird

J C Leonard

MA Fremder

M Carroll

J C Leonard

R Herron

G F Dan O’Brien *

* Resigned as a Director on 23 June, 2009.

G F Dan O’Brien*

R M Herron

J C Leonard

M Carroll

Director’s interests in contracts
Directors’ interest in contracts are disclosed in Note 34 to the ﬁ nancial statements

Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 26.

Non-audit services
Non-Audit services are approved by resolution of the Audit and Risk Committee and approval is provided in writing to the board
of directors. Non-audit services provided by the auditors of the consolidated entity during the year are detailed in Note 33. The
directors are satisﬁ ed that the provision of the non-audit services during the year by the auditor is compatible with the general
standard of independence for auditors imposed by Corporations Act 2001 as non-audit services are reviewed by the Audit & Risk
Committee to ensure they do not impact the impartiality and objectivity of the auditor.

Rounding
The amounts contained in this report and in the ﬁ nancial report have been rounded to the nearest $1,000 (where rounding is
applicable) under the option available to the company under ASIC Class Order 98/100. The Company is an entity to which the Class
Order applies.

Proceedings on behalf of the company
There are no material legal proceedings in place on behalf of the company as at the date of this report.

Corporate Governance
In recognising the need for the highest standards of corporate behaviour and accountability, the directors of Select Harvests
Limited support and have adhered to the ASX principles of corporate governance. The Company’s corporate governance statement
is contained in detail in the corporate governance section of this annual report.

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

J C Leonard
Chairman
Melbourne, 28 August 2009

Select Harvests Annual Report 2009

PricewaterhouseCoopers
ABN 52 780 433 757

Freshwater Place
2 Southbank Boulevard
SOUTHBANK VIC 3006
GPO Box 1331L
MELBOURNE VIC 3001
DX 77
Telephone 61 3 8603 1000
Facsimile 61 3 8603 1999
Website:www.pwc.com/au

Auditor’s Independence Declaration

As lead auditor for the audit of Select Harvests Limited for the year ended 30 June 2009, I declare that to the best of my knowledge and belief,
there have been:

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

b) no contraventions of any applicable code of professional conduct in relation to the audit.

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

Andrew Mill
Partner
PricewaterhouseCoopers

Melbourne
28 August 2009

Liability limited by a scheme approved under Professional Standards Legislation

Select Harvests Annual Report 2009

Corporate governance statement

This statement outlines the key corporate governance practices of the consolidated entity which considers the ASX Principles of
Good Corporate Governance and Best Practice Recommendations issued by the ASX Corporate Governance Council. During the
reporting period, the company has been compliant with the ASX Guidelines.

These principles are:

Principle 1 – Lay solid foundations for management and oversight

Principle 2 – Structure the board to add value

Principle 3 – Promote ethical and responsible decision making

Principle 4 – Safeguard integrity in ﬁ nancial reporting

Principle 5 – Make timely and balanced disclosure

Principle 6 – Respect the right of shareholders

Principle 7 – Recognise and manage risk

Principle 8 – Remunerate fairly and responsibly

The statements set out below refer to the above Principles as applicable.

Board of Directors and its Committees
The role of the Board and Board Processes set out below are with reference to Principle 1, Lay solid foundations for management
and oversight.

Role of the Board

The Board of Directors of Select Harvests Limited is responsible for the overall corporate governance of the consolidated entity.
The Board guides and monitors the business and affairs of Select Harvests Limited on behalf of the shareholders by whom they are
elected and to whom they are accountable. Details of the Board’s charter are located on the company’s website.

The Board seeks to identify the expectations of the shareholders, as well as other regulatory and ethical expectations and
obligations. In addition, the Board is responsible for ensuring that management’s objectives and activities are aligned with the
expectations and risks identiﬁ ed by the Board and ensuring arrangements are in place to adequately manage those risks.

To ensure that the Board is well equipped to carry out its responsibilities it has established guidelines for the nomination and
selection of Directors and for the operation of the Board.

The Board has delegated responsibility for the operation and administration of the company to the Managing Director and
the executive management team. The Board ensures that this team is appropriately qualiﬁ ed and experienced to carry out its
responsibilities and has in place procedures to assess the performance of the Managing Director and the executive
management team.

Board Processes

To assist in the execution of its responsibilities, the Board has established a Remuneration Committee, and an Audit and Risk
Committee. The Board also performs, as part of its function, the role of Nomination Committee. These Committees have written
charters, which are reviewed on a regular basis and are located on the company’s website. The Board has also established a
framework for the management of the consolidated entity.

The full Board holds twelve scheduled meetings each year, plus any additional meetings at such other times as may be necessary to
address any speciﬁ c matters that may arise.

The agenda for meetings is prepared and includes the Managing Director’s report, ﬁ nancial reports, business segment reports,
strategic matters, governance and compliance. Submissions are circulated in advance. Executives are involved in Board discussions
where appropriate, and Directors have other opportunities, including visits to operations, for contact with a wider group of
employees.

Set out below, Director Education, Independent Advice and Access to Company Information, Composition of The Board and the
Nomination Committee, make reference to Principle 2, Structure the board to add value.

Director Education

The consolidated entity has a process to educate new Directors about the nature of the business, current issues, the corporate
strategy, and the expectations of the consolidated entity concerning performance of Directors. Directors also have the opportunity
to visit the facilities of the consolidated entity and to meet with management to gain a better understanding of business
operations. Directors are able to access continuing education opportunities to update and enhance their skills and knowledge.

Select Harvests Annual Report 2009

Corporate governance statement

Independent Professional Advice and Access to Company Information

Each Director has the right of access to all relevant company information and to the Company’s executives and, subject to prior
consultation with the Chairman, may seek independent professional advice at the consolidated entity’s expense.

Composition of the Board

The names of the Directors of the company in ofﬁ ce at the date of this report are set out in the Directors’ report.

The composition of the Board is determined in accordance with the following ASX principles:

The Board should comprise at least four Directors;

The Board should maintain a majority of independent non-executive Directors;

The Chairperson must be a non-executive Director; and

The Board should comprise Directors with an appropriate range of qualiﬁ cations, skills and experience.

The Board assesses the independence of each Director in light of interests known to the Board, as well as those disclosed by each
Director. In accordance with the ASX Corporate Governance Council’s recommendations, the Board wishes to outline the following:

- A non—executive Director of the Company, Mr M A Fremder, is a substantial shareholder, having a 14.6% shareholding at 30 June

2009.

- A non—executive Director of the Company, Mr M A Fremder, owns (directly or indirectly) almond orchards totalling 2,053 acres

in respect to which the consolidated entity provides orchard management services under contract at market rates.

The Chairman of the Company, Mr J C Leonard, owns (directly or indirectly) almond orchards totalling 1,753 acres in respect to
which the consolidated entity provides orchard management services under contract at market rates.

- A non-executive Director of the Company, Mr Dan O’Brien, who resigned as a Director on 23 June 2009, acquired from Select
Harvests, via an associated entity, $146,974 worth of Almond Hull suitable for livestock feed. This was purchased at market
prices.

Nomination Committee

The Board of Directors, as one of its important functions, performs the role of Nomination Committee. The Board’s role as
Nomination Committee is to ensure that the composition of the Board of Directors is appropriate for the purpose of fulﬁ lling
its responsibilities to shareholders.

The duties and responsibilities of the Board in its role as Nomination Committee are as follows:

To access and develop the necessary and desirable competencies of Board members;

To develop and review Board succession plans;

To evaluate the performance of the Board;

To recommend to the Board, the appointment and removal of Directors; and

- Where a vacancy exists, to determine the selection criteria based on the skills deemed necessary and to identify potential

candidates with advice from external consultants.

The Chairman of the Board evaluates the performance of each Board member annually in the last quarter of each ﬁ nancial year.
The Chairman of the Audit Committee reviews the performance of the Chairman of the Board in the same period. The performance
of each Board member is reviewed against the Board charter and any speciﬁ c objectives agreed and set by the Board for the
consolidated entity.

The Nomination Committee meets annually unless otherwise required. The Committee met once during the ﬁ nancial year and
the Committee members’ attendance record is disclosed in the table of Directors’ meetings. The members of the Nomination
Committee are disclosed in the Directors’ Report.

Further details of the Nomination Committee’s charter are available on the Company’s website.

The statements set out below in relation to Remuneration, the Remuneration Committee and Remuneration Policies are with
reference to Principle 8, Remunerate fairly and responsibly.

Remuneration

Remuneration Committee

The Remuneration Committee reviews and makes recommendations to the Board on remuneration packages and policies applicable
to the Managing Director, senior executives and the Directors themselves. It evaluates the performance of the Managing Director
and is also responsible for share option schemes, incentive performance packages, superannuation entitlements and fringe beneﬁ ts
policies. Remuneration levels are reviewed annually and the Remuneration Committee may obtain independent advice on the
appropriateness of remuneration packages, given trends in the marketplace.

The members of the Remuneration Committee are disclosed in the Directors’ Report.

Select Harvests Annual Report 2009

Corporate governance statement

The Managing Director is invited to Remuneration Committee meetings as required to discuss senior executives’ performance and
remuneration packages.

The Remuneration Committee meets once a year or as required. The Committee met once during the ﬁ nancial year and the
Committee members’ attendance record is disclosed in the table of Directors’ meetings.

Further details of the Remuneration Committee’s charter are available on the company’s website.

Remuneration Policies

Remuneration levels are set to attract and retain appropriately qualiﬁ ed and experienced Directors and senior executives. The
Remuneration Committee may obtain independent advice on the appropriateness of remuneration packages, given trends in the
marketplace. Remuneration packages include a mix of ﬁ xed remuneration, performance based remuneration, and equity based
remuneration.

Executive Directors and senior executives may receive short term incentives based on achievement of speciﬁ c business plans and
performance indicators, which include ﬁ nancial and operational targets relevant to performance at the consolidated entity level,
divisional level, or functional level, as applicable, for the ﬁ nancial year. In addition, the consolidated entity offers executive Directors
and senior executives participation in the long-term incentive scheme involving the issue of options to the employee under the
executive share option scheme. The executive share option scheme provides for the offer of a parcel of options to participating
employees on an annual basis, with a three-year expiry period, exercisable at the market price set at the time the offer was made.
The options are granted annually in three tranches on achievement of the performance hurdles.

Non-executive Directors do not receive any performance related remuneration.

Set out below are statements in relation to the Audit and Risk Committee and Risk Management, with reference to Principle 7,
Recognise and Manage Risk, and Principle 4, Safeguard integrity in Financial Reporting.

Audit and Risk Committee

The Audit and Risk Committee has a documented charter, approved by the Board. All members of the Committee are non executive
Directors with a majority being independent, and the Chairman of the Audit and Risk Committee is not the Chairman of the Board
of Directors.

The members of the Audit and Risk Committee during the ﬁ nancial year are disclosed in the Directors’ Report.

The external auditors, the Managing Director and Chief Financial Ofﬁ cer are invited to Audit and Risk Committee meetings at the
discretion of the Committee, and the external auditor also meets with the Audit Committee during the year without management
being present. The Committee met four times during the year and the Committee members’ attendance record is disclosed in the
table of Directors’ meetings.

The Managing Director and the Chief Financial Ofﬁ cer have provided a statement in writing to the Board that the consolidated
entity’s ﬁ nancial reports for the year ended 30 June 2009 present a true and fair view, in all material respects, of the consolidated
entity’s ﬁ nancial condition and operational results and are in accordance with the relevant accounting standards. This statement is
required annually.

Further details of the Audit and Risk Committee’s charter are available on the Company’s website.

The duties and responsibilities of the Audit and Risk Committee include:

Recommending to the Board the appointment of the external auditors;

Recommending to the Board the fee payable to the external auditors;

Reviewing the audit plan and performance of the external auditors;

- Determining that no management restrictions are being placed upon the external auditors;

Evaluating the adequacy and effectiveness of the reporting and accounting controls of the company through active
communication with operating management and the external auditors;

Reviewing all ﬁ nancial reports to shareholders and/or the public prior to their release;

Evaluating systems of internal control;

- Monitoring the standard of corporate conduct in areas such as arms-length dealings and likely conﬂ icts of interest;

Requiring reports from management and the external auditors on any signiﬁ cant regulatory, accounting or reporting
development to assess potential ﬁ nancial reporting interest;

Reviewing and approving all signiﬁ cant company accounting policy changes;

Reviewing the company’s taxation position;

Reviewing the annual ﬁ nancial statements with the Chief Financial Ofﬁ cer and the external auditors, and recommending
acceptance to the Board;

Evaluating the adequacy and effectiveness of the company’s risk management policies and procedures including insurance; and

- Directing any special projects or investigations deemed necessary by the Board or by the Committee.

Select Harvests Annual Report 2009

Corporate governance statement

The Audit and Risk Committee is committed to ensuring that it carries out its functions in an effective manner. Accordingly, it
reviews its charter at least once in each ﬁ nancial year.

Risk Management
The Board oversees the establishment, implementation, and review of a system of risk management within the consolidated
entity. The consolidated entity’s areas of focus in respect of risk management practices include, but are not limited to,
environment, occupational health and safety, property, ﬁ nancial reporting and internal control.

