Annual
Report
2012
Contents
Company profi le
Performance summary
Select Harvests:
Unique business model
Letter from the Chairman
1
2
3
4
Managing Director’s Review 6
In Australia our direct access to the whole
food industry encompassing the retail,
food service and food manufacturing
The almond opportunity:
sectors and ensures that we capture the
Strong global fundamentals 8
maximum value from the almond value
chain.
Australian almonds well
placed to meet demand
Internationally we are a major exporter of
almonds to Asia, Europe and the Middle-
9
East with strong relationships in rapidly
growing emerging markets such as India.
10
The almond life cycle
A leading almond supplier
With almonds at the core of the Food
Products business, the overarching
objective is to put more almonds into the
12
hands of more consumers. To achieve this
objective, we work closely with the Almond
Board of Australia to partner with our
Select Harvests in the
major retail customers.
community: Environment
14
In each quarter, we developed promotions
in line with the seasonal advertising
calendar of the Australian almond industry:
Select Harvests in the
community: People
15
• The Australian almond blossom season
in August: highlighting the natural
goodness of almonds;
Our Board of Directors
• Celebrate Christmas with Australian
16
almonds in November and December:
promoting the versatility of almonds for
18
Statistical summary
Christmas cooking;
• The “New Year, New Heart” promotion
Financial Report Contents
in January and February: communicating
19
the heart health benefits of eating a
handful of almonds everyday;
Financial Report
• The “New Season” promotion in April
and May: focusing on the enjoyment
of Australian almonds fresh from the
orchards.
20
One of the features of this year’s
promotional campaign was the giveaway
of over 150,000 of the heart-shaped
almond snack tins. These are extremely
popular with consumers and an effective
tool in driving incremental almond
consumption.
Company
profi le
Select Harvests is a leading Australian almond
producer. The Company owns and manages a
portfolio of 17,151 acres (6,940 hectares) of
almond orchards in New South Wales, Victoria
and Western Australia.
Select Harvests is Australia’s leading manufacturer,
processor and marketer of nut products to the
Australian retail and industrial markets. Our
value-added brands, including Lucky and Soland in
retail and Renshaw and Allinga Farms in wholesale
and industrial markets, are market-leading.
As one of Australia’s largest almond exporters,
Select Harvests has strong relationships in rapidly
growing emerging markets including India and
China, plus established routes to market in Asia,
Europe and the Middle East.
Shareholder
Information
Annual General Meeting
The Annual General Meeting will be
held on 20th November 2012, at the
Sofi tel Melbourne, Collins Street,
Melbourne, Victoria at 2pm. A separate
notice of meeting has been posted to
all shareholders.
2013 Calendar
February
Announcement of
interim results
April
Payment of interim dividend
August
Announcement of preliminary
full year results
September Annual report to shareholders
October
Payment of fi nal dividend
November Annual General Meeting
Select Harvests Annual Report 2012
1
Performance
summary
Financial year 2012 was a challenging year
for the industry and this was refl ected
in the performance of the business. The
reported full year result was impacted
by non-cash write downs totalling $24.9
million related to the value of the Western
Australian greenfi eld almond development
and a legacy processing facility.
On an underlying basis the fi nancial
performance was an improvement on the
prior year, despite below average yields
which were experienced across the
industry, and wet harvesting conditions
impacting the quality of the almond crop.
Encouragingly the Food Division delivered
a 27% improvement in underlying
Earnings Before Interest and Tax (EBIT),
refl ecting the benefi ts of increased
operational discipline and a strong
performance from our value-added
brands such as Lucky.
A number of initiatives are in place to
improve performance across the business
with a focus on capital effi ciency, driving
operational improvements and effi ciency
programs to reduce costs and improve
quality, plus leveraging Select Harvests’
scale, expertise and unique integrated
business model.
Reported Results
Underlying Results*
FY11
11,644
2,334
13,978
4,739
(3,310)
15,407
(3,389)
12,018
(3,113)
8,905
17.0
–
–
FY12
14,240
3,076
17,316
6,027
(3,721)
19,622
(6,248)
13,374
(3,860)
9,514
16.8
–
–
FY12
9,332
(12,883)
(3,551)
6,027
(4,971)
(2,495)
(6,248)
(8,743)
4,274
(4,469)
(7.9)
22,031
8.0
EBIT ($’000’s)
Managed Orchards
Company Orchards
Almond Division
Food Division
Corporate Costs
Operating EBIT
Interest Expense
Net Profi t Before Tax
Tax (Expense)/Income
Net Profi t After Tax
Earnings Per Share
Operating Cash Flow
Dividend per Share (cents)
FY11
11,644
9,819
21,463
3,709
(3,310)
21,862
(3,389)
18,473
(799)
17,674
33.7
547
13.0
* FY11 excludes $7.5 million discount on acquisition of
almond orchards and $1 million of costs associated
with product recall. FY12 excludes $20 million
write down to the value of the Western Australian
greenfi eld development, $4.9 million write down of
a legacy processing facility, $4 million gain on sale of
permanent water rights and $1.2 million restructuring
and research and development tax consulting costs.
2
Select Harvests Annual Report 2012
Select Harvests:
Unique business model
Select Harvests is Australia’s largest
vertically integrated nut and health food
company with a business model which is
unique in the Australian almond industry.
The company has three core capabilities –
farming, processing and sales & marketing
which enable it to capture value at each
stage of the value chain.
Select Harvests is a major owner and
manager of Australian almond orchards.
We have a diversifi ed portfolio of orchards
including orchards which are at or near
maturity in Victoria and New South
Wales, and greenfi eld orchards in Western
Australia established to meet future global
demand for almonds.
Select Harvests is
Australia’s largest
vertically integrated
nuts and health food
company with core
capabilities across
farming, processing and
sales & marketing.
The state-of-the art processing facility at
Carina West in Victoria has the capacity to
process 30,000 metric tonnes of almonds
annually. The plant is capable of meeting
the ever increasing demand for both
in-shell and kernel. Select Harvests’
Food Division provides a route to market
domestically and around the world,
supplying both branded and private
label products to the key retailers and
industrial users.
Wheatbelt Region, WA:
Company Orchards: (acs/ha)
3,949/1,590
greenfi eld development,
fi rst crop 2013
Sunraysia Region, VIC:
Company Orchards: (acs/ha)
4,253/1721
mature and approaching
maturity
Managed Orchards: (acs/ha)
4,421/1789
Total planted orchards: (acs/ha)
17,151/6940
Company Orchards: (acs/ha)
12,730/5151
Managed Orchards: (acs/ha)
4,421/1789
Almond processing capacity:
30,000mt
Riverina Region, NSW:
Company Orchards:
(acs/ha)
4,528/1832
approaching maturity
Sunraysia Region, VIC:
KW Processing
Facility – capacity
30,000mt
Thomastown, VIC:
Value added
production facility
Select Harvests Annual Report 2012
3
Letter from the Chairman
MICHAEL IWANIW,
CHAIRMAN
Dear shareholder
Financial results
Asset write-downs
I am pleased to present your board’s
fi rst annual report with me as Chairman
of Select Harvests. My overwhelming
impression since being appointed
Chairman in November is that this is a
business with great potential and valuable
assets in a compelling industry. Over the
last 12 months there have been signifi cant
changes within the business to help
realise this potential. We have brought
in new leadership focussed on driving a
performance culture. Good progress has
been made in initiatives to strengthen
the balance sheet, reduce working capital
and costs, and implement operational
improvements. Benchmarking of our
orchard operations is well progressed
to ensure top quartile horticultural and
management practices.
In July we appointed Paul Thompson as
Select Harvests’ new Managing Director.
In the short time that Paul has been
on board, he has identifi ed a range of
initiatives to improve performance and put
the company on track to being a leading,
internationally competitive, horticulture
and food business.
Operationally 2012 was a challenging
year for Select Harvests, and the fi nancial
performance of the business refl ected
those challenges. On a reported basis the
Company produced a Net Loss After Tax
for the year of $4.5 million. This was
after net adjustments of $22.1 million
including non-cash write downs totalling
$24.9 million.
On an underlying basis the performance
was better. Underlying NPAT was
$9.5 million compared to $8.9 million in the
prior year. While this was an improvement,
the performance of our Almond Division
was disappointing, with below average
yields experienced across the industry
and wet harvesting conditions impacting
almond quality.
Encouragingly, the Food Division reported
a signifi cantly improved performance.
Underlying EBIT increased 27% to $6 million
compared to $4.7 million in fi nancial year
2011; largely a refl ection of improved
operational discipline.
Orchards
On 1 July 2012 the management of 29,500
acres of orchards in Robinvale reverted to
Olam, in a process that was well executed
by the team. This change will have an
impact on part of the 2013 fi nancial year
earnings as the remainder of the 2012
crop is processed.
Select Harvests now manages a
portfolio of 17,151 acres (6,940 hectares)
orchards over three states. 12,730 acres
(5,151 hectares) of these are owned by
Select Harvests and 4,421 acres (1,789
hectares) of these orchards are managed
for other owners. The portfolio has an
attractive maturity profi le and is well
placed to meet growing demand.
Following a review of the Company’s assets,
the Board took the decision to write-
down the value of the Western Australian
greenfi eld development by
$20 million. This included feasibility costs
and land and infrastructure impairment
provisions associated with the development.
The 3,949 acres of orchards planted have
22GL of water rights, which have no value
apportioned to them. While many of the
base assumptions for the development
remain valid, the project has experienced
higher infrastructure and planting
costs than originally expected. The WA
development was predicated on 10,000
acres being developed with the support
of other investors. A full review of the WA
development is being undertaken.
The Company also incurred a $4.9 million
write down on the former Kyndalyn
Park processing facility which is now
redundant. The state-of-the-art Carina
West processing facility with 30,000 metric
tonnes of processing capacity, is well placed
to meet future needs.
Funding and capital management
In-line with the Board’s focus on funding
and capital management, we have
undertaken a number of initiatives to
strengthen the Company’s Balance Sheet.
These include scheduled debt reductions
and the continuation of a long-term debt
funding agreement with NAB comprising
$60 million term debt and a $35 million
working capital facility.
We are also well progressed with a program
to realign our asset base and strengthen the
Balance Sheet through the sale of non-core
assets. To this end we announced the sale of
11GL of water entitlements for $18 million in
June, 2012. We continue to examine a range
of alternatives to optimise our assets.
4
Select Harvests Annual Report 2012
Global supply and demand
Board & Management
The fundamentals in the almond industry
continue to be attractive. Globally, almond
demand has grown at a compound annual
growth rate of 8% over the last decade
and growth looks set to continue. Rapid
urbanisation and growing affl uence in
China and India is driving strong demand
from those markets. In developed markets
the nutritional benefi ts of almonds and
nut categories are becoming better
understood and demand for almonds,
and other nuts, continues to grow. The
strength of global demand was well
illustrated by another record year of
almond shipments from the United
States, which produces over 80% of global
almond supply. Shipments increased by
14% with strong demand from Asia and
Europe underpinning an increase in the
almond price.
The strong growth in demand is coupled
with supply constraints due to a lack
of recent plantings globally. The long
lead time to get almond trees to mature
production, favourable supply and
demand dynamics and the long term
growth in almond consumption, bodes
well for Select Harvests’ maturing
orchards and integrated business model.
In June Curt Leonard retired from the board
of Select Harvests after eight years as a
director of the Company and three years as
Chairman. I extend my personal gratitude
to Curt. Not only did he steer the Company
through a period of signifi cant and
challenging change, he has been extremely
supportive of me in my new role. The board
wishes Curt well in his retirement.
This year saw the departure of John Bird
as our Chief Executive after 14 years in
the role. I would like to thank him for his
contribution to Select Harvests.
Dividend
At the full year results the board declared
a fi nal fully franked dividend of 3 cents per
share, resulting in a total dividend for the
year of 8 cents per share. This was payable
on 22 October to shareholders based on
their holding at 11 September 2012.
Conclusion
The outlook for Select Harvests is positive.
Global fundamentals are strong and
volumes are expected to increase as
orchards mature. We have made progress in
initiatives to strengthen the Balance Sheet
and will be focussing on the following areas:
• Utilising our assets to their best
advantage to make Select Harvests
an internationally competitive food
and horticulture business
• Ensuring we have the right people,
management structures and processes
in place
• Becoming more collaborative and working
in mutually beneficial partnerships that
add value to Select Harvests’ assets and
enable us to free up capital
• Improving our orchard management
practices and yields to ensure we optimise
their profitability
• Targeting additional volumes for the
Robinvale processing facility
• Reducing corporate and operating costs
• Further improving the financial
performance and increasing the
market share of our Food Division
• Improving communication with
stakeholders
• Investigating and progressing business
growth opportunities
On behalf of the board I would like to take
this opportunity to thank the management
team and staff for their professionalism,
hard work and commitment, and to thank
you, our shareholders, for your ongoing
support. We look forward to updating you
on the Company’s continued progress in
the future.
Michael Iwaniw,
Chairman
Select Harvests Annual Report 2012
5
Managing Director’s Review
I joined Select Harvest in July this year
and I believe it’s a business with strong
potential, operating in an industry which
has compelling fundamentals.
Global demand for almonds has grown
at an average compound annual rate of
8% for the last decade. A lack of plantings
globally in recent years, and the long lead
times to bringing orchards to production,
means that demand is expected to exceed
supply in the near term. Furthermore
the world’s largest almond producer, the
USA, with over 80% the global market, is
constrained by a lack of appropriate land
and water availability.
In developed markets consumers are
becoming more aware of the health and
nutritional benefi ts of almonds. There
is growing evidence that consumers
are choosing nuts as a healthy option
over traditional snacks. In fact almond
consumption has grown from 0.492 kg
per person in 2007 to 0.735kg in 2011.
With nutritionists recommending a
daily nut intake of 30g, the size of one
of our Lucky six-packs, we see plenty of
opportunity for that trend to continue.
Equally exciting is the demand for almonds
from emerging markets such as India and
China. Shipments from the USA to Asia
now exceed those to Western Europe.
Put simply demand continues to grow as
almonds are replacing traditional snacks,
like biscuits, across the globe.
PAUL THOMPSON,
MANAGING DIRECTOR
Australian almond growers have not
benefi ted as much as they should have
done from these strong fundamentals in
recent years. Three consecutive years of
unseasonably wet growing and harvesting
conditions have resulted in below average
crop volumes. Crop quality has also
been impacted by the wet weather. This
combined with an Australian dollar at
historic highs against the US dollar, has
in turn impacted the price Australian
growers have achieved. The Australian
industry’s profi tability has been
signifi cantly impacted.
Select Harvests is Australia’s largest
vertically integrated nut and health
food company with expertise and core
capabilities across the almond value
chain from farming and processing to
sales and marketing. The business has
a geographically diversifi ed portfolio of
Company Orchards with a signifi cant
proportion of those orchards at or near
maturity, and it has market leading brands.
The challenge for me and the leadership
team, is to manage and grow the business
as effectively and effi ciently as possible to
ensure that it is well positioned to benefi t
from the ongoing demand for almonds and
other health food products.
We are in the process of building:
• A cash generating business that will be
positioned to invest in the growth of our
industry
• A company of passionate people
• A strong and trusted company
• A business that can manage the dynamic
agricultural cycle and can mitigate the
inherent risks
• A company that responds to challenges
and learns from experience
Financial Performance
The 2012 fi nancial year was challenging
for the industry and for Select Harvests.
Despite this the underlying performance
of the business improved on the prior year
with strong contributions from the Food
Division and from the New South Wales
Belvedere orchards purchased in June 2011.
Almond Division
EBIT from our Almond Division was
$17.3 million after adjusting for the asset
write downs and the gain on sale of water
rights, up from $14 million in the prior
year. Despite a promising early crop set,
the Almond Division was impacted by
below average yields which have been
experienced across the Australian almond
industry. These poor yields were the
result of a third year of unseasonably wet
weather during the harvest impacting on
product quality, processing and price.
On an underlying basis, Managed Orchards
EBIT was $14.2 million, up from $11.6 million
a year ago. This primarily refl ects higher
year-on-year processing volumes, due
to increasing maturity of the managed
orchards. EBIT in the previous year was
impacted by lower volumes and higher
costs due to wet harvesting conditions.
Underlying Company Orchards EBIT
was $3.1 million, up from $2.3 million in
fi nancial year 2011. The Company Orchards
crop increased by 43 percent to 5,830
metric tonnes. This included a strong
performance from the recently acquired
Belvedere orchards which contributed
1,000 metric tonnes. Despite wet weather
during the harvest impacting the quality
of the crop, and the continued strength
of the Australian dollar, the almond price
achieved was 4.8 % higher than last
year. Importantly the working capital
6
Select Harvests Annual Report 2012
requirements for the Company Orchards
have plateaued refl ecting the maturity
profi le of the orchards.
We now have 3,949 acres of orchards in
Western Australia. As the Chairman states
in his letter we are conducting a review of
the Western Australian development and
investor partners may be required to
realise the potential of the project.
Food Division
The Food Division provides us with a
route to domestic and international
markets. The division delivered a solid
performance this year with an underlying
EBIT of $6 million, representing improved
operational discipline in the business
and the continued strong performance
of our market leading, value-added
brands including Lucky and industrial
supplies brands Alinga Farms and
Renshaw. Marketing revenues benefi ted
from increased volumes from our
Managed Orchards.
In March the Company appointed Kidder
Williams to oversee the sale of the
non-core health and snack food brands;
SunSol, Soland and Nu-Vit. A number of
expressions of interest have been received,
however the Company will only proceed
with a sale if suffi cient value can be
realised for shareholders. These brands are
market leaders in the health food category
and there remains signifi cant potential
to unlock value by introducing further
operating effi ciencies.
Outlook and opportunities
I am optimistic about the outlook for
Select Harvests. There are signifi cant
opportunities to unlock value by driving
operational improvements and effi ciencies,
reduce costs and leverage the business’s
scale, expertise and unique integrated
business model. We have quality assets and
an extremely passionate and experienced
workforce who understand the industry,
our opportunities, and who are determined
to succeed.
Our focus for the near term will be driving
the One Select program – a number of
initiatives to improve performance across
the business, optimise our assets and to
drive a unifi ed performance culture.
The business stands to benefi t from
the improved maturity profi le of our
orchards and improvements in yields and
crop quality. Full horticultural programs
are underway across our established
orchards. We have engaged independent
experts to conduct a benchmarking of our
orchard operations against international
best practice to ensure top quartile
horticultural and management practices.
