A N N U A L R E P OR T 2 0 21
Y E A R E N D E D 3 0 S E P TE M B E R 2 0 21
Supplies bulk product
to major bakeries,
manufacturers and
wholesalers who
depend on quality
and service
Product range
almonds and other
nuts, dried fruit, seeds,
nut pastes, pralines
and muesli
Bulk and
convenient packs
Products sold to
local and overseas
food manufacturers,
wholesalers,
distributors and
re-packers
Select Harvests Limited
ABN 87 000 721 380
PO Box 5
Thomastown VIC 3074
360 Settlement Road
Thomastown VIC 3074
T (03) 9474 3544
F (03) 9474 3588
E info@selectharvests.com.au
www.selectharvests.com.au
ASX ticker code: SHV
Select Harvests LinkedIn
company/select-havests-pty-ltd
A N N U A L R E P OR T 2 0 21
Y E A R E N D E D 3 0 S E P TE M B E R 2 0 21
DELIVERING ON GROWTH
WHETHER SOLD IN INDIA, CHINA OR ELSEWHERE IN THE WORLD, OUR
ALMONDS CAN BE TRACED TO THE ORCHARD WHERE THEY WERE GROWN.
2
2
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021
One of the world's largest almond growers,
with a geographically diverse 9,262 hectare
almond orchard portfolio.
Strategic Priorities:
• Optimise the Almond Base
Increase productivity and achieve sustainably high
yields from our growing almond orchard base
• Grow our Brands
Grow our industrial brands, aligned to the increasing
consumption of plant based foods
• Expand Strategically
Pursue value accretive acquisitions that align with our
core competencies in the plant based agrifoods sector.
GEOGRAPHIC DIVERSITY OF SELECT HARVESTS ORCHARDS
SOUTHERN
REGION
PARINGA
WAIKERIE
LAKE
CULLULLERAINE
HILLSTON
EUSTON
Adelaide
LOXTON
ROBINVALE
NORTHERN
REGION
GRIFFITH
Sydney
CENTRAL
REGION
THOMASTOWN
Melbourne
PROCESSING CENTRES
SELECT HARVESTS ORCHARDS
PIANGIL ALMOND ORCHARD
AUSTRALIA
9,262 HA
(22,886 ACRES)
TOTAL
PLANTED AREA
2,670 HA
(6,597 ACRES)
4,644HA
(11,475 ACRES)
1,948 HA
(4,814 ACRES)
SOUTHERN REGION
PLANTED AREA
CENTRAL REGION
PLANTED AREA
NORTHERN REGION
PLANTED AREA
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 3
Select Harvests is one of the world's largest
almond growers, and a leading manufacturer,
processor and marketer of almond products.
We supply the Australian retail and industrial
markets plus export almonds globally.
largest almond
We are Australia’s second
producer and marketer with core capabilities
across: Horticulture, Orchard Management,
Almond Processing, Sales and Marketing.
These capabilities enable us to add value
throughout the value chain.
Our Operations
Our geographically diverse almond orchards
are located in Victoria, South Australia and
New South Wales, with a portfolio that includes
more than 9,262 hectares (22,886 acres) of
company owned and leased almond orchards
and land suitable for planting. These orchards,
plus other independent orchards, supply our
state-of-the-art processing facility at Carina
West near Robinvale, Victoria.
Our Carina West processing facility has the
capacity to process above 30,000MT of
almonds in the peak season and is capable of
meeting the ever increasing demand for in-
shell, kernel and value-added products.
Export
Select Harvests is one of Australia’s largest
almond exporters and continues to build
fast growing
strong relationships
markets of
India and China, as well as
maintaining established routes to markets in
Asia, Europe and the Middle East.
in the
Industrial Value-Adding Almond Business
Demand for Select Harvests value-added
industrial almond products continues to grow
under our Renshaw and Allinga Farms brands.
Our industrial almond business supplies a full
range of premium value-added almond products
(blanched, roast, sliced, diced, meal and paste)
in multiple customer categories (beverage,
bakery, confectionery, cereal, snacking, health,
dairy (ice cream), re-packers and wholesalers)
to over 600 customers globally.
Our Vision
To be a leader in the supply of better for you
plant-based foods.
Company
Profile
STRATEGIC INVESTMENT IN OUR ORCHARDS
TONNAGE TOTALS
WEIGHT OF KERNELS PER ANNUM
28,250
MT
23,250
MT
22,690
MT
15,700
MT
14,500
MT
14,200
MT
14,100
MT
10,500
MT
2014
2015
2016
2017
2018
2019
2020
2021
METRIC
TONNES
92
,000
82
,000
72
,000
62
,000
52
,000
,00042
32
,000
22
,000
12
,000
,00002
91
,000
81
,000
71
,000
61
,000
51
,000
,00041
31
,000
21
,000
11
,000
,00001
9
,000
8
,000
7
,000
6
,000
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 4
Contents
3 Company Profile
5 Performance Summary
6 Chair & Managing Director’s Report
8 Business Highlights
9
In control of our destiny
1 0 2021/22 Triple Bottom Line Focus Areas
1 1 Triple Bottom Line in Action:
Co-Waste Projects
1 2 Executive Team
1 3 Board of Directors
1 4 Historical Summary
1 5 Financial Report
1 6 Directors' Report
2 4 Remuneration Report
3 6 Auditor's Independence Declaration
3 7 Annual Financial Report
3 8 Statement of Comprehensive Income
3 9 Statement of Financial Position
4 0 Statement of Changes in Equity
4 1 Statement of Cash Flows
4 2 Notes to the Financial Statements
7 1 Directors' Declaration
7 2
Independent Auditor’s Report
7 9 ASX Additional Information
8 1 Corporate Information
Using technology to
improve traceability
Being one of Australia's largest almond
exporters, it is important to be able to
trace our almonds sold around the world
to the orchard where they were grown.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021
Performance Summary
5
Results - Key Financial Data
$'000 (EXCEPT WHERE INDICATED)
REPORTED RESULT (AIFRS)
VARIANCE
VARIANCE (%)
Revenue from Continuing Operations
Almond Crop Volume (MT)
Almond Price (A$/kg)
EBITDA from Continuing Operations1
Depreciation & Amortisation
EBIT1
From Continuing Operations
From Discontinued Operations
Underlying EBIT1
One off items from discontinued operations
Reported EBIT1
Interest Expense
Profit Before Tax
Tax Expense
Net Profit After Tax (NPAT)
Earnings Per Share (EPS) (cents)
Dividend Per Share (DPS) - Interim (cents)
Dividend Per Share (DPS) - Final (cents)
DPS - Total (cents)
Net Debt (inc. lease liabilities)
Gearing (inc. lease liabilities)
Share Price (A$/Share as at 30 September)
Market Capitalisation (A$M)
41,487
5,000
(0.70)
(9,286)
(2,675)
(11,961)
389
(11,572)
(8,989)
(20,561)
(209)
(20,770)
10,885
(9,885)
22.2%
21.5%
(9.3%)
(14.7%)
(14.5%)
(26.8%)
6.7%
(29.9%)
(>100%)
(53.1%)
(10.1%)
(56.7%)
93.3%
(39.5%)
(13.3)
(51.2%)
FY2021
228,595
28,250
6.80
53,717
(21,111)
32,606
(5,452)
27,154
(8,989)
18,165
(2,273)
15,892
(776)
15,116
12.7
0
8
8
351,223
66.7%
8.29
996.7
FY2020
187,108
23,250
7.50
63,003
(18,436)
44,567
(5,841)
38,726
0
38,726
(2,064)
36,662
(11,661)
25,001
26.0
9
4
13
322,311
79.6%
5.57
538.3
Note:
It should be reiterated that, as is always the case at the time the Company develops the crop value estimate, there is the potential for changes to occur both in yield outcomes
(as the crop harvest and processing progress) and the pricing environment (driven by almond market or currency) shift.
Definitions:
1 EBITDA & EBIT are Non-IFRS measures used by the company are relevant because they are consistent with measures used internally by management and by some in the investment
community to assess the operating performance of the business. The non-IFRS measures have not been subject to audit or review.
After the shake: Hull split occurs early January to late February and harvested typically between February and April.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021
6
Chair & Managing Director’s Report
The 2021 crop yields were again higher than
industry average. Following two very high
yielding years the mature orchards’ yields
were slightly down on 2020 crop rates. The
three year average yield rates remain very
encouraging. The immature orchards again
delivered yields above business case levels as
their rate of increase slows as they near full
maturity. The improved level of quality and
higher volume of inshell produced minimised
the impact of the lower FY2021 almond price.
Crop production costs increased 2.9% as a
higher percentage of costs are recognised
based on the maturity profile of the immature
orchards. The benefit of current
lower
temporary water entitlement prices will flow
into FY2022’s results as a large volume of
FY2020 carryover water was used to grow
the FY2021 crop.
The continuing industrial almond value-adding
results were very encouraging. Despite
almond prices decreasing the additional
volumes transacted through this area led to
higher a higher EBIT contribution in FY2021.
The discontinuing consumer branded results
were lower with continued margin pressure
applied by the major retailer’s private label
alternatives. This was partially offset by cost
saving process
the
Thomastown processing facility.
Due to the sale and shut down of the consumer
branded food business the Company has
recognised $9.0 million in non-recurring
costs to cover planned redundancies, asset
impairments and other restructuring costs.
The Company’s balance sheet remains in a very
strong position. Net bank debt remains below
$100 million and bank debt gearing levels are
below 20% leaving us well placed to pursue
further growth opportunities as they arise.
in FY2021
Increased shipping of product
delivered a sizeable increase in operating
cashflow to $38.2 million (FY2020 $13.2
million). This assisted in achieving the Piangil
driven increase in investing cashflows.
As a result of the Company’s solid financial
position, and the expectation of future levels
of profitability, the Directors are pleased to
declare an $0.08 fully franked dividend for the
FY2021 year.
improvements at
SAFETY, SUSTAINABILITY & WELLBEING
Select Harvests’ Zero Harm Safety & Wellbeing
strategy holds the aim of improving our safety
performance by 15% per annum until we
operate in a zero-harm environment. It holds
many elements to achieve this, one example
being a focus on reporting hazards, so they
don’t become
incidents. This proactive
approach is important, and is supported by
Hazard Identifications increasing by 152%.
In the COVID-19 environment it might seem
that all wellbeing
issues would relate to
implementing appropriate protocols and
procedures to protect our employees in the
face of this risk, however our focus on wellbeing
is wider. Two new enhanced employee benefit
policies are now available to our people:
company-funded Paid Parental Leave and
company-funded Community Service Leave.
integrated
Achievements, challenges and optimism – all these words have their place in considering
Select Harvests’ performance in FY2021 and the situation for the company at time of
writing (November 2021).
Achievements came
in the form of two
significant strategic activities successfully
executed; the acquisition of the Piangil orchard
and divestment of the Lucky and Sunsol Brands.
On 1 October 2020, Select Harvests announced
it had entered into an Implementation Deed
and Sale Agreements to acquire the 1,566Ha
Piangil Almond Orchard, along with a $120
million capital raising to assist in funding the
acquisition. Completed in December 2020, the
acquisition increased our planted area by 20%.
We have since invested in irrigation infrastructure
immature portion of the
to support the
orchard and successfully
the
additional area into our business, with the first
year’s crop meeting our business case volumes.
On 30 August 2021, following an extensive
review, the sale of the Lucky and Sunsol brands
– the consumer branded and non-almond
segments of our business – was announced to
Prolife Foods. The Thomastown facility will
close during FY2022 and the capital released
will be reinvested in our almond value-adding
capability and capacity at Carina West.
Optimism is present because thanks to the
dedication, ongoing adaptability and sheer effort
by our employees, the company weathered a
second year of COVID-19 operating restrictions
very well. Our 2021 crop, including production
from the Piangil orchard, met our forecast of
28,250 tonnes.
The quality of the crop was good. A combination
of the good quality and our investment in the
upgrading of our inshell sorting technology
resulted in 28% of the crop being marketed as
inshell into the China and India markets. Add
to this the reality that almonds are a health
food and the global interest in consuming
healthy, plant-based foods continues to grow
– our optimism is justified.
Challenges, some of them industry-specific
and others global, clearly affected the business
as our FY2021 results
indicate and some
challenges are still present.
The almond market has faced significant
downturns after California last year produced
a record 3.2 billion pound crop that was
aggressively sold to export, driving export
almond prices to extremely low levels, which
in turn resulted in record monthly US shipments.
The silver lining was that demand for almonds
grew by an unprecedented 22% as buyers took
advantage of the low prices. While prices
recovered somewhat for a period, shipping
backlogs have turned prices lower again.
Global container shipping difficulties wrought
by the effects of COVID-19 have and continue
to affect almost every industry. Delays in
movement of full containers, empty containers
and freight rate increases have been well
documented in daily media.
We expect the external environment to remain
volatile and unpredictable. Our response to
the challenges is to focus on our sound business
base, flexible thinking, good execution,
dedicated staff and understanding the things
we can control. We understand almond yield
drivers
(improved horticultural practices,
efficient use of water/fertiliser). We prioritise
quality (improvement through processing and
product selection). We control costs. We seek
to grow our business base to increase revenue,
price realisation and profit (purchases such as
Piangil). We pursue sustainability and effective
waste management (electricity cogeneration
and composting).
As always, Select Harvests is focused on the
key internal value drivers of our business and
remains committed to our long-term growth
strategy of our almond assets.
FINANCIAL PERFORMANCE
Select Harvests delivered a FY2021 Underlying
Earnings Before Interest and Tax (EBIT) result
of $27.2 million. Another record almond crop
volume of 28,250Mt (2020 crop 23,250Mt)
represented the fourth consecutive year of
increased volumes produced. The result was
offset by a reduction in almond prices and
increased growing and depreciation costs.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 Commodity Price Trend 2017-2021 - AUD$/KG CFR
$20.00
$18.00
$16.00
$14.00
$12.00
$10.00
$8.00
$6.00
$4.00
$2.00
$-
Feb
Apr Jun
Aug Oct
Dec
Feb
Apr Jun
Aug Oct
Dec
Feb
Apr Jun
Aug Oct
Dec
Feb
Apr Jun
Aug Oct
Dec
2017
2018
2019
2020
SOURCE: COMPANY DATA
Feb Apr Jun
2021
Aug Oct
Vietnamese
Cashew WW320
Pistachio
Inshell R&S
California
Walnuts LH&P
Almond
Kernel SSR
SHV Theoretical Harvest Volume (MT)*
SOURCE: COMPANY DATA
+22%
+33%
)
s
e
n
n
o
t
(
e
m
u
o
V
l
0
0
7
,
5
1
0
5
2
,
8
2
0
9
6
,
2
2
0
5
2
,
3
2
FY18
FY19
FY20
FY21
FY22
FY23
FY24
FY25
FY26
FY27
FY28
Yield from
Existing Portfolio†
Yield from Committed
& Immature New Plantings†
Piangil
Orchard‡
* The almond crop is biennial in nature with expected +/- 10% per annum variation in tonnage.
† Assumes a 3.3MT per ha (1.35MT per acre) mature yields and immature yields based on
the average of the 2019, 2020 and 2021 crops.
‡ Assumes a 3.5MT per ha (1.40MT per acre) mature yields for Piangil Orchard.
7
Sustainability continues to grow in importance and
the Company formed a dedicated sustainability
committee in FY2021 to solely focus on the
opportunities to improve performance in this
area. Sustainability may be defined in a range of
ways, but in essence for Select Harvests it
means doing the right thing today and into the
future. This short statement actually expands
into a wide field of systems and actions, as
described in our 2021 Sustainability Report.
ALMOND MARKET OUTLOOK
It is too early to determine the final 2021 almond
crop size in California (which accounts for
approximately 80% of global almond production),
although it is anticipated to be around 2.8-2.9
billion pounds. Their ongoing drought and
water storage situation continue to present the
Californian almond industry with difficulties,
however we do not underestimate the productive
capacity of this region.
The challenges facing the global logistics network
are considerable and while many people in
industries and governments are seeking to solve
them, the situation makes it very difficult to predict
future almond prices with any degree of certainty.
In this environment Select Harvests is focused
on its plans on optimising the performance of its
orchards and processing facility in order to meet
the growing long-term demand for almonds.
Our orchards are currently performing well,
with our 2021/22 crop set to begin harvesting in
March 2022.
THANK YOU
The ongoing impacts of COVID-19, volatile
global markets and supply chain constraints
markets have led to another challenging year,
yet as explained, it has also been a year of
significant achievement.
Select Harvests’ dedicated employees, our
sound and consistent strategy and our strong
financial position are enabling the company to
successfully navigate through the challenges
and continue seeking new opportunities.
The underlying fundamentals of the almond
industry remain strong. We are very well placed
to benefit from the market settling and demand
and supply patterns returning to normal.
Our targeted
in growing the
company’s almond base and expanding our
value-adding capacity and capability will
ensure, as one of the world’s largest vertically
integrated almond producers, ongoing growth
and improved returns.
We would like to thank our shareholders,
suppliers and employees for all their support
and commitment during FY2021 and
look
forward to the growth and opportunities that
lie ahead in FY2022 and beyond.
investment
Michael Iwaniw, Chair
Paul Thompson, Managing Director
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021
8
Business Highlights
Earnings Before Interest Tax Depreciation
and Amortisation (EBITDA):
$40.4 million
Net Profit After Tax (NPAT):
$15.1 million
Continuing operations: $53.7 million
Continuing operations: $25.3 million
Net Bank Debt to Equity:
18.6%
Almond Crop:
28,250MT
Continue to maintain better than
industry standard yields
Average SHV Almond price:
$6.80/kg
Total Almond Production Costs:
$5.63/kg
Growing costs remain well controlled
Lost Time Injury Frequency Rate (LTIFR):
Down 25%
Operating Cash Flow:
$38.2 million
Piangil Almond Orchard:
4,592MT
Increase of $25.0 million, with FY2020
impacted by COVID-19 shipping delays
Yield and quality in line with expectations
BELOW: Dan Wilson has been appointed as General Manager, Almond Operations.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 In control of our destiny
Select Harvests – In control of Our Destiny
VISION
To be a Leader in the Supply of Better for You Plant Based Foods
9
VALUES
STRATEGIC
PRIORITIES
THE PATHWAY
TO ACHIEVING
OUR VISION
OPERATIONAL
FOCUS
WHAT WE DO
EVERYDAY
TRUST AND
RESPECT
INTEGRITY AND
DIVERSITY
SUSTAINABILITY
PERFORMANCE
INNOVATION
DO THE
RIGHT THING
BE ONE
TEAM
PROTECT AND
GROW
OWN IT
THINK OUTSIDE
THE SQUARE
Optimise the Almond Base
Increase productivity and achieve
sustainably high yields from our growing
almond orchard base
Grow our Brands
Grow our industrial brands,
aligned to the increasing
consumption of plant based foods
Expand Strategically
Pursue value accretive acquisitions that
align with our core competencies in the
plant based agrifoods sector
Customers
Exceed our current
customer’s expectations
and grow our customer
base, focused on the
Asian marketplace
Supply Chain
Optimise our end-to-end
supply chain to achieve
maximum value for the
business as a whole
People
Focus on a safe working
environment, well-being,
company culture, leadership
development and staff
training, attraction
and retention
Capital
Target capital discipline,
balance sheet strength,
superior shareholder returns
and long term growth
GOAL
Sustainable Shareholder Value Creation
BELOW: Inspection of one of our young orchards.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021
10
2021/22 Triple Bottom Line Focus Areas
Planet
People
Water Efficiency
100% of our orchards use
drip irrigation tree and soil
monitoring systems
Sustainability
Develop sustainability targets
to build on 2020
Sustainability report
Co-Waste Projects
Continue developing
three promising
co-waste projects
Securing Labour
Commenced securing
harvest labour
for 2022
HRIS System
HRIS System to be
implemented over the
next 12 months
Investment in Skills
Graduate program
and ongoing career
development in place
Profit
Food Division Restructure
Transition Thomastown
almond production
to Carina West
Carina West Investment
Increase the volume
and range of value-added
almond products
Water Costs
Lower water costs to flow into
FY2022, with estimated savings
of $6M to $8M due to favourable
carryover rates
BELOW: 1 00% of our orchards use drip irrigation tree and soil monitoring systems.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 Triple Bottom Line in Action: Co-Waste Projects
11
Almond Hull
to Energy
Almond Hull
to Fertiliser
Fly Ash to
Liquid Fertiliser
Waste Ash
to Compost
Select Harvests co-generation
power station is the integral link
for our three sustainable co-waste
projects, bringing together several
sustainability initiatives through
waste recycling, compost generation
as well as carbon neutral power.
Almost 30% of Select Harvests’
almond by-product is consumed
by the H2E Power Station to
produce
low carbon emissions
energy that is used to power our
Carina West processing facility
and neighbouring orchards.
Select Harvests developed a novel
process for digesting almond hull
and olive pit waste with urea to
produce liquid and solid fertilisers.
Received a 1:1 grant to scale this
process up. A pilot plant has been
commissioned for Q1 2022, with
agronomy trials planned for Q2 2022.
A provisional patent application has
been issued with full patent pending.