The Board is responsible for the overall risk management and internal control framework, but recognises that no cost-effective
risk management and internal control system will preclude all errors and irregularities. The Board has the following procedures
in place to monitor performance and to identify areas of concern:

Strategic Planning; The Board reviews and approves the strategic plan that encompasses the consolidated entity’s strategy,
designed to meet the stakeholders’ needs and manage business risk. The strategic plan is dynamic and the Board is actively
involved in developing and approving initiatives and strategies designed to ensure the continued growth and success of the
consolidated entity;

Financial reporting; Monthly actual results are reported against budgets approved by the Directors and revised forecasts
prepared during the year;

Functional Reporting; Key areas subject to regular or periodical reporting to the Board include, but are not limited to,
operational, treasury (including foreign exchange), environmental, occupational health & safety, insurance, and legal
matters;

- Continuous disclosure; A process is in place to identify matters that may have a material effect on the price of the

Company’s securities and to notify them to the ASX; and

Investment appraisal; Guidelines for capital expenditure include annual budgets, appraisal and review procedures, due
diligence requirements where businesses are being acquired or divested.

The Managing Director and Chief Financial Ofﬁ cer have provided a statement in writing to the Board that the declaration made
in respect of the consolidated entity’s ﬁ nancial reports is founded on a system of risk management and internal compliance
and control which reﬂ ects the policies adopted to date by the Board, and that the consolidated entity’s risk management and
internal control and compliance system is operating effectively in all material respects based on the criteria for effective internal
control established by the Board.

The statements set out below on Ethical standards, Conﬂ ict of Interest and Dealings in Company Shares are with reference to
Principle 3, Promote ethical and responsible decision making.

Ethical Standards

All Directors, managers and employees are expected to act with the utmost integrity and objectivity, striving at all times to
enhance the reputation and performance of the consolidated entity. The consolidated entity’s code of conduct includes the
following:

Conﬂ ict of Interest

Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conﬂ ict with those of the
Company. Should a situation arise where the Board believes that a material conﬂ ict exists, the Director concerned shall not
receive the relevant Board papers and will not be present at the meeting when the item is considered. Details of Director related
entity transactions with the Company and consolidated entity are set out in the Notes to the ﬁ nancial statements.

Dealings in Company Shares

Directors and senior management are prohibited from dealing in Company shares except within a four week trading window
that commences 48 hours after the release of the consolidated entity’s results at year end and half year on the basis that they
are not in possession of any price sensitive information. Directors must advise the ASX of any transactions conducted by them in
shares in the Company.

The statement below in relation to Communication with Shareholders is with reference to Principle 5, Make timely and
balanced disclosures and Principle 6, Respect the right of shareholders.

Communication with Shareholders

The Board of Directors aims to ensure that shareholders are informed of all major developments affecting the consolidated
entity’s state of affairs. Information is communicated to shareholders as follows:

The annual report is distributed to all shareholders (unless a shareholder has speciﬁ cally requested not to receive the
document), including relevant information about the operations of the consolidated entity during the year, changes in the
state of affairs and details of future developments;

Select Harvests Annual Report 2009

Corporate governance statement

The half yearly report contains summarised ﬁ nancial information and a review of the operations of the consolidated entity
during the period. The half year audited ﬁ nancial report is lodged with the Australian Securities and Investments Commission
and the ASX, and sent to any shareholder who requests it;

The consolidated entity has nominated the Company Secretary to ensure compliance with the consolidated entity’s continuous
disclosure requirements, and overseeing and co-ordinating disclosure of information to the ASX;

Information is posted on the consolidated entity’s website immediately after ASX conﬁ rms an announcement has been
made to ensure that the information is made available to the widest audience. The consolidated entity’s website is www.
selectharvests.com.au;

The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability
and identiﬁ cation with the consolidated entity’s strategy and goals. It is the policy of the consolidated entity and the policy of
the auditor for the lead engagement partner to be present at the Annual General Meeting to answer any questions about the
conduct of the audit and the preparation and content of the auditor’s report; and

- Occasional letters from the Chairman and Managing Director may be utilised to provide shareholders with key matters of

interest.

Select Harvests Annual Report 2009

Income statements

FOR THE YEAR ENDED 30 JUNE 2009

NOTES

CONSOLIDATED

PARENT ENTITY

Revenue

Sales of goods and services

Other revenue

Total revenue

Other income (expenses)

Almond stock fair value adjustment

Almond tree fair value adjustment

Total other income (expenses)

Expenses

Cost of sales

Temporary water costs

Total cost of sales

Distribution expenses

Marketing expenses

Occupancy expenses

Administrative expenses

Finance costs

Restructure costs

Other expenses

Proﬁ t before provision for impairment and income tax

Provision for impairment of Timbercorp receivable

PROFIT BEFORE INCOME TAX

Income Tax Expense

PROFIT ATTRIBUTABLE TO MEMBERS
OF SELECT HARVESTS LIMITED

2009
$’ 000

2008
$’ 000

2009
$’ 000

2008
$’ 000

248,581

224,655

155

248,674

224,810

20,561

27,344

(1,951)

500

592

(197,821)

(174,866)

(1,608)

(199,429)

(3,007)

(177,873)

(8,220)

(901)

(1,441)

(3,718)

(3,873)

(1,427)

27,714

(4,667)

23,047

(6,335)

(6,593)

(1,414)

(2,060)

(3,439)

(1,891)

(1,845)

(4,903)

25,384

(7,254)

(2,851)

(3,873)

(988)

12,849

570

27(c)

16,712

18,130

13,419

(2,453)

(1,806)

(1,067)

22,018

(404)

21,614

Earnings per share for proﬁ t attributable to the ordinary equity
holders of the company:

Basic earnings per share (cents per share)

Diluted earnings per share (cents per share)

42.6

46.7

Earnings per share adjusted for after tax impact of provision
for impairment of Timbercorp receivable

50.9

46.7

The above income statements should be read in conjunction with the accompanying Notes.

Select Harvests Annual Report 2009

Balance sheets

AS AT 30 JUNE 2009

NOTES

CONSOLIDATED

PARENT ENTITY

CURRENT ASSETS

Cash and cash equivalents

Trade and other receivables

Inventories

Derivative ﬁ nancial instruments

Current tax receivables

TOTAL CURRENT ASSETS

NON CURRENT ASSETS

Receivables

Other ﬁ nancial assets

Property, plant and equipment

Deferred tax assets

Biological assets – Almond Trees

Intangible assets

TOTAL NON CURRENT ASSETS

TOTAL ASSETS

CURRENT LIABILITIES

Trade and other payables

Interest bearing liabilities

Derivative ﬁ nancial instruments

Current tax liabilities

Provisions

TOTAL CURRENT LIABILITIES

NON CURRENT LIABILITIES

Trade and other payables

Deferred tax liabilities

Provisions

TOTAL NON CURRENT LIABILITIES

TOTAL LIABILITIES

NET ASSETS

EQUITY

Contributed equity

Reserves

Retained proﬁ ts

TOTAL EQUITY

The above balance sheets should be read in conjunction with the accompanying Notes.

2009

$’ 000

2008

$’ 000

2009

$’ 000

2008

$’ 000

6,945

43,128

28,680

2,322

4,054

43,101

29,229

561

6,943

1,132

2,322

3,946

1,127

561

81,075

77,014

10,397

5,703

88,685

6,039

39,136

133,884

214,959

36,764

59,293

149

3,566

2,576

102,348

10,871

864

11,735

114,083

100,876

46,433

12,949

41,494

100,876

73,135

624

6,039

39,136

160,979

9,607

394

126,352

9,607

287

577

118,934

170,980

195,948

181,377

136,823

142,526

34,847

50,787

2,446

88,162

1,303

59,293

149

3,566

361

1,405

50,609

319

64,672

52,415

63,991

41,261

13,020

695

13,715

101,877

94,071

44,375

11,235

38,461

94,071

341

137

64,469

129,141

52,236

46,433

5,304

499

52,236

126

41,387

93,802

48,724

44,375

3,590

759

48,724

Select Harvests Annual Report 2009

Statement of changes in equity

FOR THE YEAR ENDED 30 JUNE 2009

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$’ 000

2008
$’ 000

2009
$’ 000

2008
$’ 000

Total equity at the beginning of ﬁ nancial year

94,071

95,504

48,724

46,673

Changes in fair value of cash ﬂ ow hedges net of tax

Net income recognised directly in equity

1,529

128

1,529

128

Proﬁ t for the year

16,712

18,130

13,419

21,614

Total recognised income and expense for the year

18,241

18,258

14,948

21,742

Transactions with equity holders in their capacity
as equity holders:

- Contributions of equity, net of transaction costs

- Employee share options

- Dividends paid

- Dividends refunded

- Share buy back

Total equity at the end of ﬁ nancial year

2,058

185

3,695

931

2,058

185

3,695

931

(13,679)

(22,156)

(13,679)

(22,156)

(11,436)

100,876

209

(2,370)

(19,691)

94,071

(11,436)

52,236

209

(2,370)

(19,691)

48,724

The above statements of changes in equity should be read in conjunction with the accompanying Notes.

Select Harvests Annual Report 2009

Cash ﬂ ow statements

FOR THE YEAR ENDED 30 JUNE 2009

NOTES

CONSOLIDATED

PARENT ENTITY

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers

(inclusive of goods and services tax)

Payments to suppliers and employees

(inclusive of goods and services tax)

Interest received

Interest paid

Income tax paid

Net Cash Inﬂ ow/(Outﬂ ow) From Operating Activities

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sale of property, plant and equipment

Payment for property, plant and equipment

Payment for other non current assets

Net Cash Inﬂ ow/(Outﬂ ow) From Investing Activities

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issues of ordinary shares

Share Buy Back

Commercial bill draw downs

Repayments of borrowings

Dividends payment on ordinary shares, net of DRP

Net Cash Inﬂ ow/(Outﬂ ow) from ﬁ nancing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the ﬁ nancial year

Cash and cash equivalents at the end of the ﬁ nancial year

9(a)

2009
$’ 000

2008
$’ 000

2009
$’ 000

2008
$’ 000

330,408

252,731

13,640

(300,296)

(241,359)

(22,624)

30,112

(3,873)

(3,759)

22,573

161

(16,718)

(16,557)

6,000

(246)

(11,622)

(5,868)

148

4,004

4,152

11,372

155

(1,806)

(7,725)

1,996

(29,953)

(4,409)

(34,325)

931

(2,370)

50,500

(114)

(18,253)

30,694

(1,635)

5,639

4,004

13,640

(22,624)

(3,873)

(3,759)

6,101

(225)

6,000

(11,622)

(5,622)

254

3,896

4,150

155

(1,806)

(7,725)

(32,000)

(140)

931

(2,370)

50,500

(16)

(18,253)

30,792

(1,348)

5,244

3,896

The above cash ﬂ ow statements should be read in conjunction with the accompanying Notes.

Select Harvests Annual Report 2009

Notes to the Financial Statements

1. Summary of signiﬁ cant accounting policies
The principal accounting policies adopted in the preparation of the ﬁ nancial report are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated. The ﬁ nancial report includes separate ﬁ nancial statements
for Select Harvests Limited as an individual entity and the consolidated entity consisting of Select Harvests Limited and its
subsidiaries.

(a) Basis of preparation

This general purpose ﬁ nancial report has been 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.

Compliance with IFRS

Australian Accounting Standards include AIFRS. Compliance with AIFRS ensures that the consolidated ﬁ nancial statements and
Notes of Select Harvests Limited comply with International Financial Reporting Standards (IFRS).

Historical cost convention

These ﬁ nancial statements have been prepared under the historical cost convention, as modiﬁ ed by the revaluation of available-
for-sale ﬁ nancial assets, ﬁ nancial assets and liabilities (including derivative instruments) at fair value through proﬁ t and loss, and
certain classes of property, plant and equipment.

Critical Accounting Estimates

The preparation of ﬁ nancial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the consolidated entity’s accounting policies. The areas
involving a higher level of judgement or complexity, or areas where assumptions and estimates are signiﬁ cant to the ﬁ nancial
statements are disclosed in Note 3.

Going Concern Basis

The ﬁ nancial report has been prepared on the basis that Select Harvests Limited (“the Group”), comprising the parent company and
its subsidiaries, is a going concern.

At 30 June 2009, the Group’s borrowings of $59.3 million (June 2008: $50.6 million) have been classiﬁ ed as current on the basis that
the facility has been extended through to 30 June 2010 and is due for formal review on this date. The facility is subject to a number
of ﬁ nancial undertakings and covenants and the company will seek an extension, with a view to longer term funding, as soon as the
factors impacting the ownership structure of Timbercorp and its impact on the Group become more certain.

The Board is also actively considering its capital requirements in the context of:

a number of various possible outcomes of the Timbercorp orchard sale process;

the need to reduce the bank facility limit by $10m by 15 December 2009;

the aim of strengthening the company’s balance sheet;

- management of dividends; and

providing funds for future growth.

The Directors acknowledge that in the context of the current economic environment and the uncertainties surrounding the
Timbercorp situation reﬁ nancing of facilities beyond 30 June 2010 is not certain. However, the Directors are conﬁ dent that there are
realistic prospects of achieving ongoing funding based on the factors below:

The Group’s net asset position attributable to members is $100.9 million (December 2008:$95.6 million);

The Group has annuity type income streams, excluding Timbercorp, which extend well into the future. Cash ﬂ ow forecasts
indicate that the Group is able to pay its liabilities as and when they fall due;

The capital Management initiatives are well advanced and it is expected the Group will reduce debt in accordance with the
banking facility requirements by 15 December 2009;

- All ﬁ nancial banking covenants as at 30 June 2009 have been achieved and forecasts indicate continued achievement into

the future;

- Based on discussions to date it is probable that current banking facilities can be reﬁ nanced beyond 30 June 2010.