We are refi ning a number of our processes,
including tracking of crop data through
the growing cycle, to empower individuals
at the coalface to better inform our
management decisions.
Our Carina West Processing Facility at
Euston in Victoria is a truly world-class
asset. With capacity of 30,000 metric
tonnes it is well placed to service Select
Harvests needs and an anticipated
shortfall in processing capacity across the
industry. Post Olam we are endeavouring
to secure additional processing volumes
from independent growers by focussing on
quality and service.
Our Food Division has great potential
to improve its profi tability. It is clear,
post an extensive range review, that
opportunities exist in the following areas:
range rationalisation, product redesign,
go to market resources and ongoing brand
development. In the past two years we
have seen a signifi cant turnaround in this
business, it will continue over the next
couple of years.
The fundamentals underpinning the
global almond industry remain compelling.
Demand for almonds continues to grow
domestically and internationally and
demand is on track to exceed supply.
I, along with the other Board members
and employees of Select Harvests, are
committed to ensuring the business
captures the benefi t from attractive
long-term fundamentals by improving our
executional capability.
Paul Thompson,
Managing Director
Select Harvests Annual Report 2012
7
The almond opportunity:
Strong global
fundamentals
The global almond
market continues to
demonstrate strong and
attractive fundamentals.
World demand for almonds has grown at
a compound annual growth rate of 8%
annually over the past decade and demand
is on track to signifi cantly exceed available
supply in the future (see fi g. 1).
Growing awareness of the health benefi ts
and an increasingly affl uent middle class
in emerging markets such as India and
China has resulted in strong growth in
consumption. 45% of consumers worldwide
reported eating almonds several times a
month or more in 2011, an increase of
36% from 2009.1
Almonds are the number one nut used
in new products worldwide, and the
preferred nut choice among consumers
as a food ingredient.1
s
b
l
n
o
i
l
l
i
m
Statistics from the United States, which
grows over 80% of global almond supply,
provide a good indication of global trends
and demand.
Despite record US almond crops in four of
the last fi ve years, the carryout rate has
fallen and the almond price over the last
year has increased. US shipments this year
grew 14%.
As in recent years, US exports to emerging
markets including the Asia-Pacifi c and
Middle Eastern regions grew in 2012,
with exports to Asia surpassing those to
Western Europe for the fi rst time (see fi g. 2).
China, India and the United Arab
Emirates made up three of the top fi ve
US export destinations, demonstrating
the exceptional long term opportunities
presented in these markets.
8
Select Harvests Annual Report 2012
WORLD ALMOND SUPPLY VS DEMAND – FIG. 1
s
e
n
n
o
t
d
n
a
s
u
o
h
t
1,200
800
400
0
8
9
1 9
9
9
1 9
0
0
0
2
0 1
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
0 1 1
2
0 1 2
2
0 1 3
2
0 1 4
2
0 1 5
2
SUPPLY
PRODUCTION
DEMAND
CARRY OUT
CALIFORNIA ALMONDS – SHIPMENTS BY DESTINATION – FIG. 2
700
600
500
400
300
200
100
0
AMERICAS
WESTERN EUROPE
ASIA PACIFIC MIDDLE EAST/AFRICA EASTERN EUROPE
2009
2010
2011
Almond consumption per
capita in China has more
than tripled since 2007.2
The Middle East is a
fast growing export
market. The region has
an ancient tradition of
almond consumption,
with almonds playing a
key role in breaking of the
Ramadan feast.2
Australian almonds
well placed to
meet demand
AUSTRALIA’S CONTRIBUTION TO GLOBAL ALMOND PRODUCTION1
s
e
n
n
o
t
n
o
i
l
l
i
m
1.5
1
0.5
0
9 1
1 9
3
9
1 9
5
9
1 9
7
9
1 9
9
9
1 9
0 1
0
2
3
0
0
2
5
0
0
2
7
0
0
2
9
0
0
2
0 1 1
2
AUSTRALIA
US
OTHER
AUSTRALIAN ALMOND EXPORTS BY REGION (2011/12 MARKETING YEAR)1
MIDDLE EAST &
AFRICA 11%
EUROPE 33%
NTH AMERICA 4%
ASIA PACIFIC 52%
The Australian almond
industry holds a
signifi cant and growing
position in global
almond production.
Just 34% of Australian almond plantings are
currently at full maturity. Future production
increases in Australia put us on track to
overtake Spain as the world’s second
largest almond producer. At full maturity
Australia will account for around 8% of
world production leaving the industry well
placed to benefi t from increases in global
consumption and demand.
Australia already exports almonds to
more than 40 countries. Our largest
export market, representing more than
$40 million in 2011/12, is India, where
almond consumption has experienced
phenomenal growth in recent years.
Consumption trends in Australia are
similarly positive, with domestic per
capita consumption increasing from
492g per person in the 2007/08 marketing
year to 735g per person in 2011/12.
Page 8
1. 2010 Innova Market Insights,
Global New Product Report
2. Australian Almond Board
Page 9
1. Australian Almond Board
India is one of Australia’s
biggest almond export
markets. Almonds are
an important part of
India’s cultural heritage,
especially during festive
periods and weddings.1
Australians are eating
nearly double the amount
of almonds they were
fi ve years ago. The
average Australian eats
735g a year.1
Select Harvests Annual Report 2012
9
The almond life cycle
Almond trees do not produce fruit until they are
around three or four years old and reach maturity at
seven years old. Almond trees have a life span of about
25 to 35 years. Select Harvests orchards in Victoria and
New South Wales are at, or nearing, full maturity.
maturing nuts
bloom
hull split
dormancy
the almond
lifecycle
harvest
products
processing
storage
Source: Australian Almond Board
10
Select Harvests Annual Report 2012
Almonds require cold winters and hot
summers. Almond trees typically lie
dormant over the winter period with
blossom occurring from late July to
early September.
Non-pareil almond trees, which make
up 50% of plantings in Australia, require
pollination from other almond varieties
known as pollinators. Bees are transported
to orchards specifi cally to carry pollen
between the pollinators and other trees to
achieve fertilisation which leads to bloom.
From Autumn to February the blossom
matures to develop into nuts, it is
important during this period that the
trees get suffi cient water and nutrients
to optimise the growing nuts. A sign of
the winter harvest, which generally occurs
from February until March, is when the
hull splits and the almond shell, which
contains the kernel, becomes exposed.
Some of the product is de-hulled for
in-shell sales to Asia. Select Harvests
has a market share in excess of 50%
of the in-shell export market.
During processing, the almond hull is
removed and the fruit is used to make a
wide variety of products including kernels
(natural, roasted, fl avoured), blanched,
slivered or sliced almonds. Cooking
products including almond meal, fl our and
pastes are also produced, meaning there is
very little wastage during processing. The
by-product from manufacturing, almond
hulls and skins, have potential to be used
for compost or as animal feed.
In shell
Kernal
Whole blanched
Natural Sliced
Blanched sliced
Slivered
Chopped
Meal
Source: Australian Almond Board
Select Harvests Annual Report 2012
11
A leading
almond supplier
Select Harvests processes, markets
and supplies almonds in Australia
and around the world.
Our marketing program has the
overarching objective of encouraging
almond consumption growth and ensuring
we are best placed to benefi t from
favourable industry dynamics. We
work closely with the Australian Almond
Board and other industry bodies on a
domestic and international basis to
achieve this objective.
In Australia our direct access to the whole
food industry encompasses the retail, food
service and food manufacturing sectors.
This year our promotional program,
undertaken in partnership with the
Australian Almond Board, focussed on
educating and informing stakeholders,
including consumers, manufacturers,
retailers and health professionals, about
the nutritional profi le and versatility of
almond consumption.
An example of this was the “New Year,
New Heart” promotion in January and
February, and the “Hearts for Life”
campaign in April and May, both of which
highlighted the benefi ts of almonds in
assisting heart health. The promotion
was bolstered by a giveaway of over
80,000 heart shaped almond snack tins
which have been an effective tool in
increasing customer numbers and almond
consumption. The tins hold 30 grams of
almonds, the recommended daily serving
for optimum heart health.
Following a detailed review of the Food
Division during the year, we have renewed
our focus on our core retail and ingredient
almond products which will be refl ected in
our promotional program in fi scal 2013. Key
to this approach is driving the success of
our market leading brands in both core and
growth categories including snacks and
baking and ingredients.
Our suite of brands in the Food Division
continues to perform well. Lucky is a
market leading brand in the dried fruit
and nuts category, and SunSol, Nu-Vit
and Soland are strong brands in the
health foods category. Our other brands
including Renshaw and Allinga Farms are
leaders in the food service and wholesale
nuts categories.
Every year we process in excess of 14,000
metric tonnes across a varied group of
commodities. Over 30% of this volume
sits with almonds, where we take natural
product to pack, or convert almonds into
diced, fl aked, slivered or meal product.
In addition to almonds we can process
over 2,500 metric tonnes of cashews
and approximately 1,000 metric tonnes
of peanuts.
The ‘Lucky’ brand
Our Lucky nut brand continues to grow,
consolidating its leading position in
the dried fruit and nuts category. Our
marketing team focusses on driving
the brand to new heights, increasing its
contemporary feel and its relevance for
consumers.
Market growth continues to be driven
by an increasing awareness of the health
properties of nuts and the popularity of
home cooking and baking as a result of
popular cooking shows.
To this end, we continue to see positive
consumer responses to new products
such as the Lucky Traditional Fruit & Nut
Cake Mix, a blend of premium quality nuts
and fruit in one pack, making it quick and
easy for the home cook to make a perfect
fruit cake.
12
Select Harvests Annual Report 2012
In snacks, our Lucky 6 packs – nut snacks in
portion controlled packs of 30g – continue
to drive growth. The snacking range also
includes resealable Lucky tubs and the
range of Lucky Smart Snax – developed
in consultation with nutritionists – which
have been extremely popular with
consumers.
Lucky was promoted at the 2011
MasterChef Live show, which was held in
Sydney in October. Enthusiastic consumers
visited the show to meet their favourite
celebrity chefs, partake in cooking
demonstrations and sample quality
products, including Lucky cooking and
snacking products.
Over summer, Lucky Smart Snax were
promoted on beaches around Australia as
part of the Australian Surf Rowers’ League
national competition carnival.
Our healthy snacking credentials led us to
be invited to advertise in the Australian
Olympic Committee licensed “Offi cial
Australian Team Guide to the 2012 Olympic
Games”, which was distributed to all
members of the 2012 Australian Olympic
team, various sporting organisations and
sold to the general public.
Lucky has been driving growth in the Dried
Fruit and Nut category for over 50 years.
Almond exports
Gulfoods, Dubai
With over 70% of sales in international
markets, Select Harvests works closely
with the Australian Almond Board to
promote the industry, build on established
relationships and improve market access
particularly in regions with favourable
demand trends. These efforts are
supported by the counter seasonal timing
and traditional premium quality of the
Australian Almond Crop.
This year, Select Harvests held exhibits
in conjunction with the Australian
Almond Board at major international food
expos, helping to develop our presence
in important trading regions. There is a
growing appreciation and recognition
of the quality of Australian almonds
at these events which helps to drive
growth in exports.
Anuga, Germany
The Australian almond industry has been
exhibiting at Anuga since 2005 and the
event has proved an important platform
for developing customer relationships
within the key European market, and in
particular Germany which is Australia’s
second biggest almond export market.
Anuga is a biennial fair which was attended
by almost 7,000 companies from 100
countries and attracted over 155,000 trade
visitors from 180 countries in 2011.
As the largest annual food fair in the
Middle East, Gulfoods is an important
opportunity to build on our established
relationships with major customers in
these markets. At this year’s Gulfoods,
the Australian almond industry held an
Industry Forum at the conference centre
which was attended by over 50 almond
customers. The event attracted over
70,000 visitors largely from emerging
markets such as the Middle East,
North Africa and India.
International Nut Congress,
Singapore
The major annual Congress of the
International Nut and Dried Fruit
Council was held in Singapore in
May 2012 and attracted the major nut
traders from around the world. The
timing of this Congress provided the
Australian almond industry with the
opportunity to give a 2012 crop update
to major trading customers.
We will look to build on the success
of our international marketing program in
2012-13 with exhibits at major world food
trade exhibitions currently scheduled in
Paris, Dubai and Hong Kong. We will also
be exhibiting in Russia for the fi rst time;
almond consumption in Eastern Europe has
grown signifi cantly in the past three years.
Select Harvests Annual Report 2012
13
Select Harvests
in the community:
Environment
Our Environment
Select Harvests recognises that sustainable
business performance is intrinsically linked
with how the business interacts with its
communities and the environment.
We take our commitment to being
environmentally responsible very seriously
and work hard across all areas of our
business to operate effi ciently and minimise
waste, thereby reducing the impact our
business has on the environment.
The focus during 2012 was on effi ciency
and minimising waste in all forms.
During the year we undertook to
improve our standard and new product
development processes to optimise
our packaging utilisation and recycling
programs. As a long term signatory to
the Australian Packaging Covenant, this
year we submitted a detailed Action
Plan (2012–2015).
We have undertaken to:
• Review on-site recycling and identify
opportunities for improvement
• Review all existing and future packaging
against sustainable packaging guidelines
with a view to meeting minimum
standards as set out by the covenant
• Implement a plan of recycling non-
product related waste
• Review our current water usage on site
and identify possible opportunities for
reduction or recycling
The business will submit an annual
progress report in March 2013, and we look
forward to sharing our achievements with
you in next year’s Annual Report.
Water effi ciency also remains a top
priority. We recognise that we are a
large consumer of water and water is a
scarce and valuable resource. We have
sophisticated systems and technology in
place to ensure that water is conserved.
We continually monitor soil moisture
and our water use and work to develop
strategies to better meter the volumes
of water we draw and use on our farms.
Our water-wise approach, and the
availability of economically viable
temporary water solutions, meant that
we were able to sell 11GL of high security
Victorian and New South Wales water
rights assets for $18 million in June of
this year.
Regent Parrot Project research with
Charles Sturt University
Select Harvests remains a major funding
partner of a Charles Sturt University
research project in conjunction with the
Victorian Department of Sustainability and
Environment, NSW Offi ce of Environment
and Heritage and the Mallee Catchment
Management Authority.
The PhD students who have been
conducting research since 2011 on the
project titled “Managing agricultural
landscapes to maximise production
and conservation outcomes; the case
of the Regent Parrot”, are analysing the
data collected and are in the process
of completing their thesis. The thesis
focusses on assessing the positive and
negative interaction of native birds, and
in particular the endangered Regent
Parrot, with crops with a view to providing
guidelines to maximise biodiversity and
production gains.
The project is scheduled to complete
at the end of this year.
Minimising wastage
Virtually none of the almond goes to waste during
processing. Almonds not sold as whole kernels are blanched,
slivered or sliced, or used to produce cooking products
including almond meal, fl our and pastes. We are currently
investigating further sustainable uses for almond hulls so
that this by-product is not wasted.
14
Select Harvests Annual Report 2012
Select Harvests in
the community:
People
Occupational Health and Safety
(OHS)
Select Harvests is committed to
facilitating an organisational culture that
actively seeks to improve work practices
and to foster attitudes which sustain
healthy and safe work environments.
We are committed to safety in all areas
of our business and it remains a key
performance measure.
We have a health and safety programme
that provides the structural framework
within which OHS is managed and outlines
the responsibilities of management,
supervisors, employees, contactors, visitors
and their representatives.
During the year various initiatives were
implemented. The Almond Division
designed and developed an automated
process for mixing fertiliser which has
been very successful in the reduction of
manual handling. At the Thomastown
site, supporting frames for bulk bags
were specifi cally designed to hold
product over hoppers for a safer system
of work.
We also improved our safety hazard
identifi cation process throughout the
company and have a structured safety
audit inspection programme in place to
identify hazards and implement controls.
The Thomastown site reported a 20%
reduction of accidents compared with the
previous year. The Almond Division has
reported the lowest lost time injuries for
the year since the 2007/2008 fi scal year.
Training programmes are considered a
priority to maintain safe systems of work
and reinforce safe practices. Key areas
of training during the year included fi rst
aid, OHS 5-Day for Health and Safety
Representatives, emergency procedures,
forklift training, safe handling and storage
of chemicals, manual handling and hearing
protection. Specifi c training has also been
conducted for some sites, such as bee
safety awareness, fi rearms training and
vermin control.
Looking ahead, we will be conducting a
full review of employee and contractor
inductions with the intent to simplify
this process across the company,
improving internal and external traffi c
management for all sites and focussing
on effi ciencies including reducing manual
handling activities.
Training
150 orchard staff undertook their
Certifi cate III in Production Horticulture
this year. The qualifi cation provides
a vocational outcome in production
horticulture and equips participants to
develop skills in areas such as emergency
disease or plant pest response, drainage
systems performance and irrigation
maintenance. Students also develop
practical skills including problem solving,
interdependence and initiative.
Health and Wellbeing
This year, we also took a special interest
in the broader health and wellbeing of
our staff.
With a signifi cant number of female
employees at our Thomastown processing
facility, we felt it important to provide
access to women’s health services
on site. The Multicultural Centre for
Women’s Health visited Select Harvests’
Thomastown offi ces on seven different
occasions during April and May of 2012 and
delivered high quality multilingual health
information and education on various
topics. The program was very successful
and we hope to run it again next year.
We also invited Robinvale District Health
Services to conduct health screenings for
staff at the Carina West Processing Facility.
Select Harvests Annual Report 2012
15
Our Board of Directors
MICHAEL IWANIW—CHAIRMAN
PAUL THOMPSON—
MANAGING DIRECTOR
FRED GRIMWADE—
NON-EXECUTIVE DIRECTOR
Michael Iwaniw was appointed as
Chairman of Select Harvests in November
2011 following a career spanning 40 years
in Australian agribusiness. He became
Managing Director of the Australian
Barley Board (ABB) in 1989, retiring
from the role some 20 years later. As
Managing Director he led the transition
from a statutory authority to a publicly
listed company, growing the business
into an ASX 100 company with a market
capitalisation of A$1.6 billion. Michael has
acted as a Non Executive Director of a
number of Companies. He is currently a
Non Executive Director of Australian Grain
Growers Cooperative.