Burning almond hull generates an
ash. In 2020/21 Select Harvests
developed a novel process to
convert waste ash into high-grade
potassium rich liquid fertiliser.
On farm trials conducted in 2020/21
demonstrated that this product
could be delivered as a potassium
supply while also providing benefits
in drip irrigation cleaning.
A pilot plant has been identified
using a Lamella clarifier to scale
up the process. Lamella is a thin
layer, membrane or tissue designed
to remove particulates from liquids.
In 2021/22 the waste ash by-product
generated by Select Harvests’
co-generation power station will
be used to produce over 45,000MT
of high-quality compost that will
be returned to Select Harvests
almond orchards.
Led to a significant reduction in
for external
the requirements
chemical
improved
fertigation,
soil health, generated cost saving
and returned carbon to soils.
Currently seeking EPA approval
for a commercial license to supply
3rd party horticulture producers.
All natural, recycled
and low cost:
Our closed loop compost program
uses the waste hull ash from the
CoGen power plant, which is high
in potassium, and everything that
comes out of the orchards,
being almond hull, shell
and tree trimmings.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 12
Executive Team
PAUL THOMPSON
Managing Director and CEO
Appointed as the Managing Director and Chief Executive Officer of Select Harvests Limited on 9 July 2012. Paul 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. He is a member of the Australian Institute of Company Directors and has formerly held positions as
a Director of the Food and Grocery Council and councillor in the Australian Industry Group
BRADLEY CRUMP
CFO and Company Secretary
Brad joined Select Harvests as Chief Financial Officer in 2017 and was appointed Company Secretary on 7 August 2018. He is a
Certified Practising Accountant and has over 15 years experience in senior financial management. Most recently he has been
the CFO of Redflex Limited and previously gained extensive experience in agribusiness as CFO of Landmark (Australia’s largest
rural services provider) and senior roles within AWB Limited. He brings extensive agribusiness, agri services and related capital
management experience to the role.
PETER ROSS
General Manager Performance, Improvement and Sustainability
Peter joined Select Harvests in 1999. He has held the positions of Plant Manager, Project Manager and General Manager for the
Processing area of the Almond Division, General Manager Horticulture, General Manager Almond Operations and was appointed
General Manager Performance, Improvement and Sustainability in August 2021. Prior to joining Select Harvests, Peter ran his own
maintenance and fabrication business servicing agriculture, mining and heavy industry.
BEN BROWN
General Manager Horticulture
Ben joined Select Harvests in 2014. Ben held the position of Project and Technical Manager of the Horticultural Division, before
being appointed General Manager Horticulture in April 2018. Ben is an Applied Science graduate with Honours in Soil Science and
has 20 years experience across perennial irrigated horticulture with expertise in: orchard development; production horticulture;
development of detailed RD&E strategies; and extension and technology transfer of best practice. Prior to joining Select Harvests,
Ben was the Industry Development Manager at the Almond Board of Australia and an irrigation and soil agronomist.
SUZANNE DOUGLAS
General Manager Consumer
Suzanne joined Select Harvests in 2019. Suzanne is a highly experienced, successful and senior manager who has extensive
experience in both the Australian and international Fast-Moving Consumer Goods Industry. Before joining Select Harvests, Suzanne
has led HJ Heinz Australia, and held senior management roles at Devondale Murray Goulburn and McPherson’s Consumer Products.
NICOLE FEDER
General Manager, People Safety & Culture
Nicole joined Select Harvests in January 2021. Nicole is a highly experienced HR Leader and Organisational Psychologist with a track
record of helping businesses achieve success and sustainable growth by developing capable, diverse and engaged workforces.
Nicole has worked across a range of diverse business sectors including: PwC, Carlton & United Breweries, Amcor, Toll Group and
Mayne Nickless. Most recently, Nicole held the role of GM Human Resources for Database Consultants Australia. She is a Member
of the Australian Human Resources Institute and a Member of the Australian Psychological Society.
DAN WILSON
General Manager, Almond Operations
Dan joined Select Harvests in 2017. He has held the positions of H2E Cogen Manager, Operations Manager - Mechanical Engineering, and
was appointed General Manager of Almond Operations in July 2021. Before joining Select Harvests, Dan was the Plant Manager for the
BOC bulk gas division in the Northern Territory and brings with him extensive knowledge in production, processing and operations.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 Board of Directors
13
MICHAEL IWANIW
Chair
Appointed to the board on 27 June 2011 and appointed Chair on 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. Michael was instrumental in the successful 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. Michael is
the immediate past Chair of Australian Grain Technologies and has extensive non-executive director experience with several listed and
private companies. He is Chair of the Nominations Committee and is a member of the Remuneration and Sustainability Committee.
PAUL THOMPSON
Managing Director and Chief Executive Officer
Appointed as the Managing Director and Chief Executive Officer (MD) of Select Harvests Limited on 9 July 2012. Paul 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. He is a member of the Australian Institute of Company Directors and has formerly held
positions as a Director of the Food and Grocery Council and councillor in the Australian Industry Group.
FRED GRIMWADE
Non-Executive Director
Appointed to the board on 27 July 2010. Fred is a Principal and Director of Fawkner Capital, a specialist corporate advisory and
investment firm. He is Chair of CPT Global Ltd (ASX: CGO; director since October 2002) and XRF Scientific Ltd (ASX: XRF; director
since May 2012) as well as being a director of Australian United Investment Company Ltd (ASX: AUI; director since March 2014).
He was formerly Chair of Troy Resources Ltd (2013-2017), a non-executive director of AWB Ltd., and has held general management
positions with Colonial Agricultural Company, Colonial Mutual Group, Colonial First State Investments Group, Western Mining
Corporation and Goldman, Sachs and Co. He is a member of the Audit and Risk Committee.
NICKI ANDERSON
Non-Executive Director
Appointed to the board on 21 January 2016. Nicki Anderson is an accomplished leader and non-executive director with broad
experience in strategy, sales, marketing, and innovation within food, beverage and consumer goods businesses both in Australia
and Internationally (including Coca Cola Amatil, Cadbury Schweppes, McCain, Nestlé and Kraft). Nicki has strong links to
Australia's e-commerce, manufacturing and agricultural sectors. She is currently Acting Chair of Mrs Mac's Pty Ltd; Deputy Chair
of the Australian Made Campaign Limited and a non-executive director for Toys "R" Us ANZ (ASX:TOY; director since October
2018), Graincorp Limited (ASX: GNC; director since October 2021) and Prostate Cancer Foundation of Australia. She is Chair of the
Remuneration & Nominations Committee for both Mrs Mac's Limited and Toys "R" Us ANZ. Nicki is a Member and Former Chair of
the Monash University Advisory Board for the marketing faculty. She is Chair of the Remuneration and Sustainability Committee and
a member of the Nominations Committee.
FIONA BENNETT
Non-Executive Director
Appointed to the board on 6 July 2017. Ms Fiona Bennett is a Chartered Accountant and an experienced non-executive director with
an extensive background in business management, corporate governance, audit and risk. She is currently on the board of BWX Limited
(ASX: BWX; director since December 2018) and is also Chair of the Victorian Legal Services Board. Ms Bennett has previously served
on the board of Hills Limited (2010 – 2021) and Beach Energy Limited (2012-2017). She has previously held senior executive roles at BHP
Limited and Coles Limited and has been Chief Financial Officer at several organisations in the health sector. She is Chair of the Audit and
Risk Committee and a member of the Nominations Committee.
GUY KINGWILL
Non-Executive Director
Appointed to the board on 25 November 2019. Guy joins the Board with an extensive background in horticulture, international soft
commodity marketing and water investment and trading. He is currently on the Boards of Tasmanian Irrigation and ACMII Australia
1 Group and serves as the Chair of the Audit Committee at Tasmanian Irrigation. Guy has previously served as Managing Director of
Tandou Limited, and as a non-executive director of Lower Murray Urban and Rural Water Corporation. He is a member of the Audit
and Risk Committee and the Remuneration and Sustainability Committee.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 14
Historical Summary
Select Harvests consolidated results for years ended 30 September/June
$'000
(EXCEPT WHERE INDICATED)
2009
2010
2011
2012
2013
2014*
2015
2016
2017
2018
2018†
2019
2020
2021
YEAR/PERIOD ENDED
30 JUNE
30 JUNE
30 JUNE
30 JUNE
30 JUNE
30 JUNE
30 JUNE
30 JUNE
30 JUNE
30 JUNE
30 SEPT†
30 SEPT
30 SEPT
30 SEPT
Total sales
248,581
238,376
248,316
246,766
190,918 188,088
223,474 285,917
242,142
210,238
67,581 298,474
248,262
288,217
Earnings before interest and tax
26,827
26,032
22,612
(2,495)
5,241
31,288
85,845
49,785
16,979
34,869
(1,052)
80,065
Operating profit before tax
23,047
23,603
18,473
(8,743)
198
26,833
80,514 44,290
11,978
29,464
(2,089)
76,108
Net profit after tax
16,712
17,253
17,674
(4,469)
2,872
21,643
56,766
33,796
9,249
20,371
(1,536)
53,022
Earnings per share (Basic) (cents)
42.6
43.3
33.7
(7.9)
5.0
37.5
82.9
46.7
12.6
23.2
(1.6)
55.5
Return on shareholders' equity (%)
Dividend per ordinary share (cents)
Dividend franking (%)
Dividend payout ratio (%)
Financial ratios
Net tangible assets per share ($)
Net interest cover (times)
Net debt/equity ratio (%)
Current asset ratio (times)
16.6
12
100
28.2
1.56
7.10
51.9
0.79
15.2
21
100
48.5
1.87
10.70
39.6
1.44
10.5
13
100
38.6
2.17
6.70
43.3
1.96
(2.8)
8
100
1.8
12
100
(101.3)
239.8
2.19
(0.4)
41.7
1.42
2.14
1.0
49.6
1.61
12.3
20
55
53.5
2.38
6.9
54.0
4.02
19.8
50
-
62.8
3.35
15.9
38.2
3.36
11.6
46
54
99.1
3.22
9.0
23.1
1.90
3.3
10
100
79.4
2.95
3.4
52.5
1.05
42.9
12
100
51.7
3.34
6.4
18.7
4.49
12.7
32
100
50.0
3.60
20.0
6.6
2.74
0
N/A
N/A
0.00
N/A
15.9
3.23
38,726
36,662
25,001
26.0
6.2
13
100
50.0
3.46
18.7
79.6
2.39
18,165
15,892
15,116
12.7
2.9
8
100
62.9
3.68
8.0
66.7
2.22
Balance sheet data as at 30 September/June
Current assets
Non-current assets
Total assets
Current liabilities
81,075
83,993
91,228
76,936
123,303
136,639
207,782
155,521
136,610
162,118
159,721
173,667
217,397
257,838
133,884
145,612
214,352
202,371
180,542 194,080 280,130 294,251
343,081
354,435
362,900 379,190
607,497
745,967
214,959 229,605 305,580 279,307
303,845
330,719 487,912 449,772 479,691
516,553
522,621 552,858
824,894 1,003,805
102,348
58,469
46,454
54,369
76,800
33,988
61,893
81,783
130,371
36,104
49,412
63,457
91,062
116,050
Non-current liabilities
11,735
57,515
90,311
64,608
67,540
121,325
138,632
77,088
71,701
101,809
102,570 73,398
328,822
360,799
Total liabilities
Net assets
Shareholders' equity
Share capital
Reserves
Retained profits
114,083
115,984 136,765
118,977 144,340
155,313 200,525
158,871
202,072
137,913
151,982 136,854
419,884
476,849
100,876
113,621
168,815
160,330
159,505
175,406
287,387 290,901
277,619 378,640 370,639 416,003
405,010
526,956
46,433
47,470
95,066
95,957
97,007
99,750
170,198
178,553
181,164 268,567
268,567 271,750
279,096
397,343
12,949
11,327
11,201
41,494
54,824
62,548
10,472
53,901
9,144
12,190
12,818
11,168
11,602
9,601
9,802
10,417
53,354
63,466
104,371
101,180
84,853
100,472
92,270 133,836
14,280
111,634
7,657
121,956
Total shareholders' equity
100,576
113,621
168,815
160,330
159,505 175,406 287,387 290,901
277,619 378,640 370,639 416,003
405,010
526,956
Other data as at 30 September/June
Fully paid shares ('000)
Number of shareholders
Select Harvests' share price
39,519
39,779
56,227
56,813
57,463
57,999
71,436
72,919
73,607
95,226
95,226
95,737
3,296
3,039
3,227
3,359
3,065
3,779
4,328
8,908
11,461
11,943
11,884
10,331
96,637
11,258
120,224
10,236
- close ($)
2.16
3.46
1.84
1.30
3.27
5.14
11.00
6.74
4.90
6.90
5.32
7.69
5.57
8.29
Market capitalisation
85,361
137,635
103,458
73,857
187,904
298,115
785,796 491,474
360,674 657,059 506,602
736,218
538,268
996,660
* The 2014 result has been restated due to the early adoption of changes to Accounting Standards, AASB 116 Property, Plant and Equipment, and AASB 141 Agriculture, impacting 'bearer plants'.
As a result of implementation of AASB16 Leases on 1 October 2019, the Company recognised Right-of-use assets and lease liabilities in its books
† 3 month transition period
‡
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021
15
Financial Report
1 6 Directors' Report
2 4 Remuneration Report
3 6 Auditor’s Independence Declaration
3 7 Annual Financial Report
3 8 Statement of Comprehensive Income
3 9 Statement of Financial Position
4 0 Statement of Changes in Equity
4 1 Statement of Cash Flows
4 2 Notes to the Financial Statements
7 1 Directors' Declaration
7 2
Independent Auditor’s Report
7 9 ASX Additional Information
8 1 Corporate Information
RIGHT:
The Murray River
at Robinvale.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 16
Directors’ Report
The directors present their report together with the financial report of Select Harvests Limited and controlled entities (referred to
hereafter as the “Company”, “the Group” or “the consolidated entity”) for the year ended 30 September 2021.
DIRECTORS
The qualifications, 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 financial year is provided below, together with details of the company secretary. Directors were in office for this entire period
unless otherwise stated.
NAMES, QUALIFICATIONS, EXPERIENCE AND SPECIAL RESPONSIBILITIES
M Iwaniw, B Sc, Graduate Diploma in Business Management, MAICD (Chair)
Appointed to the board on 27 June 2011 and appointed Chair 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.
Instrumental in the successful 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. Michael
is the immediate past Chair of Australian Grain Technologies and has extensive non-executive director experience with several listed and private
companies. He is Chair of the Nominations Committee and is a member of the Remuneration and Sustainability Committee.
Interest in shares: 220,588 fully paid shares.
P Thompson, B Bus and MAICD (Managing Director and Chief Executive Officer)
Appointed as the Managing Director and Chief Executive Officer (MD) of Select Harvests Limited on 9 July 2012. Paul 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.
He is a member of the Australian Institute of Company Directors and has formerly held positions as a Director of the Food and Grocery Council and
councillor in the Australian Industry Group.
Interest in Shares: 624,379 fully paid shares.
F S Grimwade, B Com, LLB (Hons), MBA, FAICD, SF Fin, FCIS (Non-Executive Director)
Appointed to the board on 27 July 2010. Fred is a Principal and Director of Fawkner Capital, a specialist corporate advisory and investment firm. He is
Chair of CPT Global Ltd (ASX: CGO; director since October 2002) and XRF Scientific Ltd (ASX: XRF; director since May 2012) as well as being a director of
Australian United Investment Company Ltd (ASX: AUI; director since March 2014) and AgCap Pty Ltd. He was formerly Chair of Troy Resources Ltd (2013-
2017), a non-executive director of AWB Ltd., and has held general management positions with Colonial Agricultural Company, Colonial Mutual Group,
Colonial First State Investments Group, Western Mining Corporation and Goldman, Sachs and Co. He is a member of the Audit and Risk Committee.
Interest in shares: 92,699 fully paid shares.
F Bennett, BA (Hons), FCA, FAICD (Non-Executive Director)
Appointed to the board on 6 July 2017. Ms Fiona Bennett is a Chartered Accountant and an experienced non-executive director with an extensive
background in business management, corporate governance, audit and risk. She is currently on the boards of BWX Limited (ASX: BWX; director
since December 2018) and is also Chair of the Victorian Legal Services Board. Ms Bennett has previously served on the boards of Hills Limited (2010-
2021) and Beach Energy Limited (2012-2017). She has previously held senior executive roles at BHP Limited and Coles Limited and has been Chief Financial
Officer at several organisations in the health sector. She is Chair of the Audit and Risk Committee and a member of the Nominations Committee.
Interest in shares: 19,245 fully paid shares.
N Anderson, B Bus, EMBA, GAICD (Non-Executive Director)
Appointed to the board on 21 January 2016. Nicki Anderson has held key leadership positions at numerous Australian consumer goods businesses
within the food and beverage sector. She is an accomplished leader and non-executive director with broad experience in strategy, sales, marketing
and innovation within food, beverage and consumer goods businesses both in Australia and Internationally (including Coca Cola Amatil, Cadbury
Schweppes, McCain, Nestle and Kraft). Nicki is a true global citizen having lived in Denmark, Canada and the United States, where she was Vice
President Innovation for Cadbury Schweppes Americas Beverages based in New York. Nicki has strong links to Australia’s e-commerce, manufacturing
and agricultural sectors. She is currently Acting Chair of Mrs Mac’s Pty Ltd; Deputy Chair of the Australian Made Campaign Limited; non-executive
director for ASX listed Toys “R” Us ANZ (ASX: TOY; director since October 2018) and Graincorp (ASX: GNC, director since October 2021), Craig
Mostyn Group and Prostate Cancer Foundation of Australia. She is Chair of the Remuneration & Nominations Committee for Mrs Mac’s Pty Ltd, Craig
Mostyn Group and Toys "R" Us ANZ. Nicki is a member and former Chair of the Monash University Advisory Board for the marketing faculty. She is
Chair of the Remuneration and Sustainability Committee and a member of the Nominations Committee.
Interest in shares: 11,585 fully paid shares.
G Kingwill,B Com, CA, FAICD (Non-Executive Director)
Appointed to the board on 25 November 2019. Guy joins the Board with an extensive background in horticulture, international soft commodity
marketing and water investment and trading. He is currently on the Boards of Tasmanian Irrigation and ACMII Australia 1 Group and serves as the
Chair of the Audit Committee at Tasmanian Irrigation. Guy has previously served as Managing Director of Tandou Limited, and as a non-executive
director of Lower Murray Water Urban and Rural Water Corporation. He is a member of the Audit and Risk Committee and the Remuneration and
Sustainability Committee.
Interest in shares: 16,212 fully paid shares.
NAMES, QUALIFICATIONS, EXPERIENCE AND SPECIAL RESPONSIBILITIES
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 17
M Carroll, B Ag Sc, MBA, FAICD (Non-Executive Director)
Joined the board on 31 March 2009 and retired on 26 February 2021. He brought to the Board diverse experience from executive and non-executive
roles in food and agribusiness. Current non-executive board roles include Rural Funds Management (RE for ASX: RFF; director since April 2010),
Paraway Pastoral Company, Australian Rural Leadership Foundation and Viridis Ag Pty Ltd. Previous board roles include Queensland Sugar Limited,
Elders Limited (ASX: ELD, 2018-2020), Tassal (ASX: TGR, 2014-2018), Warrnambool Cheese & Butter, Rural Finance Corporation, Sunny Queen Farms
and Meat and Livestock Australia. During his executive career Mike established and led the NAB’s agribusiness division with earlier senior executive roles
including marketing and investment and advisory services. Prior to Mr Carroll’s retirement, he was Chair of the Remuneration and Nominations Committee.
B Crump, B Bus, CPA, AMP INSEAD (Chief Financial Officer and Company Secretary)
Joined Select Harvests as Chief Financial Officer on 20 November 2017 and appointed Company Secretary on 7 August 2018. He is a Certified
Practising Accountant and has over 15 years experience in senior financial management. Most recently he has been the CFO of Redflex Limited and
previously gained extensive experience in agribusiness as CFO of Landmark (Australia’s largest rural services provider) and senior roles within AWB
Limited. He brings extensive agribusiness, agri services and related capital management experience to the role.
Interest in shares: 2,785 fully paid shares.
CORPORATE INFORMATION
Nature of operations and principal activities
The principal activities during the year of
entities within the Company were:
• The growing, processing and sale of almonds
to the food industry from company owned and
leased almond orchards; and
• Processing, packaging, marketing and
distribution of edible nuts, dried fruits, seeds,
muesli and a range of natural health foods.
full
EMPLOYEES
The Company employed 611
time
equivalent employees as at 30 September
2021 (30 September 2020: 533 full time
equivalent employees).
Full time equivalent employees include: executive,
permanent, contractor and seasonal (casual
and labour agency hire) employment types.
OPERATING AND FINANCIAL REVIEW
Highlights and Key developments during
the year
The acquisition of the Piangil orchard and
another year of consistent yields delivered a
record crop 21.5% higher than FY2020. FY2021
was another good year for growing conditions,
enhanced by ongoing protection from frost fan
investments and a well executed, comprehensive
and targeted horticultural program, leading to
a consistent high volume production level.