On the basis of this assessment the Directors believe the going concern basis of preparation remains appropriate.

(b) Principles of consolidation

The consolidated ﬁ nancial statements are those of the consolidated entity, comprising Select Harvests Limited (the parent entity)
and all entities which Select Harvests Limited controlled at any point during the year and at balance date.

Select Harvests Annual Report 2009

Notes to the Financial Statements

Subsidiaries are all those entities (including special purpose entities) over which the consolidated entity has power to govern the
ﬁ nancial and operating policies, generally accompanying of more than one-half of the voting rights. The existence and effect of
potential voting rights that are currently exercisable or convertible are considered when assessing whether the consolidated entity
controls another entity.

Subsidiaries are fully consolidated from the date at which control is transferred to the consolidated entity. They are deconsolidated
from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the consolidated entity.

The ﬁ nancial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting
policies. Adjustments are made to bring into line any dissimilar accounting policies which may exist.

All intercompany balances and transactions, including unrealised proﬁ ts arising from intra-group transactions, have been eliminated
in full.

Investments in subsidiaries are accounted for at cost in the individual ﬁ nancial statements of Select Harvests Limited.

(i) Functional and presentation currency

Items included in the ﬁ nancial statements of each entity comprising the consolidated entity are measured using the currency
of the primary economic environment in which the entity operates (“the functional currency”). The consolidated ﬁ nancial
statements are presented in Australian dollars, which is the functional and presentation currency of Select Harvests Limited.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income
statement, except when deferred in equity as qualifying cash ﬂ ow hedges.

(d) Cash and cash equivalents

- Cash on hand and in banks and short term deposits are stated at nominal value.

For the purposes of the cash ﬂ ow statement, cash includes cash on hand and in banks, and money market investments readily
convertible to cash within two working days, net of outstanding bank overdrafts.

- Bank overdrafts are carried at the principal amount. Interest is charged as an expense as it accrues.

(e) Inventories

Inventories are valued at the lower of cost and net realisable value except for almond stocks which are measured at fair value less
estimated point of sale costs in accordance with AASB 141 Agriculture refer to (f) below.

Costs, incurred in bringing each product to its present location and condition, are accounted for as follows:

Raw materials and consumables purchase cost on a ﬁ rst in ﬁ rst out basis;

Finished goods and work in progress cost of direct material and labour and a proportion of manufacturing overheads based on
normal operating capacity; and

- Almond stocks are valued in accordance with AASB 141 Agriculture whereby the cost of the non living (harvested) produce is

deemed to be its net market value immediately after it becomes non living. This valuation takes into account current almond
selling prices and current processing and selling costs.

- Other inventories comprise consumable stocks of chemicals, fertilisers and packaging materials.

(f) Biological Assets

Almond Trees

Almond trees are classiﬁ ed as a biological asset and valued in accordance with AASB 141 Agriculture.

Developing almond trees are valued at their growing cost until the year they bear their ﬁ rst commercial crop. The value of crop
bearing almond trees is measured at fair value using a discounted cash ﬂ ow methodology.

The discounted cash ﬂ ow incorporates the following factors:

- Almond trees have an estimated 30 year economic life, with crop yields consistent with long term yield rates;

Selling prices are based on long term average trend prices;

- Growing, processing and selling costs are based on long term average levels;

- Cash ﬂ ows are discounted at a rate that takes into account the cost of capital plus a suitable risk factor; and

Select Harvests Annual Report 2009

Notes to the Financial Statements

- An appropriate rental charge is included to represent the use of the developed land on which the trees are planted.

Nursery trees are grown by the consolidated entity for sale to external almond orchard owners and for use in almond orchards
owned by the consolidated entity. Nursery trees are carried at fair value.

Growing Almond Crop

The growing almond crop is valued in accordance with AASB 141 Agriculture. This valuation takes into account current almond
selling prices and current growing, processing and selling costs. The calculated crop value is then discounted to take into account
that it is only partly developed, and then further discounted by a suitable factor to take into account the agricultural risk until
crop maturity.

New Orchards Growing Costs

All costs associated with the establishment, planting and growing of almond trees for a new orchard are accumulated for the ﬁ rst
three years of that orchard. Once immature trees commence bearing a commercial crop a proportion of the annual growing costs
are expensed on the basis of yield achieved as a proportion of anticipated yield of a mature tree. At the end of the eighth year
full maturation is deemed to occur, after which the tree is considered to be mature in terms of revenue generation and the
annual growing costs are then expensed in full. Almond trees are valued as described above once they commence bearing a
commercial crop.

(g) Derivatives

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to
their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging
instrument, and if so, the nature of the item being hedged. The consolidated entity designates derivatives as either; (1) hedges of
the fair value of recognised assets or liabilities or a ﬁ rm commitment (fair value hedge); or (2) hedges of highly probable forecast
transactions (cash ﬂ ow hedges).

The consolidated entity documents at the inception of the transaction the relationship between hedging instruments and hedged
items, as well as its risk management objective and strategy for undertaking various hedge transactions. The consolidated entity
also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in
hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash ﬂ ows of
hedged items.

(i) Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement,
together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

(ii) Cash ﬂ ow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash ﬂ ow hedges is recognised
in equity in the hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the income
statement.

Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item will affect proﬁ t or loss
(for instance when the forecast sale that is hedged takes place). However, when the forecast transaction that is hedged results in
the recognition of a non ﬁ nancial asset (for example, inventory) or a non ﬁ nancial liability, the gains and losses previously deferred
in equity are transferred from equity and included in the measurement of the initial cost or carrying amount of the asset or liability.

When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting,
any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is
ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain
or loss that was reported in equity is immediately transferred to the income statement.

(h) Property, plant and equipment

Cost and valuation

All classes of property, plant and equipment are measured at cost less accumulated depreciation.

The carrying amount of property, plant and equipment is reviewed annually by directors to ensure it is not in excess of the
recoverable amount from those assets. The recoverable amount is assessed on the basis of the expected net cash ﬂ ows which will
be received from the assets’ employment and subsequent disposal. The expected net cash ﬂ ows have been discounted to present
values in determining recoverable amounts.

Select Harvests Annual Report 2009

Notes to the Financial Statements

Where assets have been revalued, the potential effect of the capital gains tax on disposal has not been taken into account in the
determination of the revalued carrying amount. Where it is expected that a liability for capital gains tax will arise, this expected
amount is disclosed by way of Note.

Depreciation

The depreciable amount of all ﬁ xed assets including buildings and capitalised leased assets, but excluding freehold land water rights,
and almond trees, are depreciated on a straight line basis over their estimated useful lives to the entity commencing from the time
the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or
the estimated useful lives of the improvements.

The useful lives for each class of assets are:

Buildings:

Leasehold improvements:

Plant and equipment:

Leased plant and equipment:

25 to 40 years

5 to 40 years

5 to 20 years

5 to 10 years

Plantation land, irrigation systems:

10 to 40 years

Capital works in progress

Capital works in progress are valued at cost and relate to costs incurred for owned orchards and other assets under development.

(i) Leases

Leases are classiﬁ ed at their inception as either operating or ﬁ nance leases based on the economic substance of the agreement so as
to reﬂ ect the risks and beneﬁ ts incidental to ownership.

Operating leases

The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks and beneﬁ ts of
ownership of the leased item, are recognised as an expense on a straight line basis over the term of the lease.

Finance leases

Leases which effectively transfer substantially all the risks and beneﬁ ts incidental to ownership of the leased item to the consolidated
entity are capitalised at the present value of the minimum lease payments and disclosed as plant and equipment under lease. A lease
liability of equal value is also recognised.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the assets and the lease term. Minimum
lease payments are allocated between interest expense and reduction of the lease liability with the interest expense calculated using
the interest rate implicit in the lease and charged directly to the income statement.

The cost of improvements to or on leasehold property is capitalised, disclosed as leasehold improvements, and amortised over the
unexpired period of the lease or the estimated useful lives of the improvements, whichever is the shorter.

(j) Intangibles

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the consolidated entity’s share of the net identiﬁ able
assets of the acquired subsidiary/business at the date of acquisition. Goodwill is not amortised. Instead, goodwill is tested for
impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at
cost less any accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill
relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing.

Brand names

Brand names are measured at cost. Directors are of the view that brand names have an indeﬁ nite life. Brand names are therefore
not depreciated. Instead, brand names are tested for impairment annually or more frequently if events or changes in circumstances
indicate that they might be impaired, and are carried at cost less any accumulated impairment losses.

Permanent water rights

Permanent water rights are recorded at historical cost. Such rights have an indeﬁ nite life, and are not depreciated. As an integral
component of the land and irrigation infrastructure required to grow almonds, the carrying value is tested annually for impairment. If
events or changes in circumstances indicate impairment, the carrying value is adjusted to take account of any impairment losses.

(k) Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns,
trade allowances, and amounts collected on behalf of third parties. Revenue is recognised to the extent that it is probable that the
economic beneﬁ ts will ﬂ ow to the entity, the revenue can be reliably measured, and the risks and rewards have passed to the buyer.
The following speciﬁ c recognition criteria must also be met before revenue is recognised:

Select Harvests Annual Report 2009

Notes to the Financial Statements

Sale of Goods

Control of the goods has passed to the buyer.

Rendering of Services

Revenue from the rendering of services is recognised upon the delivery of the service to the customer. Certain clients may be
invoiced in advance of provision of services.

Interest

Interest revenue is recognised when it becomes receivable on a proportional basis taking into account the interest rates applicable
to the ﬁ nancial assets.

Dividends

Dividends are recognised as revenue when the right to receive payment is established.

Almond Pool Revenue

Under the contractual arrangements with external growers the Company simultaneously acquires and sells the almonds and does
not make a margin on those sales. These transactions are disclosed in Note 4 and are not recognised as revenue.

As at 30 June 2009 the Company held almond inventory on behalf of external growers which was not recorded as inventory of the
Company.

All revenue is stated net of the amount of Goods and Services Tax (GST).

(l) Other income

Almond Stocks

Increments or decrements in the net market value of almond stocks are recognised as income or expenses in the income statement
in the ﬁ nancial year in which they occur. The net increment or decrement in the total market value of the almond stocks is
determined as the difference between the net market value and quantities at the beginning of the year and at year end, less any
further costs required to get the almonds stocks to a saleable state.

(m) Income Tax

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national
income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences
between the tax bases of assets and liabilities and their carrying amounts in the ﬁ nancial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are
recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The
relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred
tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a
liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other
than a business combination, that at the time of the transaction did not affect either accounting proﬁ t or taxable proﬁ t or loss.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of
investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences
and it is probable that the differences will not reverse in the foreseeable future.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

Tax Consolidation

The parent entity of Select Harvests Limited and its subsidiaries have implemented the tax consolidation legislation and formed a
tax-consolidated group from 1 July 2003.

The parent entity and its wholly owned Australian subsidiaries in the tax-consolidated group continue to account for their own
current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be
a stand alone taxpayer in its own right.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable
from or payable to other entities in the group. Details of tax funding agreements are outlined in Note 6. Any difference between
the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or
distribution from) wholly-owned tax consolidated entities.

Select Harvests Annual Report 2009

Notes to the Financial Statements

Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST except:

- Where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the

GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

Receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
balance sheet.

Cash ﬂ ows are included in the cash ﬂ ow statement on a gross basis and the GST component of cash ﬂ ows arising from investing
and ﬁ nancing activities, which is recoverable from, or payable to the taxation authority are classiﬁ ed as operating cash ﬂ ows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(n) Impairment of assets

Assets that have an indeﬁ nite useful life are not subject to amortisation and are tested annually for impairment. Assets that are
subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identiﬁ able cash ﬂ ows
(cash generating units).

(o) Employee beneﬁ ts

Provision is made for employee beneﬁ ts accumulated as a result of employees rendering services up to the reporting date. These
beneﬁ ts include wages and salaries, annual leave and long service leave.

Liabilities arising in respect of wages and salaries, annual leave and any other employee beneﬁ ts expected to be settled within
twelve months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to
be paid when the liability is settled. All other employee beneﬁ t liabilities are measured at the present value of the estimated future
cash outﬂ ow to be made in respect of services provided by employees up to the reporting date. In determining the present value
of future cash outﬂ ows, the market yield as at the reporting date on national government bonds, which have terms to maturity
approximating the terms of the related liability, are used.

Contributions are made by the consolidated entity to an employee superannuation fund and are charged as expenses
when incurred.

Share-based payments

Share-based compensation beneﬁ ts are provided to employees via the Select Harvests Limited Executive Share Option Scheme.
Information relating to this scheme is set out in Notes 32 and 38.

The fair value of options granted under the Select Harvests Limited Executive Share Option Scheme is recognised as an employee
beneﬁ t expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period
during which the employees become unconditionally entitled to the options.

The fair value at grant date is independently determined using a Black Scholes option pricing model that takes into account the
exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the share price at grant date
and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of
the option.

The fair value of the options granted is adjusted to reﬂ ect market vesting conditions, but excludes the impact of any non market
vesting conditions (for example, proﬁ tability and sales growth targets). Non market vesting conditions are included in assumptions
about the number of options that are expected to become exercisable. At each balance sheet date, the entity revises its estimate
of the number of options that are expected to become exercisable. The employee beneﬁ t expense recognised each period
takes into account the most recent estimate. The impact of the revision to original estimates, if any, is recognised in the income
statement with a corresponding adjustment to equity.