Paul Thompson joined Select Harvests
as Managing Director in July 2012. He is
an experienced executive with over 30
years in management. Before joining
Select Harvests Paul was President of SCA
Hygiene Australasia responsible for a $600
million turnover business across all of its
divisions (FMCG, Pharmacy, Industrial/
Foodservice & Healthcare) and overseeing
leading brands including Sorbent and
Handee. Paul is a member of the Australian
Institute of Company Directors and has
formerly held positions as a Director of the
Australian Food & Grocery Council and on
other industry bodies.
Fred Grimwade was appointed to the
Board on 27 July, 2010. He works with a
wide range of companies in a board or
advisory capacity. He is Chairman of CPT
Global Limited, and is a Principal and
Executive Director of Fawkner Capital and
is also a director of Troy Resources Ltd, XRF
Scientifi c Limited and Fusion Retail Brands
Pty Ltd. He has held general management
positions in Colonial Agricultural Company,
Colonial Mutual Group, Colonial First
State Investments Group, Western Mining
Corporation and Goldman Sachs & Co.
Fred is a member of the Remuneration
Committee, Audit and Risk Committee
and the Nomination Committee.
ROSS HERRON—
NON-EXECUTIVE DIRECTOR
MICHAEL CARROLL—
NON-EXECUTIVE DIRECTOR
PAUL RIORDAN—
NON-EXECUTIVE DIRECTOR
Ross Herron joined the Board on 27 January
2005. A Chartered Accountant, he 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 Melbourne offi ce Managing Partner and
served on several international committees
within Coopers & Lybrand. He is Chairman of
GUD Holdings Ltd, and Royal Automobile Club
of Victoria (RACV) Ltd and a non-executive
director of a major industry superannuation
fund. Ross is Chairman of the Audit and
Risk Committee, and member of the
Remuneration and Nomination Committees.
Michael Carroll 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, the
Rural Finance Corporation, Rural Funds
Management, and Warrnambool Cheese
and Butter. 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. He is Chairman of the
Remuneration Committee, and a member
of the Audit and Risk Committee and
Nomination Committee.
Paul Riordan was appointed to the Board
in October 2012. He has worked in various
rural enterprises during his career, in
Australia and the United States, including
small seed production, large-scale sheep
and grain organisations, and beef cattle.
Paul is a co-founder and executive director
(operations) of Boundary Bend Olives,
Australia’s largest vertically integrated
olive company. Paul has a Diploma of
Farm Management from Marcus Oldham
Agricultural College, Geelong and has
extensive operational and business
experience in vertically integrated
agribusinesses, including in horticultural
operations and risk management.
16
Select Harvests Annual Report 2012
Select Harvests Annual Report 2012
17
Statistical summary
*2012
2011
2010
2009
2008
2007
2006
246,766
248,316
238,376
248,581
224,655
229,498
217,866
22,612
18,473
17,674
26,032
23,603
17,253
26,827
23,047
16,712
27,120
25,384
18,130
40,549
40,014
28,098
38,369
37,903
26,492
(2,495)
(8,743)
(4,469)
(7.9)
(2.8)
8
0
100
(101.3)
2.19
(0.4)
41.7
1.42
(cents)
(%)
(cents)
(cents)
(%)
(%)
($)
(times)
(%)
(times)
33.7
10.5
13
–
100
38.6
2.17
6.7
43.3
1.96
43.3
15.2
21
–
100
48.5
1.87
10.7
39.6
1.44
42.6
16.6
12
–
100
28.2
1.56
7.1
51.9
0.79
46.7
19.3
45
–
100
96.7
1.41
15.6
49.7
0.87
76,936
91,228
202,371
214,352
83,993
145,612
81,075
77,014
133,884
118,934
279,307
305,580
229,605
214,959
195,948
54,369
64,608
118,977
160,330
95,957
10,472
53,901
160,330
46,454
90,311
136,765
168,815
95,066
11,201
62,548
168,815
(000)
56,813
3,359
56,227
3,227
47,470
11,327
54,824
113,621
39,779
3,039
58,469
102,348
57,515
11,735
88,162
13,715
115,984
114,083
101,877
64,649
113,621
100,876
94,071
95,504
46,433
12,949
41,494
100,876
44,375
11,235
38,461
94,071
41,953
11,273
42,278
95,504
39,519
3,296
39,009
3,319
38,739
2,953
39,708
3,369
($)
1.30
1.84
3.46
2.16
6.00
11.60
13.02
73,857
103,458
137,635
85,361
234,054
449,372
516,998
71.0
29.4
57
–
100
80.0
1.57
75.8
1.7
1.32
70,983
89,170
160,153
53,680
10,969
67.1
26.1
53
10
100
80.0
1.83
82.3
1.3
1.82
72,455
79,421
151,876
39,905
10,490
50,395
101,481
52,665
12,691
36,125
101,481
SELECT HARVESTS CONSOLIDATED
RESULTS FOR YEARS ENDED 30 JUNE
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 capitalisation
$ ‘000 (except where indicated)
*Includes $24.9 million of pre-tax net asset write downs
18 Select Harvests Annual Report 2012
Contents
Directors’ Report
Auditor’s Independence
Declaration
Corporate Governance
Statement
Income Statement
Statement of
Comprehensive Income
Balance Sheet
Statement of
Changes in Equity
Statement of
Cash Flows
Notes to the
Financial Statements
Directors’ Declaration
Independent Auditor’s
Report to the Members
ASX Additional
Information
20
33
34
40
41
42
43
44
45
85
86
88
Select Harvests Annual Report 2012
19
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 2012.
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
M Iwaniw (Chariman)
Appointed to the board on 27 June 2011 and appointed Chairman 3 November 2011. He began his career as a chemist with the Australian Barley
Board (ABB), became managing director in 1989 and retired 20 years later. During these years he accumulated extensive experience in all facets
of the company’s operations, including leading the transition from a statutory authority and growing the business from a small base to an ASX
100 listed company. Helped orchestrate the merger of ABB Grain, AusBulk Ltd and United Grower Holdings Limited to form one of Australia’s
largest agri-businesses. He has a Bachelor of Science, a graduate diploma in business administration and is a member of the Australian
Institute of Company Directors. He has acted as a Non-executive director for a number of companies including Toepfer International, New
World Grain, Australian Bulk Alliance and 5-star fl our mill, and is currently a non-executive director of Australian Grain Growers Cooperative.
Interest in shares and options: 100,000 fully paid shares.
P Thompson (Managing Director)
Appointed the Managing Director and Chief Executive Offi cer of Select Harvests Limited on 9 July 2012. Has over 30 years of management
experience. Formerly President of SCA Australasia, part of the SCA Group, one of the world’s largest personal care and tissue products
manufacturers. Member of the Australian Institute of Company Directors and has formerly held positions as a Director of the Food & Grocery
Council and councillor in the Australian Industry Group. Member of the Nomination Committee.
Interest in Shares and Options: 0 fully paid shares.
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 Chairman of Royal Automobile Club Of Victoria (RACV) Ltd, Chairman of GUD Holdings 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: 41,965 fully paid shares.
M Carroll, BAgSc, MBA & FAICD (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 Queensland Sugar Limited, Sunny Queen Farms, Meat and Livestock Australia, Rural Finance Corporation, Rural Funds Management
and Warnambool Cheese and Butter. He has 18 years experience in banking and fi nance, having established and led 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.
20
Select Harvests Annual Report 2012
F S Grimwade, B.Com, LLB (Hons), MBA, (Non-Executive Director)
Appointed to the board on 27 July, 2010. He works with a wide range of companies in a board or advisory capacity. He is Chairman of CPT
Global Limited, a Principal and Executive Director of Fawkner Capital, a specialist corporate advisory fi rm, and is also a director of Troy
Resources Ltd, XRF Scientifi c Limited and Fusion Retail Brands Pty Ltd. He has held General Management positions in Colonial Agricultural
Company, Colonial Mutual Group, Colonial First State Investments Group, Western Mining Corporation and Goldman, Sachs & Co.
Interest in shares and options: 100,000 fully paid shares.
J C Leonard, B.Mktng & Bus. Admin, MBA (Former 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 was Chairman of the Board, a member of the Audit and Risk Committee, Remuneration Committee
and Nomination Committee.
Curt Leonard retired 1 June 2012.
J Bird (Former 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.
John Bird retired 1 March 2012.
P Chambers, BSc Hons, CA (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
25 years experience in senior fi nancial management roles in Australian and European organisations, including corporate positions with the
Fosters Group, and Henkel Australia and New Zealand.
Interest in shares and options: 22,000 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.
Employees
The consolidated entity employed 571 full time employees as at 30 June 2012 (2011: 633 employees).
Select Harvests Annual Report 2012 21
21
Select Harvests Annual Report 2012
Directors’ Report
Review and results of operations
Loss attributable to the members of Select Harvests Limited for the year ended 30 June 2012 was $4.5 million compared to a profi t of
$17.7 million in 2011.
The Company has recognised impairment losses of $24.9 million in relation to property, plant and equipment during the period. $20.0 million
of the impairment losses relate to the Company’s orchards in Western Australia with the remaining $4.9 million relating to almond processing
plant and equipment assets.
For additional information refer to the announcement lodged with the ASX.
Signifi cant changes in the state of affairs
There have been no signifi cant changes in the state of affairs of the Company.
Signifi cant events after the balance date
On 31 August 2012, the Directors declared a fi nal dividend of 3 cents per share payable on 22 October 2012 to shareholders on the register on
11 September 2012.
On 22 August 2012 the annual review of the company’s debt facility agreement with the National Australia Bank (NAB) was completed with the
total debt facility limit being amended from $115,000,000 to $95,000,000.
Likely developments and expected results
In 2013, the Company will consolidate its investments in almond orchards, continue to pursue new growth opportunities, and review
operations to enhance profi tability.
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.
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.
22 Select Harvests Annual Report 2012
Remuneration Report
The information provided in this Remuneration Report has been audited as required by section 308(3C) of the Corporations Act 2001.
Principles used to determine the nature and amount of remuneration
The objective of the Group’s executive reward framework is to set remuneration levels to attract and retain appropriately qualifi ed and
experienced directors and senior executives. The framework aligns executive reward with 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.
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 and long term incentives.
The Board has established a Remuneration Committee which makes recommendations to the Board on remuneration packages and other
terms of employment for executive and non-executive directors. The Remuneration Committee may obtain independent advice on the
appropriateness of remuneration packages, given trends in the marketplace. The Group has structured an executive reward framework that is
market competitive, performance driven and compliant with the Group’s reward strategy.
Non-executive directors
Non-executive directors receive fees but do not receive any performance related remuneration nor are they issued options or performance
rights on securities. This refl ects the responsibilities and the Group’s demands of directors. Non-executive directors’ fees are periodically
reviewed by the Board to ensure that they are continually appropriate and in line with market expectations.
Directors’ fees
The current directors’ fees were last reviewed with effect from 1 July 2011 and are as follows:
Base Fees (excluding superannuation)
Chairman
Other non-executive directors
Additional Fees (excluding superannuation)
Chair of the Audit and Risk Committee
Chair of the Remuneration Committee
From 1 July 2011
$145,000
$72,267
$10,000
$8,000
Executive Pay
The executive pay and reward framework has three components:
1. base pay and benefi ts (including superannuation);
2. short term performance incentives; and
3. long term incentives involving the issue of performance rights in the Select Harvests Limited executive Long Term Incentive Plan.
The combination of these three components forms the executive’s total remuneration.
Base pay and benefi ts
A total employment cost package which can be structured as a combination of cash and non cash benefi ts at the discretion of the company.
Executives receive a base pay that is reviewed annually to ensure market competitiveness in line with the objectives of the remuneration
framework. There are no guaranteed base pay increases in any executives’ contracts.
Executives may receive benefi ts including motor vehicle and certain private expense reimbursements.
Select Harvests Annual Report 2012 23
23
Select Harvests Annual Report 2012
Remuneration Report
Short-term incentives
Executive directors and senior executives may receive short term incentives based on achievement of 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. Financial targets ensure that variable reward is only available when value has
been created for shareholders. Operational targets allow for the recognition of effi ciencies that will provide for future shareholder value.
Long-term incentives
The Group offers executive directors and senior executives the opportunity to participate in the long term incentive plan (LTI Plan) involving
the issue of performance rights to the employee under the LTI Plan. The LTI Plan provides for the offer of a parcel of performance rights that
vest proportionately over three years, with half of the rights vesting upon achievement of earnings per share (EPS) growth targets and the
other half vesting upon achievement of total shareholder return (TSR) targets. The EPS growth targets are based on the average growth of the
company’s EPS over the three years prior to vesting. The TSR targets are measured based on the company’s average TSR compared to the TSR of
a peer group of ASX listed companies over the three years prior to vesting. The performance targets and vesting proportions are as follows:
MEASURE
EPS
Below 5% growth
5% growth
5.1% – 6.9% growth
7% or higher growth
TSR
Below the 60th percentile*
60th percentile*
61st – 74th percentile*
At or above 75th percentile*
* Of the peer group of ASX listed companies
PROPORTION OF
RIGHTS TO VEST
Nil
25%
Pro rata vesting
50%
Nil
25%
Pro rata vesting
50%
The Remuneration Committee is responsible for assessing whether the targets are met based on reports prepared by management.
Performance of Select Harvests Limited
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 EPS has fallen 117%.
Earnings Per Share
Cents
Growth
2008
46.7
(34%)
2009
42.6
(9%)
2010
43.3
2%
2011
33.7
(22%)
2012
(7.9)
(123%)
24 Select Harvests Annual Report 2012
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 senior executives:
NAME
P Ross
T Millen
L Van Driel
P Chambers
M Graham
POSITION
General Manager Almond Processing
General Manager Horticultural & Farm Operations
EMPLOYER
Select Harvests Limited
Select Harvests Limited
Group Trading Manager
Select Harvests Food Products Pty Ltd
Chief Financial Offi cer & Company Secretary
Select Harvests Limited
General Manager Food Division
Select Harvests Food Products Pty Ltd
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 performance rights
granted referred to in the remuneration details set out in this report comprise a proportion of rights which have not yet vested and are
refl ective of rights that may vest in future years.
2012
ANNUAL REMUNERATION
LONG TERM
Base
Fee
$
Short Term
Incentives
$
Non Cash
Benefi ts
$
Long
Service Leave
Accrued
$
Performance
Rights
Granted
$
Termination
Benefi ts
$
Non Executive Directors
F Grimwade
J C Leonard
M Carroll
R M Herron
M Iwaniw*
Executive Director
J Bird
66,300
83,017
73,639
75,474
223,307
467,204
Other key management personnel
P Chambers
M Graham
L Van Driel
T Millen
P Ross
252,574
229,222
231,900
223,980
255,046
-
-
-
-
-
-
-
-
-
-
-
Super-
annuation
Contri-
butions
$
5,967
7,472
6,628
6,793
-
-
-
-
-
-
20,949
41,619
46,171
38,462
18,211
16,497
-
23,001
20,716
20,081
18,382
22,954
-
-
-
-
-
-
-
-
6,377
7,352
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
72,267
90,489
80,267
82,267
223,307
-
-
-
-
-
686,745
1,216,517
-
-
-
-
-
321,746
288,400
276,569
266,211
278,000
* Includes fees of $108,412 received for fulfi lling the Executive Chairman role for the period 5 March 2012 to 9 July 2012.
Notes
The elements of remuneration have been determined on the basis of the cost to the company and the consolidated entity.
Performance rights granted as part of 2012 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.
Select Harvests Annual Report 2012 25
25
Select Harvests Annual Report 2012
Remuneration Report
2011
ANNUAL REMUNERATION
LONG TERM
Base Fee
$
Short Term
Incentives+
$
Non Cash
Benefi ts
$
Super-
annuation
Contri-
butions
$
Long
Service Leave
Accrued
$
Options
Granted++
$
27,083
59,583
130,000
65,000
65,000
-
-
-
-
-
-
-
-
-
-
-
-
-
2,438
5,363
11,700
5,850
5,850
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
29,521
64,946
141,700
70,850
70,850
-
Non Executive Directors
M A Fremder*
F Grimwade**
J C Leonard
M Carroll
R M Herron
M Iwaniw***
Executive Director
J Bird
642,874
105,000
27,932
36,995
10,885
(106,827)
716,858
Other key management personnel
M Graham
K Martin****
L Van Driel
T Millen
P Chambers
P Ross
224,047
336,922
206,499
196,791
226,449
248,073
28,000
26,265
37,950
25,300
43,500
27,040
23,465
-
31,219
11,899
43,171
-
23,443
17,026
21,510
19,448
24,135
22,327
4,333
-
3,964
3,604
4,494
4,135
-
303,288
(25,500)
(23,000)
(23,500)
(27,000)
(25,000)
354,713
278,142
233,541
314,749
276,575
* Retired 27 October 2010
** Commenced 27 July 2010
*** Commenced 27 June 2011
**** Departed 25 February 2011 (Base fee includes Termination Payments of $174,007)
+ Amounts have been restated to refl ect the actual bonus for 2011
++ Options granted includes a negative adjustment for options previously recognised as remuneration that will not vest
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 2011 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.
26 Select Harvests Annual Report 2012
The actual relative proportions of remuneration that are linked to performance and those that are fi xed are as follows:
2012
Fixed Remuneration
Non Executive Directors
J C Leonard
M Carroll
R M Herron
F Grimwade
M Iwaniw
2012
%
100.0
100.0
100.0
100.0
100.0
2011
%
100.0
100.0
100.0
100.0
100.0
Executive Director
J Bird
100.0
78.4
Other key management personnel
P Chambers
M Graham
L Van Driel
T Millen
P Ross
Service Agreements
100.0
100.0
100.0
100.0
100.0
87.7
88.6
88.1
86.7
100.0
At risk – STI
2012
%
-
-
-
-
-
-
-
-
-
-
-
2011
%
-
-
-
-
-
21.6
12.3
11.4
11.9
13.3
-
At risk – LTI
2012
%
2011
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
On appointment to the Board, all non-executive directors enter into a service agreement with the company in the form of a letter of
appointment. The letter summarises the Board policies and terms, including compensation, relevant to the offi ce of director.
Remuneration and other terms of employment for the managing director, chief fi nancial offi cer and other key management personnel are also
formalised in service agreements. Each of these agreements provide for provision of performance related cash bonuses.
The major provisions of the agreements are set out below.