The 2021 crop mature orchards’ yields were
down slightly on 2020 however remain above
their five year average yield profile. The
immature orchards’ yields continue to perform
above their business case assumptions.
The 2021 crop had been fully processed by the
end of the FY2021 year. Despite the wet
conditions this was completed earlier than
FY2020 due to the use of conditioners on farm
and the less than 2% downtime of the Carina
West processing facility.
81% of the FY2021 crop is either shipped or
committed for sale with the majority of the
remaining tonnage targeted to be shipped to
key markets based on demand levels over the
next two quarters.
Investment in quality related technology led to
the company producing increased levels of higher
priced inshell product. Costs of production
per kg increased by 2.9% as immature orchards
cost recognition increased in line with their
age profile. Consistent yields delivered by a
targeted horticultural management approach
and supported by investment in technology to
improve quality levels, remains the key strategic
focus in order to maximise returns from the
company’s almond base.
An increase in rainfall across the Murray Darling
Basin catchment areas has led to a significant
drop in costs in the temporary water market.
The financial benefit of this will flow into Select
Harvests’ FY2022 results as the cost of previously
acquired carryover water was recognised in
the FY2021 results.
This solid production result was more than
offset by a $0.70/kg reduction in the almond
price. Lower almond pricing was due to a
record 2020 crop being produced in the U.S.
leading to an increase in global supply. Record
shipment levels of the 2020 crop out of the
U.S. have meant a major portion of the 2020
crop has been sold and dispatched. This factor,
increased demand for value added product
and the ongoing drought issues in California,
led to prices firming during the FY2021 year
but still 9.3% lower than last year. Global almond
prices currently remain flat as congestion in
key ports (impacting the physical movement
of stock) along with stocks still held by export
markets from purchases of the 2020 U.S. crop
have meant levels of demand have slowed.
Additionally, a number of sellers are not
entering into the market with the expectation
that prices will rise.
related activities
Food
(continuing and
discontinuing) delivered an improved result
compared to FY2020. This result was driven
by continuing growth in demand for value
added almond related products. Additionally,
implemented process improvements resulted
in material costs savings across the company’s
Thomastown operations. The result was partially
offset by lower margins recorded in branded
food sales as competitive pressures with retailer
private label products continue.
The consumer branded food business (made
up of the Lucky and Sunsol brands) was sold
during the FY2021 year. The Thomastown
almond based industrial food business will
transfer to Select Harvests’ processing facility
near Robinvale and the remaining private
label packing and
industrial non-almond
business will be sold or wound down in the
first half of FY2022.
Operational cashflows improved in FY2021 as
shipment movements increased as key export
locations and
food customers
industrial
opened up from COVID-19 imposed lockdowns.
While volume movements have increased,
shipment bookings have had to be stretched
further in advance as available container
space is increasingly limited. However, the
company has successfully continued to deliver
on its sales program throughout the year.
Logistics costs in general have increased
significantly adding further pressure to the
global almond price.
The acquisition of the Piangil Orchard was
partially debt
funded, however strong
operational cashflows and control of capital
expenditure has led to net bank debt as at 30
September 2021 being $98.1M (FY2020 $57.5m)
and a healthy bank debt to equity ratio of 18.6%.
The options for greenfield expansion, mature
orchard acquisition, non-almond related
opportunities and further expansion into value
adding to almonds continue to be assessed
for future growth.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 18
Directors’ Report
Continued
FINANCIAL PERFORMANCE REVIEW
Profitability
Reported Net Profit After Tax (NPAT) is $15.1 million. Reported Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) is $40.4
million and Reported Earnings Before Interest and Taxes (EBIT) is $18.2 million.
Results Summary and Reconciliation
($‘000)
EBIT from continuing operations
EBIT from discontinued operations
Underlying EBIT
One off items from discontinued operations
Reported EBIT
Interest Expense
Net Profit Before Tax
Tax (Expense)
Net Profit After Tax
Earnings Per Share (cents)
Company Profitability
Company revenue from continuing operations
of $228.6 million was generated for FY2021.
This was 22.2% higher than last year due to the
opening of export markets following COVID-19
related global
in key export
lockdowns
locations. The increase in revenue recognised
was despite the fall in the FY2021 almond price
as volumes shipped increased compared to
the COVID-19 impacted FY2020.
The FY2021 continuing operations EBIT of
$32.6 million was $12.0 million lower than
FY2020. This excludes the operating results of
the sold consumer branded business and
related activities that was finalised prior to the
end of the financial year and related reported
significant items. The lower result was due to a
$0.70 per kg reduction in the almond price to
$6.80 per kg (FY2020 almond price was $7.50
per kg). Additionally, production costs per kg
increased by 2.9% due to higher costs in line
with immature tree profiles and increased
depreciation costs related to the Piangil
orchard. This result was partially offset by FY2021
almond volumes produced increasing by 21.5%
to 28,250 MT (FY2020 volume was 23,250 MT)
and an increase in volumes of Industrial value-
added almonds sold to the food industry
sector internationally and domestically.
The FY2021 underlying EBIT of $27.2 million was
$11.5 million lower than FY2020. Underlying
EBIT includes the operating results of the sold
consumer branded business and related
activities that will finalise prior to the end of
FY2022 but excludes
reported
significant items. In addition to the factors
related to the lower continuing operations
EBIT, the discontinued operations delivered an
improved result due to implemented efficiencies
and cost savings at the Thomastown processing
facility. This was partially offset by lower
margins achieved on branded products due to
retail private label competitive pressures.
related
FY2021 operating EBIT of $18.2 million was
$20.6 million lower than FY2020.
In addition to the factors detailed above, $9.0
million of non-recuring costs have been
recognised relating to the sale and closure of the
discontinued operations including redundancy
provisions, other associated business restructure
costs and asset impairments (refer Note 5.5).
These costs recognised are non-recurring and
relate specifically to discontinued operations.
Interest Expense
Interest expense of $2.2 million reflects the lower
interest rates applicable to current finance
facilities and the ongoing close management
of operating cashflows and resultant debt levels.
Statement of Financial Position
Net assets as at 30 September 2021 are $527.0
million, compared to $405.0 million as at 30
September 2020. The acquisition of the Piangil
orchard in December 2020 was the major
driver for the increase in net assets during the
FY2021 year. This has resulted in the increase in
property plant and equipment and intangibles
(water) balances. This has also led to higher
working capital levels as almond inventory has
also increased. Partially offsetting this increase
is the higher level of borrowings as a result of
the debt portion of funding the Piangil
acquisition and the provision raised for the
costs associated with the sale and closure of
the branded consumer food business.
Net working capital has increased by 9.4%. This
increase is due to additional stocks (inventory &
biological assets) from higher almond production
levels (Piangil acquisition) in addition to an
adjusted export sales program that will extend
through to the receival of the 2022 crop.
$’000
Trade & other receivables
Inventories
Biological assets
Trade & other payables
Net working capital
FY2021
84,842
114,316
51,321
(64,967)
185,512
FY2020
69,154
100,549
42,432
(42,517)
169,618
REPORTED RESULT (AIFRS)
FY2021
32,606
(5,452)
27,154
(8,989)
18,165
(2,273)
15,892
(776)
15,116
12.7
FY2020
44,567
(5,841)
38,726
-
38,726
(2,064)
36,662
(11,661)
25,001
26.0
Cash flow and Net Bank Debt
Total net debt as at 30 September 2021 was
$98.1 million (30 September 2020: $57.5 million),
with a gearing ratio (total net debt excluding
lease liabilities/equity) of 18.6% (30 September
2020: 14.2%). The increase in borrowings is a
result of the debt funding portion of the Piangil
orchard acquisition.
Operating cash inflows generated for FY2021
amounted to $38.2 million (2020: $13.2 million).
This improved result was due to increased levels
of shipments to export markets compared to
the delayed shipping program in FY2020 as a
result of COVID-19 impacting ports and supply
chains in general. Additionally, taxes paid
reduced due to the lower profits generated in
FY2020 (compared with FY2019).
Investing cash outflows of $169.7 million were
$134.4 million higher than FY2020 due to the
acquisition of the Piangil orchard and related
water assets. Other capital
items and
development costs were in line with FY2020.
Dividend payments for the year were lower
due to the final dividend payment relating to
the FY2020 result (paid in FY2021) and no
interim FY2021 dividend paid. Net cash outflow
for FY2021 was $155.8 million which was funded
through an increase in bank debt and the issue
of new shares (completed as part of the
acquisition of the Piangil orchard).
Dividends
A final dividend of 8 cents per share has been
declared, resulting in a total dividend of 8
cents per share for the financial year. This
compares to a total dividend of 13 cents per
share declared for the previous financial year.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 19
CORPORATE SOCIAL RESPONSIBILITY
Health, Safety and Wellbeing
Focus continues towards achieving Zero Harm,
with annual targets to improve year on year
performance by driving a 15% reduction in the
number of incidents and injuries and reducing
the level of injury severity. To prevent harm, a
15% target to increase hazards identified and
resolved has been put in place.
The key focus for the year has predominantly
been to ensure the safety and wellbeing of our
employees, during the COVID-19 pandemic,
whilst not diverting our attention from key risk
areas in the business.
The key strategic priorities for the year were:
1. COVID-19 Management & Response Plan
2. Process improvement and
System Implementation
3. Building on the Safety Culture
and Safety Leadership
4. Commence Policy Reviews to enhance our
employee wellbeing and safety culture.
The key activities that were implemented included:
• Activating and continually updating the
COVID-19 Management & Response Plan
• A major focus for the year was to identify
hazards to eradicate unsafe environments to
avoid accidents.
• Continued education to increase utilisation
of our technology to support compliance
management and real time incident and
hazard reporting. There was a big push on
increasing our Safety reporting culture
resulting in significantly increased Hazard
reporting and a growing number of Minor
incident reports (see table below).
• Actioning process improvements in incident
investigation reporting and risk assessment.
• Reinforcing the strong safety culture, through
the revised Company Values and Behaviours,
company-wide training on updated WH&S
policies and expected behaviours delivered
to all managers and supervisors across the
business, visible safety leadership, including
safety walks and frequent toolbox training
sessions and discussions
• Review and implementation of new Policies
to support the wellbeing of our employees and
communities, with a focus on the Parental
Leave Policy and Community Service Policy.
Occupational Health and Safety (OH&S)
Total Recordable Incidents
Number Reported
Hazards
Medical Treatment Injuries
Lost Time Injuries Severity
Lost Time Injuries
Frequency Rate
Number Reported
Number Reported
Frequency Rate
Days Lost
Severity Rate
Number Reported
Frequency Rate
Overall, total number of recorded incidents in
FY2021 increased markedly from 68 to 164
incidents primarily due to a significant
increase in minor incident reporting (Near
Miss, No Treatment and Damage to Property)
via the ManGo Incident Management system.
The total number of Hazards reported in
FY2021 increased by 152% from 627 hazards in
FY2020 to 1,582 reported in FY2021.
The number of Medical Treatment Injuries
reduced by 31% during FY2021 (from 13 to 9),
with the Medical Treatment Injury Frequency
Rate decreased by 29% from 14 Medical
Treatment Injuries per million hours worked
in FY2020 to finish at 10 per million hours
worked in FY2021.
The number of Lost Time Injuries sustained in
FY2021 reduced by 57% from 14 LTIs in FY2020
to 6 recorded in FY2021. The Lost Time Injury
Frequency Rate reduced by 25% in FY2021
from 16 Lost Time Injuries per million hours
worked in FY2020 to 12 Lost Time Injuries per
million hours worked in FY2021.
Due to injuries sustained in FY2020, the
number of Days Lost in FY2021 increased
slightly by 2% from 374 days lost in FY2020 to
381 total days lost in FY2021.
Community
Select Harvests is a significant employer and
proud member of the community with
orchards in regional Victoria, South Australia
and New South Wales and the Company has
significant processing facilities at Thomastown
in the Northern Metropolitan area of Melbourne
and Robinvale, in North West Victoria. The
Company is actively involved in all our local
communities. Many employees contribute to
local community organisations on a regular basis.
Select Harvests supports the local communities
with both financial and non-financial support
and through product donations.
This year the company donated $40,000 to 33
charitable organisations across VIC, NSW & SA.
In addition, Select Harvests set up COVID-19
vaccination hubs at our Carina West Processing
Facility to support vaccination for employees,
families and other nearby community members
to receive their vaccinations.
Fair Employment Practices
Our policies, practices and procedures ensure
that all our employees and contractors are
treated in a fair and reasonable manner. We are
an Equal Employment Opportunity employer,
who values and respects
Inclusion and
Diversity in our workplace.
All third-party labour providers engaged are
subject to meeting our Contractor Engagement
and Recruitment Policies that warrant compliance
with Australian labour laws and legislative
obligations. We undertake regular reviews to
ensure compliance, with a focus on the payment
of wages and eligibility to work in Australia.
This year we introduced a new Company
funded Parental Leave Policy to support the
health and wellbeing of our employees going
through their parental journeys. In addition,
we introduced a new company-sponsored
Community Service Policy to encourage our
employees to undertake 2 days of community
service activity to benefit our overall employee
wellbeing and to action our community
corporate responsibility.
Select Harvests has an Ethical Sourcing Policy
in place, with the objectives of upholding
human rights, protecting the environment
and operating in a sustainable manner, whilst
being a respected leader in the industry and
communicating the same expectations of our
suppliers and their supply chains. The Company
is committed to managing the economic,
environmental and social challenges across
our supply chain and this will be achieved by
committing to:
• Employing innovative approaches to conserve
resources and reduce impacts to help preserve,
improve and protect the environment
• Promoting responsible agricultural and food
manufacturing practices
• Safeguarding the quality and integrity of the
food we produce, market and manufacture
• Respecting people and human rights by treating
our employees, suppliers, and contractors with
dignity and respect and providing safe, secure
and healthy work environments, and expecting
the same from our supply.
The Ethical Sourcing Policy is available on the
Select Harvests website:
www.selectharvests.com.au/governance
FY2020
FY2021
VARIANCE
FY2020 VS FY2021
68
53
627
13
14
374
9
14
16
164
58
1,582
9
10
381
11
6
12
+141.2%
+9.4%
+152.3%
-30.8%
-28.6%
+1.9%
+22.2%
-57.1%
-25%
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 20
Directors’ Report
Continued
Sustainability
Approach to Sustainability
We are cognisant of the impact we have on
our environment, employees, and
local
communities. Customers, consumers, and
investors are increasingly seeking assurance
of high food safety standards, workplace
ethics and care for the environment. Without
consideration of natural resources, reduction
of greenhouse gases and protection of
ecosystems the long-term viability of any
horticultural business is in jeopardy.
Our approach to sustainability is a core value
underpinning our business strategy and centres
across three platforms: Planet, People and
Profit. When making decisions at Select
Harvests, we seek to ensure a balance
between creating value for our shareholders
and broader stakeholder groups such as
customers, employees, suppliers, and the
government. We are committed to tracking
our performance, delivering on environmental,
social, and economic best practices, and
providing continual improvement by setting
objectives, measuring progress, and
communicating our results.
Sustainability Actions
In February 2021, we published the company’s
2019/2020 Sustainability Report
Priority topics were
identified by being
assessed against the relevant United Nations
Sustainability Development Goals (SDGs) for
our business. The agreed priorities were:
• Water Management & Stewardship
• Food Safety, Product Labelling & Quality
• Financial Performance & Business Strategy
• Climate Change
• Environmental Impact
• Occupational Health and Safety
• Labour Practices
• Human Rights, Anti-Corruption,
Ethics & Integrity.
We look to continually build on our disclosure
against the SDGs and develop
initiatives,
metrics and targets that support the Triple
Bottom Line Focus of Planet, People and Profit.
Select Harvests commits to the alignment of its
reporting standards to the Task Force on
Climate-Related Financial Disclosures (TCFD).
TCFD has developed a framework to help public
companies & other organisations disclose climate-
related risks and opportunities.
Select Harvests has continued to focus on our
planet priorities to Reduce, Recycle, Reuse and
Recover as we aim to close the resource loop.
This includes:
• The composting program of recycling
34,000 tonnes of biogen ash, hulls, and
other organic materials.
• Select Harvests has obtained a grant from
Recycling Victoria. The grant is to co-fund
the construction of a Pilot Plant to trial the
recovery of solid almond waste into liquid
and granulated fertiliser alternatives for
in the company’s orchards, with
reuse
potential to supply these alternates to other
horticulture and agricultural sectors.
• The Hull to Energy biomass facility used
recovered hull and organic processing waste
to generate19,810 MWh of electrical energy
this year which equates to a reduction of
22,385 tons in GHG emissions.
Water stewardship is always front of mind, the
company’s focus is to target optimum output:
• 100% of orchard use drip irrigation;
• Where appropriate water is recycled & reused;
• 100% of the company’s orchards use soil
moisture monitoring technology; and
• We are rolling out tree water uptake technology
to all orchards to ensure accurate, timely
irrigation delivery and practices.
In 2022 we will be undertaking an extensive
project to understand our current carbon
footprint & opportunities to reduce our impact.
The 2019/20 Sustainability Report is available
on the company website :
www.selectharvests.com.au/sustainability
Governance structure
The Board of Select Harvests is responsible
for the overall corporate governance of the
Company, this also includes sustainability.
The Remuneration and Sustainability Committee
continues to guide and monitor the progress
on Select Harvests' sustainability journey. The
Board Sustainability Committee gives input
into the strategy and assures accountability
for targets and timelines set.
An Executive Sustainability Committee has been
formed, in addition to an internal re-structure
leading to the creation of a new executive role of
General Manager - Performance, Improvement
and Sustainability.
A Group Quality and Sustainability Manager
has also been appointed to ensure sufficient
resourcing to support the ever-growing demand
for sustainability programs. This role also
chairs the Executive Sustainability Committee.
The Executive Sustainability Committee’s overall
role is to formally engage Select Harvests in
strategic sustainability decision making,
encourage long term sustainability planning
and facilitate sustainability initiatives to ensure
Select Harvests core value of sustainability is
achieved. Committee members consist of senior
representatives from Horticulture, Operations,
Engineering, Trading, Strategy Development,
Finance and Human Resources.
Our updated Environment and Sustainability
Policy and its related procedures and systems
govern our sustainability procedures & practices.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 Climate Change
Select Harvests is focused on the impacts of
climate change. The Company’s Sustainability
Committee is developing strategies to ensure
the impact to the climate of current and
is minimised wherever
future operations
possible. Reporting on this critical area is
further extensive
being developed and
information,
including clear metrics and
targets, will be publicised in future Company
released announcements.
Risk Management
Select Harvests has a risk management
process in place to identify, analyse, assess,
manage and monitor risks throughout all
parts of the business. The Company maintains
and refreshes its detailed risk register annually.
The register provides a framework and
benchmark against which risks are reported
on at different levels in the business, with a
biannual report presented to the Board.
Each month major risks are reviewed by Senior
Management and the Board. They include:
• Safety Risks (including employee safety, fire
prevention and plant operation);
• Horticultural Risks (including climatic, disease,
water management, pollination and quality);
• Food Safety Risks (including product quality,
utilities supply, major equipment failure); and
• Financial Risks (including currency, customer
concentration, market pricing).
In addition to the above the risk and impacts of
climate change on the business is considered
regularly throughout the year. Areas that are
reviewed, monitored and mitigation strategies
put in place are water management and
ownership, global orchard plantings and
removals (impact on almond pricing), energy
consumption and production (through use of
Biomass technology), regeneration of orchards
through compost production and internal liquid
fertiliser opportunities to minimise reliance
on external fertiliser production and supply.
The Audit and Risk Committee Charter is
available on the Select Harvests website:
www.selectharvests.com.au/governance
Outlook
The global macro outlook
for almonds
continues to remain positive moving forward,
driven by increasing wealth and a higher number
of consumers adopting and consuming healthier
diets, including the increased consumption of
plant-based products, particularly almonds.
FY2021 continued to be impacted by COVID-19
related global supply chain issues. There
continues to be delays in available shipping
space and disruptions to port facilities. However,
almond shipments have been positive both
out of the USA and Australia. Select Harvests
remains well placed to successfully deliver on
both the export of raw almond product and
the processed value-added options both
domestically and internationally.
The horticultural program for the 2022 crop is
well underway. Conditions to date have been
favourable with the trees receiving sufficient
chill hours through the dormancy period and
the pollination process has completed without
issue. There have been a limited number of frost
events and the previous investment in frost
fans implemented in key areas has mitigated
any negative impact. There have been some
isolated storm events impacting orchard areas.
The damage to date has been minimal.
Based on industry standard yields and the age
profile of the orchards, and assuming normal
growing conditions for the season, the Select
Harvests 2022 theoretical crop would be
approximately 30,000MT.
in FY2022 from the
Continuing increased levels of rainfall have led
to temporary water prices remaining at lower
than average levels. Select Harvests will fully
lower priced
benefit
temporary water market with all previously
carried forward water utilised in the 2021 crop.
Our policy of owning water entitlements, long
and medium term leasing entitlements and
acquiring annual allocations on the spot market
means we are not fully exposed to annual
fluctuations in water prices.