(p) Financial Instruments

Financial Assets

Collectibility of trade receivables is reviewed on an ongoing basis. Trade receivables are carried at full amounts due less any
provision for doubtful debts. A provision for doubtful debts is recognised when collection of the full amount is no longer probable,
and where there is objective evidence of impairment, debts which are known to be non collectible are written off immediately.

Amounts receivable from other debtors are carried at full amounts due. Other debtors are normally settled on 30 days from month
end unless there is a speciﬁ c contract which speciﬁ es an alternative date.

Amounts receivable from related parties are carried at full amounts due. Details of the terms and conditions are set out in Note 34.

Select Harvests Annual Report 2009

Notes to the Financial Statements

Financial Liabilities

The bank overdraft is carried at the principal amount. Interest is charged as an expense as it accrues.

Liabilities are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the
consolidated entity.

Finance lease liability is accounted for in accordance with AASB 117 Leases.

(q) Fair value estimation

The fair value of certain ﬁ nancial assets and ﬁ nancial liabilities must be estimated for recognition and measurement or for
disclosure purposes.

The fair value of ﬁ nancial instruments traded in active markets (such as foreign exchange hedge contracts) is based on quoted
market prices at the balance sheet date. The quoted market price used for ﬁ nancial assets held by the consolidated entity is the
current bid price; the appropriate quoted market price for ﬁ nancial liabilities is the current ask price.

The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair
values. The fair value of ﬁ nancial liabilities for disclosure purposes is estimated by discounting the future contractual cash ﬂ ows at
the current market interest rate that is available to the consolidated entity for similar instruments.

(r) Borrowing costs

Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required
to complete and prepare the asset for its intended use. All other borrowing costs, inclusive of all facility fees, bank charges, and
interest, are expensed as incurred.

(s) Earnings per share

(i) Basic Earnings per share

Basic earnings per share are calculated by dividing the proﬁ t attributable to equity holders of the company by the weighted
average number of ordinary shares outstanding during the ﬁ nancial year.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the ﬁ gures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other ﬁ nancing costs associated with dilutive potential ordinary shares.

(t) Segment Reporting

A business segment is identiﬁ ed for a group of assets and operations engaged in providing products or services that are subject to
risks and returns that are different to those of other business segments.

(u) New accounting standards and UIG interpretations

Certain new accounting standards and UIG interpretations have been published that are not mandatory for 30 June 2009 reporting
periods. The Group’s and the parent entity’s assessment of the impact of these new standards and interpretations is set out below:

a) AASB 123 (Amendment) Borrowing Costs is effective from 1 January 2009. The deﬁ nition of borrowing costs has been
amended so that interest expense is calculated using the effective interest method deﬁ ned in AASB 139 Financial
Instruments:Recognition and Measurement. The group has adopted the standard early and the accounting policy is set out in
note 1 (r) to the capitalization of borrowing costs on qualifying assets from 1 July 2008.

b) AASB 136 (Amendment) Impairment of Assets is effective from 1 January 2009. Where fair value less costs to sell is calculated

on the basis of discounted cash ﬂ ows, disclosures equivalent to those for a value- in - use calculation should be made. The group
will apply the AASB 136 (Amendment) and provide the required disclosure where applicable for impairment tests from 1 July
2009.

c) AASB 119 (Amendment) Employee Beneﬁ ts is effective from 1 January 2009. The distinction between short term and long term
employee beneﬁ ts will be based on whether beneﬁ ts are due to be settled within or after 12 months of employee service being
rendered. AASB 137 Provisions, Contingent Liabilities and Contingent Assets requires contingent liabilities to be disclosed, not
recognised. AASB 119 has been amended to be consistent. The amendment also clariﬁ es certain treatments of pension plans,
not applicable to Select Harvests.

d) AASB 139 (Amendment) Financial Instruments: Recognition and Measurement is effective from 1 January 2009. This

amendment clariﬁ es that it is possible for there to be movements into and out of fair value through proﬁ t or loss category
where a derivative commences or ceases to qualify as a hedging instrument in a cash ﬂ ow or net investment hedge.
The amendment also treatment pertaining of ﬁ nancial assets and liabilities held for trading purposes; the treatment of
intersegmental hedges; and carrying values of debt instruments.

e) AASB 101 (Amendment) Presentation of Financial Statements is effective from 1 January 2009. The amendment clariﬁ es that some
rather than all ﬁ nancial assets and liabilities classiﬁ ed as ﬁ nancial assets and liabilities classiﬁ ed as held for trading in accordance
with AASB 139 Financial Instruments: Recognition and Measurement are examples of current assets and liabilities respectively.

Select Harvests Annual Report 2009

Notes to the Financial Statements

f) AASB 141 (Amendment) Agriculture is effective from 1 January 2009. The amendment requires the use of a market - based

discount rate where fair value calculations are based on discounted cash ﬂ ows and the removal of the prohibition on taking into
account biological transformation when calculating fair value.

g) AASB 3 Business Combinations (Amendment) and AASB 127 (Amendment) Consolidated and Separate Financial Statements

change the application of acquisition accounting for business combinations and accounting for non controlling interests. Key
changes include the expensing of all transaction costs, measurement of contingent consideration at acquisition date with
subsequent changes through the income statements, measurement of minority interests at full fair value or the proportionate
share of fair value of the underlying net assets.

h) AASB 8 Segment Reporting will result in a requirement to adopt a “management approach” to reporting on ﬁ nancial performance.

The introduction of amendments to the above standards will not have a material impact on Select Harvests and the impact is limited
to disclosure requirements only in future years.

(v) Provisions

Provisions are recognised when the consolidated entity has a present legal or constructive obligation as a result of past events, it is
probable that an outﬂ ow of resources will be required to settle the obligation, and the amount has been reliably estimated.

(w) Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of the ﬁ nancial year which are
unpaid. These amounts are unsecured and are usually paid within 30 days of recognition.

(x) Contributed equity

Ordinary shares are classiﬁ ed as equity. The value of new shares or options issued is shown in equity.

(y) Comparatives

Where necessary, comparatives have been reclassiﬁ ed and repositioned for consistency with current year disclosures.

(z) Rounding amounts

The company is of a kind referred to in Class Order 98/100, issued by the Australian Securities & Investments Commission, relation
to the “rounding off” of amounts in the ﬁ nancial report. Amounts in the ﬁ nancial report have been rounded off in accordance with
that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.

2. Financial risk management
The Group’s activities expose it to a variety of ﬁ nancial risks: market risk (including currency risk, interest rate risk and commodity
price risk), credit risk and liquidity risk. The Group uses different methods to measure different types of risk to which it is exposed.
These methods include sensitivity analysis in the case of interest rate risk, foreign exchange and other price risks, and ageing analysis
for credit risk.

Risk management is carried out by management pursuant to policies approved by the Board of Directors.

(a) Market risk

(i) Foreign exchange risk

Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a
currency that is not the consolidated entity’s functional currency.

The Group sells both almonds harvested from owned orchards through the almond pool and processed products internationally
in United States dollars, and purchases raw materials and other inputs to the manufacturing and almond growing process from
overseas suppliers predominantly in United States dollars.

Management and the Board review the foreign exchange position of the Group and, where appropriate, take out forward exchange
contracts, transacted with the Group’s banker, to manage foreign exchange risk.

The exposure to foreign currency risk at the reporting date was as follows:

GROUP

Trade receivables net of payables

Cash at bank/(overdraft)

30 JUNE 2009
USD $000’S

9,186

(2,253)

30 JUNE 2008
USD $000’S

7,245

283

Foreign exchange contracts

- buy foreign currency (cash ﬂ ow hedges)

- sell foreign currency (cash ﬂ ow hedges)

3,740

14,464

2,793

1,657

Select Harvests Annual Report 2009

Notes to the Financial Statements

PARENT

Cash at bank/(overdraft)

Foreign exchange contracts

- buy foreign currency (cash ﬂ ow hedges)

- sell foreign currency (cash ﬂ ow hedges)

Group sensitivity analysis

30 JUNE 2009
USD $000’S

(2,253)

30 JUNE 2008
USD $000’S

283

3,740

14,464

2,793

1,657

Based on ﬁ nancial instruments held at the 30 June 2009, had the Australian dollar strengthened/weakened by 5% against the US
dollar, with all other variable’s held constant, the Group’s post tax proﬁ t for the year would have been $287,000 lower/
$317,000 higher (2008: $262,000 lower/$290,000 higher), mainly as a result of the US dollar denominated ﬁ nancial instruments
as detailed in the above table. Other components of equity would have been $730,000 lower/$806,000 higher (2008: $306,000
lower/$329,000 higher), arising mainly from foreign forward exchange contracts designated as cash ﬂ ow hedges.

Parent sensitivity analysis

Based on ﬁ nancial instruments held at the 30 June 2009, had the Australian dollar strengthened/weakened by 5 % against the
US dollar, with all other variables held constant, the parent entity post tax proﬁ t for the year would have been $103,000 lower/$
93,000 higher (2008: $ 11,000 higher/$ 10,000 lower), mainly as a result of the US dollar denominated ﬁ nancial instruments
as detailed in the above table. Other components of equity would have been $546,000 lower/$583,000 higher (2008: $ lower
54,000/$50,000 higher), arising mainly from foreign forward exchange contracts designated as cash ﬂ ow hedges.

(ii) Price risk

The Group is exposed to commodity price risk in relation to its owned orchards. The Group sells almonds harvested from owned
orchards domestically and overseas throughout the year based on an almond price which will ﬂ uctuate from time to time due to
changes in international market conditions. The Group has an active and ongoing almond marketing and selling program in place
which is continually monitored and adapted for changes in almond prices.

The Group also purchases raw materials and other inputs to the manufacturing and almond growing process domestically and
overseas. The price of such inputs will also ﬂ uctuate from time to time based on market forces. Where practical, the consolidated
entity, through its procurement programs, contracts from time to time to acquire such quantity of inputs as is projected to be
required at ﬁ xed prices.

(iii) Cash ﬂ ow and fair value interest rate risk

The Group’s interest rate risk arises from borrowings issued at variable rates, which exposes the Group to cash ﬂ ow interest rate
risk. The Group’s borrowings at variable interest rate are denominated in Australian dollars.

At the reporting date the Group and the parent had the following variable rate borrowings:

30 JUNE 2009
WEIGHTED AVERAGE
INTEREST RATE

BALANCE

30 JUNE 2008
WEIGHTED AVERAGE
INTEREST RATE

BALANCE

$000

Commercial bills

Overdraft

7.87%

3.80%

56,500

2,793

7.30%

11.75%

50,500

An analysis of maturities is provided in (c) below

The Group analyses interest rate exposure on an ongoing basis in conjunction with debt facility, cash ﬂ ow and capital management.

Group and Parent sensitivity

At 30 June 2009, if interest rates had changed by +/- 25 basis points from the year end rates with all other variables held constant,
post tax proﬁ t for the year would have been $94,000 lower/higher (2008: $88,000 lower/higher).

All Group borrowings are held by the parent entity.

Select Harvests Annual Report 2009

Notes to the Financial Statements

(b) Credit risk

Credit risk arises from cash and cash equivalents, derivative ﬁ nancial instruments and deposits with banks and ﬁ nancial
institutions, as well as exposure to wholesale, retail and farm investor customers, including outstanding receivables and committed
transactions.

The Group has no signiﬁ cant concentrations of credit risk. The Group has policies in place to ensure that sales of products and
services are made to customers with an appropriate credit history. Derivative counterparties and cash transactions are limited to
high credit quality ﬁ nancial institutions.

The credit quality of ﬁ nancial assets that are neither past due or impaired can be assessed by reference to external credit ratings (if
available) or to historical information about default rates.

The Group’s banking partner has a long-term credit rating of AA (Standard & Poors).

Refer to note 10 for a summary of aged receivables impaired, and past due but not impaired.

The Group manages liquidity risk by continuously monitoring forecast and actual cash ﬂ ows and matching the maturity proﬁ les of
ﬁ nancial assets and liabilities.

Financing arrangements

The Group and parent entity had access to the following undrawn borrowing facilities at the reporting date:

Floating rate (expiring within 1 year)

- Commercial bill facility

- Bank overdraft facility AUD

- Bank overdraft facility USD

2009

$’000

$A8,500

$US 747

2008

$’000

$A 9,500

$A 949

$US 3,000

The bank overdraft facility may be drawn at any time and may be terminated by the bank without notice. The commercial bill
acceptance facility may be drawn at any time and is subject to annual review.

Maturities of ﬁ nancial liabilities

The table below analyses the Group’s and parent entity’s ﬁ nancial liabilities, net and gross settled derivative instruments into
relevant maturity groupings based on the remaining period at the reporting date on the contractual maturity date. The amounts
disclosed in the table are the contractual undiscounted cash ﬂ ows.

Select Harvests Annual Report 2009

Notes to the Financial Statements

Group and Parent at 30 June 2009

Non derivatives

Variable Rate

Bills payable

Derivatives

USD buy - outﬂ ow

Bank Overdraft

USD sell - inﬂ ow

USD net

Group and Parent at 30 June 2008

Non derivatives

Variable Rate

Bills payable

Derivatives

USD buy - outﬂ ow

Bank Overdraft

USD sell - inﬂ ow

USD net

LESS THAN 12
MONTHS

MORE THAN 12
MONTHS

TOTAL
CONTRACTUAL
CASH FLOWS

CARRYING AMOUNT
(ASSETS)/LIABILITIES

$’000

56,500

2,793

(3,740)

7,884

4,144

50,500

(2,793)

1,657

1,136

6,580

56,500

2,793

(3,740)

14,464

10,724

50,500

(2,793)

1,657

1,136

56,500

2,793

149

2,322

2,173

50,500

(69)

3. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors.