NAME
P Thompson
P Chambers*
M Graham*
T Millen*
L Van Driel*
P Ross*
TERM OF AGREEMENT
On-going – 6 Months Notice
On-going – 3 Months Notice
On-going – 3 Months Notice
On-going – 3 Months Notice
On-going
On-going – 3 Months Notice
BASE SALARY INCL SUPERANNUATION
450,000
305,080
288,400
263,803
264,098
278,000
* Base salaries quoted are for the year ended 30 June 2012. They are reviewed annually by the Remuneration Committee, however the review for the 30 June 2013
year is yet to be completed.
Other than the notice periods noted above there are no specifi c termination benefi ts applicable to the service agreements.
Select Harvests Annual Report 2012 27
27
Select Harvests Annual Report 2012
Remuneration Report
Share-based compensation
Long Term Incentive Plan
The current LTI Plan provides for the offer of a parcel of performance rights with a three year expiry period to participating employees on an
annual basis. The rights vest annually in three tranches on achievement of the performance hurdles as described previously.
Individual parcels of rights offered to participating employees are based on a percentage of fi xed remuneration. Performance rights granted as
remuneration are subject to continuing service with the consolidated entity. Performance rights granted as remuneration are valued at grant
date in accordance with AASB 2 Share-based Payments. Options previously granted as remuneration under the former executive share option
scheme in relation to 409,742 shares, valued at $117,459 have lapsed during the year.
The assessed fair value at grant date is determined using a Black-Scholes option pricing model that takes into account the exercise price, the
term of the rights, 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 right.
Performance rights are granted under the plan for no consideration. The plan rules contain a restriction on removing the ‘at risk’ aspect of
the instruments granted to executives. Plan participants may not enter into any transaction designed to remove the ‘at risk’ aspect of an
instrument before it vests.
During or since the end of the fi nancial year, the Company granted 655,740 performance rights to unissued ordinary shares to the key
management personnel of the company as part of their remuneration.
Number of
rights granted
during the year
$ Value of
rights at
grant date
Number of
rights/options vested
during the year
Number of
options lapsed
during the year
$ Value at
lapse date
Other key management personnel
P Chambers
M Graham
L Van Driel
T Millen
P Ross
-
-
173,880
167,940
-
151,740
162,180
198,708
191,919
-
173,406
185,337
-
-
-
-
-
-
539,784
136,426
41,320
116,214
117,685
126,757
-
-
-
-
-
-
2012
Executive
J Bird
No options or performance rights were exercised in the fi nancial year ended 30 June 2012 (and in 2011).
28 Select Harvests Annual Report 2012
Details of remuneration: Bonuses and share based compensation benefi ts
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
J Bird
P Chambers
M Graham
L Van Driel
T Millen
P Ross
Paid
%
-
-
-
-
-
-
Forfeited
%
100%
100%
100%
100%
100%
100%
Year
granted
2009
Vested
%
-
Forfeited
%*
100
Financial years
in which
options/rights
may vest
2012
2010
2009
2010
2012
2012
2012
2010
2012
2012
2012
2009
2010
2009
2010
2012
2012
2012
2009
2010
2012
2012
2012
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100
100
100
-
-
-
100
-
-
-
100
100
100
100
-
-
-
100
100
-
-
-
2013
2012
2013
2014
2015
2016
2013
2014
2015
2016
2012
2013
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
* These options are not legally forfeited, but they have been deemed unlikely to vest.
Use of Remuneration Consultants
During the year the remuneration committee employed the services of Oppeus International Pty Ltd (Oppeus) to provide recommendations in
relation to the senior executive long term incentive plan design, incorporating the company’s key management personnel. Under the terms of
the engagement, Oppeus provided remuneration recommendations as defi ned in section 9B of the Corporations Act 2001 and was paid $9,500
for these services.
Oppeus has confi rmed the recommendations have been made free from undue infl uence by members of the company’s key management
personnel.
The following arrangements were made to ensure remuneration recommendations were free from undue infl uence:
• Oppeus was engaged by the Board and reported directly to the chair of the Remuneration Committee; and
• The report containing the remuneration recommendations was provided by Oppeus directly to the chair of the Remuneration Committee.
As a consequence the Board is satisfi ed that the recommendations were made free from undue infl uence from any members of the key
management personnel.
Select Harvests Annual Report 2012 29
29
Select Harvests Annual Report 2012
Directors’ Report
Dividends
Interim for the year
• on ordinary shares
Final for 2012 shown as recommended in the 2012 report
• on ordinary shares
Cents
5.0
3.0
2012
$000’S
2,820
1,704
Indemnifi cation and insurance of directors and offi cers
During the year the Company entered into 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. The terms of the contract do not permit disclosure of the
premium paid.
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:
MEETINGS OF COMMITTEES
Directors’ Meetings
Audit and Risk
Remuneration
Nomination
Number
Eligible to
Attend
14
Number
Attended
14
Number
Eligible to
Attend
4
Number
Attended
4
Number
Eligible to
Attend
2
Number
Attended
2
Number
Eligible to
Attend
1
Number
Attended
1
14
14
14
13
7
14
14
14
12
7
4
4
4
4
-
4
4
4
4
-
2
2
2
2
-
2
2
2
2
-
1
1
1
1
-
1
1
1
1
-
M Iwaniw
R M Herron
M Carroll
F Grimwade
J C Leonard
J Bird
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
R M Herron (Chairman)
Remuneration
M Carroll (Chairman)
Nomination
M Iwaniw (Chairman)
F Grimwade
M Carroll
M Iwaniw
J C Leonard
F Grimwade
R M Herron
M Iwaniw
J C Leonard
M Iwaniw joined the Board 27 July 2011
P Thompson joined the Board 9 July 2012
J Bird resigned from the Board 1 March 2012
J C Leonard resigned from the Board 1 June 2012
30 Select Harvests Annual Report 2012
P Thompson
R M Herron
M Carroll
F Grimwade
J C Leonard
J Bird
Director’s interests in contracts
Directors’ interests in contracts are disclosed in Note 32 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 16.
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 31. 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 and 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.
Select Harvests Annual Report 2012 31
31
Select Harvests Annual Report 2012
Directors’ 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.
M Iwaniw
Chairman
Melbourne, 31 August 2012
32 Select Harvests Annual Report 2012
Auditor’s Independence Declaration
As lead auditor for the audit of Select Harvests Limited for the year ended 30 June 2012, 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.
John O’Donoghue
Partner
PricewaterhouseCoopers
Melbourne
31 August 2012
PricewaterhouseCoopers, ABN 52 780 433 757
Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation
Select Harvests Annual Report 2012 33
33
Select Harvests Annual Report 2012
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. A number of channels are used to source candidates to ensure the company benefi ts from a
diverse range of individuals during the selection process.
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.
34 Select Harvests Annual Report 2012
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.
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 of 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 former non–executive director of the company (resigned 1 June 2012), Mr J C Leonard, owns (directly or indirectly) almond orchards totalling
1,782 acres in respect to which the consolidated entity provides orchard management services under contract at market rates.
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.
Select Harvests Annual Report 2012 35
35
Select Harvests Annual Report 2012
Corporate Governance Statement
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.
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 each year and vest over three years
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 2012 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;
36 Select Harvests Annual Report 2012
• 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.
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; The Board reviews actual results 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:
Diversity
Selects Harvests is an equal opportunity employer and recruits people from a diverse range of backgrounds.
Workplace diversity encompasses the full variety of differences between people in the organisation. It includes differences in gender, race,
ethnicity, age, disability and cultural background. Select Harvests recognises that embracing such diversity in its workforce contributes to the
achievement of the Group’s objectives and enhances its reputation as an employer.
Select Harvests Annual Report 2012 37
37
Select Harvests Annual Report 2012
Corporate Governance Statement
Select Harvests is committed to achieving the goals of providing access to equal opportunities at work based on merit and fostering a culture
that embraces the value of diversity.
To support this goal, the Board has developed a Diversity Policy which is available on the Group’s website.
While Select Harvest has a rich diversity of ethnicities and cultural backgrounds amongst its employees, we recognise the need to improve
diversity at senior executive and board level and to make stronger progress on our commitment to building a gender diverse workforce.
At 30 June 2012 there were 131 female employees within the Group (24% of total employees). There were no female senior executives or
Board members.
In order to enhance the commitment to gender and broader diversity principles, we are working to achieve objectives which include:
OBJECTIVE:
MEASURABLE ACTION:
Review and communicate the company’s core values
Increased focus on gender participation
and distribution across the Group
Review the means by which the Group recruits,
develops and retains females across the Group
Continue to build on our current workplace fl exibility options
Regular reporting to the Board on gender diversity
New Company Values Statement to be developed and
rolled out
Survey management and employee attitudes to diversity
Review, refresh and re communicate the Diversity Policy
Review Recruitment Policy & Procedures
Review and enhance position fl exibility and Employment
Terms and Conditions
Enhance Board Reports to provide greater insight
on diversity
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;
• 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.
38 Select Harvests Annual Report 2012
Annual Financial Report
This fi nancial report covers the consolidated entity consisting of Select Harvests Limited and its subsidiaries. The fi nancial report is presented
in the Australian currency.
Select Harvests Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered offi ce and principal place of
business is:
Select Harvests Limited
360 Settlement Road
Thomastown Vic 3074
A description of the nature of the consolidated entity’s operations and its principal activities is included in the review of operations and
activities and in the directors’ report, both of which are not part of this fi nancial report.
The fi nancial report was authorised for issue by the directors on 31 August 2012. The company has the power to amend and reissue the
fi nancial report.
Through the use of the internet, we have ensured that our corporate reporting is timely, complete, and available globally at minimum cost to
the company. All fi nancial reports and other information are available on our website: www.selectharvests.com.au.
Select Harvests Annual Report 2012 39
39
Select Harvests Annual Report 2012
Income Statement
For the year ended 30 June 2012
Notes
CONSOLIDATED
Revenue
Sales of goods and services
Gain on sale of permanent water rights
Other revenue
Total revenue
Other income (expenses)
Biological asset fair value adjustment
Total other income (expenses) excluding discount on acquisition
Expenses
Cost of sales
Distribution expenses
Marketing expenses
Occupancy expenses
Administrative expenses
Finance costs
Other expenses
Impairment of property, plant and equipment
Discount on acquisition
PROFIT/(LOSS) BEFORE INCOME TAX
Income tax benefi t/(expense)
PROFIT/(LOSS) ATTRIBUTABLE TO MEMBERS
OF SELECT HARVESTS LIMITED
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)
4
4
4
15
5
5
5
7
6
25(c)
29
29
The above income statement should be read in conjunction with the accompanying Notes.
2012
$’000
246,766
4,041
515
251,322
2,508
2,508
(215,212)
(6,936)
(614)
(1,308)
(4,383)
(6,489)
(2,723)
(24,908)
-
(8,743)
4,274
(4,469)
(7.9)
(7.9)
2011
$’000
248,316
-
1,642
249,958
2,397
2,397
(222,939)
(7,249)
(1,114)
(1,276)
(3,544)
(3,774)
(2,247)
-
8,261
18,473
(799)
17,674
33.7
33.7
40 Select Harvests Annual Report 2012
Statement of Comprehensive Income
For the year ended 30 June 2012
CONSOLIDATED
Profi t/(Loss) for the year
Other comprehensive income
Changes in fair value of cash fl ow hedges, net of tax
Other comprehensive income/(expense) for the year
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO
MEMBERS OF SELECT HARVESTS LIMITED
2012
$’000
(4,469)
(401)
(401)
(4,870)
2011
$’000
17,674
179
179
17,853
Select Harvests Annual Report 2012 41
41
Select Harvests Annual Report 2012
Balance Sheet
As at 30 June 2012
Notes
CONSOLIDATED
2012
$’000
1,061
37,398
36,644
375
1,458
76,936
1,047
90,970
74,171
36,183
202,371
279,307
25,365
25,495
818
2,691
54,369
-
42,500
21,171
937
64,608
118,977
160,330
95,957
10,472
53,901
160,330
2011
$’000
7,398
39,565
37,618
348
6,299
91,228
1,283
116,523
49,585
46,961
214,352
305,580
26,721
16,458
79
3,196
46,454
137
64,000
25,123
1,051
90,311
136,765
168,815
95,066
11,201
62,548
168,815
9
10
11
12
13
14
15
16
17
18
12
19
20
21
22
23
24
25
25
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative fi nancial instruments
Current tax receivables
TOTAL CURRENT ASSETS
NON CURRENT ASSETS
Other assets
Property, plant and equipment
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
Provisions
TOTAL CURRENT LIABILITIES
NON CURRENT LIABILITIES
Trade and other payables
Interest bearing liabilities
Deferred tax liabilities
Provisions
TOTAL NON CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained profi ts
TOTAL EQUITY
The above balance sheet should be read in conjunction with the accompanying Notes.
42 Select Harvests Annual Report 2012
Statement of Changes in Equity
CONSOLIDATED
Balance at 1 July 2010
Profi t for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with equity holders in their
capacity as equity holders:
Contributions of equity, net of transaction
costs and deferred tax
Dividends paid or provided
Employee share options
Balance at 30 June 2011
Profi t for the year
Other comprehensive income/(expense)
Total comprehensive income for the year
Transactions with equity holders in their capacity
as equity holders:
Contributions of equity, net of transaction costs
and deferred tax
Dividends paid or provided
Employee share options
Transfer to retained earnings
Balance at 30 June 2012
Notes
Contributed
Equity
Reserves
Retained
Earnings
Total
47,470
11,327
54,824
113,621
-
-
-
47,596
-
-
-
179
179
-
-
(305)
17,674
-
17,674
-
(9,950)
-
17,674
179
17,853
47,596
(9,950)
(305)
95,066
11,201
62,548
168,815
-
-
-
891
-
-
-
95,957
-
(401)
(401)
-
-
-
(328)
10,472
(4,469)
-
(4,469)
-
(4,506)
-
328
53,901
(4,469)
(401)
(4,870)
891
(4,506)
120
-
160,450
24
8
24
8
The above statement of changes in equity should be read in conjunction with the accompanying Notes.
Select Harvests Annual Report 2012 43
43
Select Harvests Annual Report 2012
Statement of Cash Flows
For the year ended 30 June 2012
Notes
CONSOLIDATED
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 received/(paid)
Net Cash Infl ow From Operating Activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of water rights
Proceeds from sale of property, plant and equipment
Payment for property, plant and equipment
Acquisition of almond orchards
Tree development costs
Net Cash Outfl ow From Investing Activities
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from equity raising
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
26
7
24
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)
The above cash fl ow statement should be read in conjunction with the accompanying Notes.
2012
$’000
260,748
(239,533)
21,215
241
(4,415)
4,990
22,031
15,689
357
(9,641)
-
(18,694)
(12,289)
-
-
(12,000)
(3,616)
(15,616)
(5,874)
5,940
66
2011
$’000
318,352
(314,120)
4,232
385
(5,911)
1,841
547
-
-
(21,087)
(24,991)
(19,415)
(65,493)
45,057
79,000
(55,000)
(8,202)
60,855
(4,091)
10,031
5,940
44 Select Harvests Annual Report 2012
Notes to the Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these consolidated fi nancial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated. The fi nancial statements are for 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.
Select Harvests Limited is a for profi t entity for the purpose of preparing the fi nancial statements.
Restatement of prior period
As disclosed in the interim fi nancial report for the half-year reporting period ended 31 December 2011, the 2011 fi nancial statements have been
restated to refl ect the following:
(i) Accounting for the acquisition of the Belvedere orchard in the Company Orchards Division was provisional at 30 June 2011. Since the 30 June
2011 fi nancial report, further information was obtained about the valuation of the 2011 almond crop proceeds at the acquisition date. As a
result, in the balance sheet the provisional acquired receivables balance was restated upwards by $2,500,000 with corresponding increases
in the deferred tax liability of $750,000 and retained earnings of $1,750,000. In the income statement discount on acquisition has been
restated upwards by $1,750,000.
(ii) The company identifi ed that total almond processing cost accruals in the Managed Orchard Division were understated by $2,500,000 as at
30 June 2011. The company has therefore restated the prior period balance sheet to refl ect this adjustment, with a corresponding increase
in the tax receivable of $750,000 and a decrease in retained earnings of $1,750,000. In the income statement cost of sales has been restated
upwards by $2,500,000 and income tax expense has been restated downwards by $750,000.
Compliance with IFRS
The consolidated fi nancial statements of the Select Harvests Limited group comply with International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board (IASB).
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 the income statement, biological assets,
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.
(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.
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 acquisition 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.
Select Harvests Annual Report 2012 45
45
Select Harvests Annual Report 2012
Notes to the Financial Statements
(c) Foreign currency translation
(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
For the purpose of presentation in the statement of cash fl ows, cash and cash equivalents includes cash on hand, deposits held at call with
fi nancial institutions, money market investments readily convertible to cash within two working days, and bank overdrafts. Bank overdrafts
are shown within borrowings in current liabilities in the balance sheet.
(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
cost to sell at the point of harvest, and subsequently at Net Realisable Value under AASB 102 Inventories.
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.
A fair value review is completed at each period end to ensure compliance with AASB 141. The value of almond trees is measured at fair value
using a discounted cash fl ow methodology.
The discounted cash fl ows incorporate the following factors:
• Almond trees have an estimated 30 year economic life, with crop yields consistent with long term almond industry yield rates;
• Selling prices are based on long term average trend prices being $6 per Kg;
• Growing, processing and selling costs are based on long term average levels;
• Temporary water costs are based on long term average market prices where assets have no permanent water rights attached;
• Cash fl ows are discounted at a post tax rate of 13%, that 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.
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.
46 Select Harvests Annual Report 2012
New orchards growing costs
All costs associated with the establishment, planting and growing of almond trees for an orchard in a new area where there is no previous
experience of commercial almond production are accumulated for the fi rst three years of that orchard. Once the fair value of this orchard
becomes reliably measurable, the orchard is measured in accordance with the almond trees policy noted above.
(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 cash fl ow hedge 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 historical 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.
Depreciation
The depreciable amount of all fi xed assets including buildings and capitalised leased assets, but excluding freehold land water rights 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:
25 to 40 years
Leasehold improvements:
5 to 40 years
Plant and equipment:
5 to 20 years
Leased plant and equipment:
5 to 10 years
Irrigation systems:
10 to 40 years
Select Harvests Annual Report 2012 47
47
Select Harvests Annual Report 2012
Notes to the Financial Statements
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) Business Combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other
assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred,
the liabilities incurred and the equity interests issued by the group. The consideration transferred also includes the fair value of any asset
or liability resulting from a contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary.