The USD almond price increased from its 10
year lows early in FY2021. The increase was
driven by the likely outcome of the 2021 US
crop being 15% lower than the 3.2 Billion pound
2020 crop and the anticipated drought impact
on quality and sizing levels. Additionally, continued
record breaking shipment levels out of the USA
gave the market confidence that carryover
levels would be manageable leading into the
2021 crop. While prices have stabilised, it is
expected that further increases will occur once
markets continue to become less restricted
and the food services sector gets back to full
operating capacity. The continuing drought
conditions in California are expected to add
further supply pressure to the global market.
The Company continues to pursue opportunities
to further maximise returns from its core
almond asset base. This occurs through
increased production (yields), improved quality
and greater efficiency. This is achieved through
the following:
• Increasing the use of technology to provide a
more targeted horticultural management
approach delivering improvements to yield,
quality and lower water usage
• Further investment in advanced equipment
in our Robinvale processing facility to deliver
additional scale, quality and productivity
improvements
• Additional
capabilities
and operating
efficiency from our Parboil value adding
facility through targeted investment and
new product manufacturing processes
• Consistent maximum power generation
from our H2E bio-mass facility using hull and
horticultural waste and producing high
quality pot ash to be composted and applied
to current orchard assets
21
In addition to the above, domestic greenfield
developments and mature orchard acquisitions
continue to be assessed. On 18 December
2020 Select Harvests successfully completed
the acquisition of the Piangil Almond Orchard.
This acquisition has been seamlessly added to
the portfolio of highly productive almond
orchards. The Piangil 2021 crop yield and quality
were in line with expectations and the 2022
crop is on track to meet business case levels.
Following a detailed strategic review Select
Harvests commenced a process to sell the
Consumer Foods section of the Food Division.
This process resulted in the decision to close
the Thomastown processing facility and exit
the branded and non-almond related areas of
the business. As part of this process Select
Harvests completed the sale of the Lucky and
Sunsol brands to Prolife Foods on 30 September
2021. The Thomastown based almond related
industrial business is in the process of being
transferred to the Robinvale based processing
facility and the private label packing and non-
almond processing areas will either be sold or
wound down. Select Harvests is planning to
finalise all production out of Thomastown by
31 March 2022.
An extensive capital program is underway in
Select Harvests’ Robinvale processing facility to:
• Increase production and efficiency levels of
currently produced almond based products
• Allow for the production of additional
almond based products previously catered
for out of the Thomastown facility
• Develop new products
in the growing
almond based value add sector
Additionally, the company continues to
carefully assess (through internally set hurdle
its growth
rates and strategic benefits)
opportunities. These comprise:
• Continued expansion in almond orchards,
both greenfield and mature
• Diversification into other nuts
• Growth opportunities
in value adding
processes to almonds. This covers both
expanding and becoming
increasingly
efficient in current capabilities and looking
for new opportunities in the health benefits
of almond related products.
• Development of opportunities in the use of
almond hull and husk, particularly
in
compost and fertiliser.
The macro outlook for the almond industry and
‘better for you’ plant-based foods remain very
strong both domestically and internationally.
Select Harvests has high quality assets, a
sustained increasingly efficient and consistent
production profile supported by world class
technology. We remain well placed to deliver
on the opportunities that will arise from
continued demand growth globally for plant
based foods both as a raw and value added
processed product.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 22
Directors’ Report
Continued
SIGNIFICANT CHANGES IN
THE STATE OF AFFAIRS
There have been no significant changes in the
state of affairs of the Company.
SIGNIFICANT EVENTS AFTER THE
BALANCE DATE
On 26 November 2021, the Directors of the
Company declared a final
franked
dividend of 8 cents per share payable on 4
February 2022 to shareholders on the register
on 10 December 2021.
fully
NON IFRS FINANCIAL INFORMATION
The non IFRS financial information included
within this Directors’ Report has not been
audited or reviewed
in accordance with
Australian Auditing Standards.
information
IFRS financial
Non
includes
underlying EBIT, underlying result, underlying
NPAT, underlying earnings per share, net
interest expense, net bank debt, net debt, net
working capital and adjustments to reconcile
from reported results to underlying results.
INDEMNIFICATION AND INSURANCE OF
DIRECTORS AND OFFICERS
During the year the Company entered into an
insurance contract to indemnify Directors and
Officers against liabilities that may arise from
their position as directors and officers of the
Company and its controlled entities. The terms
of the contract do not permit disclosure of the
premium paid.
indemnified
include the company
Officers
secretary, all directors, and executive officers
participating
in the management of the
Company and its controlled entities.
COMMITTEE MEMBERSHIP
During or since the end of the financial year, the
Company had an Audit and Risk Committee, a
Remuneration and Sustainability Committee,
and a Nominations Comittee comprising
members of the Board of Directors. Members
acting on the Committees of the Board during
or since the end of the financial year were:
AUDIT AND RISK
F Bennett (Chair)
F Grimwade
G Kingwill
DIVIDENDS
Final fully franked
dividend declared for
30 September 2021*
* On ordinary shares
CENTS
8
2021
($’000)
9,618
REMUNERATION AND SUSTAINABILITY
N Anderson (Chair)
M Iwaniw
G Kingwill
M Carroll (Chair) - retired 26 February 2021
NOMINATIONS
M Iwaniw (Chair)
F Bennett
N Anderson
DIRECTORS’ MEETINGS
The number of meetings of directors (including meetings of committees of directors) held during the financial year and the number of meetings
attended by each director was as follows:
DIRECTORS’ MEETINGS
Audit and Risk
Number Eligible
to Attend
12
12
12
12
12
12
6
Number
Attended
12
12
12
12
12
12
6
Number Eligible
to Attend
-
4
4
4
-
4
-
Number
Attended
-
4
4
4
-
4
-
M Iwaniw
P Thompson
F Bennett
F Grimwade
N Anderson
G Kingwill
M Carroll*
MEETINGS OF COMMITTEES
Remuneration & Sustainability
Number Eligible
to Attend
4
4
-
-
4
3
1
Number
Attended
4
4
-
-
4
3
1
Nominations
Number Eligible
to Attend
4
4
-
-
4
-
1
Number
Attended
4
4
-
-
4
-
1
* Retired 26 February 2021
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 23
DIRECTORS’ INTERESTS IN CONTRACTS
Directors’ interests in contracts are disclosed in Note 5.3 to the financial 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 36.
NON-AUDIT SERVICES
Non-audit services provided by the external auditor are approved by resolution of the Audit and Risk Committee and approval is provided in writing
to the Board of Directors. The amounts paid or payable to PricewaterhouseCoopers (PwC) for non-audit services provided during the year was
$250,000. The Board has formed the view that the provision of those non-audit services by PwC is compatible with, and did not compromise, the
general standards of independence for auditors imposed by the Corporations Act 2001 (Cth). Amounts paid to PwC are included in Note 6.4 to the
financial report.
ROUNDING
The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) under the
option available to the Company under ASIC Corporations (Rounding in Financial/ Directors’ Reports) Instrument 2016/191. The Company is an
entity to which the Class Order applies.
PROCEEDINGS ON BEHALF OF THE COMPANY
There are no material legal proceedings in place on behalf of the Company as at the date of this report.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the directors of Select Harvests Limited support and
have adhered to the ASX principles of corporate governance. The Company has previously adopted Listing Rule 4.10.3 which allows companies to
publish their corporate governance statement on their website rather than in their annual report. A copy of the statement along with any related
disclosures is available at:
www.selectharvests.com.au/governance
This report is made in accordance with a resolution of the Directors.
M Iwaniw
Chair
Melbourne, 26 November 2021
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021
24
Remuneration Report
Introduction from the Chair of the Remuneration and Sustainability Committee
Dear Shareholder,
On behalf of the Board, I am pleased to
present the 2021 Remuneration Report and
my first as Chair of the Remuneration and
Sustainability Committee. The financial year
2021 (FY2021) has seen challenging market
conditions associated with the ongoing
impact of the COVID-19 pandemic. Our
customers, employees and the broader
community have all been affected on various
levels. Our focus has been on ensuring the
health and well-being of our staff and their
families, and supporting our customers and
the broader community.
The objective of Select Harvests' remuneration
strategy is to attract, retain and motivate the
people we require to sustainably manage and
grow the business. Executive remuneration
packages include a balance of fixed remuneration,
short term cash incentives and long term equity
incentives. The framework endeavours to align
executive reward with market conditions and
shareholders’ interests.
Fixed remuneration is aligned to the market mid-
point for similar roles in comparable companies.
The health and well-being of our people remains
the paramount priority for the business, with the
short term incentive payments conditional on
the foundations being in place for a safe work
environment, demonstration of a strong safety
culture and our values. The board assessed
the safety environment to be sound.
The short term incentive program is based on
annual performance and assessed against key
financial & operational performance indicators
(KPIs). The performance targets are based on
the annual business plan and set at a level that
results in a 50% payout on achievement of a
stretching but realistically achievable level of
performance. Maximum payout only occurs
where there is a clearly outstanding level of
performance across all KPIs.
In addition to KPIs for their business unit and
areas of direct responsibility all Key Management
Personnel (KMP) share a company NPAT KPI to
encourage a strong executive team dynamic
and cross business unit collaboration.
Setting KPIs for a business such as ours has the
challenge of a number of factors such as climatic
conditions, commodity prices and exchange
rates having a significant effect on results.
While management can to some degree
mitigate these “agricultural risks” and should be
encouraged to do so, they are largely out of our
control. The Board retains some discretion in
evaluating overall performance and taking into
account operating conditions. KMP STI vesting
levels ranged from 29% to 36% of the maximum
opportunity. The higher vesting levels were
primarily driven by strong orchard yields,
innovation, improved culture and strong cost
control in the orchards, processing, manufacturing
and head office.
The long term incentive plan is based on 3
year compound annual growth in earnings
per share and relative total shareholder return
against ASX listed industry peers and absolute
Earnings Per Share (EPS) growth. The EPS
band is broad with vesting starting at 5% and
full vesting occurring at 20%.
The choice of a broad band reflects our desire
for the start point to have a reasonable
probability of occurring and for full vesting to
only occur when there is a strong outcome
for shareholders. TSR over the three year
performance period was 64.3% which came
out at the 93rd percentile of the peer group
and resulted in 100% vesting. EPS growth
target was not met. No adjustments were
made to the reported statutory EPS
in
determining this outcome. Overall LTI vesting
was at 50%.
The remuneration outcomes resulting from
the FY2021 performance are set out in this
Remuneration Report.
Nicki Anderson
Chair – Remuneration &
Sustainability Committee
The report has been prepared and audited
against the disclosure requirements of the
Corporations Act 2001 (Cth).
1. KEY QUESTIONS
What are our remuneration objectives and guiding principles?
OBJECTIVE
To deliver
sustainable returns
as a leader in “better
for you” plant based
foods.
Align management
and shareholder
interests.
PRINCIPLES
Deliver competitive
advantage in
attracting,
motivating and
retaining talent.
Encourage a diverse
workforce.
Simple, easily
understood,
rewarding
performance and
creating a culture
that delivers
shareholder value.
Reflect our values of:
• Trust & Respect
• Integrity &
Diversity
• Sustainability
• Performance
& Innovation
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 How is our remuneration structured?
The table below provides an overview of the different remuneration components within the framework.
25
PURPOSE
DELIVERY
FY21 APPROACH
OBJECTIVE
Attract and
retain the best
talent
REMUNERATION
COMPONENT
Total Fixed
Remuneration
(TFR)
Reward
current year
performance
Short Term
Incentive
(STI)
Base salary,
superannuation and
salary sacrifice
components based on
total cost to the
company
Annual cash payment
TFR is set in relation to the
external market and takes
into account:
• Size & complexity of the role
• Individual responsibilities
STI ensures appropriate
differentiation of pay for
performance and is based on
business and individual
performance outcomes
Reward long
term
sustainable
performance
Long Term
Incentive
(LTI)
LTI ensures alignment to
long-term overall company
performance and is
consistent with:
• Profitable growth
• Long-term shareholder return
Performance rights
(vesting after three
years, subject to
performance)
Target TFR positioning is Median of
Comparator Group
Comparators: ASX Listed Food and
Agribusiness Companies
STI Performance Measures1
• NPAT (50%)
• Culture/ Executive Development (15%)
• Capital management (5%)
• Personal & Operational performance (10%)
• Board discretion (20%)
With a tollgate for safety & values
LTI Performance Measures
• Relative TSR (50%)
• EPS growth (50%)
With a positive TSR gate
• Holding Lock
The participant’s holding is equal to
their fixed annual remuneration
• Clawback conditions
For fraud or dishonest conduct
breach of obligations to the Company
1 This summarises the MD’s Performance Measures. Other KMP’s measures are tailored to their responsibilities
Who and how much did you pay your Key Management Personnel for the financial year (non IFRS)?
In financial year 2021, Key Management Personnel (KMP) comprised the Non-Executive Director, Managing Director (MD) and Executives (Other
KMP). KMP is defined as those persons having authority and responsibility for planning, directing and controlling the activities of an entity directly
or indirectly, including any Director (whether executive or otherwise) of that entity.
The table below presents the remuneration paid to, or vested for, MD and Other KMP for the financial year.
$
TERM AS KMP
Paul Thompson
Managing Director & CEO
Brad Crump
CFO & Company Secretary
Ben Brown
GM Horticulture
Peter Ross
GM Performance Improvement
& Sustainability
Suzanne Douglas
GM Consumer
Dan Wilson
GM Almond Operations
Nicole Feder
GM People, Safety & Culture
Laurence Van Driel
GM Trading & Industrial Sales
Urania Di Cecco
GM People, Safety & Sustainability
Full Year
Full Year
Full Year
Full Year
Full Year
From 1 July 2021
From 1 July 2021
Resigned 30 July
2021
Vale 9 March
2021
TOTAL FIXED
REMUNERATION
659,251
410,827
341,881
348,130
337,835
58,750
68,156
306,603
123,626
STI ACHIEVED1
93,335
64,242
43,567
43,383
45,676
9,358
10,526
-
-
VESTED PERFORMANCE
RIGHTS2
343,272
91,588
68,691
68,691
-
-
-
-
-
TOTAL
1,095,858
566,657
454,139
460,204
383,511
68,108
78,682
306,603
123,626
1 Cash STI will be paid after the FY2021 financial statements have been finalised.
2 The vested performance rights value in this table has been determined using the closing share price on the last trading day of FY2021. Vesting occurs after the finalisation of the
FY2021 financial statements and hurdle testing is completed by an independent expert. Sale of shares emanating from vested performance rights under the current plan
are subject to a holding lock which requires Executive KMPs to accumulate and hold a value equivalent to their annual TFR.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021
26
Remuneration Report
Continued
1. KEY QUESTIONS (CONTINUED)
When remuneration is earned and received?
The remuneration components are structured to reward executives progressively across different timeframes. The diagram below shows the period
over which FY2021 remuneration was received and when the awards were granted and vested.
TFR
STI
LTI
AGM
Monthly
FY18
FY19
FY20
FY21
FY22
Date Paid
Date Granted
Vesting Date
Performance Period
What is the remuneration mix for Key Management Personnel?
The remuneration mix for KMP is balanced between fixed and variable remuneration.
• Non-Executive Director: 100% of remuneration is fixed remuneration.
• MD: 50% of remuneration is performance-based pay and 25% of remuneration is delivered as performance rights to shares.
• Other KMP: 50% of their remuneration is performance-based pay and 25% of their remuneration is delivered as performance rights to shares.
Non-Executive
Director
MD
Other
KMP
100%
50%
50%
7%
(Max 25%)
6.2-8.0%
(Target 25%)
22%
(Max 25%)
22%
(Max 25%)
Total Fixed
Remuneration
Peformance
Dependent STI
Peformance
Dependent LTI
STI payments are based on 50% of the fixed remuneration, with maximum payment on achievement of a stretching but achievable target, with
regard to past and otherwise expected achievements.
LTI grants are at face value, where face value represents the share pricing at 30 September 2021. Other KMP have minimum shareholding requirements.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 27
What equity was granted for year ended 30 September 2021?
Equity was granted to the MD and other KMP in FY2021, as detailed in the table below. The methodology used for the allocation was determined
using the face value of full vesting based on the Volume Weighted Average Price (VWAP) over the 10 days preceding the date of the 26 February 2021
Annual General Meeting.
NUMBER OF PERFORMANCE
RIGHTS GRANTED
FACE VALUE
MD
Paul Thompson
Managing Director & CEO
Other KMP
Brad Crump
CFO & Company Secretary
Peter Ross
GM Performance Improvement & Sustainability
Ben Brown
GM Horticulture
Suzanne Douglas
GM Consumer
Nicole Feder
GM People, Safety & Culture
Dan Wilson
GM Almond Operations
77,903
18,622
15,742
15,361
15,337
-
8,066
$423,013
$101,117
$85,479
$83,410
$83,280
-
$43,798
Is there alignment between management and shareholder interests?
The following chart shows the alignment between shareholder interests as measured by reported profit and earnings per share and management’s
interests as measured by the proportion of STI that pays out and the number of performance rights vesting. The Board believes these outcomes
show “at risk” remuneration has varied appropriately.
100
80
60
40
20
0
FY17
FY18
FY19
FY20
FY21
STI Vesting % of
maximum dollars (%)
LTIP vesting % of
maximum rights (%)
Basic Earnings
per Share (cents)
Reported NPAT ($’m)
Note:
This report excludes the FY18 transition period (3 months period ending 30 September 2018) as no STI or LTIP were vested.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 28
Remuneration Report
Continued
2. MD AND OTHER KMP REMUNERATION
2.1 How STI outcomes are linked to performance
At the commencement of each annual operating cycle the Board sets KPIs for the MD and the MD sets KPIs for the KMP with target levels of
performance based on the Board approved annual operating plan. At the end of the operating cycle the Board assesses performance against these
KPIs and how these rate against the scales set out in the following table. This determines the STI reward.
PERFORMANCE
LEVEL
Unsatisfactory
Threshold
PERFORMANCE DESCRIPTION
Unacceptable level of performance
The minimum acceptable level of performance that needs
to be achieved before any reward would be available.
Target
Represents the planned level of performance. Financial
and other quantitative KPIs are set at the budgeted level
assuming plans are challenging but achievable
Outstanding
A clearly outstanding level of performance and evident to
all as an exceptional level of achievement
SUBJECTIVE
TARGETS
(BASED ON A 1 TO 5 SCALE)
Score 1 or < 2
Score 2
STI REWARD
(% MAXIMUM)
STI REWARD
(% TFR)
No payment
1%
No payment
0.5%
Score > 2 & < 3
Score of 3
Pro-rata from
1% to 49.9%
50%
Pro-rata from
12.5% to 24%
25%
Score > 3 & < 5
Score of 5
Pro-rata from
50.1% to 99.9%
100% (double on
target reward)
Pro-rata from
26% to 49%
50%
For FY2021 the KMP score cards range from 24% to 32% as a percentage of the potential maximum score and resulted in STI rewards as a percentage
of TFR of 12%. This level of performance is reflective of the delivery of a solid result through a challenging year.
2.2 Overview of FY2021 remuneration framework
FIXED REMUNERATION
Base salary
Short Term Incentive (STI)
Opportunity
Purpose
Term
Instrument
Performance measures
Why these were chosen
Long Term Incentive (LTI)
Opportunity
Consists of cash salary, superannuation and salary sacrifice arrangements based on total cost to the company.
Reviewed annually with reference to the market median for comparable companies, the individual’s performance and
potential and the company’s future plans. There is no guaranteed base pay increase in any executive contract.
% of Fixed Remuneration
MD
Unsatisfactory – 0%
Threshold – up to 12.5%
Target – up to 25%
Maximum - up to 50%
Other KMP
Unsatisfactory – 0%
Threshold – up to 7.5-12.5%
Target – up to 15-25%
Maximum – up to 50%
To provide incentive to exceed the annual business objectives.
1 year
Cash
KPI Score Card
Company NPAT
Culture/Executive Development
Capital management
Personal & Operational performance / Project delivery
Board discretion
With a safety and values tollgate
To provide a balance between outperforming the annual operating plan, individual business unit plans, focus on
the efficient use of capital and strengthening the balance sheet, on time and budget delivery of strategic projects
and sustained orchard productivity. The Board retains some discretion to adjust the outcomes based on whether
they were influenced by uncontrollable “headwinds” or “tailwinds” and the degree to which behaviours reflect our
values. The health and wellbeing of our people remains paramount and no incentive is paid if the foundations for a
safe work environment were not maintained.
Other KMP
40%
15%
5%
20%
20%
MD
50%
15%
5%
10%
20%
% of Fixed Remuneration
MD
Face Value – up to 50%
Other KMP
Face Value – up to 25%
Purpose
Term
Instrument
Reward achievement of long term business objectives and sustainable value creation for shareholders.
3 years, vesting at the end of the period.
Performance rights
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 29
FIXED REMUNERATION
Performance conditions*
Why these were chosen
1. Continuing service
2. Positive absolute shareholder return
3. 50% Compound Annual Growth in underlying earnings per share† over three years.
The performance targets and vesting proportions are as follows:
• Below 5% CAGR
• 5% CAGR
• 5.1% - 19.9% CAGR
• 20% or higher CAGR
4. 50% Total Shareholder Return relative to a peer group of ASX listed companies over three years.