Critical accounting estimates and assumptions

The consolidated entity makes estimates and assumptions concerning the future. The resulting accounting estimates will, by deﬁ nition,
seldom equal the related actual results. The estimates and assumptions that have a risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next ﬁ nancial year are discussed below.

Almond Trees

Almond trees are classiﬁ ed as a biological asset and valued in accordance with AASB 141 “Agriculture”. The consolidated entity’s accounting
policies in relation to almond trees are detailed in Note 1(f). In applying this policy, the consolidated entity has made various assumptions.
These are detailed in Note 17 of the ﬁ nancial statements. As at 30 June 2009, the value of almond trees carried in the ﬁ nancial statements of
the consolidated entity is $6.0 million (2008:$6.0 million)

Estimated impairment of intangible assets

The Group tests annually whether intangible assets, has suffered any impairment, in accordance with the accounting policy stated in note 1(j).
The recoverable amounts of cash generating units have been determined based on value-in-use calculations. These calculations require the
use of assumptions. Refer to note 18 for details of these assumptions and the potential impact of changes to these assumptions.

Select Harvests Annual Report 2009

Notes to the Financial Statements

4. Revenue

Revenue from continuing operations

Sales of goods and services *

Other revenue

Management fees

Dividends and distributions

- Controlled entities

Interest

- Wholly owned entities

- Other persons/corporations

Total interest

Total other revenue

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$’000

2008
$’000

2009
$’000

2008
$’000

248,581

224,655

155

3,737

3,915

10,500

20,500

6,231

6,324

20,561

2,774

155

2,929

27,344

Total revenue

248,674

224,810

20,561

27,344

Revenue / Cost of goods sold from Almond Pool

Revenue from almond pool sales

Cost of goods sold from almond pool sales

92,150

(92,150)

43,210

(43,210)

* Revenue from almond pool sales includes sales of almonds for externally owned almond orchards, which are sold by the consolidated entity on a
pooled basis, the proceeds from which are distributed to the pool participants. This revenue is not included in the revenue as stated above within
revenue from continuing operations.

Select Harvests Annual Report 2009

Notes to the Financial Statements

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$’000

2008
$’000

2009
$’000

2008
$’000

5. Expenses

Proﬁ t before tax includes the following speciﬁ c expenses:

Cost of goods & services sold

Temporary water costs

Depreciation of non current assets

Freehold land and buildings

Buildings

Plantation Land and irrigation systems

Leased plant and equipment

Plant and equipment

Total depreciation of non current assets

Finance costs

other persons

capitalised

Total ﬁ nance costs

Impairment losses: trade receivables

Foreign exchange (gain)

Operating lease rental minimum lease payments

197,821

1,608

174,866

3,007

236

356

4,170

4,796

4,585

(712)

3,873

4,695

(279)

10,681

468

116

3,163

3,802

3,373

(1,482)

1,891

(126)

9,514

Net loss on disposal of property, plant and equipment

837

144

148

4,585

(712)

3,873

117

133

3,288

(1,482)

1,806

(a) Capitalised Borrowing Costs

The capitalised rate used to determine the amount of borrowing costs to be capitalised is the weighted average interest rate applicable to the
entity’s outstanding borrowings during the year, 7.87% (2008 – 7.3%)

Select Harvests Annual Report 2009

Notes to the Financial Statements

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$’000

2008
$’000

2009
$’000

2008
$’000

6. Income Tax

(a) Income tax expense

Current Tax

Deferred tax

Under (over) provided in prior years

Income tax expense is attributable to:

Proﬁ t from continuing operations

Aggregate income tax expense

Deferred income tax (revenue) expense included in income tax expense comprises:

Decrease (increase) in deferred tax assets

(Decrease) increase in deferred tax liabilities

(b) Numerical reconciliation of income tax expense to prima facie tax payable

8,213

(1,439)

(439)

6,335

(1,494)

(1,439)

4,912

2,715

(373)

7,254

(127)

2,842

2,715

(509)

1,074

(1,135)

(570)

996

1,074

501

(37)

(60)

404

(37)

23,047

25,384

12,849

22,018

Proﬁ t from continuing operations before
income tax expense

Tax at the Australian tax rate of 30% (2008 – 30%)

23,047

6,914

Tax effect of amounts that are not deductible (taxable) in calculating taxable income

Rebateable dividends

Other non allowable items

Other non assessable items

Under/(over) provision of previous year

Income tax expense

(150)

(439)

6,335

25,384

7,615

(373)

7,254

12,849

3,855

(3,150)

(150)

(1,135)

(570)

22,018

6,605

(6,150)

(60)

404

Select Harvests Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation as of 1 July
2003. The accounting policy in relation to this legislation is set out in Note 1(m). On adoption of the tax consolidation legislation, the entities in
the tax consolidated group entered into a tax sharing agreement which limits the joint and several liability of the wholly-owned entities in the
case of a default by the head entity, Select Harvests Limited.

The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate Select Harvests Limited
for any current tax payable assumed and are compensated by Select Harvests Limited for any current tax receivable and deferred tax assets
relating to unused tax losses or unused tax credits that are transferred to Select Harvests Limited under the tax consolidation legislation. The
funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’ ﬁ nancial statements.

The amounts receivable / payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which
is issued as soon as practicable after the end of each ﬁ nancial year. The head entity may also require payment of interim funding amounts to
assist with its obligations to pay tax instalments. The funding amounts are recognised as current intercompany receivables or payables.

7. Discontinued Operations

There are no discontinued operations impacting the reported results in the current ﬁ nancial year or the prior ﬁ nancial year.

Select Harvests Annual Report 2009

Notes to the Financial Statements

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$’000

2008
$’000

2009
$’000

2008
$’000

8. Dividends Paid or Proposed for on Ordinary Shares
(a) Dividends paid during the year

(i) Interim - paid 16 April 2009 (2008: 3 April 2008)

Fully franked dividend (12c per share) (2008: 22c per share)

(ii) Final - paid 1 October 2008 (2007: 1 October 2007)

Fully franked dividend (23c per share) (2007: 35c per share)

(b) Dividends proposed and not recognised as a liability

No ﬁ nal dividend has been declared by the Directors.

Franking credits available for the subsequent ﬁ nancial year arising from:

Franking account balance as at the beginning of the ﬁ nancial year

Current year tax payment instalments and adjustments

Interim Dividends paid

Franking account balance at end of ﬁ nancial year

Current year income tax payable/(receivable)

Dividend declared

Franking account balance after payment of current year tax and dividends

4,707

8,972

13,679

8,556

13,600

22,156

4,707

8,972

13,679

28,817

10,299

(4,707)

34,409

8,321

42,730

8,556

13,600

22,156

29,629

18,025

(8,556)

39,098

(1,309)

(8,972)

28,817

The impact on the franking account of the dividend recommended by the directors since year end, but not recognised as a liability at year end,
is $ nil (2008 - $3,845,165).

9. Cash and Cash Equivalents
Cash at bank and in hand

6,945

4,054

6,943

3,946

(a) Reconciliation to cash at the end of the year

The above ﬁ gures are reconciled to cash at the end of the ﬁ nancial year as shown in the
statement of cash ﬂ ow as follows:

Balances as above

Bank overdrafts

6,945

(2,793)

4,152

4,054

(50)

4,004

6,943

(2,793)

4,150

3,946

(50)

3,896

(b) Cash at bank and on hand

Details of the interest rates applicable to cash at bank and on hand are detailed in Note 36.

Select Harvests Annual Report 2009

Notes to the Financial Statements

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$’000

2008
$’000

2009
$’000

2008
$’000

46,126

(4,688)

41,438

1,690

43,128

40,664

(15)

40,649

2,452

43,101

1,132

1,127

10. Receivables (Current)
Trade receivables

Provision for impairment of trade receivables

Prepayments

(a) Impaired trade receivables

As at 30 June 2009 current trade receivables of the Group with a value of $4,688,000 (2008: $15,000) were impaired. The amount of the
provision was $4,688,000 (2008:$15,000). There were no impaired receivables for the parent in 2009 or 2008.

The aging of these receivables is as follows:

Over 6 months

Movements in the provision for impairment of receivables are as follows:

At 1 July 2008

Provision for impairment recognised during the year

Receivables written off during the year

At 30 June 2009

CONSOLIDATED

2009
$’000

2008
$’000

4,695

(22)

4,688

(41)

Provision for impairment recognised during the year includes $4,667,000 relating to revenues earned but not yet collected from Almond
Management Pty Ltd, a subsidiary of Timbercorp Limited

(b) Trade receivables past due but not impaired

As at 30 June 2009, trade receivables of $ 5,566,108 (2008: $4,804,382) were past due but not impaired. These relate to a number of
customers for whom there is no recent history of default. The ageing analysis of these receivables is as follows:

Up to 3 months

3 to 6 months

> 6 months

CONSOLIDATED

2009
$’000

5,165

183

218

5,566

2008
$’000

3,277

660

867

4,804

Select Harvests Annual Report 2009

Notes to the Financial Statements

All receivables are non-interest bearing.

The Company minimises concentrations of credit risk in relation to trade receivables by undertaking transactions with a large number of
customers from across the range of business segments in which the consolidated entity operates. Refer to Note 2 for more information on
the risk management policy of the consolidated entity.

Information concerning the effective interest rate and credit risk of both current and non current receivables is set out in Note 36.

(d) Fair value and credit risk

Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value.

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$’000

2008
$’000

2009
$’000

2008
$’000

11. Inventories (Current)
Raw Materials

Raw materials at cost

Finished goods

Finished goods at cost

Other inventory

Other inventory at cost

Almond stocks

Almond stock at cost

Almond stock fair value adjustment

8,911

9,911

5,564

1,768

2,526

4,294

28,680

9,887

5,750

4,759

4,353

4,480

8,833

29,229

1(f)

Write-downs of inventory to net realisable value recognised as an expense during the year ended 30 June 2009 amounted to $17,000 (2008
$133,000). The expense has been included in other expenses.

12. Derivative Financial Instruments (Current)
Current Assets

Forward exchange contracts – cash ﬂ ow hedges

Total current derivative ﬁ nancial instrument assets

Current Liabilities

Forward exchange contracts – cash ﬂ ow hedges

Total current derivative ﬁ nancial instrument liabilities

2,322

149

2,322

149

(i) Forward exchange contracts – cash ﬂ ow hedges

The consolidated entity enters into forward exchange contracts to buy and sell speciﬁ ed amounts of foreign currency in the future at
stipulated exchange rates. The objective in entering the forward exchange contracts is to protect the consolidated entity against unfavourable
exchange rate movements for highly probable contracted and forecasted sales and purchases undertaken in foreign currencies.

Select Harvests Annual Report 2009

Notes to the Financial Statements

The net amount of the foreign currency the consolidated entity will be required to pay or purchase when settling the brought forward
exchange contracts should the counterparty not pay the currency it is committed to deliver to the Company at balance date was $10,724,000
(2008: $1,136,000).

The accounting policy in regard to forward exchange contracts is detailed in Note 1(c).

At balance date, the details of outstanding forward exchange contracts are:

BUY UNITED STATES DOLLARS SETTLEMENT

SELL AUSTRALIAN DOLLARS

AVERAGE EXCHANGE RATE

Less than 6 months

6 months to 1 year

2009
$’000

3,740

2008
$’000

2,397

396

2,793

2009
$

0.78

2008
$

0.92

SELL UNITED STATES DOLLARS SETTLEMENT

BUY AUSTRALIAN DOLLARS

AVERAGE EXCHANGE RATE

Less than 6 months

6 months to 1 year

More than 1 year

(ii) Credit risk exposures

2009
$’000

7,884

6,580

14,464

2008
$’000

1,546

111

1,657

2009
$

0.73

0.67

2008
$

0.92

0.86

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised ﬁ nancial assets is
the carrying amount of those assets, net of any provisions for doubtful debts of those assets, as disclosed in the balance sheet and Notes to
the ﬁ nancial statements.

Credit risk for derivative ﬁ nancial instruments arises from the potential failure by counterparties to the contract to meet their obligations at
maturity. The credit risk exposure to forward exchange contracts is the net fair value of these contracts.

The consolidated entity does not have any material credit risk exposure to any single debtor or group of debtors under ﬁ nancial instruments
entered into by the consolidated entity.

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$’000

2008
$’000

2009
$’000

2008
$’000

13. Receivables (Non Current)
Related party receivables

Wholly-owned group controlled entities

34(f)

160,979

126,352

Select Harvests Annual Report 2009

Notes to the Financial Statements

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$’000

2008
$’000

2009
$’000

2008
$’000

15(a)

9,607

10,511

(702)

9,809

30,091

(2,729)

27,362

37,171

66,173

(26,295)

39,878

11,636

51,514

118,411

(29,726)

88,685

2,809

(466)

2,343

21,589

(2,363)

19,226

21,569

608

(410)

198

36,466

(22,210)

14,256

37,112

51,368

98,584

(25,449)

73,135

1,434

(1,040)

394

1,434

(1,040)

394

103

(45)

1,104

(875)

229

1,207

(920)

287

14. Other Financial Assets (Non current)
Investments at cost comprise:

Controlled entities – unlisted

15. Property, Plant and Equipment
Buildings

At cost

Accumulated depreciation

Plantation Land and irrigation systems

At cost

Accumulated depreciation

Total land and buildings

Plant and equipment under lease

At cost

Accumulated amortisation

Plant and equipment

At cost

Accumulated amortisation

Capital works in progress

At cost

Total plant and equipment

Total property, plant and equipment

Cost

Accumulated depreciation and amortisation

Total written down amount

Select Harvests Annual Report 2009

Notes to the Financial Statements

(a) Reconciliations
Reconciliations of the carrying amounts of property, plant and equipment at the beginning and end of the current ﬁ nancial year.