Acquisition-related costs are expensed as incurred. Identifi able assets acquired and liabilities and contingent liabilities assumed in a business
combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis,
the group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of
the acquiree’s net identifi able assets.
The excess of the consideration transferred the amount of any non-controlling interest in the acquiree and the acquisition-date fair value
of any previous equity interest in the acquiree over the fair value of the group’s share of the net identifi able assets acquired is recorded as
goodwill. If those amounts are less than the fair value of the net identifi able assets of the subsidiary acquired and the measurement of all
amounts has been reviewed, the difference is recognised directly in the income statement as a discount on acquisition.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at
the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be
obtained from an independent fi nancier under comparable terms and conditions.
Contingent consideration is classifi ed either as equity or a fi nancial liability. Amounts classifi ed as a fi nancial liability are subsequently
remeasured to fair value with changes in fair value recognised in profi t or loss.
(k) 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.
48 Select Harvests Annual Report 2012
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.
(l) 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:
Sale of Goods
Control of the goods has passed to the buyer.
Interest
Interest income is recognised using the effective interest method. When a receivable is impaired, the group reduces the carrying amount to its
recoverable amount, being the estimated future cash fl ow discounted at the original effective interest rate of the instrument, and continues
unwinding the discount as interest income. Interest income on impaired loans is recognised using the original effective
interest rate.
Dividends
Dividends are recognised as revenue when the right to receive payment is established.
Almond Pool Revenue
Under contractual arrangements, the group acts as an agent for external growers by simultaneously acquiring and selling the almonds and
therefore, does not make a margin on those sales. These amounts are not included in the group’s revenue.
As at 30 June 2012 the group 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).
(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 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. 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.
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.
Select Harvests Annual Report 2012 49
49
Select Harvests Annual Report 2012
Notes to the Financial Statements
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
Goodwill and other Intangible 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
(i) Short-term obligations:
Liabilities for wages and salaries, including non-monetary benefi ts and annual leave expected to be settled within 12 months after the end of
the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting
period and are measured at the amounts expected to be paid when the liabilities are settled.
The liability for annual leave is recognised in the provision for employee benefi ts. All other short-term employee benefi t obligations are
presented as payables.
(ii) Other long-term benefi t obligations
The liability for long service leave and annual leave which is not expected to be settled within 12 months after the end of the period in which
the employees render the related service is recognised in the provision for employee benefi ts and measured as the present value of expected
future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit
method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected
future payments are discounted using market yields at the end of the reporting period on national government bonds with terms to maturity
and currency that match, as closely as possible, the estimated future cash outfl ows.
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 Long Term Incentive Plan (LTIP). Information
relating to this scheme is set out in Note 35.
The fair value of performance rights granted under the Select Harvests Limited LTIP 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 performance rights. The fair value at grant date is independently determined using a Black Scholes option
pricing model that takes into account the term of the right, 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
right. The fair value of the performance rights 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 rights that are expected to vest. At each balance sheet date, the entity revises its estimate of the number of rights that
are expected to vest. 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
Collectability 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.
50 Select Harvests Annual Report 2012
Financial Liabilities
The bank overdraft is carried at the principal amount and is part of the Net Cash balance in the Statement of Cash Flows. 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 liabilities are 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 and the Interest Rate Cap, are 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) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost.
Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the income statement over the
period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction
costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until
the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is
capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are classifi ed as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12
months after the reporting period.
(s) 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.
(t) 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.
(u) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The
chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been
identifi ed as the Chief Executive Offi cer.
(v) New accounting standards and UIG pronouncements
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2012 reporting periods. The
group’s assessment of the impact of these new standards and interpretations is set out below.
AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2010-7
Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) (effective from 1 January 2013)
AASB 9 Financial Instruments addresses the classifi cation, measurement and derecognition of fi nancial assets and fi nancial liabilities. The
standard is not applicable until 1 January 2013 but is available for early adoption. There will be no impact on the group’s accounting for fi nancial
liabilities, as the new requirements only affect the accounting for fi nancial liabilities that are designated at fair value through the
Select Harvests Annual Report 2012 51
51
Select Harvests Annual Report 2012
Notes to the Financial Statements
income statement and the group does not have any such liabilities. The derecognition rules have been transferred from AASB 139 Financial
Instruments: Recognition and Measurement and have not been changed. The group has not yet decided when to adopt AASB 9.
AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests in Other Entities, revised AASB
127 Separate Financial Statements and AASB 128 Investments in Associates and Joint Ventures and AASB 2011-7 Amendments to Australian
Accounting Standards arising from the Consolidation and Joint Arrangements Standards (effective 1 January 2013).
In August 2011 the AASB issued a suite of fi ve new and amended standards which address the accounting for joint arrangements, consolidated
fi nancial statements and associated disclosures.
AASB 10 replaces all of the guidance on control and consolidation in AASB 127 Consolidated and Separate Financial Statements, and
Interpretation 12 Consolidation – Special Purpose Entities. The core principle that a consolidated entity presents a parent and its subsidiaries
as if they are a single economic entity remains unchanged, as do the mechanics of consolidation. However, the standard introduces a single
defi nition of control that applies to all entities. The group does not expect the standard to have an impact on its composition.
AASB 11 introduces a principle based approach to accounting for joint arrangements. As the group does not have any joint arrangements no
impact is expected from this standard.
AASB 12 sets out the required disclosures for entities reporting under the two new standards, AASB 10 and AASB 11, and replaces the disclosure
requirements currently found in AASB 127 and AASB 128. Application of the standard by the group will not affect any of the amounts
recognised in the fi nancial statements.
Amendments to AASB 128 will not impact the group as the group does not have any joint venture arrangements or associated entities.
The group does not expect to adopt the new standards before their operative date, therefore they will be fi rst applied in the fi nancial
statements for the annual reporting period ending 30 June 2014.
IFRS 13 Fair Value Measurement (effective 1 January 2013)
IFRS 13 was released in May 2011. The AASB is expected to issue an equivalent Australian standard shortly. IFRS 13 explains how to measure fair
value and aims to enhance fair value disclosures. The group has yet to determine which, if any, of its current measurement techniques will
have to change as a result of the new guidance. It is therefore not possible to state the impact, if any, of the new rules on any of the amounts
recognised in the fi nancial statements. However, application of the new standard will impact the type of information disclosed in the notes to
the fi nancial statements. The group does not intend to adopt the new standard before its operative date, which means that it would be fi rst
applied in the annual reporting period ending 30 June 2014.
There are no other standards that are not yet effective and that are expected to have a material impact on the entity in the current or future
reporting periods and on foreseeable future transactions.
(w) 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.
(x) 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.
(y) Contributed equity
Ordinary shares are classifi ed as equity. The value of new shares or options issued is shown in equity.
(z) Comparatives
Where necessary, comparatives have been reclassifi ed and repositioned for consistency with current year disclosures.
(aa) 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.
(ab) Parent entity fi nancial information
The fi nancial information for the parent entity, Select Harvests Limited, disclosed in note 37 has been prepared on the same basis as the
consolidated fi nancial statements, except as set out below.
52 Select Harvests Annual Report 2012
(i) Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the fi nancial statements of
Select Harvests Limited.
(ii) Tax consolidation legislation
Select Harvests Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation.
The head entity, Select Harvests Limited, and the controlled entities in the tax consolidated group 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 standalone taxpayer
in its own right.
In addition to its own current and deferred tax amounts, Select Harvests Limited also recognises the current tax liabilities (or assets) and the
deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.
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.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current amounts receivable from
or payable to other entities in the group.
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.
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)
Foreign exchange contracts
- buy foreign currency (cash fl ow hedges)
- sell foreign currency (cash fl ow hedges)
30 June 2012
USD $000’s
7,131
(1,019)
4,813
9,547
30 June 2011
USD $000’s
6,034
(1,344)
3,000
2,186
Select Harvests Annual Report 2012 53
53
Select Harvests Annual Report 2012
Notes to the Financial Statements
Group sensitivity analysis
Based on fi nancial instruments held at the 30 June 2012, had the Australian dollar strengthened/weakened by 5% against the US dollar, with
all other variables held constant, the Group’s post tax profi t for the year would have been $200,000 lower/$221,000 higher (2011: $147,000
lower/$162,000 higher), mainly as a result of the US dollar denominated fi nancial instruments as detailed in the above table. Equity would
have been $354,000 lower/$391,000 higher (2011: $121,000 lower/$134,000 higher), arising mainly from foreign forward exchange contracts
designated as cash fl ow hedges.
(ii) Cash fl ow 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 had the following variable rate borrowings:
30 June 2012
Weighted Average
Interest Rate
%
7.14%
1.18%
30 June 2011
Weighted Average
Interest Rate
%
8.48%
3.80%
Balance
$’000
67,000
995
Balance
$’000
79,000
1,458
Debt facilities
Overdraft (USD)
An analysis of maturities is provided in 2(c) below
The Group analyses interest rate exposure on an ongoing basis in conjunction with debt facility, cash fl ow and capital management. As part
of the Risk Management policy of Select Harvests Limited, the company has entered into an agreement to swap $30,000,000 of debt at a rate
of 5.12% to reduce the risk that higher interest rates pose to the company’s cash fl ows. The weighted average interest rate of 7.14% in the table
above is inclusive of the interest rate swap.
Group sensitivity
At 30 June 2012, 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 $116,000 lower/higher (2011: $136,000 lower/higher.
54 Select Harvests Annual Report 2012
,
e
t
a
d
e
c
n
a
a
b
e
h
t
l
t
a
d
e
s
i
n
g
o
c
e
r
n
u
d
n
a
d
e
s
i
n
g
o
c
e
r
h
t
o
b
,
s
e
i
t
i
l
i
b
a
i
l
l
a
i
c
n
a
n
fi
d
n
a
s
t
e
s
s
a
l
a
i
c
n
a
n
fi
f
o
s
e
t
a
r
t
s
e
r
e
t
n
i
e
v
i
t
c
e
f
f
e
e
h
t
d
n
a
s
k
s
i
r
e
t
a
r
t
s
e
r
e
t
n
i
o
t
e
r
u
s
o
p
x
e
s
’
y
t
i
t
n
e
d
e
t
a
d
i
l
o
s
n
o
c
e
h
T
:
s
w
o
l
l
o
f
s
a
e
r
a
k
s
i
r
e
t
a
r
t
s
e
r
e
t
n
I
1 %
1
0
2
2 %
1
0
2
1
1
0
2
0
0
0
$
’
2
1
0
2
0
0
0
$
’
1
1
0
2
0
0
0
$
’
2
1
0
2
0
0
0
$
’
1
1
0
2
0
0
0
$
’
2
1
0
2
0
0
0
$
’
1
1
0
2
0
0
0
$
’
2
1
0
2
0
0
0
$
’
1
1
0
2
0
0
0
$
’
2
1
0
2
0
0
0
$
’
1
1
0
2
0
0
0
$
’
2
1
0
2
0
0
0
$
’
d
e
t
h
g
i
e
W
e
v
i
t
c
e
f
f
e
e
g
a
r
e
v
a
e
t
a
r
t
s
e
r
e
t
n
i
g
n
i
y
r
r
a
c
l
a
t
o
T
t
n
u
o
m
a
e
h
t
r
e
p
s
a
t
e
e
h
s
e
c
n
a
l
a
b
g
n
i
r
a
e
b
t
s
e
r
e
t
n
i
n
o
N
s
r
a
e
y
5
n
a
h
t
e
r
o
M
s
r
a
e
y
5
o
t
1
r
e
v
O
s
s
e
l
r
o
r
a
e
y
1
g
n
i
t
a
o
l
F
e
t
a
r
t
s
e
r
e
t
n
i
s
t
n
e
m
u
r
t
s
n
I
l
a
i
c
n
a
n
i
F
-
-
-
-
-
8
3
.
.
5
8
-
-
-
-
-
-
-
-
-
-
2
.
1
1
.
7
-
-
-
-
-
8
9
3
7
,
1
6
0
,
1
-
-
6
9
9
6
3
,
1
0
0
7
3
,
6
9
9
6
3
,
1
0
0
7
3
,
0
2
3
8
2
-
5
7
3
0
2
3
8
2
-
5
7
3
2
4
7
4
4
,
7
3
4
8
3
,
4
4
3
7
3
,
6
7
3
7
3
,
8
5
4
,
1
5
9
9
0
0
0
9
7
,
0
0
0
7
6
,
-
-
-
-
3
4
4
2
1
,
5
7
0
3
1
,
3
4
4
2
1
,
5
7
0
3
1
,
4
7
8
0
1
,
0
9
2
2
1
,
4
7
8
0
1
,
0
7
1
,
2
1
-
9
7
4
6
6
4
5
1
-
9
7
4
6
6
4
5
1
4
5
8
3
0
1
,
8
7
1
,
4
9
6
9
3
3
2
,
3
6
0
6
2
,
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8
9
3
7
,
1
6
0
,
1
8
9
3
7
,
1
6
0
,
1
s
e
l
b
a
v
i
e
c
e
r
r
e
h
t
o
d
n
a
e
d
a
r
T
p
a
C
e
t
a
R
t
s
e
r
e
t
n
I
s
t
c
a
r
t
n
o
c
e
g
n
a
h
c
x
e
d
r
a
w
r
o
F
s
t
e
s
s
a
l
a
i
c
n
a
n
fi
l
a
t
o
T
s
e
i
t
i
l
i
b
a
i
l
l
a
i
c
n
a
n
i
F
)
i
i
(
s
t
e
s
s
a
l
a
i
c
n
a
n
i
F
)
i
(
h
s
a
C
8
5
4
,
1
5
9
9
D
U
A
@
D
S
U
–
t
f
a
r
d
r
e
v
o
k
n
a
B
0
0
0
9
7
,
0
0
0
7
6
,
-
-
-
-
-
-
-
-
8
5
4
0
8
,
5
9
9
7
6
,
s
t
c
a
r
t
n
o
c
e
g
n
a
h
c
x
e
d
r
a
w
r
o
F
s
l
l
i
B
l
a
i
c
r
e
m
m
o
C
s
r
o
t
i
d
e
r
c
e
d
a
r
T
s
r
o
t
i
d
e
r
c
r
e
h
t
O
p
a
w
S
e
t
a
R
t
s
e
r
e
t
n
I
s
e
i
t
i
l
i
b
a
i
l
l
a
i
c
n
a
n
fi
l
a
t
o
T
Select Harvests Annual Report 2012 55
55
Select Harvests Annual Report 2012
:
n
i
g
n
i
r
u
t
a
m
e
t
a
r
t
s
e
r
e
t
n
i
d
e
x
i
F
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. Given that the majority of income is derived from large, blue chip customers with no history of
default, the provision raised against receivables is deemed to be satisfactory.
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.
(c) Liquidity risk
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
As outlined in note 28, on 22 August 2012 a review of the company’s debt facility agreement with the NAB was completed with various facility
limits being revised as a result. The following contains the NAB facility limits both at 30 June 2012 and following the review:
Debt Facilities
Review Date
1. Core debt
21/06/2016
2. Working capital
Annual Review
3. Acquisition
Annual Review
4. USD Overdraft
Annual Review
30 June 2012
Facility Limit
Post Balance
Date Adjusted
Facility Limit
$50,000,000
$60,000,000
$32,000,000
$32,000,000
$30,000,000
-
$3,000,000
$3,000,000
$115,000,000
$95,000,000
The debt margin above is based on a margin above BBSY or LIBOR.
The Group had access to the following undrawn borrowing facilities at the reporting date:
Floating rate
- Working capital/Acquisition facility
- Bank overdraft facility USD
2012
$’000
2011
$’000
$A 45,000
$US 1,981
$A 34,542
$US 2,119
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 over a three year term.
(d) Fair Value Measurement
The fair value of fi nancial assets and fi nancial liabilities must be estimated for recognition and measurement or for disclosure purposes.
As of 1 July 2009, Select Harvests Limited has adopted the amendment to AASB 7 Financial Instruments: Disclosures which requires disclosure
of fair value measurements by level of the following fair value measurement hierarchy:
(a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level one);
(b) Inputs other than quoted prices included within level one that are observable for the asset or liability, either directly (as prices) or indirectly
(derived from prices) (Level two); and
(c) Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level three).
At both 30 June 2012 and 30 June 2011, the group’s assets and liabilities measured and recognised at fair value comprised the interest rate swap
derivative, interest rate cap derivative and foreign exchange forward contracts. Both are measured with reference to level 2.
56 Select Harvests Annual Report 2012
Maturities of fi nancial liabilities
The table below analyses the Group’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.
Group at 30 June 2012
Non derivatives
Variable Rate
Debt facilities
Bank Overdraft
Derivatives
Interest Rate Swap
USD buy – outfl ow
USD sell – (infl ow)
USD net
Group at 30 June 2011
Non derivatives
Variable Rate
Debt facilities
Bank Overdraft
Derivatives
Interest Rate Cap
USD buy – outfl ow
USD sell – (infl ow)
USD net
Less than
6 months
$’000
6 – 12
months
$’000
More than
12 months
$’000
Total
contractual
cash fl ows
$’000
Carrying Amount
(assets)/liabilities
$’000
20,750
995
285
4,490
(9,547)
(5,057)
3,750
42,500
-
285
323
-
323
-
94
-
-
-
67,000
995
664
4,813
(9,547)
(4,734)
67,000
995
664
154
(375)
(221)
Less than
6 months
$’000
6 – 12
months
$’000
More than
12 months
$’000
Total
contractual
cash fl ows
$’000
Carrying Amount
(assets)/liabilities
$’000
2,500
1,458
(99)
3,000
(2,186)
814
17,500
-
(94)
-
-
-
74,000
-
(137)
-
-
-
94,000
1,458
(330)
3,000
(2,186)
814
79,000
1,458
(320)
79
(28)
51
Select Harvests Annual Report 2012 57
57
Select Harvests Annual Report 2012
Notes to the Financial Statements
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 15 of the fi nancial statements. As at 30 June 2012, the value of almond trees carried in the fi nancial statements of
the consolidated entity is $74.2 million (2011:$49.6 million). The valuation of almond trees is very sensitive to the assumption of the long term
almond price. Any change to the long term almond price may have a material impact on these valuations.
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(k).
The recoverable amounts of cash generating units have been determined based on value-in-use calculations.