The performance targets and vesting proportions are as follows:
Nil
• Below the 50th percentile
25%
• 50th percentile
Pro rata vesting
• 51st – 74th percentile
• At or above 75th percentile
50%
Underlying EPS represents a strong measure of overall business performance.
TSR provides a shareholder perspective of the Company’s relative performance against comparable companies.
Nil
25%
Pro rata vesting
50%
* The Remuneration and Sustainability Committee is responsible for assessing whether the targets are met and in doing so obtains the advice of an independent expert.
† EPS adjustments are made consistent with the guidance issued by the Australian Institute of Company Directors and Financial Services Institute of Australasia in March 2009 and
ASIC Regulator Guide RG230 ‘Disclosing Non-IFRS financial information’.
OTHER
Hedging policy
Clawback
Minimum shareholding
requirements
Individuals cannot hedge Select Harvests equity that is unvested or subject to restrictions.
The Board may determine that any unvested share rights will lapse or be forfeited in certain circumstances such as
in the case of fraud, wilful misconduct or dishonesty.
Vested performance rights are to be held until the accumulated value is equal to 100% base salary.
The safety tollgate, which requires maintenance of a safe work environment, was passed.
The individual KMP actual STI payments and potential maximum payments are set out in the following table in section 2.3.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 30
Remuneration Report
Continued
2. EXECUTIVE KMP REMUNERATION (CONTINUED)
2.3 What we paid to the MD and other KMP in FY2021 – Further detail
The following pages compare the maximum potential and actual remuneration for the financial year ended 30 September 2021 for current KMP.
Amounts include:
• Total fixed remuneration
• STI achieved as a result of business and individual performance (versus the maximum potential cash STI)
• Share performance rights that vested during the year at face value (versus the maximum initial award face value) for the performance testing
period concluding in that year.
This information differs from the statutory remuneration disclosures presented in Section 5.1 (which are presented in accordance with the accounting
standards) as the performance rights value is based on the closing share price on the day the tranche of performance rights were approved.
The directors believe that the remuneration received is more relevant to users for the following reasons:
• The statutory remuneration expensed is based on historic cost and does not reflect the value of the equity instruments when they are actually
received by the KMPs;
• The statutory remuneration shows benefits before they are actually received by the KMPs.
Actual Remuneration
Maximum Potential
Actual Remuneration
Maximum Potential
Actual Remuneration
Maximum Potential
Actual Remuneration
Maximum Potential
Actual Remuneration
Maximum Potential
Actual Remuneration
Maximum Potential
Actual Remuneration
Maximum Potential
2021
2021
2021
2021
2021
2021
2021
2021
2021
2021
2021
2021
2021
2021
TOTAL FIXED
REMUNERATION
659
659
411
411
348
348
SHORT TERM
INCENTIVE
93
330
64
206
43
174
PERFORMANCE
RIGHTS
421
487
101
117
84
97
342
342
338
338
68
68
59
59
44
171
46
169
11
34
9
31
84
97
-
-
-
-
-
-
TOTAL
1,173
1,476
576
734
475
619
470
610
384
507
79
102
68
90
$’000
Paul Thompson
Managing Director & CEO
Brad Crump
CFO & Company Secretary
Peter Ross
GM Performance Improvement
& Sustainability
Ben Brown
GM Horticulture
Suzanne Douglas
GM Consumer
Nicole Feder*
GM People, Safety & Culture
Dan Wilson*
GM Almond Operations
* Commenced as KMP on 1 July 2021
2.4 FY2022 Outlook
The Committee and Board continue to review our remuneration strategy:
• The 2022 STIP KPI’s focus on priorities and outcomes budgeted for as part of annual business plans, maintaining the focus on safety, financial
metrics, cost of production and culture.
• Our LTIP performance rights are allocated annually, ensuring closer alignment to current strategic plans and financial targets.
• The focus of LTIP moves to delivery of strategic sustainable growth in shareholder value over the medium and longer terms. Performance metrics:
Absolute TSR (40% weighting), ROCE (40% weighting) and strategy delivery (20% weighting).
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 31
2.5 Long Term Performance Perspective
The following table provides the performance outcomes over a five year period which align to the STI and LTI outcomes for Executive KMP.
Net profit / (loss) after tax ($'000)
Basic EPS (cents)
Basic EPS Growth
Dividend per share (cents)
Opening share price
1 Oct / 1 July ($)
Change in share price ($)
Closing share price
30 September / 30 June ($)
TSR % p.a.†
2021
YEAR ENDED
30 SEPT
15,116
12.7
(51%)
8.0
5.57
2.72
8.29
50%
2020
YEAR ENDED
30 SEPT
25,001
26.0
(53%)
13.0
7.69
(2.12)
5.57
(26%)
2019
YEAR ENDED
30 SEPT
53,022
55.5
3,552%
32.0
5.32
2018*
3 MONTH PERIOD
ENDED 30 SEPT
(1,536)
(1.6)
(107%)
Nil
6.90
2.37
7.69
51%
(1.58)
5.32
(23%)
2018
YEAR ENDED
30 JUNE
20,371
23.2
84%
12.0
4.90
2.00
6.90
(26%)
2017
YEAR ENDED
30 JUNE
9,249
12.6
(73%)
10.0
6.74
(1.84)
4.90
(35%)
* No assessment made against this period but shown for the purpose of completeness
† TSR is calculated as the change in share price for the year plus dividends announced for the year, divided by opening share price
Vesting of performance rights is based on performance against the hurdles over the three years prior to vesting.
The following illustrates the Company’s performance against the criteria in the LTI plan.
EPS GROWTH
Basic EPS (cents)
Underlying EPS (cents)‡
3 Year EPS CAGR
3 Year EPS CAGR target 5% - 20%
Percentage vested
2021
YEAR ENDED
30 SEPT
12.7
18.0
(7.5%)
2020
YEAR ENDED
30 SEPT
26.0
26.0
24.9%
2019
YEAR ENDED
30 SEPT
55.5
55.5
11.9%
2018
3 MONTH PERIOD
ENDED 30 SEPT
(1.6)
(1.6)
N/A
2018
YEAR ENDED
30 JUNE
23.2
23.2
(36%)
0%
100%
73%
N/A
0%
‡ Underlying EPS is adjusted for the loss on sale of the Consumer Brands and restructuring costs for the Thomastown site. Please refer to note 5.5 for more information.
RELATIVE TSR PERFORMANCE�
SHV 3 Year TSR %
SHV 3 Year TSR Ranking
Peer group 3 Year Median TSR
SHV Rank against peer group
Percentage vested
2021
YEAR ENDED
30 SEPT
2020
YEAR ENDED
30 SEPT
2019
YEAR ENDED
30 SEPT
2018
3 MONTH PERIOD
ENDED 30 SEPT
2018
YEAR ENDED
30 JUNE
64.3%
93rd percentile
(5.8%)
2nd out of 16
100%
24.5%
62nd percentile
20%
6th out of 14
73%
22.8%
29th percentile
50%
11th out of 15
0%
N/A
N/A
N/A
N/A
N/A
(22.5%)
0th percentile
27%
15th out of 15
0%
� TSR ranking relative to ASX Consumer Staples also included in the All Ordinaries index.
2.6 Terms of KMP Service Agreements
Remuneration and other terms of employment for the KMP are formalised in service agreements. These service agreements set out the base salary
arrangements and future review. Each of these agreements provide for participation in a Short Term Incentive Plan and a Long Term Incentive Plan.
Other significant provisions of the agreements are that the term is on-going with a 6 month notice period for the MD and 3 month notice period for
Other KMP.
Other than the notice periods, there are no specific termination benefits applicable to the service agreements.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 32
Remuneration Report
Continued
3. NON-EXECUTIVE DIRECTORS’ ARRANGEMENTS
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 office of Director.
Non-Executive Directors receive fees (including statutory superannuation) but do not receive any performance related remuneration nor are they
issued options or performance rights on securities. This reflects the responsibilities and the Group’s demands of directors. Non-Executive Directors’
fees are periodically reviewed by the Board to ensure that they are appropriate and in line with market expectations.
Non-Executive Directors’ professional development is supported and funded through the company’s training budget. There is no equity ownership
requirement for Non-Executive Directors. Directors are encouraged to acquire and hold shares equivalent in value to their annual fees.
The current aggregate fee limit of $950,000 was approved by shareholders at the 21 February 2020 Annual General Meeting. For the FY2021
reporting year, the total amount paid to Non-Executive Directors was $724,187.
The remuneration is a base fee with the Chair of each of the Committee receiving additional fees commensurate with their responsibilities. The
current directors’ fees are as follows:
Current Base Fees (including superannuation)
Chair
Other Non-Executive Directors
Additional Fees (including superannuation)
Chair of the Audit and Risk Committee
Chair of the Remuneration and Sustainability Committee
$250,791
$108,749
$14,501
$14,501
4. GOVERNANCE
4.1 Role of the Remuneration and Sustainability Committee
The Remuneration and Sustainability Committee operates under its own Charter and reports to the Board. The Charter, which the Board reviews
annually, was last approved in April 2021. A copy of the Charter is available on the Company’s website:
www.selectharvests.com.au
4.2 Use of Remuneration Advisors
During the year, the Remuneration Committee engaged Godfrey Remuneration to:
• Prepare reports on market benchmarking of executive remuneration;
• Review of short-term variable remuneration plan; and
• Review of long-term variable remuneration plan
The following arrangements were made to ensure that the engagement and delivery of services from Godfrey Remuneration are free from undue
influence by members of the Group’s Key Management Personnel and are as follows:
• Remuneration consultants are to be engaged by, and report directly to, the Chair of the Remuneration and Sustainability Committee. Agreements
for the provision of remuneration consulting services are to be executed by the Chair of the Remuneration and Sustainability Committee under
delegated authority on behalf of the Board.
• Reports containing remuneration recommendations are to be provided directly to the Chair of the Remuneration and Sustainability Committee; and
• Remuneration consultants are permitted to speak to management throughout the engagement (if required) to understand company processes,
practices and other business issues and obtain management perspectives.
As a consequence, the board is satisfied that the recommendations were made free from undue influence from any members of the key management
personnel. The total consulting fees paid were $88,000 (ex GST).
4.3 Share Trading Policy
The Share Trading Policy was last reviewed by the Board in December 2020. A copy is available on the Company’s website:
www.selectharvests.com.au
Under the policy senior executives may not hedge Select Harvests equity that is unvested or subject to restrictions.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 33
5. KMP STATUTORY DISCLOSURES
5.1 Details of FY2021 and FY2020 Remuneration
Remuneration of the Directors and other key management personnel of Select Harvests Limited and the consolidated entity.
$
ANNUAL REMUNERATION
LONG TERM
Base Fee
Short Term
Incentives
Non Cash
Benefits
Superannuation
Contributions
Long Service Leave
Accrued & Paid
Performance
Rights Granted1
Total
F Grimwade
N Anderson
Financial
Year
Non Executive Directors
2021
M Iwaniw
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
G Kingwill
F Bennett
M Caroll*
P Ross
B Brown
S Douglas
N Feder†
D Wilson†
L Van Driel‡
U Di Cecco�
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2 2 3,821
223,788
97,578
96,924
105,205
96,924
121,168
112,458
9 7, 5 7 8
82,634
4 5 , 7 7 0
109,849
388,491
383,614
321,901
321,063
316,595
312,782
315,499
304,378
60,696
-
53,409
-
278,185
334,521
112,730
260,362
Executive Director
P Thompson
2021
2020
631,699
574,553
Other key management personnel
B Crump
-
-
-
-
-
-
-
-
-
-
-
-
93,335
87,807
64,242
59,660
43,383
56,417
43,567
65,560
45,676
56,632
10,526
-
9,358
-
-
47,532
-
42,189
-
-
-
-
-
-
-
-
-
-
-
-
5,216
45,517
-
-
3,862
3,888
2,919
4,997
-
-
1,498
-
-
-
10,000
-
-
-
-
-
9,329
9,208
10,061
9,208
-
7,827
9,329
7,850
4,348
10,436
22,336
21,003
22,336
21,003
22,367
21,003
22,367
21,003
22,336
21,003
5,962
-
5,341
-
18,418
21,003
10,896
21,003
-
-
-
-
-
-
-
-
-
-
-
-
14,312
11,993
-
-
7,351
5,986
10,262
53,751
-
-
-
-
-
-
-
6,465
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2 2 3,821
223,788
106,907
106,132
115,266
106,132
121,168
120,285
106,907
90,484
50,118
120,285
(4,253)
231,037
762,645
971,910
(3,289)
64,481
(926)
43,824
(1,253)
43,824
17,478
4,298
-
-
2,263
-
(58,999)
43,824
(3,545)
3,545
471,780
528,758
397,938
452,181
394,457
501,917
400,989
386,311
78,682
-
70,371
-
247,604
453,345
120,081
327,099
* Retired 26 February 2021
† Commenced as KMP 1 July 2021
‡ Resigned 30 July 2021
� Vale 9 March 2021
1 The amortisation approach for the performance rights has been amended to include the service period when the award was earned. This typically results in amortisation over an
additional month to the vesting date. In prior years, the amortisation approach only considered the respective performance period. The 2020 values have been restated to align with
the current year presentation. As the 2020 restatement was not considered material to the users of financial statements, no restatement was made in the financial statements.
Notes:
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 reflective of rights that may or may not vest in future years.
The elements of remuneration have been determined based on the cost to the consolidated entity.
Performance rights granted have been independently valued using the Monte Carlo simulation option pricing model, which takes account of factors such as the exercise price
of the rights, the current level and volatility of the underlying share price and the time to maturity of the rights. The amount shown here is an accounting expense and reflects
the value as determined using this model. The value is expensed over the vesting period of the rights.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021
34
Remuneration Report
Continued
5. KMP STATUTORY DISCLOSURES (CONTINUED)
5.2 Details of LTI Performance Rights Granted, Vested and Exercised
Performance rights granted to the Managing Director and Other KMP during the year.
Opening balance
1 Oct 2020
Granted during the
year
NUMBER
Vested during the
year
Forfeited during
the year
Closing balance
30 Sept 2021
Executive Director
P Thompson
Other key management personnel
B Crump
P Ross
B Brown
S Douglas
D Wilson*
L Van Driel†
U Di Cecco�
204,660
51,338
40,940
40,940
9,369
4,500
40,940
7,729
77,903
18,622
15,742
15,361
15,337
8,066
-
-
64,875
15,570
12,975
12,975
-
-
12,975
-
10,125
2,430
2,025
2,025
-
-
27,965
7,729
207,563
51,960
41,682
41,301
24,706
12,566
-
-
* Commenced as KMP 1 July 2021
† Resigned 30 July 2021
‡ Vale 9 March 2021
All vested rights are exercisable after the performance period, subject to a holding lock that requires KMP to hold shares with a value equivalent to
their base salary.
5.3 Active Plan Performance Rights Granted
Performance rights granted to executives under the LTI Plans that are relevant to FY2020 and beyond.
GRANT
DATE
29 April
2019
27 March
2020
28 July
2021
VESTING CONDITIONS
• EPS Compound Annual
Growth
• Relative TSR performance
to peer group
• Continuous service
• Holding Lock
• EPS Compound Annual
Growth
• Relative TSR performance
to peer group
• Continuous service
• Holding Lock
• EPS Compound Annual
Growth
• Relative TSR performance
to peer group
• Continuous service
• Holding Lock
PERFORMANCE
PERIOD
30 September 2021
PARTICIPATING
EXECUTIVES
P Thompson
B Crump
P Ross
B Brown
PERFORMANCE
ACHIEVED
30 September 2021
rights achieved 0%
of EPS condition
rights and 100% of
TSR condition rights
VESTED %
EXPIRY DATE
50% of
30 September
2021 rights
28 October
2021
30 September 2022
30 September 2023
P Thompson
B Crump
P Ross
B Brown
S Douglas
D Wilson
P Thompson
B Crump
P Ross
B Brown
S Douglas
D Wilson
2022 period to be
determined
N/A
31 October
2022
2021 period to be
determined
N/A
31 October
2023
The LTI Plan provides for the offer of a parcel of performance rights with a three year performance period to participating employees. The rights vest
at the end of the period on achievement of the performance hurdles. 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.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 5.4 Grants of Performance Rights
The table details the grants of performance rights to the Managing Director and Executive team.
NAME
YEAR GRANTED
NUMBER
GRANTED
VALUE PER
RIGHT*
VESTED %
RIGHTS TO DEFERRED SHARES
FORFEITED
NUMBER
VESTED
NUMBER
P Thompson
B Crump
P Ross
B Brown
S Douglas
D Wilson
L Van Driel
U Di Cecco
2017
2019
2020
2021
2018
2019
2020
2021
2017
2019
2020
2021
2017
2019
2020
2021
2020
2021
2020
2021
2017
2019
2020
2020
75,000
82,815
46,845
77,903
18,000
22,095
11,243
18,622
15,000
16,571
9,369
15,742
15,000
16,571
9,369
15,361
9,369
15,337
4,500
8,066
15,000
16,571
9,369
7,729
$4.07
$5.18
$4.22
$6.29
$3.65
$5.18
$4.22
$6.29
$3.38
$5.18
$4.22
$6.29
$3.38
$5.18
$4.22
$6.29
$4.22
$6.29
$4.22
$6.29
$3.38
$5.18
$4.22
$4.22
87%
-
-
-
87%
-
-
-
87%
-
-
-
87%
-
-
-
-
-
-
-
87%
-
-
-
64,875
-
-
-
15,570
-
-
-
12,975
-
-
-
12,975
-
-
-
-
-
-
-
12,975
-
-
-
10,125
-
-
-
2,430
-
-
-
2,025
-
-
-
2,025
-
-
-
-
-
-
-
2,025
16,571
9,369
7,729
35
FINANCIAL YEARS IN WHICH
RIGHTS MAY VEST
MAX. VALUE YET
TO VEST†
30-Sep-21
30-Sep-22
30-Sep-23
30-Sep-24
30-Sep-21
30-Sep-22
30-Sep-23
30-Sep-24
30-Sep-21
30-Sep-22
30-Sep-23
30-Sep-24
30-Sep-21
30-Sep-22
30-Sep-23
30-Sep-24
30-Sep-23
30-Sep-24
30-Sep-23
30-Sep-24
30-Sep-21
30-Sep-22
30-Sep-23
30-Sep-23
-
$428,982
$197,686
$490,010
-
$114,452
$47,445
$117,132
-
$85,838
$39,537
$99,017
-
$85,838
$39,537
$96,621
$39,537
$96,470
$18,990
$50,735
-
-
-
-
* The value per right for each grant has been amended to include
both the TSR and EPS vesting conditions. In prior years, this
disclosure only considered the respective value of the TSR and
EPS vesting conditions to the extent the hurdle was expected to
be achieved:
YEAR GRANTED
2020
2021
PERFORMANCE HURDLES
TSR
EPS
TSR
EPS
FAIR VALUE
$2.83
$5.60
$5.30
$7.28
† The values disclosed for 2020 have been
revised to reflect changes made to the way the
weighted average fair value has been calculated.
5.5 Number of shares held by directors and other key management personnel
The movement during the year in the number of ordinary shares of the company held, directly or indirectly, by each director and other key
management personnel, including their personally related entities, is as follows:
HELD AT
1 OCTOBER 2020
RECEIVED ON EXERCISE OF
PERFORMANCE RIGHTS
OTHER –DRP, SALES
AND PURCHASES
HELD AT
30 SEPTEMBER 2021
Non-executive directors
M Iwaniw
F Grimwade
N Anderson
F Bennett
G Kingwill
Executive director
P Thompson
Other key management personnel
B Crump
P Ross
B Brown
S Douglas
N Feder
D Wilson
L Van Driel
U Di Cecco
205,856
80,000
7,467
7,919
5,361
511,425
-
135,867
3,445
-
-
-
5,475
-
-
-
-
-
-
64,875
15,570
12,975
12,975
-
-
-
12,975
-
14,732
12,699
4,118
11,326
10,851
48,079
(12,785)
11,370
3,776
4,000
-
-
(18,450)
-
220,588
92,699
11,585
19,245
16,212
624,379
2,785
160,212
20,196
4,000
-
-
-
-
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021
36
Auditor’s Independence Declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Select Harvests Limited for the year ended 30 September 2021, 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.
Alison Tait
Partner
PricewaterhouseCoopers
Melbourne
26 November 2021
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, 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 30 SEPTEMBER 2021
Annual Financial Report
37
ABOVE: Daniel Wilson has overseen the successful installation of the upgraded H2E filter system.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 38
Statement of Comprehensive Income
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2021
Continuing Operations Revenue
Total revenue
Other income
Fair value adjustment of biological assets
Gain on sale of assets
Total other income
Expenses
Cost of sales
Distribution expenses
Marketing expenses
Occupancy expenses
Administrative expenses
Finance costs
Others
PROFIT / (LOSS) BEFORE INCOME TAX
Income tax (expense)
PROFIT / (LOSS) FROM CONTINUING OPERATIONS
Profit / (loss) from discontinued operations
PROFIT / (LOSS) ATTRIBUTABLE TO MEMBERS OF SELECT HARVESTS LIMITED
Other comprehensive income
Items that may be reclassified to profit or loss
Changes in fair value of cash flow hedges, net of tax
Other comprehensive income for the year
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO MEMBERS OF
SELECT HARVESTS LIMITED
Total Comprehensive Income Attributable to Members of Select Harvests Limited arises from:
Continuing Operations
Discontinuing Operations
Earnings per share for profit from continuing operations attributable to the ordinary
equity holders of the company:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Earnings per share for profit attributable to the ordinary equity holders of the company:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
The above Statement of Comprehensive Income should be read in conjunction with the accompanying Notes.