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$’000

2008
$’000

2009
$’000

2008
$’000

Buildings

Carrying amount at beginning

Transfers between classes

Depreciation expense

Plantation land and irrigation systems

Carrying amount at beginning

Additions

Transfers between classes

Depreciation expense

Plant and equipment under lease

Carrying amount at beginning

Disposals

Transfer between classes

Depreciation expense

Plant and equipment

Carrying amount at beginning

Additions

Disposals

Transfers between classes

Depreciation expense

Capital works in progress

Carrying amount at beginning

Additions

Reclassiﬁ cation from Trade & Other Receivables

Expensed to proﬁ t & loss

Transfers between classes

Total written down value

2,343

7,702

(236)

9,809

19,226

8,489

(356)

27,362

198

(164)

(34)

14,256

(50)

29,840

(4,170)

39,878

37,112

16,713

3,867

(25)

(46,031)

11,636

88,685

2,398

(55)

2,343

17,594

2,100

(468)

19,226

314

(116)

198

17,475

1,252

(674)

(633)

(3,164)

14,256

9,973

28,848

(1,709)

37,112

73,135

(54)

(4)

229

255

(144)

394

(16)

159

115

(116)

229

(43)

394

287

Select Harvests Annual Report 2009

Notes to the Financial Statements

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$’000

2008
$’000

2009
$’000

2008
$’000

16. Deferred Tax Assets
The balance comprises temporary differences attributable to:

Amounts recognised in proﬁ t and loss

Employee beneﬁ ts

Accruals

Provisions

Amounts recognised directly in equity

Cash ﬂ ow hedges

Movements:

Opening balance 1 July

Credited / (charged) to income statement

Credited / (charged) to equity

Closing balance at 30 June

Deferred tax assets to be recovered after more than 12
months

Deferred tax assets to be recovered within 12 months

624

(655)

163

411

620

624

692

(127)

624

553

624

577

(655)

140

387

573

577

555

(37)

577

537

577

17. Biological Assets – Almond Trees
The consolidated entity, as part of its operations, grows, harvests, and sells almonds. Harvesting of almonds occurs from February through to
April each year. The almond orchards are located in the Robinvale area of North West Victoria.

As at 30 June 2009 the consolidated entity owned and managed a total of 1,863 acres of almond orchards (2008: 1,863 acres) and leased and
managed a total of 1,505 acres of almond orchards (2008: 1,505 acres).

During the year ended 30 June 2009, 2,600 metric tonnes of almonds were harvested from these orchards (2008: 2,400 metric tonnes). These
almonds had a fair value less estimated point of sale costs of $13.0 million (2008: $12.8 million).

Carrying amount at 1 July

Additions

Carrying amount at 30 June

CONSOLIDATED

2009
$’000

6,039

2008
$’000

5,998

6,039

Select Harvests Annual Report 2009

Notes to the Financial Statements

Developing almond trees are valued at their growing cost until the year they bear their ﬁ rst commercial crop. The value of crop bearing almond
trees is calculated using a discounted cash ﬂ ow methodology. The discounted cash ﬂ ow incorporates the following factors:

- Almond trees have an estimated 30 year economic life, with crop yields consistent with long term yield rates;

Selling prices are based on long term average trend prices;

- Growing, processing and selling costs are based on long term average levels;

- Cash ﬂ ows are discounted at a rate of 17% which takes into account the cost of capital plus a suitable risk factor; and

- An appropriate rental charge is included to represent the use of the developed land on which the trees are planted.

(a) Financial risk management strategies
The consolidated entity is exposed to ﬁ nancial risks arising from changes in the price of almonds. The consolidated entity reviews its outlook
for almond prices regularly in considering the need for active ﬁ nancial risk management.

(b) Non current assets pledged as security
Refer to Note 23 for information on biological assets whose title is restricted and the carrying amounts of any biological assets pledged as
security by the parent entity or its subsidiaries.

18. Intangibles
Year ended 30 June 2008

Opening net book amount

Additions

Closing net book amount

Year ended 30 June 2009

Opening net book amount

Closing net book amount

GOODWILL
$’000

CONSOLIDATED

BRAND
NAMES*
$’000

PERMANENT
WATER RIGHTS
$’000

TOTAL
$’000

25,995

2,905

5,826

4,410

10,236

34,726

4,410

39,136

* Brand name assets relate to the “Lucky” brand, which has been assessed as having an indeﬁ nite useful life. This assessment was based on the Lucky brand having been
sold in the market place for over 50 years, is a market leader in the cooking nuts category and remains a heritage brand.

(a) Impairment tests for goodwill

Goodwill is allocated to the consolidated entity’s cash-generating units (CGU) identiﬁ ed according to business segment. The total value
of goodwill relates to the Food Products CGU. The recoverable amount of a CGU is determined based on value-in-use calculations. These
calculations use cash ﬂ ow projections based on ﬁ nancial projections by management covering a ﬁ ve-year period assuming a 10% growth rate
based on projected crop increases and other growth rates based on past performance and its expectations for the future. These do not exceed
the long-term growth rate for the business in which the Food Products Division operates in. A weighted average cost of capital of 12.8% has
been used to discount the cash ﬂ ow projections.

(b) Impact of possible changes to key assumptions

The recoverable amount of the goodwill in the Food Products Division exceeds the carrying amount of goodwill at 30 June 2009. If a pre-tax
discount rate of 13.8% was used instead of 12.8% the recoverable amount of the goodwill in the Food Products Division would still exceed the
carrying amount of goodwill at 30 June 2009.

The value of permanent water rights relates to the almond division Cash Generating Unit (CGU) and is an integral part of land and irrigation
infrastructures required to grow almond orchards. The fair value of permanent water rights is supported by the tradeable market value , which
at current market prices is in excess of book value.

Select Harvests Annual Report 2009

Notes to the Financial Statements

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$’000

2008
$’000

2009
$’000

2008
$’000

7,047

29,717

36,764

2,793

56,500

59,293

8,112

26,735

34,847

50,500

237

50,787

1,221

1,303

1,309

1,405

2,793

56,500

59,293

50,500

50,609

19. Trade And Other Payables (Current)
Trade creditors

Other creditors and accruals

20. Interest Bearing Liabilities (Current)
Secured

Bank overdraft

Bills payable

Lease liability

Total secured current borrowings

(a) Security

Details of the security relating to each of the secured liabilities and further information on the bank overdrafts and bank loans are set out in
Note 23.

(b) Interest rate risk exposures

Details of the consolidated entity’s exposure to interest rate changes on borrowings are set out in Note 36.

21. Provisions (Current)
Employee beneﬁ ts

22. Trade And Other Payables (Non current)
Aggregate amounts payable to related parties

- wholly owned companies

2,576

2,446

361

319

63,991

41,261

Select Harvests Annual Report 2009

Notes to the Financial Statements

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$’000

2008
$’000

2009
$’000

2008
$’000

23. Secured Liabilities
Assets pledged as security
The bank overdraft and commercial bills of the parent entity and subsidiaries are secured by the following:

(i).

A registered mortgage debenture is held as security over all the assets and undertakings of Select Harvests Limited and the entities
of the wholly owned group.

(ii).

A deed of cross guarantee exists between the entities of the wholly owned group.

The carrying amounts of assets pledged as security for current and non current borrowings are:

Current

Floating charge

Cash and cash equivalents

Receivables

Inventories

Derivative ﬁ nancial instruments

Total current assets pledged as security

Non current

Floating charge

Receivables

Other ﬁ nancial assets

Property, plant and equipment

Biological assets – almond trees

Permanent water rights

Total non current assets pledged as security

Total assets pledged as security

6,945

43,128

28,680

2,322

81,075

88,685

6,039

10,236

104,960

186,035

4,054

43,101

29,229

76,453

73,135

6,039

10,236

89,410

165,863

6,943

1,132

2,322

10,397

163,790

9,607

394

3,946

1,127

5,142

126,352

9,607

287

173,791

184,188

136,246

141,388

Financing arrangements
The consolidated entity and the Company have bank overdraft facilities available to the extent of USD 3,000,000 (2008: AUD 1,000,000
& USD 3,000,000). As at 30 June 2009 the consolidated entity and Company have used USD 2,253,000 (2008: AUD 51,018 & USD Nil) of
the facility.

The consolidated entity and the Company have a commercial bill facility available to the extent of $65,000,000 (2008: $60,000,000). As at
30 June 2009 the consolidated entity and Company have used $56,500,000 (2008: $50,500,000). This facility is treated as a current liability
because it is due for renewal on 30 June 2010.

The current interest rates are 6.2% on the commercial bill facility, and 3.8% on the United States dollar bank overdraft facility.

A number of covenants and ﬁ nancial undertakings are associated with the company banking facilities, all of which have been met during
the period and as at 30 June 2009.

Select Harvests Annual Report 2009

Notes to the Financial Statements

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$’000

2008
$’000

2009
$’000

2008
$’000

24. Deferred Tax Liabilities (Non Current)
The balance comprises temporary differences attributable to:

Amounts recognised in proﬁ t and loss

Inventory

Assets at cost

Employee beneﬁ ts

Accruals

Provisions

Intangibles

Operating leases

Amounts recognised directly in equity

Cash ﬂ ow hedges

Movements:

Opening balance 1 July

Credited / (charged) to income statement

Credited / (charged) to equity

Closing balance at 30 June

Deferred tax liabilities to be settled after more
than 12 months

Deferred tax liabilities to be settled within 12 months

25. Provisions (Non Current)
Employee entitlements

(a) Aggregate employee entitlements liability

(b) Number of full time employees at year end

1,338

10,709

(1,093)

898

(1,995)

870

(396)

10,331

540

10,871

13,020

(1,494)

(655)

10,871

11,222

(351)

10,871

864

3,440

366

2,169

9,777

(893)

1,468

870

(371)

(154)

(45)

13,020

(199)

13,020

10,178

2,842

13,020

10,249

2,771

13,020

695

3,141

340

540

341

996

(655)

341

382

(41)

341

137

498

126

445

Select Harvests Annual Report 2009

Notes to the Financial Statements

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$’000

2008
$’000

2009
$’000

2008
$’000

46,433

44,375

46,433

44,375

2009

2008

NUMBER OF
SHARES

39,008,928

$’000

44,375

NUMBER OF
SHARES

38,739,047

509,987

2,058

451,074

119,700

(300,893)

39,518,915

46,433

39,008,928

$’000

41,953

3,695

1,097

(2,370)

44,375

26. Contributed Equity
(a) Issued and paid up capital

Ordinary shares fully paid

(b) Movements in shares on issue

Beginning of the ﬁ nancial year

- Issued during the year

- Dividend reinvestment scheme

- Employee share scheme

Share buy back

End of Financial year

Employee share scheme

The company continued to offer employee participation in short term and long term incentive schemes as part of the remuneration packages
for the employees of the companies. Both the short term and long term schemes involve payments up to an agreed proportion of the total
ﬁ xed remuneration of the employee, with relevant proportions based on market relativity of employees with equivalent responsibilities.

The employee is able to receive payments under the short term incentive scheme based on the achievement of agreed business plans by the
individual. This performance is measured and reported by a balanced scorecard approach.

The long term scheme involves the issue of options to the employee, under the executive share option scheme. During or since the end of the
ﬁ nancial year, no options (2008: 71,167 options) have been granted under this scheme (refer Note 38 and Directors’ Report for further details).
The market value of ordinary Select Harvests Limited shares closed at $ 2.16 on 30 June 2009 ($6.00 on 30 June 2008).

(d) Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of
and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each
share is entitled to one vote.

Select Harvests Annual Report 2009

Notes to the Financial Statements

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$’000

2008
$’000

2009
$’000

2008
$’000

27(a)

27(c)

27. Reserves And Retained Proﬁ ts
Capital reserve

Cash ﬂ ow hedge reserve

Asset revaluation reserve

Options reserve

Retained proﬁ ts

(a) Movements

Capital reserve

Balance at beginning of year

Balance at end of year

Cash ﬂ ow hedge reserve

Balance at beginning of year

Currency translation differences arising during the year

Balance at end of year

Asset revaluation reserve

Balance at beginning of year

Balance at end of year

Options reserve

Balance at beginning of year

Option expense

Transfer to share capital (options exercised)

Balance at end of year

(b) Nature and purpose of reserves

(i) Capital reserve

3,270

1,520

7,645

514

12,949

41,494

3,270

(9)

1,529

1,520

7,645

329

185

514

3,270

(9)

7,645

329

11,235

38,461

3,270

(137)

128

(9)

7,645

495

(166)

329

3,270

1,520

514

5,304

499

3,270

(9)

1,529

1,520

329

185

514

3,270

(9)

329

3,590

759

3,270

(137)

128

(9)

495

(166)

329

The capital reserve is used to isolate realised capital proﬁ ts from disposal of non current assets

(ii) Asset revaluation reserve

The asset revaluation reserve is used to record increments and decrements in the value of non current assets. The reserve can only be used
to pay dividends in limited circumstances. This revaluation reserve is no longer in use given assets are now recorded at cost. This is in line
with accounting policies within note 1.

(iii) Options reserve

The options reserve is used to recognise the fair value of options granted but not exercised.