Key assumptions are disclosed in note 16.
Income taxes
The income tax provision is developed at Balance Sheet date based on a preliminary estimate of the tax payable or receivable. This includes
an estimate of allowable R&D tax concession credits. The tax return in relation to the fi nancial year ended 30 June 2012 will be prepared and
submitted during the fi nancial year ended 30 June 2013. Due to uncertainties associated with changes to the R&D tax concession rules, no
accrual has been made for possible R&D credits in 2012.
WA Project expenditure
Costs in relation to the Western Australia Greenfi eld orchard development have been capitalised. Impairment losses of $20 million have been
recognised in relation to this project as a result of the reassessment of its recoverable amount, with the remaining amount capitalised on
the balance sheet of $41m, consisting of land and irrigation infrastructure, plant and equipment and almond trees. A discounted cash fl ow
analysis is prepared to determine the value in use of the project, which refl ects its recoverable amount. A number of estimates are made in
determining the value in use in accordance with AASB 136 “Impairment of Assets”. These include:
• Estimated remaining capital expenditure to bring the project to maturity
• Estimated future crop yields and selling prices
• Estimated future growing, processing and selling costs
A pre-tax discount rate of 17% is applied to the calculation.
The project is currently subject to a Strategic Review. It is reasonably possible, on the basis of existing knowledge, that outcomes within the
next fi nancial year that are different from the assumptions could require a material adjustment to the carrying amount.
Almond processing plant and equipment
The Company has reviewed the carrying value of all assets at the almond processing plant. This review identifi ed some assets which no longer
have a future use, resulting in an impairment loss of $4.9 million being recognised, The remaining amount capitalised on the balance sheet
for the hulling and cracking plant and equipment is $38.8m. A discounted cash fl ow analysis is prepared to determine the value in use of the
remaining plant and this supports the carrying value of these assets. A number of estimates are made in determining the value in use in
accordance with AASB 136 “Impairment of Assets”. These include:
• Estimated future processing volumes
• Estimated future capital expenditure and operating costs
It is reasonably possible, on the basis of existing knowledge, that outcomes within the next fi nancial year that are different from the
assumptions could require a material adjustment to the carrying amount.
A pre-tax discount rate of 13% was applied to the calculation.
58 Select Harvests Annual Report 2012
4. REVENUE
Revenue from continuing operations
- Management services
- Sale of goods
Other revenue
- Gain on sale of permanent water rights
- Bank interest
- Other revenue
Total other revenue
Total revenue
5. EXPENSES
Profi t before tax includes the following specifi c expenses:
Cost of goods & services sold
Depreciation of non current assets
Buildings
Plantation land and irrigation systems
Plant and equipment
Total depreciation of non current assets
Finance costs
other persons
Total fi nance costs
Impairment losses: trade receivables
Foreign exchange loss/(gain)
Operating lease rental minimum lease payments
Net loss/(gain) on disposal of property, plant and equipment
Net loss (gain) on disposal of property, plant and equipment
Impairment of property, plant and equipment (a)
Land and irrigation systems
Plant and equipment
Notes
Consolidated
2012
$’000
2011
$’000
95,445
151,321
246,766
4,041
241
274
4,556
104,801
143,515
248,316
-
385
1,257
1,642
251,322
249,958
215,212
222,939
51
338
5,724
6,113
6,489
6,489
34
(111)
13,013
254
20,000
4,908
24,908
46
406
4,760
5,212
3,774
3,774
3
47
11,990
(16)
-
-
-
Select Harvests Annual Report 2012 59
59
Select Harvests Annual Report 2012
Notes to the Financial Statements
(a) Impairment of property, plant and equipment
Impairment of land and irrigation systems relates to impairment losses recognised in relation to the Company’s orchards in Western Australia.
Impairment of plant and equipment relates to impairment losses recognised in relation to almond processing plant and equipment.
WA impairment
The WA impairment arose as a result of a re-evaluation of the project, due to the fact that less acres were planted than planned, infrastructure
and planting costs were higher than initially expected and future costs are now considered likely to be higher than originally planned. The
recoverable amount for the WA project is determined on a value in use basis, using a 17% pre-tax discount rate.
Almond processing plant impairment
This impairment arose as a result of a re-assessment of future operations and the likelihood of utilising equipment which had been maintained
as an overrun facility.
Notes
Consolidated
2012
$’000
2011
$’000
6. INCOME TAX
(a) Income tax expense/(benefi t)
Current Tax
Deferred tax
(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
22
22
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profi t (loss) from continuing operations before income tax expense
Tax at the Australian tax rate of 30% (2011 – 30%)
Tax effect of amounts that are not deductible (taxable) in calculating
taxable income
Other non assessable items
Current year R&D estimate
(Over) provided in prior years
Income tax expense
(3,006)
387
(1,655)
(4,274)
(4,274)
(4,274)
(7,977)
6,709
(1,268)
(8,743)
(2,623)
4
-
(1,655)
(4,274)
(3,375)
4,835
(661)
799
799
799
439
4,396
4,835
18,473
5,542
(2,507)
(1,575)
(661)
799
60 Select Harvests Annual Report 2012
7. BUSINESS COMBINATIONS
Summary of Acquisitions
On 2 December 2010, Select Harvests acquired 532 acres of established almond orchards at Lake Powell, Northern Victoria.
On 19 January 2011, Select Harvests purchased 116 acres of established almond orchards at Bannerton Park, Northern Victoria.
On 22 June 2011, Select Harvests purchased 1,500 acres of established almond orchards near Narranderra, New South Wales.
Accounting for the acquisitions was provisional at 30 June 2011. Since the 30 June 2011 fi nancial report further information was obtained about
the valuation of the 2011 almond crop proceeds at the acquisition date. No changes have been made to the provisional balances of the other
assets and liabilities acquired.
Details of the purchase consideration, the net assets acquired and discount on acquisition are as follows:
Purchase consideration
Cash paid
$’000s
24,991
The provisional and fi nal fair values of assets and liabilities recognised as a result of the acquisitions are as follows:
Property, Plant and Equipment
Biological Assets – Almond Trees
Inventory
Water Rights
Annual leave liability
Deferred tax liability
Net Identifi able Assets
Discount arising on acquisition
Net Cash outfl ow on acquisition
Provisional
Fair Value
$’000
Final
Fair Value
$’000
14,052
12,248
197
7,825
(30)
(2,790)
31,502
6,511
24,991
14,052
12,248
2,697
7,825
(30)
(3,540)
33,252
8,261
24,991
The change in fair value of inventory, deferred tax liability and discount on acquisition relates to the Belvedere orchard acquisition
(on 22 June 2011) and this amount has been refl ected in the restated 30 June 2011 fi nancial statement comparatives as outlined in note 1 (a).
Select Harvests Annual Report 2012 61
61
Select Harvests Annual Report 2012
Notes to the Financial Statements
8. DIVIDENDS PAID OR PROPOSED ON ORDINARY SHARES
(a) Dividends paid during the year
(i) Interim – paid 16 April 2012 (2011: 22 April 2011)
Fully franked dividend (5c per share)
(2011: 10c per share)
(ii) Final – paid 13 October 2011 (2011: 4 October 2010)
Fully franked dividend (3c per share)
(2011: 11c per share)
(b) Dividends proposed and not recognised as a liability.
A fi nal dividend of 3c per share has been declared by the directors ($1,704,381)
(c) Franking credit balance
Franking credits available for the subsequent fi nancial year arising from:
Franking credits available for subsequent reporting periods
Notes
Consolidated
2012
$’000
2011
$’000
2,820
2,820
1,686
4,506
5,566
5,566
4,384
9,950
13,865
13,865
18,717
18,717
The above amounts represent the balance of the franking account (presented as the gross dividend value) as at the end of the reporting
period, adjusted for franking debits that will arise from the receipt of the amount of the tax receivable.
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 $1,704,381 (2011 $1,686,809).
9. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
(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
18
10. TRADE AND OTHER RECEIVABLES (CURRENT)
Trade receivables
Provision for impairment of trade receivables
Prepayments
1,061
1,061
1,061
(995)
66
37,001
(24)
36,977
421
37,398
7,398
7,398
7,398
(1,458)
5,940
36,996
(3)
36,993
2,572
39,565
62 Select Harvests Annual Report 2012
As at 30 June 2012 current trade receivables of the Group with a value of $24,446 (2011: $3,305) were impaired. The amount of the provision was
$24,446 (2011:$3,305).
The ageing of these receivables is as follows:
Over 6 months
Movements in the provision for impairment of receivables are as follows:
At 1 July
Provision for impairment recognised during the year
Receivables written off during the year
At 30 June
(b) Trade receivables past due but not impaired
Consolidated
2012
$’000
24
24
3
34
(13)
24
2011
$’000
3
3
170
3
(170)
3
As at 30 June 2012, trade receivables of $3,970,002 (2011: $4,457,660) 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
(c) Effective interest rates and credit risk
All receivables are non-interest bearing.
Consolidated
2012
$’000
3,600
370
-
3,970
2011
$’000
4,099
227
132
4,458
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 2.
(d) Fair value
Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value.
Select Harvests Annual Report 2012 63
63
Select Harvests Annual Report 2012
Notes to the Financial Statements
Notes
Consolidated
2012
$’000
2011
$’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 net realisable value
1(e)
12. DERIVATIVE FINANCIAL INSTRUMENTS (CURRENT)
Current Assets
Forward exchange contracts – cash fl ow hedges
Interest rate cap – cash fl ow hedges
Total current derivative fi nancial instrument assets
Current Liabilities
Interest rate swap – cash fl ow hedges
Forward exchange contracts – cash fl ow hedges
Total current derivative fi nancial instrument liabilities
(i) Cash fl ow hedges
6,296
6,296
7,450
7,450
5,707
5,707
17,191
36,644
375
-
375
664
154
818
6,587
6,587
5,610
5,610
9,817
9,817
15,604
37,618
28
320
348
-
79
79
On 5 August 2011, the consolidated entity entered into an agreement to fi x the interest rate applicable to $30m of debt at 5.12% until 25 August
2013. The market value of the cap is recognised as a current liability in the balance sheet. Movements in the fair value of the cap are treated
similarly to those of forward exchange contracts. Movements caused by changes in the intrinsic value of the cap are recognised in Other
Comprehensive Income to the extent that the hedge is effective; those relating to a change in the time value of money are recognised in the
income statement.
The consolidated entity also enters into forward exchange contracts to buy and sell specifi ed amounts of foreign currency in the future at
stipulated exchange rates. The objective of 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.
The accounting policy in regard to forward exchange contracts is detailed in Note 1(c).
64 Select Harvests Annual Report 2012
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
2012
$’000
4,490
323
4,813
2011
$’000
3,000
-
3,000
2012
$
0.99
0.97
Sell United States Dollars Settlement
Buy Australian Dollars
Average Exchange Rate
Less than 6 months
(ii) Credit risk exposures
2012
$’000
9,547
9,547
2011
$’000
2,186
2,186
2012
$
0.97
2011
$
1.04
-
2011
$
1.05
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 and the interest rate cap are the net fair values of these instruments.
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
$4,733,901 (2011: $813,858).
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.
Select Harvests Annual Report 2012 65
65
Select Harvests Annual Report 2012
Notes to the Financial Statements
Notes
Consolidated
2012
$’000
13. OTHER ASSETS (NON-CURRENT)
Prepayments
14. PROPERTY, PLANT AND EQUIPMENT
Buildings
At cost
Accumulated depreciation
Plantation land and irrigation systems (i)
At cost
Accumulated depreciation and impairment
Total land and buildings
Plant and equipment (i)
At cost
Accumulated depreciation and impairment
Capital works in progress
At cost
Total plant and equipment
Total property, plant and equipment
Cost
Accumulated depreciation
Total written down amount
1,047
1,047
11,910
(851)
11,059
75,230
(23,714)
51,516
62,575
70,257
(42,902)
27,355
1,040
28,395
158,437
(67,467)
90,970
14(a)
14(a)
14(a)
14(a)
2011
$’000
1,283
1,283
11,909
(799)
11,110
58,068
(3,490)
54,578
65,688
71,297
(35,601)
35,696
15,139
50,835
156,413
(39,890)
116,523
(i) Items have been reclassifi ed between the plantation land and irrigation systems and plant and equipment asset categories in the 30 June 2011 comparatives.
66 Select Harvests Annual Report 2012
(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
2012
$’000
Buildings
Carrying amount at beginning
Acquired through business combinations
Depreciation expense
Plantation land and irrigation systems
Carrying amount at beginning
Acquired through business combinations
Impairment of land and irrigation systems
Disposals
Depreciation expense
Transfers between classes
Plant and equipment
Carrying amount at beginning
Acquired through business combinations
Additions
Impairment of plant and equipment
Disposals
Transfers between classes
Depreciation expense
Capital works in progress
Carrying amount at beginning
Additions
Transfers between classes
Total written down value
11,110
-
(51)
11,059
54,578
-
(20,000)
(3,211)
(338)
20,487
51,516
35,696
-
349
(4,908)
(1,399)
3,341
(5,724)
27,355
15,139
9,729
(23,828)
1,040
90,970
2011
$’000
9,856
1,300
(46)
11,110
35,974
10,756
-
-
(406)
8,254
54,578
29,775
1,996
-
-
(16)
8,701
(4,760)
35,696
11,955
20,139
(16,955)
15,139
116,523
Select Harvests Annual Report 2012 67
67
Select Harvests Annual Report 2012
Notes to the Financial Statements
15. BIOLOGICAL ASSETS – ALMOND TREES (NON-CURRENT)
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 Victoria NSW and WA.
As at 30 June 2012 the consolidated entity owned a total of 8,232 acres of almond orchards (2011: 6,254 acres) and leased a total of 4,521 acres of
almond orchards (2011: 4,521 acres).
For almond trees on orchards leased on a long term basis by the company, the future economic risks and rewards associated with these trees
remain with Select Harvests. Accordingly, the trees are deemed to be an asset of the company.
During the year ended 30 June 2012, 5,830 metric tonnes of almonds were harvested from these orchards (2011: 4,173 metric tonnes).
These almonds had a fair value less estimated point of sale costs of $24.3 million (2011: $19.8 million).
Carrying amount at 1 July
Transferred to inventory
Change in fair value
Acquired through business combinations
Additions
Carrying amount at 30 June
Consolidated
2012
$’000
49,585
(1,066)
2,508
-
23,144
74,171
2011
$’000
17,363
(1,838)
2,397
12,248
19,415
49,585
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, which are in line with almond
industry sourced data;
• Selling prices are based on long term average trend prices being $6 per kg;
• Growing, processing and selling costs are based on expected future costs;
• Temporary water costs are based on long term average market prices where assets have no permanent water rights attached;
• Cash fl ows are discounted at a rate of 13% (2011: 14%) which takes into account the cost of capital plus an appropriate risk factor; and
• An appropriate rental charge is included to represent the use of the developed land on which the trees are planted.
Price risk
The Group is exposed to commodity price risk in relation to its owned and leased orchards. The Group sells almonds harvested from owned
and leased 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.
(a) Financial risk management strategies
The consolidated entity is exposed to fi nancial risks arising from changes in the Australian dollar price of almonds because export sales are
denominated in US dollars. 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 21 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.
68 Select Harvests Annual Report 2012
16. INTANGIBLES (NON-CURRENT)
Year ended 30 June 2011
Opening net book amount
Acquired through business combinations
Closing net book amount
Year ended 30 June 2012
Opening net book amount
Disposal of permanent water rights
Closing net book amount
Consolidated
Brand
Names*
$’000
Permanent
Water Rights
$’000
Goodwill
$’000
25,995
-
25,995
25,995
-
25,995
2,905
-
2,905
2,905
-
2,905
10,236
7,825
18,061
18,061
(10,778)
7,283
Total
$’000
39,136
7,825
46,961
46,961
(10,778)
36,183
* Brand name assets relate to the “Lucky” brand, which has been assessed as having an indefi nite useful life. This assessment is based on the Lucky brand having
been sold in the market place for over 50 years, being a market leader in the cooking nuts category and remaining a heritage brand.
(a) Impairment tests for goodwill and brand names
Goodwill is allocated to the consolidated entity’s cash-generating units (CGU) identifi ed according to operating 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 forecasts 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 pre-tax weighted average cost of capital of 13%
(2011:13%) 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 2012. If a pre-tax
discount rate of 14% was used instead of 13% the recoverable amount of the goodwill in the Food Products Division would still exceed the
carrying amount of goodwill at 30 June 2012.
(c) Permanent water rights
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.
17. TRADE AND OTHER PAYABLES (CURRENT)
Trade creditors
Other creditors and accruals
18. INTEREST BEARING LIABILITIES (CURRENT)
Secured
Bank overdraft
Working capital facility
Total secured current borrowings
Notes
Consolidated
2012
$’000
13,075
12,290
25,365
995
24,500
25,495
2011
$’000
12,443
14,278
26,721
1,458
15,000
16,458
Select Harvests Annual Report 2012 69
69
Select Harvests Annual Report 2012
Notes to the Financial Statements
(a) Security
Details of the security relating to each of the secured liabilities and further information on the bank overdrafts and bank facilities are set out in
Note 21.
(b) Interest rate risk exposures
Details of the consolidated entity’s exposure to interest rate changes on borrowings are set out in Note 2.
19. PROVISIONS (CURRENT)
Employee benefi ts
20. TRADE AND OTHER PAYABLES (NON-CURRENT)
Interest rate cap payable
21. INTEREST BEARING LIABILITIES (NON-CURRENT)
Term debt facility
Acquisition facility
Assets pledged as security
Consolidated
2012
$’000
2,691
2,691
-
-
42,500
-
42,500
2011
$’000
3,196
3,196
137
137
50,000
14,000
64,000
The bank overdraft and facilities 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
Current tax receivables
Derivative fi nancial instruments
Total current assets pledged as security
Non-current
Floating charge
Prepayments
Property, plant and equipment
Biological assets – almond trees
Permanent water rights
Total non-current assets pledged as security
Total assets pledged as security
70 Select Harvests Annual Report 2012
Consolidated
2012
$’000
1,061
37,398
36,644
1,458
375
76,936
1,047
90,970
74,171
7,283
173,471
250,407
2011
$’000
7,398
39,565
37,618
6,299
348
91,228
1,283
116,523
49,585
18,061
185,452
276,680
Financing arrangements
The consolidated entity and the Company have bank overdraft facilities available to the extent of USD 3,000,000 (2011: USD 3,000,000).