CONSOLIDATED ($'000)
NOTE
2021
2020
2.2
3.3
2.3
2.3
2.3
2.3
2.4
5.5
2.5
2.5
2.5
2.5
228,595
187,108
(4,203)
1,945
(2,258)
(179,220)
(812)
(9)
(239)
(12,387)
(2,181)
(1,064)
30,425
(5,136)
25,289
(10,173)
15,116
13,988
289
14,277
(142,304)
(906)
(3)
(317)
(14,748)
(1,932)
1,464
42,639
(13,454)
29,185
(4,184)
25,001
(6,543)
(6,543)
4,383
4,383
8,573
29,384
18,746
(10,173)
8,573
33,568
(4,184)
29,384
21.3
21.2
12.7
12.7
30.4
30.3
26.0
25.9
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 Statement of Financial Position
AS AT 30 SEPTEMBER 2021
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Biological assets
Current tax receivable
Derivative financial instruments
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Other receivables
Property, plant and equipment
Right-of-use assets
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Borrowings
Lease liabilities
Derivative financial instruments
Current tax liabilities
Deferred gain on sale
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Other payables
Borrowings
Lease liabilities
Deferred tax liabilities
Deferred gain on sale
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained profits
TOTAL EQUITY
The above Statement of Financial Position should be read in conjunction with the accompanying Notes.
39
2020
1,451
69,154
100,549
42,432
-
3,811
217,397
1,891
298,715
236,444
70,447
607,497
824,894
42,517
6,235
31,264
-
5,398
175
5,473
91,062
3,525
52,750
233,513
36,312
2,452
270
328,822
419,884
405,010
279,096
14,280
111,634
405,010
CONSOLIDATED ($'000)
NOTE
4.2
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
4.3
3.9
3.4
3.10
3.12
3.8
4.3
3.9
3.11
3.10
3.12
4.1
2021
1,995
84,842
114,316
51,321
5,286
78
257,838
1,825
437,607
222,550
83,985
745,967
1,003,805
64,967
5,063
31,661
3,626
-
175
10,558
116,050
2,761
95,000
221,494
38,851
2,277
416
360,799
476,849
526,956
397,343
7,657
121,956
526,956
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 40
Statement of Changes in Equity
FOR THE FINANCIAL YEAR
ENDED 30 SEPTEMBER 2021
Balance at 1 October 2019
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with equity holders in their capacity
as equity holders:
Contributions of equity, net of transaction costs and deferred tax
Deferred tax credit on transaction costs
Dividends paid or provided
Employee performance rights
Balance at 30 September 2020
Profit for the year
Other comprehensive loss
Total comprehensive income for the year
Transactions with equity holders in their capacity
as equity holders:
Contributions of equity - net of transaction costs and deferred tax
Placement and Share Purchase Plan - net of transaction cost
Deferred tax credit on transaction costs
Dividends paid or provided
Employee performance rights
Balance at 30 September 2021
NOTE
CONTRIBUTED
EQUITY
271,750
3.4
4.1
4.1
2.6
6.3
3.4
4.1
4.1
4.1
2.6
6.3
-
-
-
6,289
1,057
-
-
279,096
-
-
-
1,962
115,382
903
-
-
397,343
CONSOLIDATED ($'000)
RESERVES
10,417
-
3,326
3,326
-
-
-
537
14,280
-
(6,543)
(6,543)
-
-
-
-
(80)
7,657
RETAINED
EARNINGS
114,445
25,001
-
25,001
-
-
(27,812)
-
111,634
15,116
-
15,116
-
-
-
(4,794)
-
121,956
TOTAL
396,612
25,001
3,326
28,327
6,289
1,057
(27,812)
537
405,010
15,116
(6,543)
8,573
1,962
115,382
903
(4,794)
(80)
526,956
The above Statement of Changes in Equity should be read in conjunction with the accompanying Notes.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 Statement of Cash Flows
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Interest and finance costs paid
Income tax received / (paid)
Net cash inflow / (outflow) from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Government grants
Proceeds from sale of property, plant and equipment
Proceeds from sale of brand names
Proceeds from sale of water rights
Payment for water rights
Payment for property, plant and equipment
Payment for bearer plants and plantation land
Payment for tree development costs
Net cash inflow / (outflow) from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares net of transaction costs
Proceeds from borrowings
Repayments of borrowings
Principal elements of lease payments
Dividends on ordinary shares, net of Dividend Reinvestment Plan
Net cash inflow / (outflow) from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Reconciliation to cash at the end of the year:
Cash and cash equivalents
Bank overdrafts
41
CONSOLIDATED ($'000)
NOTE
2021
2020
275,193
(214,672)
60,521
24
(15,155)
(7,201)
38,189
50
4,310
1,500
1,929
(19,192)
(21,392)
(124,943)
(11,986)
(169,724)
115,382
275,090
(232,840)
(21,549)
(2,832)
133,251
1,716
(4,784)
(3,068)
1,995
(5,063)
(3,068)
4.2
4.2
4.2
236,617
(189,755)
46,862
5
(15,440)
(18,274)
13,153
-
1,058
-
-
-
(26,103)
-
(10,216)
(35,261)
-
246,519
(193,769)
(21,848)
(21,523)
9,379
(12,729)
7,945
(4,784)
1,451
(6,235)
(4,784)
The above Statement of Cash Flow includes both continuing and discontinued operations and should be read in conjunction with the accompanying notes.
Amounts related to discontinued operations are disclosed in Note 5.5.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 42
Notes to the Financial Statements
1. BASIS OF PREPARATION
1.1 Basis of Preparation
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated. The financial statements are for the Company consisting of Select Harvests
Limited and its subsidiaries. Where appropriate, comparatives have been reclassified to enhance comparability with current year disclosures.
This general purpose financial report has been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements
of the Australian Accounting Standards Board and the Corporations Act 2001. Select Harvests Limited is a for profit entity which is incorporated and
domiciled in Australia. Its registered office and principal place of business is:
Select Harvests Limited
360 Settlement Road
Thomastown Vic 3074
This financial report covers the Group consisting of Select Harvests Limited and its subsidiaries. The financial report is presented in Australian currency.
A description of the nature of the Company’s operations and its principal activities is included in the review of operations in the directors’ report,
which is not part of this financial report.
The financial report was authorised for issue by the directors on 26 November 2021. The Company has the power to amend and reissue the financial 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 financial reports and other information are available on our website: www.selectharvests.com.au.
Compliance with IFRS
The consolidated financial 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 financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial
assets, financial assets and liabilities (including derivative instruments) at fair value through the income statement and biological assets.
Critical accounting estimates
The preparation of financial 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 Company’s accounting policies. The areas involving a higher level of judgement
or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 1.2.
New or amended Accounting Standards and Interpretations adopted during the financial year
During the year, the Group adopted IFRS Interpretations Committee (IFRIC) Agenda item 5 - Cloud computing arrangement costs. The impact was
determined as not material to the Group. Refer to note 3.7 for further information.
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board
(‘AASB’) that are mandatory for the current reporting year. These do not have a material effect on the Group’s financial statements.
Any new, revised or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for the 30 September 2021 reporting period and
have not been early adopted by the Company. The group’s assessment of these new standards and interpretations concluded that they will not have
a material impact on the financial statements of the Group in future periods. The new standards and interpretations are as follows:
• AASB 2018-6 Amendments to Australian Accounting Standards definition of a business- AASB 3 Business Combinations (effective 1 January 2020)
• AASB 2018-7 Amendments to Australian Accounting Standards definition of material- AASB 101and AASB 108 (effective 1 January 2020)
• AASB 2019-1 Revised conceptual framework for financial reporting (effective date 1 January 2020)
• AASB 2019-3 Interest rate benchmark reform on hedge accounting- AASB 7, AASB 9 and AASB 139 (effective 1 January 2020)
Principles of consolidation
(i) Subsidiaries
Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the
activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from
the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the group.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 43
Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each entity comprising the Company are measured using the currency of the primary economic
environment in which the entity operates (“the functional currency”). The consolidated financial 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 flow hedges.
Comparatives
Where necessary, comparatives have been reclassified and repositioned for consistency with current year disclosures.
Rounding
The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) under the
option available to the Company under ASIC Corporations (Rounding in Financial/ Directors’ Reports) Instrument 2016/191. The Company is an
entity to which the Class Order applies.
Parent entity financial information
The financial information for the parent entity, Select Harvests Limited, disclosed in Note 5.2 has been prepared on the same basis as the consolidated
financial statements, except as set out below.
(i) Investments in subsidiaries
Investments in subsidiaries are accounted for at cost in the financial statements of Select Harvests Limited.
1.2. 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 Company makes estimates and assumptions concerning the future. The resulting accounting estimates may not, by definition, 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 financial year are discussed below.
Inventory - Current Year Almond Crop
The 2021 almond crop is classified as inventory once the crop is harvested in accordance with AASB 102 Inventories. The Company's estimated
average almond selling price at the point of harvest was $6.80 per kilogram. It was determined with reference to the Company's committed sales
contracts, market values for the uncommitted inventory, quality and foreign exchange rates at the point of harvest.
At balance date, the company had completed hulling and shelling of all its almonds with a yield of 28,250MT and 81% of this crop had been sold or
committed to be sold.
Fair Value of Acquired Assets
In determining the allocation of fair value across the assets acquired, in particular the bearer plants, the Company has made various assumptions.
These include cash flow projections based on future almond price, yield and associated costs.
Discontinued Operations
The Company disposed of the Consumer Brands section of the business on 30 September 2021. The associated revenue and expenses have been
disclosed as discontinued operations, in note 5.5. As part of the discontinuation, the Thomastown factory is to be closed, and a provision for the
restructuring costs of the business has been taken. In deriving the costs of the restructure, the Company has made various assumptions including
closure dates, recoverable amount and various costs estimates.
An impairment loss has been recognised for the write-down of assets to fair value less costs to sell.
Carrying value of intangible assets
The Group tests annually whether intangible assets have suffered any impairment, in accordance with the accounting policy stated in Note 3.7. The
recoverable amounts of cash generating units have been determined based on value-in-use calculations.
Key assumptions and sensitivities are disclosed in Note 3.7.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 44
Notes to the Financial Statements
Continued
2. RESULTS FOR THE YEAR
2.1 Segment Information
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 identified as
the Chief Executive Officer.
Segment products and locations
Following the sale of the Consumer Foods Branded business, the reporting and operational information internally presented to the Chief Executive
Officer has been adjusted. The Chief Executive Officer and Executive Management now assess the performance of the Group on an integrated and
consolidated basis. Therefore, no specific segments will be reported on in the FY2021 results and going forward.
The Group grows, processes and value-adds to almonds from company owned and leased almond orchards. Raw and processed product is exported
or sold domestically to consumers and Business to Business for industrial related almond products. The Group operates predominantly within the
geographical area of Australia. The total of the reportable segments’ results, profit, assets and liabilities is the same as that of the Consolidated
Group as a whole and as disclosed in the Statement of Comprehensive Income and the Statement of Financial Position.
2.2 Revenue From Continuing Operations
CONSOLIDATED ($'000)
Revenue from continuing operations
Sale of goods
Management services
Government grant and other revenue
Total revenue
NOTE
2021
2020
(a)
(b)
218,079
10,183
333
228,595
176,764
9,953
391
187,108
(a) Revenue from the Sale of goods includes sales of value-added almond products of $89.0m (2020: $84.3m) and non value-added products of
$129.0m (2020: $92.4m).
(b) A government grant of $50,000 was received during the year for export marketing purposes. The Company did not apply for or receive any
JobKeeper payments.
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 when performance obligations are satisfied and control of the goods or
services have passed or been provided to the buyer. The following specific recognition criteria must also be met before revenue is recognised:
Sale of goods and services
The sale of goods and services represents a single performance obligation and accordingly, revenue is recognised in respect of the sale of these
goods at the point in time when control over the corresponding goods and services is transferred to the customer (i.e. at a point in time for sale of
goods when the goods are shipped to the customer or when the services have been provided).
Management services
Management services revenue relates to services provided for the management and development of farms as well as acting as sales agent for
external growers by selling almonds on their behalf. Sales for external growers are not included in the Group’s revenue. However, the Group receives
a marketing fee for providing this service. Revenue from providing services is recognised in the accounting period in which the services are
rendered, on the basis of quantity of almonds sold by Select Harvest on behalf of the external grower.
The above services are recognised as revenue when services are provided. All revenue is stated net of the amount of Goods and Services Tax (GST).
As at 30 September 2021 the group held almond inventory on behalf of external growers which was not recorded as inventory to the Group.
Government grants
Government grants are assistance by the government in the form of transfers of resources to the Group in return for past or future compliance with
certain conditions relating to the operating activities of the consolidated entity.
Government grants relating to income are recognised as income over the periods necessary to match them with the related costs. Government
grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the
Group with no future related costs are recognised as income of the period in which they become receivable.
Government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are deducted
from the carrying amount of the asset on the Balance sheet. The Grant is recognised in profit or loss over the life of the depreciable asset as a
reduced depreciation expense.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 2.3 Other Income and Expenses
CONSOLIDATED ($'000)
Profit before tax from continuing operations includes the following specific expenses:
Inventory write off
Depreciation of non-current assets:
• Buildings
• Plantation land and irrigation systems
• Plant and equipment
Bearer plants
Total depreciation of non-current assets
Depreciation charge of right-of-use assets:
• Property
• Plant and equipment
• Orchard
Interest on leases
Amortisation of software
Employee benefits
Short term and low-value lease rental payments
Net (gain)/ loss on disposal of property, plant and equipment
Net (gain)/ loss on disposal of permanent water
NOTE
(a)
(b)
(c)
(d)
(e)
2021
-
565
4,035
11,323
-
15,923
189
3,055
1,125
4,369
928
820
41,204
557
(986)
(959)
45
2020
16,275
537
2,185
9,948
-
12,670
197
3,641
1,106
4,944
1,101
820
41,535
527
(289)
-
(a) Included in Cost of Sales were write down of inventories to net realisable value for the 2020 almond crop (due to the market almond price
reducing from $8.20/kg to $7.50/kg) amounting to $16.28 million. As the market almond price has not reduced during the period, there was no
write down in relation to the 2021 almond crop.
(b) Depreciation on almond trees relating to Property, Plant and Equipment amounting to $11.05 million (2020: $5.98 million) was capitalised as part
of growing crop which will then unwind as part of cost of sales when the almonds are sold.
(c) Right-of-Use asset depreciation amounting to $12.33 million (2020: $11.89 million) and $6.18 million (2020: $5.64 million) was capitalised as part
of growing crop and leasehold improvement respectively.
(d) Lease interest amounting to $7.14 million (2020: $7.63 million) and $4.69 million (2020: $4.50 million) was capitalised as part of growing crop and
leasehold improvement respectively.
(e) The expense represents lease rentals that are short-term leases (terms of 12 months or less) and leases of low-value assets charged directly to
the Statement of Comprehensive Income.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 46
Notes to the Financial Statements
Continued
2. RESULTS FOR THE YEAR (CONTINUED)
2.4 Income Tax Expense
CONSOLIDATED ($'000)
(a) Income tax expense
Current tax
Deferred tax
Over / (under) provided in prior years
Total current tax expense
Deferred income tax benefit included in income tax expense comprises:
Increase / (Decrease) in deferred tax assets
(Increase) / Decrease in deferred tax liabilities
Income tax expense is attributable to:
(Profit) from continuing operations
Loss from discontinued operations
Aggregate income tax (expense)
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit from continuing operations before income tax expense
Tax at the Australian tax rate of 30% (2020 – 30%)
Tax effect of amounts that are not deductible/ (taxable) in calculating taxable income
Other non-assessable income
Other non-deductible items
(Under) / Over provided in prior years
Income tax (expense)
NOTE
2021
2020
3.11
3.11
5.5
(522)
(4,258)
4,004
(776)
(1,758)
(2,500)
(4,258)
(5,136)
4,360
(776)
30,425
(9,128)
(12)
-
4,004
(5,136)
(7,222)
(4,162)
(277)
(11,661)
1,219
(5,381)
(4,162)
(13,454)
1,793
(11,661)
42,639
(12,792)
-
(386)
(276)
(13,454)
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 financial statements, and to unused tax losses.
(i) Investment allowances and similar tax incentives
Companies within the group may be entitled to claim special tax deductions for investments in qualifying assets or in relation to qualifying
expenditure (e.g. the Research and Development Tax Incentive regime in Australia or other investment allowances). The group accounts for such
allowances as tax credits, which means that the allowance reduces income tax payable and current tax expense. A deferred tax asset is recognised
for unclaimed tax credits that are carried forward.
(ii) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST except:
• Where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised
as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• Receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.
Cash flows are included in the cash flow statement on a gross basis and the GST component of cash flows arising from investing and financing
activities, which is recoverable from, or payable to the taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 2.5 Earnings Per Share
CENTS
(a) Basic earnings per share
From continuing operations attributable to the ordinary equity holders of the company
From discontinued operations
Total basic earnings per share attributable to the ordinary equity holders of the company
(b) Diluted earnings per share
From continuing operations attributable to the ordinary equity holders of the company
From discontinued operations
Total basic earnings per share attributable to the ordinary equity holders of the company
(c) Reconciliation of earnings used in calculating earnings per share
Profit/ (Loss) attributable to the ordinary equity holders of the company used in calculating basic
earnings per share
From continuing operations
From discontinued operations
47
2020
30.4
(4.4)
26.0
30.3
(4.4)
25.9
NOTE
2021
21.3
(8.6)
12.7
21.2
(8.5)
12.7
25,289
(10,173)
15,116
29,185
(4,184)
25,001
The following reflects the share data used in the calculations of basic and diluted earnings per share:
NUMBER OF SHARES
NOTE
2021
2020
(d) Weighted average number of shares
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
118,919,084
96,137,435
119,261,156
96,517,979
Basic Earnings per share
Basic earnings per share are calculated by dividing the profit attributable to equity holders of the company by the weighted average number of
ordinary shares outstanding during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the weighted average
number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive ordinary shares, and after income
tax effect of interest and other financing costs associated with dilutive potential ordinary shares.
2.6 Dividends
CONSOLIDATED ($'000)
(a) Dividends paid during the year
(i) FY2021 Interim Dividend
Nil (30 September 2020: 9c paid on 3 August 2020)
(ii) FY2020 Final Dividend – paid 5 February 2021
Fully franked dividend 4c per share (30 September 2020: 20c paid on 6 January 2020)
(b) Dividends proposed and not recognised as a liability.
A final fully franked dividend of 8 cents per share (2020: 4 cents per share) has been declared by the
directors $9,617,950 (2020: $4,793,810).
NOTE
2021
2020
-
8,656
4,794
4,794
19,156
27,812
(c) Franking credit balance
Franking credits available for subsequent reporting periods based on a tax rate of 30% (2020: 30%)
29,048
23,901
The above amounts represent the balance of the franking account (presented as the gross dividend value) as at the end of the period, adjusted for:
(i) Franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date
(ii) Franking debits that will arise from the payment of dividends recognised as a liability at the reporting date.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 48
Notes to the Financial Statements
Continued
3. ASSETS AND LIABILITIES
3.1 Trade And Other Receivables
CONSOLIDATED ($'000)
Trade receivables
Loss allowance
Other receivables
Prepayments
Trade Receivables
NOTE
2021
60,082
-
60,082
3,279
21,481
84,842
2020
39,941
-
39,941
5,666
23,547
69,154
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are recognised
initially at the amount of consideration that is unconditional and subsequently measured at amortised cost using the effective interest method.
Details about the Company’s impairment policies and the calculation of the loss allowance are explained below.
(a) Impairment of trade receivables
The group applies the AASB 9 Financial Instruments simplified approach to measuring expected credit losses which uses a lifetime expected loss
allowance for all trade receivables.
To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The
expected loss rates are based on the payment profiles of sales over a period of 24 months before 30 September 2021 and the corresponding
historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on
macroeconomic factors affecting the ability of the customers to settle the receivables.
The ageing analysis for FY2021 was determined as follows:
GROSS CARRYING AMOUNT ($'000)
Current
Up to 3 months past due
More than 3 months past due
Note:
Expected credit loss on aged receivables is immaterial and not disclosed above.
The reconciliation of the closing balance of the loss allowances as at 30 September 2021 are as follows:
CONSOLIDATED ($'000)
Opening loss allowances
Increase in loan loss allowance recognised in profit or loss during the year
Unused amount reversed
Receivables written off during the year
At 30 September
(b) Effective interest rates and credit risk
All receivables are non-interest bearing.