(iv) Cash ﬂ ow hedge reserve

The cash ﬂ ow hedge reserve is used to record gains or losses on foreign exchange contracts in a cash ﬂ ow hedge that are recognised
directly in equity.

Select Harvests Annual Report 2009

Notes to the Financial Statements

Balance at the beginning of year

Proﬁ t attributable to members of Select Harvests Limited

Total available for appropriation

Dividends paid

Dividends refunded

Balance at end of year

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$’000

2008
$’000

2009
$’000

2008
$’000

38,461

16,712

55,173

(13,679)

41,494

42,278

18,130

60,408

(22,156)

209

38,461

759

13,419

14,178

(13,679)

499

1,092

21,614

22,706

(22,156)

209

759

28. Reconciliaton Of The Net Proﬁ t After Income Tax To The Net Cash Flows From
Operating Activities
Net proﬁ t

18,130

16,712

Non-cash items

Depreciation and amortisation

Almond stock fair value adjustment

Almond trees fair value adjustment

Net loss on disposal of property, plant and equipment

Dividends received from controlled entities

Interest received

Management fees received

Changes in assets and liabilities

(Increase) in trade receivables

(Increase) / decrease in inventory

(Increase) / decrease in receivables and other assets

(Decrease) / increase in trade and other payables

(Decrease) / increase in income tax payable

Increase/ (decrease) in deferred income tax liability

(Increase) / decrease in deferred tax assets

Increase in employee entitlements

Net cash ﬂ ow from operating activities

Non cash ﬁ nancing activities

4,796

1,951

(4,440)

(1,401)

(1,491)

3,516

4,127

(2,149)

600

299

22,573

3,802

(92)

(500)

837

(7,562)

1,532

(1,863)

(11,977)

(3,327)

2,842

105

1,996

13,419

21,614

148

133

(10,500)

(20,500)

(6,231)

(3,737)

(2,929)

(3,915)

(6)

(14,718)

22,628

4,127

341

577

(26,334)

968

(1,028)

(22)

6,101

(32,000)

During the current year the company issued $2,058,000 of new equity as part of the Dividend Reinvestment Plan (refer to note 26).

Select Harvests Annual Report 2009

Notes to the Financial Statements

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$’000

2008
$’000

2009
$’000

2008
$’000

29. Expenditure Commitments
Lease commitments – Group company as lessee

Commitments in relation to leases contracted for at the reporting date but not recognised as liabilities, payable:

Within one year

Later than one year but not later than ﬁ ve years

Later than ﬁ ve years

(i) Operating leases (non cancellable):

- Minimum lease payments

- Not later than one year

- Later than one year and not later than ﬁ ve years

- Later than ﬁ ve years

Aggregate lease expenditure contracted for at reporting date

11,532

27,071

50,357

88,960

9,026

16,338

9,997

35,361

Operating lease payments are for rental of premises, farming and factory equipment.

(ii) Finance leases:

- Not later than one year

- Later than one year and not later than ﬁ ve years

- Total minimum lease payments

- Future ﬁ nance charges

- Lease liability

- Current liability

- Non current liability

Finance leases are for various items of plant & equipment

(iii) Almond orchard leases:

Minimum lease payments:

- Not later than one year

- Later than one year and not later than ﬁ ve years

- Later than ﬁ ve years

Aggregate expenditure commitments comprise:

2,506

10,733

40,360

2,212

10,376

42,919

11,550

27,110

52,624

91,284

9,101

16,734

9,705

35,540

257

(20)

237

(1)

Aggregate lease expenditure contracted for at reporting date

53,599

55,507

The almond orchard leases comprises the lease of a 512 acre almond orchard and a 1,002 acre lease from Sandhurst Trustees Limited in which
the consolidated entity has the right to harvest the almonds from the trees owned by the lessor for the term of the agreement. The company
also has ﬁ rst right of refusal to purchase the properties in the event that the lessor wished to sell. Other leases within Select have renewal
and ﬁ rst right of refusal clauses.

Select Harvests Annual Report 2009

Notes to the Financial Statements

30. Events Occuring After Balance Date
On 28 August 2009, the Directors resolved that no ﬁ nal dividend will be paid in relation to the ﬁ nancial year ended 30 June 2009. This decision
was made to preserve cash in the context of current uncertainties pertaining to the liquidation of Timbercorp.

On 8 July, 2009, the company debt facility was extended for review on 30 June 2010. An undertaking of this is that $10 million of debt is to be
repaid by 15 December 2009.

Since the 30 June 2009, the company has been involved in extensive discussions with the liquidator of Timbercorp relating to the future
management of the Timbercorp almond orchards. The Board is conﬁ dent that agreement will soon be reached to secure future management
rights over these orchards through a restructured ownership model.

There has been no other matter or circumstance, which has arisen since 30 June 2009 that has signiﬁ cantly affected or may signiﬁ cantly
affect:

a) the operations, in ﬁ nancial years subsequent to 30 June 2009, of the consolidated entity, or

b) the results of those operations, or

c) the state of affairs, in ﬁ nancial years subsequent to 30 June 2009, of the consolidated entity.

31. Earnings Per Share
The following reﬂ ects the income and share data used in the calculations of basic and diluted earnings per share:

Proﬁ t attributable to equity holders of the company used
in calculating basic earnings per share

Diluted earnings per share:

Proﬁ t attributable to equity holders of the company used
in calculating diluted earnings per share

Weighted average number of ordinary shares used in calculating basic earnings
per share

Effect of dilutive securities:

CONSOLIDATED

2009
$’000

16,712

2008
$’000

18,130

16,712

18,130

NUMBER OF SHARES

2009

2008

39,242,683

38,851,551

Adjusted weighted average number of ordinary shares used in calculating diluted earnings
per share

39,242,683

38,851,551

Select Harvests Annual Report 2009

Notes to the Financial Statements

32. Remuneration of Directors and Key Management Personnel

Principles used to determine the nature and amount of remuneration
Remuneration levels are set to attract and retain appropriately qualiﬁ ed and experienced directors and key management personnel.
The Remuneration Committee may obtain independent advice on the appropriateness of remuneration packages, given trends in the
marketplace. Remuneration packages include a mix of ﬁ xed remuneration, performance based remuneration, and equity based remuneration.

Executive directors and key management personnel may receive short term incentives based on achievement of speciﬁ c business plans
and performance indicators, which include ﬁ nancial and operational targets relevant to performance at the consolidated entity level,
divisional level, or functional level, as applicable, for the ﬁ nancial year. In addition, the consolidated entity offers executive directors and key
management personnel participation in the long-term incentive scheme involving the issue of options to the employee under the executive
share option scheme. The executive share option scheme provides for the offer of a parcel of options to participating employees on an annual
basis, with a three-year expiry period, exercisable at the market price set at the time the offer was made. The options are granted annually in
three tranches on achievement of the performance hurdles.

Non-executive directors each receive a base fee of $65,000 per annum. The Chairman receives up to twice the base fee. Non-executive
directors do not receive any performance related remuneration nor are they issued options on securities.

a) Directors
The following persons were directors of Select Harvests Limited during the ﬁ nancial year:

(i) Chairman – non-executive

J C Leonard

(ii) Executive director

J Bird, Managing Director

(iii) Non-executive directors

G F Dan O’Brien – resigned on 23 June, 2009
M A Fremder
R M Herron
M Carroll – appointed on 31 March, 2009

b) Other key management personnel
The following persons also had authority and responsibility for planning, directing, and controlling the continuing activities of the consolidated
entity, directly or indirectly, during the ﬁ nancial year:

NAME

POSITION

EMPLOYER

M Bartholemew

Group Manager Sales & Marketing*

Select Harvests Food Products Pty Ltd

K Martin

T Millen

L Van Driel

P Chambers

P Ross

M Graham

* Resigned on 9 April, 2009

Operations Manager, Food Products Division

Select Harvests Limited

Group Horticultural & Farm Operations Manager

Kyndalyn Park Pty Ltd

Group Trading Manager

Select Harvests Food Products Pty Ltd

Chief Financial Ofﬁ cer & Company Secretary

Operations Manager, Almond Division

Select Harvests Limited

Kyndalyn Park Pty Ltd

Manager Sales & Marketing

Select Harvests Food Product Pty Ltd

Select Harvests Annual Report 2009

Notes to the Financial Statements

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$

2008
$

2009
$

2008
$

Short term employment beneﬁ ts

2,755,075

2,366,048

1,324,753

1,581,383

Long service leave

Share based payments

51,053

48,196

50,436

92,881

23,034

27,833

72,799

2,854,324

2,509,365

1,375,620

1,682,015

Detailed remuneration disclosures are provided in Sections A to C of the remuneration report on pages X to X.

(d) Equity instrument disclosures relating to key management personnel

Number of options held by directors and key management personnel
The movement during the ﬁ nancial year in the number of options over ordinary shares in the company held, directly or indirectly, by each
director and key management personnel is as follows:

2009

Directors

J Bird

Key Management Personnel

K Martin (Group Operations Manager)

T Millen (Group Horticultural & Farm
Operations Manager)

L Van Driel (Group Trading Manager)

P Chambers ( Chief Financial Ofﬁ cer
& Company Secretary)

P Ross (Operations Manager Almond
Division)

2008

Directors

J Bird

Key Management Personnel

K Martin (Group Operations Manager)

T Millen (Group Horticultural & Farm Opera-
tions Manager)

L Van Driel (Group Trading Manager)

P Chambers (Chief Financial Ofﬁ cer &
Company Secretary)

HELD AT
1 JULY 2008

GRANTED AS
COMPENSATION

LAPSED

HELD AT
30 JUNE 2009

UNVESTED AT
30 JUNE 2009

186,023

157,114

(46,134)

297,003

25,845

35,135

37,166

26,351

37,500

35,294

33,824

39,706

36,765

(7,066)

(9,334)

63,345

63,363

61,656

66,057

63,345

63,363

61,656

66,057

36,765

HELD AT
1 JULY 2007

GRANTED AS
COMPENSATION

EXERCISED

HELD AT
30 JUNE 2008

UNVESTED AT
30 JUNE 2008

105,965

103,125

(23,067)

186,023

18,398

21,563

25,845

20,270

26,351

25,845

(3,533)

(4,667)

35,135

37,166

26,351

25,845

35,135

37,166

26,351

No options held by directors or key management personnel are vested but not exercisable.

Select Harvests Annual Report 2009

Notes to the Financial Statements

Number of shares held by directors and key management personnel
The movement during the ﬁ nancial year in the number of ordinary shares of the company held, directly or indirectly, by each director and key
management personnel, including their personally related entities, is as follows:

2009

Directors – Non Executive

M A Fremder

J C Leonard

R M Herron

G F Dan O’Brien*

M Carroll

*resigned as a Director on 23 June 2009

Directors – Executive

J Bird

Key Management Personnel

K Martin (Group Operations Manager)

T Millen (Group Horticultural & Farm Operations Manager)

L Van Driel (Group Trading Manager)

P Chambers ( Chief Financial Ofﬁ cer & Company Secretary)

P Ross (Operations Manager, Almond Division)

2008

Directors – Non Executive

M A Fremder

J C Leonard

C G Clark*

R M Herron

G F Dan O’Brien

* resigned as a Director on 31 January 2008

Directors – Executive

J Bird

Key Management Personnel

K Martin (Group Operations Manager)

T Millen (Group Horticultural & Farm Operations Manager)

L Van Driel (Group Trading Manager)

P Chambers ( Chief Financial Ofﬁ cer & Company Secretary)

HELD AT
1 JULY 2008

RECEIVED ON
EXERCISE OF
OPTIONS

OTHER –
DRP, SALES &
PURCHASES

5,777,234

581,779

8,772

54,769

619,522

45,444

33,849

10,000

4,580

HELD AT
1 JULY 2007

RECEIVED ON
EXERCISE OF
OPTIONS

OTHER – DRP,
SALES & PUR-
CHASES

5,777,234

484,797

23,892

5,000

51,090

518,122

101,400

39,444

6,000

12,300

96,982

3,772

3,679

(12,300)

TOTAL

5,777,234

615,628

18,772

59,349

619,522

45,444

TOTAL

5,777,234

581,779

23,892

8,772

54,769

619,522

45,444

(e) Other transactions with directors and key management personnel

Transactions with directors and key management personnel that require disclosure in accordance with AASB 124 for the year ended 30 June
2009 are detailed in Note 34.

Select Harvests Annual Report 2009

Notes to the Financial Statements

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$

2008
$

2009
$

2008
$

33. Remuneration Of Auditors
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices
and non-related audit ﬁ rms:

Amounts received or due and receivable by PricewaterhouseCoopers for:

- An audit or review of the ﬁ nancial report of
the entity and any other entity in the
consolidated entity

- Other ﬁ nancial services

(a)

185,950

177,800

185,950

177,800

75,860

261,810

137,307

315,107

75,860

261,810

137,307

315,107

(a) Amounts paid or payable to an auditor for non-audit services provided during the year by the auditor to any entity that is part of
the consolidated entity for:

PricewaterhouseCoopers:

Taxation compliance and advice

IT consulting

Other

52,650

7,210

16,000

75,860

33,910

80,897

22,500

137,307

52,650

7,210

16,000

75,860

33,910

80,897

22,500

137,307

34. Related Party Disclosures

(a) Parent entity

The parent entity within the consolidated entity is Select Harvests Limited.

(b) Subsidiaries

Interests in subsidiaries are set out in Note 37.

Disclosures relating to key management personnel are set out in Note 32.