The consolidated entity and the company have a debt facility available to the extent of $115,000,000 as at 30 June 2012 (2011: $115,000,000).
As outlined in note 28, on 22 August 2012 a review of the company’s debt facility agreement with the NAB was completed with the total debt
facility being reduced to $95,000,000 as a result. As at 30 June 2012 the consolidated entity and company have utilised $67,000,000 (2011:
$79,000,000) of the total facility. The split between current and non-current liabilities has been based on the repayment requirements under
the terms of the debt facility.
The current interest rates at balance date are 5.76% on the debt facility, and 0.92% 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 2012.
Consolidated
2012
$’000
2011
$’000
22. DEFERRED TAX LIABILITIES (NON CURRENT)
The balance comprises temporary differences attributable to:
Amounts recognised in profi t and loss
Inventory
Assets at cost
Accruals and provisions
Intangibles
Amounts recognised directly in OCI
Cash fl ow hedges
Amounts recognised directly in equity
Equity raising costs
Total deferred tax liabilities
Carry forward tax losses
Net deferred tax liabilities
Movements:
Opening balance 1 July
Prior period over provision
Charged/(credited) to income statement
Business combination
Charged/(credited) to equity
Carry forward tax losses
Closing balance at 30 June
23. PROVISIONS (NON CURRENT)
Employee entitlements
(a) Aggregate employee entitlements liability
Including current liabilities in Note 19)
(b) Number of full time employees at year end
1,679
28,268
10
871
30,828
153
(632)
30,349
(9,178)
21,171
25,123
1,655
(387)
-
244
(5,464)
21 ,171
937
3,628
571
1,542
28,748
(1,515)
871
29,646
(18)
(791)
28,837
(3,714)
25,123
16,302
4,183
5,585
3,540
(773)
(3,714)
25,123
1,051
4,218
633
Select Harvests Annual Report 2012 71
71
Select Harvests Annual Report 2012
Notes to the Financial Statements
Consolidated
2012
$’000
95,957
95,957
2012
Number of Shares
56,226,960
585,739
-
56,812,699
$’000
95,066
891
-
95,957
2011
Number of Shares
39,761,768
559,917
15,905,275
56,226,960
2011
$’000
95,066
95,066
$’000
47,470
1,748
45,848
95,066
24. 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 plan
• Rights issue
End of Financial year
(c) Performance Rights
Long Term Incentive Plan
The company offered employee participation in short term and long term incentive schemes as part of the remuneration packages for the
employees. 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 long term scheme involves the issue of performance rights to the employee, under the Long Term Incentive Plan. During or since the
end of the fi nancial year, no performance rights (2011: no options) have vested under this plan (refer Note 35 and Directors’ Report for further
details). The market value of ordinary Select Harvests Limited shares closed at $1.30 on 30 June 2012 ($1.84 on 30 June 2011).
(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.
(e) Capital risk management
The group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to
provide returns for shareholders and benefi ts for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets to reduce debt.
72 Select Harvests Annual Report 2012
25. RESERVES AND RETAINED PROFITS
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
Fair value movement in interest rate swap
Fair value movement in interest rate cap
Fair value movement in foreign currency dealings
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 retained earnings
Balance at end of year
(b) Nature and purpose of reserves
(i) Capital reserve
25(a)
25(a)
25(a)
25(a)
25(c)
Consolidated
2012
$’000
3,270
(444)
7,645
-
10,471
2011
$’000
3,270
(43)
7,645
329
11,201
53,901
62,548
3,270
3,270
(43)
(664)
7
256
(444)
7,645
7,645
328
-
(328)
-
3,270
3,270
(222)
-
315
(136)
(43)
7,645
7,645
633
(305)
-
328
The capital reserve was previously used to isolate realised capital profi ts from disposal of non-current assets.
(ii) Asset revaluation reserve
The asset revaluation reserve was used to record increments and decrements in the value of non-current assets. 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 and expensed but not exercised.
(iv) Cash fl ow hedge reserve
The cash fl ow hedge reserve is used to record gains or losses on the fair value movements in the interest rate cap and foreign currency
contracts in a cash fl ow hedge that are recognised directly in equity.
Select Harvests Annual Report 2012 73
73
Select Harvests Annual Report 2012
Notes to the Financial Statements
(c) Retained profi ts
Balance at the beginning of year (i)
Profi t/(loss) attributable to members of Select Harvests Limited
Total available for appropriation
Dividends paid
Transfer from reserves
Balance at end of year
(i) Refer to Note 1 (a)
26. RECONCILIATON OF THE NET PROFIT AFTER INCOME TAX TO THE
NET CASH FLOWS FROM OPERATING ACTIVITIES
Net profi t/(loss)
Non-cash items
Depreciation and amortisation
Biological asset fair value adjustment
Impairment of property, plant and equipment
Discount on acquisition
Net gain on sale of assets
Changes in assets and liabilities
(Increase)/decrease in trade receivables
(Increase) in inventory
(Increase)/decrease in other assets
Increase/(decrease) in trade and other payables
(Increase)/decrease in income tax receivable
Increase/(decrease) in deferred tax liability
(Increase) in deferred tax assets
Increase in employee entitlements
Net cash fl ow from operating activities
Consolidated
2012
$’000
62,548
(4,469)
58,079
(4,506)
328
53,901
(4,469)
6,113
(2,508)
24,908
-
(3,787)
3,118
(2,819)
2,575
(1,352)
4,841
(3,970)
-
(619)
22,031
2011
$’000
54,824
17,674
72,498
(9,950)
-
62,548
17,674
5,212
(2,397)
-
(6,511)
-
(1,663)
(3,269)
(920)
(13,283)
(2,928)
11,785
(3,714)
561
547
Non cash fi nancing activities
During the current year the company issued $890,813 of new equity as part of the Dividend Reinvestment Plan.
74 Select Harvests Annual Report 2012
27. 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
Operating lease payments are for rental of premises, farming and factory equipment.
(ii) 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 lease expenditure contracted for at reporting date
Consolidated
2012
$’000
2011
$’000
9,412
33,173
98,484
141,069
3,411
7,473
7,569
18,453
6,001
25,700
90,915
122,616
15,203
33,413
99,537
148,153
9,408
8,402
8,952
26,762
5,795
25,012
90,584
121,391
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 the consolidated entity
have renewal and fi rst right of refusal clauses. There is also a 20 year lease of 3,100 acres at Hillston with Rural Funds Management.
28. EVENTS OCCURING AFTER BALANCE DATE
On 31 August 2012, the Directors declared a fi nal dividend of 3 cents per share in relation to the fi nancial year ended 30 June 2012 to be paid on
22 October 2012.
On 22 August 2012 a review of the company’s debt facility agreement with the NAB was completed with the total debt facility being reduced
from $115,000,000 to $95,000,000 as a result.
There has been no other matter or circumstance, which has arisen since 30 June 2012 that has signifi cantly affected or may signifi cantly affect:
a) the operations, in fi nancial years subsequent to 30 June 2012, 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 2012, of the consolidated entity.
Select Harvests Annual Report 2012 75
75
Select Harvests Annual Report 2012
Notes to the Financial Statements
29. EARNINGS PER SHARE
The following refl ects the income and share data used in the calculations of basic and diluted earnings per share:
CONSOLIDATED
2012
$’000
(4,469)
2011
$’000
17,674
(4,469)
17,674
Number of shares
2012
2011
56,429,488
52,462,405
56,429,488
52,462,405
Profi t/(loss) attributable to equity holders of the company
used in calculating basic earnings per share
Diluted earnings per share:
Profi t/(loss) 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:
Adjusted weighted average number of ordinary shares
used in calculating diluted earnings per share
30. REMUNERATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
a) Directors
The following persons were directors of Select Harvests Limited during the fi nancial year:
(i) Chairman – non-executive
M Iwaniw
J C Leonard*
(ii) Executive director
J Bird, Managing Director**
(iii) Non-executive directors
F Grimwade
R M Herron
M Carroll
* Retired
** Retired 1 March 2012. Paul Thompson was appointed Managing Director 9 July 2012
1 June 2012
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
P Chambers
M Graham
L Van Driel
T Millen
P Ross
Position
Employer
Chief Financial Offi cer & Company Secretary
Select Harvests Limited
Manager Sales & Marketing
Group Trading Manager
Select Harvests Food Products Pty Ltd
Select Harvests Food Products Pty Ltd
Group Horticultural & Farm Operations Manager
Select Harvests Limited
Operations Manager, Almond Division
Select Harvests Limited
76 Select Harvests Annual Report 2012
(c) Key management personnel compensation
Short term employment benefi ts
Termination benefi ts
Long service leave
Share based payments
Notes
Consolidated
2012
$’000
2,495,566
686,745
13,729
-
3,196,041
2011
$’000
2,677,279
-
31,415
(230,827)
2,477,867
(d) Equity instrument disclosures relating to key management personnel
Number of options/performance rights held by directors and key management personnel
The movement during the fi nancial year in the number of options/performance rights over ordinary shares in the company held, directly or
indirectly, by each director and member of key management personnel is as follows:
2012
Directors
J Bird*
Key Management Personnel
P Chambers
M Graham
L Van Driel
T Millen
P Ross
* Retired 1 March 2012
2011
Directors
J Bird
Key Management Personnel
K Martin (Group Operations Manager)
T Millen
L Van Driel
P Chambers
M Graham
P Ross
Held at
1 July 2011
Granted as
Compensation
Lapsed
Held at
30 June 2012
Unvested at
30 June 2012
539,784
136,426
41,320
116,214
117,685
126,757
-
(539,784)
-
-
173,880
167,940
-
151,740
162,180
(136,426)
(41,320)
(116,214)
(117,685)
(126,757)
173,880
167,940
-
151,740
162,180
173,880
167,940
-
151,740
162,180
Held at
1 July 2010
Granted as
Compensation
Lapsed
Held at
30 June 2011
Unvested at
30 June 2011
450,982
191,927
(103,125)
539,784
539,784
108,881
96,635
95,164
114,271
-
81,408
45,811
41,320
41,320
48,506
41,320
45,349
(154,692)
(20,270)
(20,270)
(26,351)
-
-
-
117,685
116,214
136,426
41,320
126,757
-
117,685
116,214
136,426
41,320
126,757
No performance rights held by directors or key management personnel are vested but not exercisable.
Select Harvests Annual Report 2012 77
77
Select Harvests Annual Report 2012
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:
2012
Directors – Non executive
J C Leonard*
R M Herron
M Carroll
F Grimwade
M Iwaniw
Directors – Executive
J Bird**
Key Management Personnel
M Graham
T Millen
L Van Driel
P Chambers
P Ross
Held at
1 July 2011
Received
on exercise
Other – DRP,
sales & purchases
947,099
40,672
-
30,000
3,000
645,005
-
45,444
-
8,000
-
-
-
-
-
-
-
-
-
-
-
-
-
1,293
-
70,000
97,000
-
-
-
-
14,000
-
* Retired 1 June 2012. Total number of shares shown is as at retirement.
** Retired 1 March 2012. Total number of shares shown is as at retirement.
Held at
1 July 2010
Received
on exercise
Other – DRP,
sales & purchases
Total
947,099
41,965
-
100,000
100,000
645,005
-
45,444
-
22,000
-
Total
5,835,234
947,099
40,672
-
30,000
3,000
5,835,234
663,668
18,772
-
-
-
619,522
-
45,444
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
283,431
21,900
-
30,000
3,000
25,483
645,005
-
-
-
8,000
-
-
45,444
-
8,000
-
2011
Directors – Non executive
M A Fremder*
J C Leonard
R M Herron
M Carroll
F Grimwade**
M Iwaniw***
Directors – Executive
J Bird
Key Management Personnel
M Graham
T Millen
L Van Driel
P Chambers
P Ross
* Retired 27 October 2010
** Commenced 27 July 2010
*** Commenced 27 June 2011
(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
2012 are detailed in Note 32.
78 Select Harvests Annual Report 2012
2012
$
236,750
60,000
296,750
41,500
548,247
589,747
886,497
2011
$
192,450
25,000
217,450
98,530
9,000
107,530
324,980
31. REMUNERATION OF AUDITORS
Audit and other assurance services
Audit and review of fi nancial statements
Other assurance services
Total remuneration for audit and other assurance services
Taxation services
Tax compliance services
Tax consulting
Total remuneration for taxation services
Total remuneration of PricewaterhouseCoopers
32. 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 34.
(c) Key management personnel
Disclosures relating to key management personnel are set out in Note 30.
(d) Director related entity transactions
Services
Select Harvests Limited has an Almond Orchard Management Agreement with Almas Almonds Pty Ltd, a company which manages the Almas
Almonds Partnership in which Mr J C Leonard has an indirect interest. Under the terms of the agreement, Select Harvests Limited is developing
and shall manage 1,782 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 $6,739,958 (2011: $6,409,370) up until 1 June 2012 when the entity ceased to be a related party, 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.
During the fi nancial year the company entered into foreign exchange contracts on behalf of Almas Pty Limited, under conditions which pass
costs and benefi ts to the related parties under normal commercial terms.
33. SEGMENT INFORMATION
Segment products and locations
The segment reporting refl ects the way information is reported internally to the Chief Executive Offi cer.
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 is split into two segments:
» Company Orchards - the growing, processing and sale of almonds to the food industry from company owned almond orchards; and
» Managed 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 2012 79
79
Select Harvests Annual Report 2012
Notes to the Financial Statements
y
t
i
t
n
E
d
e
t
a
d
i
l
o
s
n
o
C
)
0
0
0
$
(
’
d
n
a
s
n
o
i
t
a
n
m
i
i
l
E
e
t
a
r
o
p
r
o
C
)
0
0
0
$
(
’
n
o
i
s
i
v
i
D
d
n
o
m
A
l
l
a
t
o
T
s
d
r
a
h
c
r
O
y
n
a
p
m
o
C
n
o
i
s
i
v
i
D
d
n
o
m
A
l
s
d
r
a
h
c
r
O
d
e
g
a
n
a
M
n
o
i
s
i
v
i
D
d
n
o
m
A
l
s
t
c
u
d
o
r
P
d
o
o
F
)
0
0
0
$
(
’
)
0
0
0
$
(
’
)
0
0
0
$
(
’
)
0
0
0
$
(
’
,
6
1
3
8
4
2
,
6
6
7
6
4
2
-
-
8
3
3
3
1
1
,
2
7
6
9
0
1
,
8
3
5
8
,
7
2
2
4
1
,
0
0
8
4
0
1
,
5
4
4
5
9
,
8
7
9
4
3
1
,
4
9
0
7
3
1
,
-
-
0
0
,
6
1
3
8
4
2
6
6
7
,
6
4
2
)
4
9
5
6
(
,
)
4
9
5
,
6
(
)
8
8
8
9
(
,
)
8
8
8
9
(
,
4
9
5
6
,
8
8
8
9
,
2
3
9
9
1
1
,
0
6
5
,
9
1
1
4
9
5
6
,
2
3
1
,
5
1
8
8
8
9
,
5
1
1
,
4
2
-
-
-
-
0
0
8
4
0
1
,
5
4
4
,
5
9
8
7
9
4
3
1
,
4
9
0
,
7
3
1
1
1
0
2
2
1
0
2
1
1
0
2
2
1
0
2
1
1
0
2
2
1
0
2
1
1
0
2
2
1
0
2
1
1
0
2
2
1
0
2
1
1
0
2
2
1
0
2
2
4
6
,
1
6
5
5
4
,
5
8
3
2
4
2
7
5
2
,
1
4
1
3
4
,
5
6
4
4
1
3
4
,
2
9
7
-
-
-
8
5
9
9
4
2
,
2
2
3
,
1
5
2
)
9
0
2
6
(
,
)
6
4
6
9
(
,
9
8
1
,
1
2
1
4
7
8
3
2
1
,
7
9
5
,
5
1
9
2
4
8
2
,
2
9
5
,
5
0
1
5
4
4
,
5
9
8
7
9
4
3
1
,
4
9
0
,
7
3
1
2
6
8
,
1
2
)
5
9
4
2
(
,
)
0
1
3
3
(
,
)
1
7
9
4
(
,
3
6
4
,
1
2
)
1
5
5
3
(
,
9
1
8
9
,
)
3
8
8
2
1
(
,
4
4
6
,
1
1
2
3
3
9
,
9
0
7
3
,
7
2
0
6
,
0
0
5
8
3
)
4
7
7
3
(
,
3
7
4
8
1
,
0
0
1
4
2
)
9
8
4
6
(
,
)
3
4
7
,
8
(
5
8
3
)
4
7
7
3
(
,
)
9
9
6
6
(
,
1
4
2
)
9
8
4
6
(
,
)
9
1
2
,
1
1
(
0
0
-
-
0
0
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
6
4
,
1
2
)
1
5
5
,
3
(
9
1
8
9
,
)
3
8
8
,
2
1
(
4
4
6
,
1
1
2
3
3
9
,
9
0
7
,
3
7
2
0
6
,
0
8
5
5
0
3
,
8
0
3
9
7
2
,
7
6
0
,
1
1
)
4
7
3
(
7
2
0
5
2
2
,
0
3
8
,
1
1
2
5
6
7
6
3
1
,
7
7
9
8
1
1
,
4
7
0
3
8
,
0
7
2
4
6
,
5
5
2
3
4
,
8
0
9
2
4
,
1
9
1
,
4
3
5
3
3
8
2
,
8
4
2
1
2
5
,
3
1
1
,
6
8
4
1
5
3
1
0
0
1
5
2
7
3
3
,
3
2
9
7
2
,
0
4
3
4
,
4
3
3
5
,
.