NOTE
NOTE
30 SEPT 2021
59,404
678
-
60,082
30 SEPT 2020
37,908
2,033
-
39,941
2021
-
-
-
-
-
2020
15
-
-
(15)
-
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 Company operates. Refer to Note 4.4 for more information on the risk management policy
of the Company as well as the effective interest rate and credit risk of current receivables.
(c) 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 30 SEPTEMBER 2021 3.2 Inventories
CONSOLIDATED ($'000)
Raw materials
Finished goods and work in progress
Other inventories
49
NOTE
2021
34,826
72,986
6,504
114,316
2020
75,001
20,175
5,373
100,549
Inventories are valued at the lower of cost and net realisable value. There were no write-downs made for the 2021 almond crop (2020- $16.3 million
was recognised as an expense during the year and included in ‘Cost of Sales’ in the Statement of Comprehensive Income).
Costs incurred in bringing each product to its present location and condition, are accounted for as follows:
• Raw materials and consumables: purchase cost on a first in first out basis;
• Biological assets reclassified as inventory (included within raw materials in the table above): the initial cost assigned to agricultural produce is the
fair value less costs to sell at the point of harvesting in accordance with AASB 141 Agriculture;
• Finished goods and work in progress: cost of direct material and labour and a proportion of manufacturing overheads based on normal operating
capacity; and
• Other inventories comprise consumable stocks of chemicals, fertilisers and packaging materials recorded at cost on a first in first out basis.
3.3 Biological Assets
CONSOLIDATED ($'000)
Growing almond crop
Reconciliation of changes in carrying amount of biological assets
Opening balance
Increases due to purchases / growing costs
Decreases due to harvest
Gain arising from changes in fair value
Closing balance
NOTE
2021
51,321
42,432
171,298
2020
42,432
34,144
134,327
(i)
(ii)
(195,433)
(190,650)
33,024
51,321
64,611
42,432
(i)
Includes biological assets reclassified as inventory at the point of harvest
(ii) Includes physical changes as a result of biological transformation such as growth. Net increments in the fair value of the growing assets are
recognised as income in the statement of Comprehensive Income.
Fair value adjustment of biological assets recognised in the Statement of Comprehensive Income relates to:
• the recognition of 2021 crop fair value margin throughout growth, accrued evenly between harvests and taking into account major cash outflows
• the unwinding of 2020 crop fair value margin previously recognised, at the point of sale
The movement is disclosed as follows:
CONSOLIDATED ($'000)
Fair value margin recognised on 2021 almond crop (FY2020: 2020 almond crop)
Unwinding of fair value margin recognised on 2021 and 2020 crop upon sales
(FY2020: 2020 and 2019 crop)
NOTE
2021
33,024
(37,227)
2020
64,611
(50,623)
(4,203)
13,988
Recognition and Measurement
Almond trees are bearer plants and are therefore presented and accounted for as property, plant and equipment (see note 3.5). However, almonds
growing on the trees are accounted for as biological assets until the point of harvest. Almonds are transferred to inventory at fair value less costs to
sell when harvested (see note 3.2). Biological assets relate to the almond crop and are measured at fair value less costs to sell in accordance with
AASB141 Agriculture. Where fair value cannot be reliably measured or little or no biological transformation has taken place, biological assets are
measured at cost.
At 30 September 2021, the biological asset balance relates to the 2022 almond crop, which is recorded at cost and has little or no biological
transformation. The 2021 almond crop has been transferred to inventory when fully harvested.
The change in estimated fair value of the biological assets are recognised in the Statement of Comprehensive Income. Fair value measurements have
been categorised as Level 3 fair values based on the inputs to the valuation techniques used, which are not based on observable market data. It is
measured taking into account the following:
• estimated selling price at harvest and estimated cash inflows based on forecasted sales;
• estimated yields; and
• estimated remaining growing, harvests, processing and selling costs.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 50
Notes to the Financial Statements
Continued
3. ASSETS AND LIABILITIES (CONTINUED)
3.4 Derivative Financial Instruments
CONSOLIDATED ($'000)
Current Assets
Forward exchange and option contracts – cash flow hedges
Current Liabilities
Forward exchange and option contracts – cash flow hedges
NOTE
2021
78
2020
3,811
3,626
-
(a) 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
at the end of each reporting period. 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 Company designates derivatives as either; (1) hedges of the fair value of
recognised assets or liabilities or a firm commitment (fair value hedge); or (2) hedges of highly probable forecast transactions (cash flow hedges).
(i) Hedge effectiveness
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to
ensure that an economic relationship exists between the hedged item and hedging instrument. The Company documents the relationship between
hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions.
For hedges of foreign currency purchases and sales, the Company enters into hedge relationships where the critical terms of the hedging instrument
match exactly with the terms of the hedged item. The Company therefore performs a qualitative assessment of effectiveness. If changes in
circumstances affect the terms of the hedged item such that the critical terms no longer match exactly with the critical terms of the hedging
instrument, the Company uses the hypothetical derivative method to assess effectiveness. Ineffectiveness may arise if the timing of the forecast
transaction changes from what was originally estimated or if there are changes in the credit risk.
In hedges of foreign currency purchases and sales, ineffectiveness may arise if the timing of the forecast transaction changes from what was
originally estimated, or if there are changes in the credit risk of Australia or the derivative counterparty.
(ii) 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.
(iii) Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in the cash flow
hedge reserve within equity. The gain or loss relating to the ineffective portion is recognised immediately in Other Expenses in the Statement of
Comprehensive Income.
When option contracts are used to hedge forecast transactions, the Company designates intrinsic value options as the hedging instrument. Gains
and losses relating to the effective portion of the change in value of the options are recognised in the cash flow hedge reserve within equity.
When forward contracts are used to hedge forecast transactions, the Company designates the full change in fair value of the forward contract as the
hedging instrument. The gains or losses relating to the effective portion of the change in fair value of the entire forward contract are recognised in
the cash flow hedge reserve within equity.
Amounts accumulated in equity are reclassified in Cost of Sales in the Statement of Comprehensive Income in the periods when the hedged item
will affect profit 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-financial asset (for example, inventory) or a non-financial 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
deferred 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 Other Expenses in the Statement of Comprehensive Income.
The Company entered into forward foreign currency contracts to buy and sell specified amounts of foreign currency in the future at stipulated
exchange rates. The objective of entering the forward foreign currency contracts is to protect the Company against unfavourable exchange rate
movements for highly probable contracted and forecasted sales and purchases undertaken in foreign currencies
At balance date, the details of outstanding foreign currency contracts are:
LESS THAN 6 MONTHS
FEC Buy USD Settlement
LESS THAN 6 MONTHS
FEC Sell USD Settlement
Option Sell USD Settlement
MORE THAN 6 MONTHS
FEC Sell USD Settlement
Option Sell USD Settlement
SELL AUSTRALIAN DOLLARS ($'000)
2020
USD1,954
2021
USD1,783
AVERAGE EXCHANGE RATE ($)
2021
0.74
2020
0.73
BUY AUSTRALIAN DOLLARS ($'000)
2020
USD20,195
USD7,500
2021
USD34,179
-
BUY AUSTRALIAN DOLLARS ($'000)
2020
USD21,000
USD7,000
2021
USD37,674
USD15,000
AVERAGE EXCHANGE RATE ($)
2021
0.75
-
2020
0.65
0.68
AVERAGE EXCHANGE RATE ($)
2021
0.74
0.75
2020
0.69
0.65
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 51
(iv) Credit risk exposures
Credit risk for derivative financial instruments arises from the potential failure by counterparties to the contract to meet their obligations at maturity.
The credit risk exposure to forward exchange contracts is the net fair values of these instruments.
The net amount of the foreign currency the Company will be required to pay or purchase when settling the brought forward foreign currency contracts
should the counterparty not pay the currency it is committed to deliver to the Company at balance date was USD $85,070,534 (2020: USD $53,740,749).
The Company does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by
the Company.
(v) Hedging reserves
The Company’s hedging reserves as presented in Statement of Changes in Equity relate to the following hedging instruments:
CONSOLIDATED ($'000)
Closing balance 30 September 2019
Add: Change in fair value of hedging instrument recognised in OCI
Less: Reclassified from OCI to profit or loss
Less: Deferred tax
Closing balance 30 September 2020
Add: Change in fair value of hedging instrument recognised in OCI
Less: Reclassified from OCI to profit or loss
Less: Deferred tax
Closing balance 30 September 2021
(vi) Market risk
INTRINSIC VALUE
OF OPTIONS
(186)
(137)
178
(13)
(158)
(896)
137
228
(689)
SPOT COMPONENT OF
CURRENCY FORWARDS
(718)
3,948
762
(1,413)
2,579
(2,652)
(3,948)
588
(3,433)
TOTAL HEDGE
RESERVES
(904)
3,811
940
(1,426)
2,421
(3,548)
(3,811)
816
(4,122)
The effects of the foreign currency related hedging instruments on the Company’s financial position and performance are as follows:
CONSOLIDATED ($'000)
Foreign currency forwards
Carrying amount asset / (liability)
Notional amount
Maturity date
Hedge ratio
Change in discounted spot value of outstanding hedging instruments since 1 October
Change in value of hedged item used to determine hedge effectiveness
Weighted average hedged rate for the year (including forward points)
CONSOLIDATED ($'000)
Foreign currency forwards
Carrying amount asset / (liability)
Notional amount
Maturity date
Hedge ratio
Change in discounted spot value of outstanding hedging instruments since 1 October
Change in value of hedged item used to determine hedge effectiveness
Weighted average hedged rate for the year (including forward points)
Foreign currency options
Carrying amount asset / (liability)
Notional amount
Maturity date
Hedge ratio
Change in intrinsic value of outstanding hedging instruments since 1 October
Change in value of hedged item used to determine hedge effectiveness
Weighted average strike rate for the year
2021 BUY USD
2020 BUY USD
78
1,783
Oct 2021
1:1
78
(78)
0.7437
42
1,954
Oct-Nov 2020
1:1
42
(42)
0.7269
2021 SELL USD
2020 SELL USD
(2,731)
71,854
Oct 2021 - Sep 2022
1:1
(2,730)
2,730
USD$0.7418: AUD$1
3,905
41,195
Oct 2020 - Sep 2021
1:1
3,905
(3,905)
USD$0.6678: AUD$1
(896)
15,000
Apr-July 2022
1:1
(896)
896
USD$0.7520: AUD$1
(136)
14,500
Nov 2020 - Aug 2021
1:1
(136)
136
USD$0.6627: AUD$1
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 52
Notes to the Financial Statements
Continued
3. ASSETS AND LIABILITIES (CONTINUED)
3.5 Property, Plant and Equipment
(a) Reconciliations
Reconciliations of the carrying amounts of property, plant and equipment for the current financial year.
($'000)
NOTES
BUILDINGS
LEASEHOLD
IMPROVEMENT
PLANTATION
LAND AND
IRRIGATION
SYSTEMS
PLANT AND
EQUIPMENT
BEARER
PLANTS
TOTAL
CAPITAL
WORK IN
PROGRESS
At 30 September 2019
Cost
Accumulated depreciation
Net book amount
Year ended
30 September 2020
Opening net book amount
Finance lease assets
reclassified to right-of-use
assets
Restated opening net book
amount
Additions
Disposals
Depreciation expense
Transfers
Closing net book amount
At 30 September 2020
Cost
Accumulated depreciation
Net book amount
Year ended
30 September 2021
Opening net book amount
Additions
Acquired through business
combinations
Disposals
Depreciation expense
Impairment loss
Transfers
Closing net book amount
At 30 September 2021
Cost
Accumulated depreciation
Net book amount
(i) Impairment loss
(b), 3.6
(i)
21,589
(3,564)
18,025
18,025
-
18,025
-
-
(537)
303
17,791
21,892
(4,101)
17,791
17,791
-
869
(2)
(565)
-
19
18,112
22,777
(4,665)
18,112
-
-
-
-
-
-
-
-
-
29,098
29,098
29,098
-
29,098
29,098
10,873
-
-
-
-
-
39,971
39,971
-
39,971
113,495
(37,334)
76,161
142,968
(75,543)
67,425
156,213
(34,917)
121,296
25,016
-
25,016
459,281
(151,358)
307,923
76,161
-
67,425
(13,309)
121,296
(22,776)
25,016
-
307,923
(36,085)
76,161
54,116
98,520
25,016
271,838
-
-
(2,186)
2,075
76,050
115,570
(39,520)
76,050
76,050
-
33,089
-
(4,035)
-
5,133
110,237
7,049
(782)
(10,294)
20,968
71,057
10,216
-
(5,980)
1,392
104,148
29,391
-
-
(53,836)
571
46,656
(782)
(18,997)
-
298,715
146,244
(75,187)
71,057
139,146
(34,998)
104,148
571
-
571
452,521
(153,806)
298,715
71,057
1,833
152
-
(11,742)
(2,507)
9,255
68,048
104,148
11,986
90,833
-
(11,048)
-
-
195,919
571
19,578
-
(422)
-
-
(14,407)
5,320
298,715
44,270
124,943
(424)
(27,390)
(2,507)
-
437,607
153,791
(43,554)
110,237
152,026
(83,978)
68,048
241,964
(46,045)
195,919
5,320
-
5,320
615,849
(178,242)
437,607
With the sale of the Consumer Brands division and the impending closure of the Thomastown processing facility expected in June 2022, an
impairment loss was taken amounting to $2.5m of the total $3.2m Net Book Value of assets held at Thomastown. The amount is disclosed as part of
the discontinued operations results. Please refer to note 5.5(b).
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 53
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 flows which will be received from the assets’ employment
and subsequent disposal. The expected net cash flows have been discounted to present values in determining recoverable amounts.
An independent valuation was performed by CBRE in September 2019 for specific assets of our Almond Division (seven owned orchards and the
Carina West Processing Facility). The orchards were valued using a direct comparison summation and a discounted cashflow to determine their
market value. This was performed on the basis of ‘highest and best use’ being the most probable use of a property which is physically possible,
appropriately justified, legally permissible, financially feasible, and results in the highest value of the property being valued. The valuation approach
used for the processing facility was capitalisation of EBITDA and a productive unit basis to determine its market value. The book value of the assets
at 30 September 2019 was $169.8 million against the September 2019 market valuation of $249.7 million. As the inputs to determine the fair value are
unobservable, the valuation is considered Level 3 in the fair value hierarchy.
Depreciation
The depreciable amount of all fixed assets including buildings, but excluding freehold land 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. Bearer plants are assumed ready for use when a commercial crop
is produced from the seventh year post planting. The depreciation on the almond trees amounting to $11.05 million (2020: $5.98 million) was
capitalised into the inventory cost base. Leasehold improvements commence depreciation when a commercial crop is produced from the seventh
year post planting and depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.
The useful lives for each class of assets are:
Buildings:
25 to 40 years
Plant and equipment:
5 to 20 years
Bearer plants:
Irrigation systems:
10 to 30 years
10 to 40 years
Leasehold improvements
13 to 14 years
Capital works in progress
Capital works in progress are valued at cost and relate to costs incurred for owned orchards and other assets under development.
(b) Reclassification of Leased assets - 2019
As at 30 September 2019, plant and equipment and bearer plants included the following amounts where the group was a lessee under finance leases.
CONSOLIDATED ($'000)
Leasehold plant and equipment and bearer plants
At cost
Accumulated depreciation and impairment
Adjustment to 2019 finance lease recorded at 30 September 2019
Net book amount transferred to right-of-use assets on 1 October
NOTE
2019 RESTATED
47,643
(13,652)
33,991
2,094
36,085
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021
54
Notes to the Financial Statements
Continued
3. ASSETS AND LIABILITIES (CONTINUED)
3.6 Right-Of-Use Assets
($'000)
At 1 October 2019
Transition from operating lease
Finance leases reclassified to right-of-use assets*
At 1 October 2019*
Additions
Depreciation charge for the year
At 30 September 2020
Additions
Disposal
Depreciation charge for the year
At 30 September 2021
NOTE
PROPERTY
PLANT AND EQUIPMENT
ORCHARD (a)
TOTAL
2,071
-
2,071
87
(803)
1,355
50
-
(806)
599
(b)
(b)
1,299
13,309
14,608
1,920
(3,995)
12,533
962
(187)
(3,640)
9,668
206,711
22,776
229,487
11,475
(18,406)
222,556
8,911
-
(19,184)
212,283
210,081
36,085
246,166
13,482
(23,204)
236,444
9,923
(187)
(23,630)
222,550
* Pre 1 October 2019, the group only recognised lease assets and lease liabilities in relation to leases that were classified as ‘finance leases’ under AASB 117 Leases. The assets were presented
in property, plant and equipment and the liabilities as part of the group’s borrowings. These have now been transferred to Right-of-use assets and lease liabilities respectively.
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial
amount of the lease liability, adjusted for, as applicable, by any lease payments made at or before the commencement date net of any lease incentives
received, any initial direct costs incurred, and an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and
restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever
is shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is expensed
over its estimated useful life. Right-of-use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.
The group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less
and leases of low-value assets. Lease payments on these assets are expensed to the income statement as incurred.
(a) Orchard
The orchards comprise leases with Arrow Funds Management, Rural Funds Management and Aware Super. A total of 11,729 acres of land are leased
over a 20 year term (with extension options) in which the Company has the right to harvest almonds and citrus from the trees for the term of the
agreement. The Company also has first right of refusal to purchase the properties in the event that the lessor wishes to sell.
(b) Orchard depreciation
Depreciation relating to the orchards have either been capitalised as part of growing crop and leasehold improvements or expensed directly to the
Statement of Comprehensive Income.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021
55
GOODWILL
BRAND
NAMES
PERMANENT
WATER RIGHTS
SOFTWARE
TOTAL
25,995
-
25,995
25,995
-
25,995
25,995
-
25,995
25,995
-
-
-
-
25,995
25,995
-
25,995
2,905
-
2,905
2,905
-
2,905
2,905
-
2,905
2,905
-
-
(2,905)
-
-
-
-
-
37,859
-
37,859
37,859
-
37,859
37,859
-
37,859
37,859
5,755
13,437
(1,929)
-
55,122
55,122
-
55,122
5,586
(1,078)
4,508
72,345
(1,078)
71,267
4,508
(820)
3,688
71,267
(820)
70,447
5,586
(1,898)
3,688
72,345
(1,898)
70,447
3,688
-
-
-
(820)
2,868
70,447
5,755
13,437
(4,834)
(820)
83,985
5,586
(2,718)
2,868
86,703
(2,718)
83,985
3.7 Intangibles
CONSOLIDATED ($'000)
At 30 September 2019
Cost
Accumulated amortisation
Net book amount
Year ended 30 September 2020
Opening net book amount
Amortisation of software
Closing net book amount
At 30 September 2020
Cost
Accumulated amortisation
Net book amount
Year ended 30 September 2021
Opening net book amount
Acquisition
Acquired through business combination
Disposal
Amortisation of software
Closing net book amount
At 30 September 2021
Cost
Accumulated amortisation
Net book amount
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Company’s share of the net identifiable 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 name assets principally relate to the Lucky brand, which has been assessed as having an indefinite useful life. On 30 September 2021, the
Group announced the completion of the sale of the Lucky and Sunsol brands. Please refer to note 5.5 for more information.
Brand names are measured at cost. Directors are of the view that brand names have an indefinite life. Brand names are therefore not amortised.
Instead, brand names are tested for impairment annually or more frequently if events or changes in circumstances indicate that they might be
impaired and are carried at cost less any accumulated impairment losses.
Permanent water rights
Permanent water rights are recorded at historical cost. Such rights have an indefinite life, and are not amortised. 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.
The value of permanent water rights relates to the Group’s 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.
The Company’s portfolio of water rights is currently recorded at a historical cost value of $55.1 million (2020: $37.9 million). A market value assessment
was performed at the end of the financial year. This was completed by accessing the State Water Registers and determining the median price for the
applicable class of water rights. This value is then applied on a like for like basis to the company’s water portfolio. As water prices fluctuate due to
seasonal factors current market rates has been valued internally at $106.9 million (2020: $97.7 million). As the inputs to determine the fair value are
observable, the valuation is considered Level 2 in the fair value hierarchy.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 56
Notes to the Financial Statements
Continued
3. ASSETS AND LIABILITIES (CONTINUED)
3.7 Intangibles (CONTINUED)
Software
Costs associated with maintaining software programmes are recognised as an expense when incurred. Development costs that are directly
attributable to the design and testing of identifiable software products controlled by the group are recognised as intangible assets when the
following criteria are met:
•
it is technically feasible to complete the software so that it will be available for use
• management intends to complete the software to use it
• there is an ability to use the software
•
it can be demonstrated how the software will generate probable future economic benefits
• adequate technical, financial and other resources to complete the development of the software
• the expenditure attributable to the software during its development can be reliably measured
Directly attributable costs that are capitalised as part of the software include employee costs, consultant costs and an appropriate portion of
relevant overheads. Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready for use.
Software costs are amortised on a straight line basis over the period of their expected benefit, being 7 years.
During the year, the Group adopted IFRS Interpretations Committee (IFRC) Agenda item 5- Cloud computing arrangement costs. This relates to
configuration and customisation costs incurred in implementing Software as a Service arrangements. The Group assesses whether the arrangement
contains a lease and if not, whether the arrangement provides the Group with a resource it can control. The Group’s assessment indicates that these
costs can be controlled as the implementation costs are customised and kept separate from other clients. Therefore, it was deemed appropriate
that the costs are capitalised in accordance with relevant accounting standards.