Select Harvests Annual Report 2009

Notes to the Financial Statements

(d) Wholly owned group transactions

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$’000

2008
$’000

2009
$’000

2008
$’000

Dividend revenue

Subsidiaries

Interest income

Subsidiaries

Other transactions

Management fees

10,500

20,500

6,231

3,737

2,774

3,915

Management fees are received by Select Harvests Limited from controlled entities under normal terms and conditions.

(e) Director related entity transactions

Services

Select Harvests Limited has an Almond Orchard Management Agreement and a Land Lease agreement with Maxdy Nominees Pty Ltd, a
company in which Mr M A Fremder is a director. Under the terms of the agreements, Select Harvests Limited has developed and continues to
manage 300 acres of almond orchard on a fee basis for Maxdy Nominees Pty Ltd.

In addition, Select Harvests Limited will process and sell the entire production of the orchard for a 25 year period. The consolidated entity
received an amount of $1,805,723 (2008: $1,514,000) during the ﬁ nancial year in relation to the above contract. The agreements are under
normal terms and conditions no more favourable than those which it is reasonable to expect the entity would have adopted if dealing with
the director or director related entity at arms length in the same circumstances.

Select Harvests Limited also has an Almond Orchard Management Agreement with Almas Almonds Pty Ltd, a company which manages the
Almas Almonds Partnership in which both Mr M A Fremder and Mr J C Leonard have an indirect interest. Under the terms of the agreement,
Select Harvests Limited is developing and shall manage 1,753 acres of almond orchard on a fee basis for Almas Almonds Pty Ltd.

In addition, Select Harvests Limited will process and sell the entire production of the orchard for the entire 30 year life of the orchard. The
consolidated entity received an amount of $3,546,136 (2008: $3,242,000) during the ﬁ nancial year in relation to the above contract. The
agreements are under normal terms and conditions no more favourable than those which it is reasonable to expect the entity would have
adopted if dealing with the director or director related entity at arms length in the same circumstances.

At 30 June 2009, the total amount receivable from director related entities in respect to the above transaction is $518,797.

During the ﬁ nancial year the company entered into foreign exchange contracts on behalf of Almas Pty Limited and Maxdy Pty Ltd, under
conditions which pass costs and beneﬁ ts to the related parties under normal commercial terms.

A former non-executive director of the Company, Mr Dan O’Brien, acquired from Select Harvests, via an associated entity. $146,974 (2008:
$89,344) worth of almond hull suitable for livestock feed. This was purchased at market prices.

Select Harvests Annual Report 2009

Notes to the Financial Statements

(f) Outstanding balances

The following balances are outstanding at the reporting date in relation to transactions with related parties:

NOTES

CONSOLIDATED

PARENT ENTITY

2009
$’000

2008
$’000

2009
$’000

2008
$’000

Non current receivables

Subsidiaries

Non current payables

Subsidiaries

Loans to/from subsidiaries

Beginning of the year

Loans advanced

Loan repayments received

Interest charged

End of year

160,979

126,352

63,991

41,261

85,091

336,770

(331,104)

6,231

96,988

34,159

329,830

(281,672)

2,774

85,091

Loans are made to Select Harvests Limited by controlled entities under normal terms and conditions.

35. Segment Information

Segment products and locations

The consolidated entity has the following business segments:

The food products division processes, markets, and distributes edible nuts, dried fruits, seeds, and a range of natural health foods.

The almond operation comprises the growing, processing and sale of almonds to the food industry from company owned almond
orchards; the sale of a range of management services to external owners of almond orchards, including orchard development, tree
supply, farm management, land rental and, irrigation infrastructure; and the sale of almonds on behalf of external investors.

The consolidated entity operates predominantly within the geographical area of Australia.

Select Harvests Annual Report 2009

Notes to the Financial Statements

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Select Harvests Annual Report 2009

Notes to the Financial Statements

37. Controlled Entities

Parent Entity:

Select Harvests Limited

Subsidiaries of Select Harvests Limited:

Kyndalyn Park Pty Ltd

Select Harvests Food Products Pty Ltd

Meriram Pty Ltd

Kibley Pty Ltd

38. Employee Beneﬁ ts

Executive share option scheme

COUNTRY OF INCORPORATION

PERCENTAGE OWNED (%)

2009

2008

Australia

100

The consolidated entity has in place an executive share option scheme. The scheme provides for the board to offer to eligible employees a
parcel of options, which will be granted for no consideration in three equal tranches over a period of approximately three years from the date
of each result announcement to the ASX in each ﬁ nancial year.

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market of the ASX immediately following the result announcement.

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the consolidated entity achieving growth of at least 10% in EPS in each ﬁ nancial year over the preceding ﬁ nancial year. Accordingly, the scheme
does not represent remuneration for past services.

There are no voting or dividend rights attached to the options.

Select Harvests Annual Report 2009

Notes to the
Financial
Statements

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Select Harvests Annual Report 2009

Notes to the Financial Statements

38. Employee Beneﬁ ts (cont.)
The amounts recognised in the ﬁ nancial statements of the consolidated entity in relation to executive share options exercised during the
ﬁ nancial year were:

Issued and Paid up Capital

2009
$’000

2008
$’000

1,097

(b) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employee beneﬁ t expense were as
follows:

Options granted under employee option plan

CONSOLIDATED

PARENT ENTITY

2009
$

48,196

2008
$

92,881

2009
$

27,883

2008
$

72,799

39. Contingent Liabilities
Cross guarantees given by the entities comprising the consolidated entity are detailed in Note 23.

Select Harvests Annual Report 2009

Directors Declaration

In the directors’ opinion:

(a) the ﬁ nancial statements and Notes set out on pages 32 to 76 are in accordance with the Corporations Act 2001, including:

(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting

requirements; and

(ii) giving a true and fair view of the company’s and consolidated entity’s ﬁ nancial position as at 30 June 2009 and of their performance

for the ﬁ nancial year ended on that date; and

(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable;

and

The directors have been given the declarations by the Managing Director and Chief Financial Ofﬁ cer required under section 295A of the
Corporations Act 2001.

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

J C Leonard
Chairman

Melbourne, 28 August 2009

Select Harvests Annual Report 2009

PricewaterhouseCoopers
ABN 52 780 433 757

Freshwater Place
2 Southbank Boulevard
SOUTHBANK VIC 3006
GPO Box 1331L
MELBOURNE VIC 3001
DX 77
Telephone 61 3 8603 1000
Facsimile 61 3 8603 1999
Website:www.pwc.com/au

Independent auditor’s report to the members of Select Harvests Limited

Report on the ﬁ nancial report
We have audited the accompanying ﬁ nancial report of Select Harvests Limited (the company), which comprises the balance sheet as at 30
June 2009, and the income statement, statement of changes in equity and cash ﬂ ow statement for the year ended on that date, a summary of
signiﬁ cant accounting policies, other explanatory notes and the directors’ declaration for both Select Harvests Limited and the Select Harvests
Limited Group (the consolidated entity). The consolidated entity comprises the company and the entities it controlled at the year’s end or from
time to time during the ﬁ nancial year.

Directors’ responsibility for the ﬁ nancial report

The directors of the company are responsible for the preparation and fair presentation of the ﬁ nancial report in accordance with Australian
Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes
establishing and maintaining internal controls relevant to the preparation and fair presentation of the ﬁ nancial report that is free from material
misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are
reasonable in the circumstances. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the ﬁ nancial report,
comprising the ﬁ nancial statements and notes, complies with International Financial Reporting Standards.

Auditor’s responsibility

Our responsibility is to express an opinion on the ﬁ nancial report based on our audit. We conducted our audit in accordance with Australian
Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan
and perform the audit to obtain reasonable assurance whether the ﬁ nancial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the ﬁ nancial report. The procedures
selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the ﬁ nancial report, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair
presentation of the ﬁ nancial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the
ﬁ nancial report.

Our procedures include reading the other information in the Annual Report to determine whether it contains any material inconsistencies with
the ﬁ nancial report.

Our audit did not involve an analysis of the prudence of business decisions made by directors or management.

Select Harvests Annual Report 2009

Independent auditor’s report to the members of Select Harvests Limited (cont.)

We believe that the audit evidence we have obtained is sufﬁ cient and appropriate to provide a basis for our audit opinions.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

Auditor’s opinion

In our opinion:

(a) the ﬁ nancial report of Select Harvests Limited is in accordance with the Corporations Act 2001, including:

(i)

(ii)

giving a true and fair view of the company’s and consolidated entity’s ﬁ nancial position as at 30 June 2009 and of their
performance for the year ended on that date; and

complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001; and

the consolidated ﬁ nancial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 1.

Report on the Remuneration Report
We have audited the Remuneration Report included in pages 18 to 24 of the directors’ report for the year ended 30 June 2009. The
directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section
300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.

Auditor’s opinion

In our opinion, the Remuneration Report of Select Harvests Limited for the year ended 30 June 2009, complies with section 300A of the
Corporations Act 2001.

PricewaterhouseCoopers

Andrew Mill
Partner

Melbourne
28 August 2009

Liability limited by a scheme approved under Professional Standards Legislation

Select Harvests Annual Report 2009

ASX additional information

Additional information required by the Australian Stock Exchange Limited and not shown elsewhere in this report is as follows.
The information is current as at 31 July 2009.

(a) Distribution of equity securities
The number of shareholders, by size of holding, in each class of share is:

NUMBER OF ORDINARY SHARES

NUMBER OF SHAREHOLDERS

1 to 1,000

1,001 to 5,000

5,001 to 10,000

10,001 to 100,000

100,001 and over

1,313

1,328

350

270

The number of shareholders holding less than a marketable parcel of shares is:

NUMBER OF ORDINARY SHARES

18,358

NUMBER OF SHAREHOLDERS

256

(b) Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:

Maxdy Nominees Pty Ltd

HSBC Custody Nominees (Australia) Limited

Almonds Australia Pty Ltd

MF Custodians Ltd

ANZ Nominees Limited

Le Grand Pty Ltd

MF Custodians (account 10051001)

Mirrabooka Investments Limited

Mr John Bird

Mid Manhattan Pty Ltd

Mr Petrus Cornelius Nicolaas Middencorp

Longo Pty Ltd

Citicorp Nominees Pty Ltd

AMP Life Limited

UBS Nominees Pty Ltd

RBC Dexia Investor Services Nominees Pty Limited

Mr Max Fremder

National Nominees Limited

Spectrok Pty Ltd

JP Morgan Nominees Australia Limited

Select Harvests Annual Report 2009

LISTED ORDINARY SHARES

NUMBER OF SHARES

PERCENTAGE OF ORDINARY

5,406,671

4,964,959

4,500,000

1,141,234

733,113

629,888

585,587

570,684

555,815

499,244

464,128

460,871

410,790

357,108

356,631

324,241

330,563

320,804

306,722

272,405

13.68

12.56

11.39

2.89

1.86

1.56

1.48

1.44

1.41

1.26

1.17

1.04

0.90

0.87

0.84

0.81

0.78

0.69

ASX additional information

NAMES

Maxdy Nominees Pty Ltd

HSBC Custody Nominees (Australia) Limited

Almonds Australia Pty Ltd

NUMBER OF SHARES

5,406,671

4,964,959

4,500,000

(d) Voting rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.

(e) The Company is listed on the Australian Stock Exchange. The home exchange is Melbourne.

Select Harvests Annual Report 2009

Corporate Information

Select Harvests Limited
ABN 87 000 721 380

Directors
J C Leonard (Chairman)
J Bird (Managing Director)
M Carroll (Non-Executive Director)
M Fremder (Non-Executive Director)
R M Herron (Non-Executive Director)

Company Secretary
P Chambers

Registered Ofﬁ ce – Select Harvests Limited
360 Settlement Road
THOMASTOWN VIC 3074

Postal address
PO Box 5
THOMASTOWN VIC 3074

Telephone (03) 9474 3544
Facsimile (03) 9474 3588
Email info@selectharvests.com.au

Solicitors
Gadens Lawyers

Bankers
Australia and New Zealand Banking Group Limited

Auditor
PricewaterhouseCoopers

Share Register
Computershare Investor Services Pty Limited
Yarra Falls
452 Johnston Street
Abbotsford VIC 3067
Telephone (03) 9415 5040
Facsimile (03) 9473 2562

Internet Address
www.selectharvests.com.au

Select Harvests Annual Report 2009

Select Harvests Limited
ABN 87 000 721 380
PO Box 5
THOMASTOWN VIC 3074

360 Settlement Road
THOMASTOWN VIC 3074

Telephone (03) 9474 3544
Facsimile (03) 9474 3588
Email info@selectharvests.com.au
www.selectharvests.com.au

Corporate Information

Select Harvests Limited
ABN 87 000 721 380
Directors
J C Leonard (Chairman)
J Bird (Managing Director)
M Carroll (Non-Executive Director)
M Fremder (Non-Executive Director)
R M Herron (Non-Executive Director)

Company Secretary
P Chambers

Registered Ofﬁ ce - Select Harvests Limited
360 Settlement Road
THOMASTOWN VIC 3074

Postal address
PO Box 5
THOMASTOWN VIC 3074

Telephone (03) 9474 3544
Facsimile (03) 9474 3588
Email info@selectharvests.com.au

Solicitors
Gadens Lawyers

Bankers
Australia and New Zealand Banking Group Limited

Auditor
PricewaterhouseCoopers

Share Register
Computershare Investor Services Pty Limited
Yarra Falls
452 Johnston Street
Abbotsford VIC 3067
Telephone (03) 9415 5040
Facsimile (03) 9473 2562

Internet Address
www.selectharvests.com.au