6
8
4
9
6
,
2
5
8
7
6
,
6
3
4
0
1
,
9
9
7
,
1
1
8
1
4
4
2
7
7
7
2
9
7
6
l
a
n
r
e
t
x
e
m
o
r
f
e
u
n
e
v
e
r
l
a
t
o
T
s
r
e
m
o
t
s
u
c
e
u
n
e
v
e
r
t
n
e
m
g
e
s
r
e
t
n
I
e
u
n
e
v
e
r
t
n
e
m
g
e
s
l
a
t
o
T
s
r
e
m
o
t
s
u
c
o
t
s
e
c
i
v
r
e
s
f
o
s
e
l
a
S
y
r
i
t
n
e
c
i
m
o
n
o
c
e
e
h
t
e
d
i
s
t
u
o
e
u
n
e
v
e
R
e
u
n
e
v
e
r
r
e
h
t
O
e
u
n
e
v
e
r
l
a
t
o
T
T
B
E
I
x
a
t
e
r
o
f
e
b
t
fi
o
r
p
g
n
i
t
a
r
e
p
O
d
e
s
n
e
p
x
e
s
t
s
o
c
e
c
n
a
n
i
F
x
a
t
e
m
o
c
n
i
e
r
o
f
e
b
t
fi
o
r
P
d
e
v
i
e
c
e
r
t
s
e
r
e
t
n
I
)
s
t
b
e
d
y
n
a
p
m
o
c
-
r
e
t
n
i
i
g
n
d
u
l
c
x
e
(
)
s
t
b
e
d
y
n
a
p
m
o
c
-
r
e
t
n
i
i
g
n
d
u
l
c
x
e
(
s
e
i
t
i
l
i
b
a
i
l
t
n
e
m
g
e
S
n
o
i
t
a
s
i
t
r
o
m
a
d
n
a
n
o
i
t
a
i
c
e
r
p
e
D
s
t
e
s
s
a
t
n
e
m
g
e
s
f
o
t
n
e
r
r
u
c
-
n
o
n
f
o
n
o
i
t
i
s
i
u
q
c
A
s
t
e
s
s
a
t
n
e
m
g
e
s
s
t
e
s
s
a
t
n
e
m
g
e
S
80 Select Harvests Annual Report 2012
:
e
l
b
a
t
g
n
w
o
i
l
l
o
f
e
h
t
n
i
d
e
c
n
e
r
e
f
e
r
s
i
r
e
c
fi
f
O
e
v
i
t
u
c
e
x
E
f
e
i
h
C
e
h
t
o
t
d
e
d
i
v
o
r
p
n
o
i
t
a
m
r
o
f
n
i
t
n
e
m
g
e
s
e
h
T
)
.
t
n
o
c
(
N
O
I
T
A
M
R
O
F
N
I
T
N
E
M
G
E
S
.
3
3
.
s
t
s
o
c
n
o
i
t
c
a
s
n
a
r
t
n
i
k
6
7
7
$
d
n
a
,
s
d
r
a
h
c
r
o
d
e
h
s
i
l
b
a
t
s
e
f
o
s
n
o
i
t
i
s
i
u
q
c
a
e
h
t
m
o
r
f
g
n
i
s
i
r
a
t
n
u
o
c
s
i
d
m
3
8
$
a
s
e
d
u
l
c
n
.
i
s
d
r
a
h
c
r
o
n
a
i
l
a
r
t
s
u
A
n
r
e
t
s
e
W
s
’
y
n
a
p
m
o
C
e
h
t
o
t
n
o
i
t
a
l
e
r
n
i
s
s
o
l
t
n
e
m
r
i
a
p
m
i
.
m
0
0
2
$
a
s
e
d
u
l
c
n
i
.
s
t
e
s
s
a
g
n
i
s
s
e
c
o
r
p
d
n
o
m
a
o
t
n
o
i
t
a
l
e
r
n
l
i
s
s
o
l
t
n
e
m
r
i
a
p
m
i
.
m
9
4
$
a
s
e
d
u
l
c
n
i
I
T
B
E
s
d
r
a
h
c
r
o
d
e
g
a
n
a
M
2
1
0
2
I
T
B
E
s
d
r
a
h
c
r
o
y
n
a
p
m
o
C
2
1
0
2
I
T
B
E
s
d
r
a
h
c
r
o
y
n
a
p
m
o
C
1
1
0
2
.
l
e
v
e
l
n
o
i
s
i
v
i
d
d
n
o
m
a
l
l
a
t
o
t
e
h
t
t
a
d
e
t
r
o
p
e
r
d
n
a
d
e
g
a
n
a
m
e
r
a
n
o
i
s
i
v
i
d
d
n
o
m
a
e
h
t
n
l
i
s
e
i
t
i
l
i
b
a
i
l
d
n
a
s
t
e
s
s
A
.
s
e
l
a
s
l
a
t
o
t
l
f
o
%
2
1
s
h
t
r
o
w
o
o
W
d
n
a
%
7
1
s
e
l
o
C
,
l
%
3
3
m
a
O
e
d
u
l
c
n
i
s
r
e
m
o
t
s
u
c
r
o
j
a
m
o
t
s
e
l
a
S
34. CONTROLLED ENTITIES
Parent Entity:
Select Harvests Limited (i)
Subsidiaries of Select Harvests Limited:
Kyndalyn Park Pty Ltd (i)
Select Harvests Food Products Pty Ltd (i)
Meriram Pty Ltd (i)
Kibley Pty Ltd (i)
(i) Members of extended closed group
35. EMPLOYEE BENEFITS
Long Term Incentive Plan
Country of Incorporation
Percentage Owned (%)
2012
2011
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
The Group offers executive directors and senior executives the opportunity to participate in the long term incentive plan (LTI Plan) involving
the issue of performance rights to the employee under the LTI Plan. The LTI Plan provides for the offer of a parcel of performance rights
with a three year life to participating employees on an annual basis. One third of the rights vest in each year, with half of the rights vesting
upon achievement of earnings per share (EPS) growth targets and the other half vesting upon achievement of total shareholder return (TSR)
targets. The EPS growth targets are based on the average growth of the company’s EPS over the three years prior to vesting. The TSR targets
are measured based on the company’s average TSR compared to the TSR of a peer group of ASX listed companies over the three years prior to
vesting. The performance targets and vesting proportions are as follows:
MEASURE
EPS
Below 5% growth
5% growth
5.1% – 6.9% growth
7% or higher growth
TSR
Below the 60th percentile*
60th percentile*
61st – 74th percentile*
At or above 75th percentile*
* Of the peer group of ASX listed companies
PROPORTION OF
RIGHTS TO VEST
Nil
25%
Pro rata vesting
50%
Nil
25%
Pro rata vesting
50%
The assessed fair value at grant date is determined using a Black-Scholes option pricing model that takes into account the term of the rights,
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 right.
Select Harvests Annual Report 2012 81
81
Select Harvests Annual Report 2012
Notes to the Financial Statements
$
$
r
e
b
m
u
N
$
d
e
t
s
e
V
e
u
s
s
I
n
O
r
e
b
m
u
N
r
e
b
m
u
N
r
e
b
m
u
N
r
e
b
m
u
N
e
u
l
a
v
r
i
a
F
e
t
a
g
e
r
g
g
a
e
u
l
a
v
r
i
a
F
e
r
a
h
s
r
e
p
s
e
r
a
h
S
d
e
u
s
s
i
s
d
e
e
c
o
r
P
d
e
v
i
e
c
e
r
d
n
e
t
a
e
c
n
a
l
a
B
r
a
e
y
e
h
t
f
o
d
e
s
i
c
r
e
x
E
e
h
t
g
n
i
r
u
d
r
a
e
y
d
e
t
i
e
f
r
o
F
e
h
t
g
n
i
r
u
d
r
a
e
y
d
e
t
n
a
r
G
e
h
t
g
n
i
r
u
d
t
a
e
c
n
a
l
a
B
e
h
t
f
o
t
r
a
t
s
r
a
e
y
r
a
e
y
e
s
i
c
r
e
x
E
e
c
i
r
P
e
t
a
d
y
r
i
p
x
E
e
t
a
d
t
n
a
r
G
-
-
-
0
4
7
5
5
6
,
-
-
-
-
-
0
4
7
5
5
6
,
-
)
9
7
8
4
2
3
(
,
,
)
2
7
6
2
9
3
(
,
)
1
4
7
9
0
4
(
-
-
-
9
7
8
4
2
3
,
,
2
7
6
2
9
3
,
1
4
7
9
0
4
-
5
1
.
5
$
3
8
2
$
.
.
7
2
3
$
1
1
0
2
/
0
1
/
1
3
8
0
0
2
/
9
0
/
0
2
2
1
0
2
/
0
1
/
9
2
9
0
0
2
/
9
0
/
8
2
3
1
0
2
/
0
1
/
8
2
0
1
0
2
/
9
0
/
7
2
5
1
0
2
/
6
0
/
9
2
2
1
0
2
/
6
0
/
9
2
:
w
o
l
e
b
t
u
o
t
e
s
e
r
a
r
a
e
y
e
h
t
g
n
i
r
u
d
s
t
n
e
m
e
v
o
m
d
n
a
e
t
a
d
g
n
i
t
r
o
p
e
r
e
h
t
i
f
o
g
n
d
n
e
d
n
a
g
n
n
n
g
e
b
e
h
t
i
i
i
t
a
s
e
r
a
h
s
y
r
a
n
d
r
o
d
e
u
s
s
i
n
u
r
e
v
o
s
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
/
s
n
o
i
t
p
o
f
o
s
l
i
a
t
e
D
i
s
e
r
a
h
s
y
r
a
n
d
r
o
d
e
u
s
s
i
n
u
r
e
v
o
s
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
/
s
n
o
i
t
p
o
f
o
y
r
a
m
m
u
S
)
.
t
n
o
c
(
S
T
I
F
E
N
E
B
E
E
Y
O
L
P
M
E
.
5
3
-
-
-
-
-
-
-
-
e
u
l
a
v
r
i
a
F
e
t
a
g
e
r
g
g
a
$
-
-
-
-
-
-
-
-
e
u
l
a
v
r
i
a
F
e
r
a
h
s
r
e
p
$
-
-
-
-
-
-
-
-
s
e
r
a
h
S
d
e
u
s
s
i
r
e
b
m
u
N
-
-
-
-
-
-
-
-
s
d
e
e
c
o
r
P
d
e
v
i
e
c
e
r
$
-
-
-
-
-
-
-
-
.
e
t
a
d
e
s
i
c
r
e
x
e
e
h
t
n
o
g
n
d
a
r
t
i
f
o
e
s
o
l
c
e
h
t
t
a
s
a
X
S
A
e
h
t
n
o
s
e
r
a
h
s
s
’
y
n
a
p
m
o
c
e
h
t
f
o
e
c
i
r
p
t
e
k
r
a
m
e
h
t
s
i
d
o
i
r
e
p
g
n
i
t
r
o
p
e
r
e
h
t
g
n
i
r
u
d
s
n
o
i
t
p
o
e
h
t
g
n
i
s
i
c
r
e
x
e
f
o
t
l
u
s
e
r
a
s
a
d
e
u
s
s
i
s
e
r
a
h
s
f
o
e
u
a
v
r
i
a
f
e
h
T
l
d
e
t
s
e
V
e
u
s
s
I
n
O
r
e
b
m
u
N
r
e
b
m
u
N
r
e
b
m
u
N
r
e
b
m
u
N
d
n
e
t
a
e
c
n
a
l
a
B
r
a
e
y
e
h
t
f
o
d
e
s
i
c
r
e
x
E
e
h
t
g
n
i
r
u
d
r
a
e
y
d
e
t
i
e
f
r
o
F
e
h
t
g
n
i
r
u
d
r
a
e
y
d
e
t
n
a
r
G
e
h
t
g
n
i
r
u
d
t
a
e
c
n
a
l
a
B
e
h
t
f
o
t
r
a
t
s
r
a
e
y
r
a
e
y
e
s
i
c
r
e
x
E
e
c
i
r
P
e
t
a
d
y
r
i
p
x
E
e
t
a
d
t
n
a
r
G
-
9
7
8
4
2
3
,
,
2
7
6
2
9
3
,
1
4
7
9
0
4
6
6
3
$
.
-
-
-
-
-
)
9
7
3
0
1
2
(
,
)
0
0
5
7
3
(
,
)
6
3
5
5
4
(
,
)
1
1
8
5
4
(
,
,
2
5
5
5
5
4
-
-
-
-
9
7
3
0
1
2
,
,
9
7
3
2
6
3
8
0
2
8
3
4
,
.
4
7
9
$
5
1
.
5
$
3
8
2
$
.
.
7
2
3
$
0
1
0
2
/
0
1
/
1
3
1
1
0
2
/
0
1
/
1
3
2
1
0
2
/
0
1
/
9
2
3
1
0
2
/
0
1
/
8
2
7
0
0
2
/
8
0
/
7
2
8
0
0
2
/
9
0
/
0
2
9
0
0
2
/
9
0
/
8
2
0
1
0
2
/
9
0
/
7
2
3
4
7
$
.
.
7
2
3
$
0
1
.
5
$
e
c
i
r
P
e
s
i
c
r
e
x
E
e
g
a
r
e
v
A
d
e
t
h
g
i
e
W
2
1
0
2
1
1
0
2
82 Select Harvests Annual Report 2012
35. EMPLOYEE BENEFITS (continued)
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
(b) Expenses arising from share-based payment transactions
Consolidated
2012
$
-
2011
$
-
Total expenses arising from share-based payment transactions recognised during the period as part of employee benefi t expense were as
follows:
Performance rights/options granted under employee option plan
36. CONTINGENT LIABILITIES
Cross guarantees given by the entities comprising the consolidated entity are detailed in Note 37.
37. PARENT ENTITY FINANCIAL INFORMATION
(a) Summary fi nancial information
The individual fi nancial statements for the parent entity show the following aggregate amounts:
Balance Sheet
Current Assets
Total Assets
Current Liabilities
Total Liabilities
Shareholders’ Equity
Issued Capital
Reserves
Capital Reserve
Cash fl ow hedge reserve
Options Reserve
Retained profi ts
Profi t or Loss for the year
Total comprehensive income
Consolidated
2012
$
-
-
2011
$
(305,000)
(305,000)
2012
$’000
1,726
2011
$’000
19,266
329,885
308,226
19,768
17,987
226,249
206,887
95,957
3,270
(444)
121
4,732
103,636
2,015
1,614
95,066
3,270
(43)
329
2,717
101,339
1,842
2,021
Select Harvests Annual Report 2012 83
83
Select Harvests Annual Report 2012
Notes to the Financial Statements
(b) Tax consolidation legislation
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.
(c) Guarantees entered into by parent entity
Each entity within the consolidated group has entered into a cross deed of fi nancial guarantee in respect of bank overdrafts and loans of
the group.
Loans are made by Select Harvests Limited to controlled entities under normal terms and conditions.
84 Select Harvests Annual Report 2012
Directors’ Declaration
In the directors’ opinion:
(a) the fi nancial statements and Notes set out on pages 39 to 84 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 consolidated entity’s fi nancial position as at 30 June 2012 and of its 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
(c) at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group identifi ed in note
34 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee
described in note 37.
Note 1(a) confi rms that the fi nancial statements also comply with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
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.
M Iwaniw
Chairman
Melbourne, 31 August 2012
Select Harvests Annual Report 2012 85
85
Select Harvests Annual Report 2012
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 2012, and the income statement, the statement of comprehensive income, statement of
changes in equity and statement of cash fl ows for the year ended on that date, a summary of signifi cant accounting
policies, other explanatory notes and the directors’ declaration for the Select Harvests 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 of the fi nancial report that gives a true and fair view
in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the
directors determine is necessary to enable the preparation of the fi nancial report that is free from material misstatement,
whether due to fraud or error. In Note1, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the fi nancial statements comply 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.
We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinions.
PricewaterhouseCoopers, ABN 52 780 433 757
Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation
86 Select Harvests Annual Report 2012
Independent auditor’s report to the members of
Select Harvests Limited (continued)
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) giving a true and fair view of the consolidated entity’s fi nancial position as at 30 June 2012 and of its
performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001; and
(b) the fi nancial report 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 the directors’ report for the year ended 30 June 2012. 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 2012 complies with section
300A of the Corporations Act 2001.
PricewaterhouseCoopers
John O’Donoghue
Partner
Melbourne
31 August 2012
Select Harvests Annual Report 2012 87
87
Select Harvests Annual Report 2012
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 2012.
(a) Distribution of equity securities
The number of shareholders, by size of holding, in each class of share is:
Number of Ordinary Shares
1 to 1,000
Number of Shareholders
1,026
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
1,239
482
569
43
The number of shareholders holding less than a marketable parcel of shares is:
Number of Ordinary Shares
72,888
Number of Shareholders
457
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
1
2
Thorney Investments
Fidelity Mgt & Research
3 Credit Suisse Asset Mgt
4 Deutsche Bank Private Wealth Mgt
5 Deutsche Asset Mgt Americas
6
Mr Maxwell Fremder
7 Dimensional Fund Advisors
8 Myer Family Company
9 Wilson Asset Mgt
10 Mr Curt Leonard
11 Hadley Family
12 Hayberry Investments
13 Mr Rodney M Fitzroy
14 Mr Petrus Middendorp
15 Realindex Investments
16 Mr & Mrs Franklyn R Brazil
17 Mr William M Matthes
18 Mr & Mrs Gabriel M Ripka
19 Mr John O Lawless
20 Mr Anton K Middendorp
(c) Substantial shareholders
The names of substantial shareholders are:
Thorney Investments
Fidelity Mgt & Research
(d) Voting rights
Listed Ordinary Shares
Number of Shares
6,200,190
Percentage of Ordinary
10.9
5,529,973
2,384,000
2,261,754
2,149,246
1,936,671
1,591,703
1,578,215
1,558,209
947,099
881,844
727,421
579,244
541,878
500,318
500,000
500,000
286,000
285,000
280,945
9.7
4.2
4.0
3.8
3.4
2.8
2.8
2.7
1.7
1.6
1.3
1.0
1.0
0.9
0.9
0.9
0.5
0.5
0.5
Number of Shares
6,200,190
5,529,973
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
The Company is listed on the Australian Stock Exchange. The home exchange is Melbourne.
88 Select Harvests Annual Report 2012
Corporate
Information
Select Harvests Limited
ABN 87 000 721 380
Directors
M Iwaniw (Chairman)
P Thompson (Managing Director)
M Carroll (Non-Executive Director)
R M Herron (Non-Executive Director)
F Grimwade (Non-Executive Director)
P Riordan (Non-Executive Director)
Company Secretary
P Chambers
Registered Offi ce
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
Minter Ellison Lawyers
Bankers
National Australia Bank Limited
Auditor
PricewaterhouseCoopers
Share Register
Computershare Investor Services Pty Limited
GPO Box 242
MELBOURNE VIC 3001
Telephone (03) 9415 4000
Facsimile (03) 9473 2555
www.investorcentre.com
Internet Address
www.selectharvests.com.au
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