Impairment of assets
Goodwill, brand names and permanent water rights that have an indefinite 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 identifiable cash flows (cash generating units).
Following the sale of the Consumer Foods Branded business, the company have determined it appropriate to operate as a single segment.
The Group operates one cash generating unit, that is expected to benefit from the synergies of the combination. The goodwill is allocated to the
CGU at the level that is monitored for internal management purposes.
(a) Impairment tests for goodwill
In accordance with AASB 136 Impairment, the Company undertook an impairment assessment at 30 September 2021. The recoverable amount of the
CGU was determined based on a value-in-use calculation which uses cash flow projections based on financial budgets and forecasts approved by
management and the Board covering a five-year period. The cash flow projections take into account past performance and its expectations for the future.
Based on a set of key assumptions it was determined that the company’s implied value in use was above the carrying value of its assets therefore no
impairment adjustments were necessary.
Key assumptions used in the value-in-use calculations for impairment included a real pre-tax weighted average cost of capital (of 10.7%), long term growth
rate (of 2%), harvest volumes, almond price, growing crop costs and water prices. Additionally, assumptions around capital expenditure and working
capital changes were incorporated. The real pre-tax weighted average cost of capital takes into account industry related gearing levels, risk premiums
and benchmarking peer group rates used. This rate differs to what the company uses internally to assess strategic opportunities and asset performance.
Based on these assumptions, the recoverable amount of the CGU exceeded the carrying amount of the CGU.
(b) Impact of possible changes to key assumptions
The recoverable amount of the goodwill exceeds its carrying amount based on impairment testing performed at 30 September 2021. The Directors
and management have considered and assessed reasonably possible changes in key assumptions. The recoverable amount of the CGU would equal
its carrying amount if the key assumptions were to change as follows:
• Average almond price growth between FY23 - FY26 reduced from 1.2% to 0.69%
• Post-tax discount rate increase from 7.5% to 7.845%
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 3.8 Trade and Other Payables
CONSOLIDATED ($'000)
Current
Trade creditors
Other creditors and accruals
Non-Current
Other creditors and accruals
57
NOTE
2021
2020
28,754
36, 213
64,967
22,997
19,520
42,517
2,761
3,525
These amounts represent liabilities for goods and services provided to the Group prior to the end of the year which are unpaid. These amounts are
unsecured and are usually paid within 30 days of recognition.
3.9 Lease Liabilities
CONSOLIDATED ($'000)
Current
Non-current
NOTE
2021
31,661
221,494
253,155
The following table sets out the maturity analysis of lease payments, showing the undiscounted lease payments after the reporting date.
CONSOLIDATED ($'000)
Within one year
Later than one year but not later than 5 years
Later than 5 years
NOTE
2021
33,765
121,987
175,381
331,133
2020
31,264
233,513
264,777
2020
34,698
123,217
173,209
331,124
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments
to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the
consolidated entity’s incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease
payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when
the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend
on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the
following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and
termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of-use asset, or to profit or loss if the
carrying amount of the right-of-use asset is fully written down.
Leases are secured with the orchards, property and plant and equipment
3.10 Deferred Gain On Sale
CONSOLIDATED ($'000)
Current
Sale and leaseback
Non-Current
Sale and leaseback
NOTE
2021
175
2020
175
2,277
2,452
The deferred gain on sale relates to the sale and leaseback of bearer plants for three orchards that were sold to First State Super on 22 September
2015 and 1 January 2016. The lease is for a 20 year term.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 58
Notes to the Financial Statements
Continued
3. ASSETS AND LIABILITIES (CONTINUED)
3.11 Deferred Tax
CONSOLIDATED ($'000)
Deferred tax liabilities (Non-current)
The balance comprises temporary differences attributable to:
Amounts recognised in profit and loss
Receivables
Inventory
Biological assets
Property, plant and equipment (includes bearer plants)
Right-of-use assets
Intangibles
Accruals and provisions
Lease liabilities
Amounts recognised in profit and loss
Cash flow hedges
Amounts recognised directly in equity
Equity raising costs
Net deferred tax liabilities
Movements
Opening balance 1 Oct
Prior period under provision
Charged/ (Credited) to income statement
Charged/ (Credited) to other comprehensive income
Debited/ (Credited) to equity
Closing balance at 30 September
NOTE
2021
2020
(668)
4,714
14,855
35,848
64,511
-
(3,462)
(75,947)
39,851
11
5,974
9,194
33,626
67,883
749
(3,704)
(78,141)
35,592
327
1,143
(1,327)
38,851
36,312
-
4,258
(816)
(903)
38,851
(423)
36,312
39,629
30
4,162
1,425
(8,934)
36,312
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
profit or taxable profit 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.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 3.12 Provisions
CONSOLIDATED ($'000)
Current
Employee benefits
Others
Non-Current
Employee benefits
59
2020
5,218
255
5,473
NOTE
2021
(a)
5,513
5, 045
10,558
416
270
(a) A provision was taken for the restructuring costs of the business at Thomastown. The amount includes employee retention incentives,
redundancy costs and other associated costs. Refer to note 5.5 for more information.
Provisions
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow
of resources will be required to settle the obligation, and the amount has been reliably estimated.
Employee benefits
This covers the leave obligations for long service leave and annual leave which are classified as either short-term benefits or other long-term benefits
explained below. The current portion of this liability includes all of the accrued annual leave, the unconditional entitlements to long service leave
where employees have completed the required period of service and also for those employees who are entitled to pro-rata payments in certain
circumstances. The entire amount of the provision is presented as current, since the group does not have an unconditional right to defer settlement
for any of these obligations.
Contributions are made by the Company to employees' superannuation funds and are charged as expenses when incurred.
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled wholly 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 benefits. All other short-term employee benefit obligations are presented
as payables.
(ii) Other long-term benefit obligations
The liability for long service leave and annual leave which is not expected to be settled wholly within 12 months after the end of the period in which
the employees render the related service is recognised in the provision for employee benefits 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 outflows
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 60
Notes to the Financial Statements
Continued
4. CAPITAL, FINANCING AND RISK MANAGEMENT
4.1 Equity
CONSOLIDATED ($'000)
(a) Contributed Equity
Ordinary shares issued and fully paid
Contributed equity
NOTE
2021
2020
(b)
397,343
279,096
Ordinary shares are classified as equity. The value of new shares or options issued is shown in equity.
(b) Movements in shares on issue
Beginning of the year
Issued during the year
• Dividend reinvestment plan
• Long term incentive plan – tranche vested
• Placement and Share Purchase Plan – net
of transaction cost and deferred tax*
• Deferred tax credit on transaction costs
End of the year
2021
2020
NUMBER OF SHARES
96,637,013
$'000
279,096
NUMBER OF SHARES
95,736,628
379,116
125,858
23,082,383
-
120,224,370
1,962
-
115,382
903
397,343
856,584
43,801
-
-
96,637,013
$'000
271,750
6,289
-
-
1,057
279,096
* Capital raising completed in October 2020 as part of the Piangil acquisition. Please refer to note 5.4 for details on Piangil acquisition
Performance Rights
Long Term Incentive Plan
The Company offers employee participation in long term incentive schemes as part of the remuneration packages for the employees. In determining
the quantum of rights offered the board considers a number of factors including: the corporate strategy; the appropriate mix of fixed and at risk
remuneration; the fair value and face value of the rights; and the 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. The market value of ordinary
Select Harvests Limited shares closed at $8.29 on 30 September 2021 ($5.57 on 30 September 2020).
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and
amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is
entitled to one vote.
Capital risk management
The group’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue to provide returns
for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt.
CONSOLIDATED ($'000)
(c) Reserves
Asset revaluation reserves
Options reserve
Cash flow reserve
(i) Asset revaluation reserve
NOTE
2021
2020
(i)
(ii)
(iii)
7,644
4,135
(4,122)
7,657
7,644
4,215
2,421
14,280
The asset revaluation reserve was previously 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.
(ii) Options reserve
The options reserve is used to recognise the fair value of performance rights granted and expensed but not exercised
(iii) Cash flow hedge reserve
The cash flow hedge reserve is used to record gains or losses on the fair value movements in the interest rate swap and foreign currency contracts
in a cash flow hedge that are recognised directly in equity.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 4.2 Cash and Cash Equivalents
Reconciliation of the net profit after income tax to the net cash flows from operating activities
CONSOLIDATED ($'000)
Net profit after tax
Adjustments
Depreciation and amortisation
Depreciation Right-Of-Use asset (net of capitalised amount)
Capitalised lease interest payments
Impairment loss
Net (gain) / loss on sale of assets
Options expense
Deferred gain on sale
Changes in assets and liabilities
(Increase) / Decrease in trade and other receivables
(Increase) / Decrease in inventory
(Increase) / Decrease in biological assets
Increase / (Decrease) in trade payables
Increase / (Decrease) in income tax receivable/payable
Increase / (Decrease) in deferred tax liability
Increase in provisions
Net cash flow from operating activities
61
2020
25,001
19,816
17,548
(4,502)
-
(291)
537
(175)
(20,822)
(15,092)
(8,289)
13,696
(11,591)
(3,317)
634
13,153
NOTE
2021
15,116
28,209
17,451
(4,693)
2,507
(539)
(80)
(175)
(15,621)
(13,767)
(8,888)
21,581
(10,684)
2,539
5,233
38,189
Non-cash financing activities
During the current financial year ended 30 September 2021, the company issued 379,116 of new equity (September 2020: 856,584) as part of the
Dividend Reinvestment Plan.
(a) Net debt reconciliation
Net debt movement during the year as follows:
CONSOLIDATED ($'000)
Cash and cash equivalents
Bank overdrafts
Borrowings- repayable after one year
Lease liabilities- repayable within one year
Lease liabilities- repayable after one year
Net debt
NOTE
2021
1,995
(5,063)
(95,000)
(31,661)
(221,494)
(351,223)
2020
1,451
(6,235)
(52,750)
(31,264)
(233,513)
(322,311)
Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial
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.
($'000)
CASH/ BANK
OVERDRAFT
Net debt as at 30 September 2019
Adjustment on adoption of AASB16
Cash flows - Principal
Cash flows - Interest
Additions to leases
Foreign exchange adjustments
Other non-cash movements
Net debt as at 30 September 2020
Cash flows - Principal
Cash flows - Interest
Additions to leases
Foreign exchange adjustments
Other non-cash movements
Net debt as at 30 September 2021
7,945
-
(15,820)
-
-
3,091
-
(4,784)
(7,863)
-
-
9,579
-
(3,068)
LIABILITIES FROM FINANCING ACTIVITIES
TOTAL
LEASES DUE
WITHIN 1 YEAR
(4,468)
(26,992)
35,215
(13,367)
(13,482)
-
(8,170)
(31,264)
34,407
(12,858)
(9,927)
-
(12,019)
(31,661)
LEASES DUE
AFTER 1 YEAR
(30,903)
(210,780)
-
-
-
-
8,170
(233,513)
-
-
-
-
12,019
(221,494)
BORROWINGS DUE
WITHIN 1 YEAR
-
-
-
-
-
-
-
-
-
-
-
-
-
-
BORROWINGS DUE
AFTER 1 YEAR
-
-
(52,750)
-
-
-
-
(52,750)
(42,250)
-
-
-
-
(95,000)
(27,426)
(237,772)
(33,355)
(13,367)
(13,482)
3,091
-
(322,311)
(15,706)
(12,858)
(9,927)
9,579
-
(351,223)
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 62
Notes to the Financial Statements
Continued
4. CAPITAL, FINANCING AND RISK MANAGEMENT (CONTINUED)
4.3 Borrowings
CONSOLIDATED ($'000)
Current - Secured
Bank overdraft
Non-current - Secured
Debt facilities
Borrowings
NOTE
2021
5,063
2020
6,235
95,000
52,750
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 classified 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.
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.
(a) Interest rate risk exposures
Details of the Company’s exposure to interest rate changes on borrowings are set out in Note 3.
(b) Assets pledged as security
The bank overdraft and debt 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:
CONSOLIDATED ($'000)
Current
Floating charge
Cash and cash equivalents
Receivables
Inventories
Biological assets
Current tax receivables
Derivative financial instruments
Total current assets pledged as security
Non-current
Floating charge
Other receivables
Property, plant and equipment
Permanent water rights
Total non-current assets pledged as security
Total assets pledged as security
Financing arrangements
NOTE
2021
2020
1,995
84,842
114,316
51,321
5,286
78
257,838
1,825
437,607
55,122
494,554
752,392
1,451
69,154
100,549
42,432
-
3,811
217,397
1,891
298,715
37,859
338,465
555,862
On 16 December 2020, the Company had signed new debt facility agreements with NAB and Rabobank which provide a total facility to the extent of
$210 million (30 September 2020: $100 million) for a period of 3 years. The additional facilities have been/ will be used to partly fund the Piangil
acquisition, capital equipment purchases and working capital for the Piangil farm. There was no change to other bank facilities in place.
As a result of the likely lower FY2021 almond price, the Company sought and received waivers from NAB and Rabobank not to test two of its three
covenants (Debt Leverage Ratio and Interest Coverage Ratio) for the period ending 31 March 2021. These two covenants have now been replaced
with a Liquidity Ratio and Fixed Charge Cover Ratio which better reflect movements related to a commodity based agricultural business. The new
covenants for the 30 September 2021 period have been met.
There was no change made to the Company’s bank overdraft facilities which amounted to US$5 million (2020: US$5 million). The current interest
rates at balance date are 1.62% (2020: 1.44%) on the debt facility, and 1.675 % (2020: 1.675%) on the United States dollar bank overdraft facility.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 63
4.4 Financial Risk Management
The Group’s activities expose it to a variety of financial 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
Company’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. The Group also acquires capital related items internationally in both United States dollars and European Euros.
Management and the Board review the foreign exchange position of the Group and, where appropriate, enter into a variety of derivative financial
instruments, transacted with the Group’s bankers to manage its foreign exchange risk. These include formulating various strategies, forward foreign
currency contracts, and options.
The exposure to foreign currency risk at the reporting date was as follows
GROUP
Trade receivables net of payables
Overdraft
Foreign Exchange Contracts (FEC)
•
•
Sell foreign currency option contracts*
buy foreign currency (cash flow hedges)
sell foreign currency (cash flow hedges)
2021
(USD $'000)
30,520
(3,648)
2021
(EUR €'000)
-
-
2020
(USD $'000)
13,347
(4,432)
2020
(EUR €'000)
(10)
-
1,783
71,854
15,000
-
-
-
1,954
41,195
14,500
-
-
-
* Foreign currency option contracts have a number of possible outcomes depending on the spot rate at maturity. These contracts are shown at face value. Depending on spot rate
at maturity, the value of the contract can be USD$15 million (2020: USD$14.5 million) or USD$30 million (2020: USD$29 million).
Group sensitivity analysis
Based on financial instruments held at 30 September 2021, had the Australian dollar strengthened/ weakened by 5% against the US dollar and the
EUR, with all other variables held constant, the Group’s results for the period would have been $3,935,000 lower/$4,349,000 higher (2020:
$2,520,000 lower/$2,785,000 higher), mainly as a result of the US dollar denominated financial instruments as detailed in the above table. Equity
would have been $5,178,000 lower/$5,723,000 higher (2020: $2,938,000 lower/$3,247,000 higher), arising mainly from forward foreign currency
contracts designated as cash flow hedges.
(ii) Cash flow interest rate risk
The Group’s interest rate risk arises from borrowings issued at variable rates, which exposes the Group to cash flow interest rate risk. The Group’s
borrowings at variable interest rate are denominated in AUD.
At the reporting date the Group had the following variable rate borrowings:
Debt facilities (AUD)
Overdraft (USD)
An analysis of maturities is provided in (c) below.
2021
2020
INTEREST RATE (%)
BALANCE ($'000)
INTEREST RATE (%)
BALANCE ($'000)
0.90%
1.68%
95,000
3,648
0.94%
1.68%
52,750
4,432
The Group analyses interest rate exposure on an ongoing basis in conjunction with the debt facility, cash flow and capital management. With the
current low interest rate environment and the future expectation that interest rates will remain at low levels, management has not entered into any
interest rate swap agreement during the year.
Group sensitivity
At 30 September 2021, if interest rates had changed by +/- 25 basis points from the weighted average interest rate with all other variables held
constant, the result for the period would have been $173,000 lower/higher (2020: $100,000 lower/higher).
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021
64
Notes to the Financial Statements
Continued
4. CAPITAL, FINANCING AND RISK MANAGEMENT (CONTINUED)
4.4 Financial Risk Management (CONTINUED)
Interest rate risk
The Company's exposure to interest rate risks and the effective interest rates of financial assets and financial liabilities both recognised and
unrecognised at the balance date, are as follows:
FINANCIAL INSTRUMENTS
Floating Interest Rate
Non-interest bearing
Total carrying amount as per
the balance sheet
2021
2020
2021
2020
2021
-
-
-
-
-
-
-
-
1,995
84,842
78
1,451
69,154
3,811
1,995
84,842
78
86,915
74,416
86,915
74,416
5,063
95,000
253,155
-
-
-
6,235
52,750
264,777
-
-
-
-
-
-
28,754
36,213
3,626
-
-
-
23,290
19,227
-
5,063
95,000
253,155
28,754
36,213
3,626
6,235
52,750
264,777
23,290
19,227
-
353,218
323,762
68,593
42,517
421,811
366,279
2020
1,451
69,154
3,811
Weighted average effective
interest rate
2021 (%)
2020 (%)
-
-
-
1.68
1.01
4.99
-
-
-
-
-
-
1.80
1.25
4.99
-
-
-
$('000)
(i) Financial assets
Cash
Trade and other receivables
Forward foreign currency
contracts
Total financial assets
(ii) Financial liabilities
Bank overdraft – USD @ AUD
Commercial Bills
Lease liabilities
Trade creditors
Other creditors
Forward foreign currency
contracts
Total financial liabilities
Financial Assets
Collectability of trade receivables is reviewed on an ongoing basis. Trade receivables are carried at full amounts due less expected credit losses
which uses a lifetime expected loss allowance for all trade receivables.
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 specific contract which specifies an alternative date. Amounts receivable from related parties are carried at full amounts due.
Financial Liabilities
The bank overdraft disclosed within interest bearing liabilities 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 Company.
(b) Credit risk
Credit risk arises from cash and cash equivalents, favourable derivative financial instruments and deposits with banks and financial institutions, as
well as credit exposures to wholesale, retail and farm investor customers, including outstanding receivables and committed transactions.
The Group has no significant 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 financial institutions.
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) and
to historical information. The majority of the Group’s sales are derived from large, established customers with no history of default.
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial 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 financial
statements.
The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade
receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days
past due. The expected loss rates are based on the payment profiles of sales over a period of 24 month and the corresponding historical credit losses
experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors
affecting the ability of the customers to settle the receivables.
The Group’s banking partners have long-term credit ratings of AA- and A+ (Standard and Poor’s ).
(c) Liquidity risk
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets
and liabilities.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 65
Financing arrangements
The following debt facilities are held with National Australia Bank (NAB) and Rabobank (RABO).
DEBT FACILITIES
1. Working Capital
2. Acquisition
2. Seasonal*
HELD WITH
NAB
RABO
RABO
RABO
3. Overdraft†
NAB
EXPIRY DATE
18/12/2023
18/12/2023
18/12/2023
30/06/2023
28/02/2022
* The facility is reviewed annually and available for the period 1 March to 30 June each year
† Held with NAB only and reviewed annually.
FACILITY LIMIT
$105,000,000
$42,500,000
$42,500,000
$20,000,000
$210,000,000
USD $5,000,000
AMOUNT DRAWN 30 SEPT 2021
$95,000,000
Nil
Nil
Nil
AUD $95,000,000
USD $3,648,375
The interest rate paid on these facilities is determined by an incremental margin on the BBSY or LIBOR rate.
The Group had access to the following undrawn borrowing facilities at the reporting date:
FLOATING RATE ($'000)
Term / Seasonal‡
Bank Overdraft Facility USD
‡ Subject to seasonal restrictions as mentioned above
2021
AUD $115,000
USD $1,352
2020
AUD $47,250
USD $568
The bank overdraft facility may be drawn at any time and may be terminated by the bank without notice. The debt facilities (term and seasonal) may
be drawn at any time over the term subject to restrictions noted above on the seasonal facility.
Maturities of financial liabilities
The table below analyses the Group’s financial liabilities, net and gross settled derivative instruments into relevant maturity groupings based on the
remaining period at the reporting date of the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows
($'000)
Group at 30 September 2021
Non-derivatives
Variable Rate
Debt facilities
Trade and other payables
Lease liabilities
Bank Overdraft
Derivatives
FEC USD buy – outflow
FEC USD sell – (inflow)
USD Sell option
Net USD
Group at 30 September 2020
Non-derivatives
Variable Rate
Debt facilities
Trade and other payables
Lease liabilities
Bank Overdraft
Derivatives
FEC EUR buy - outflow
FEC USD buy – outflow
FEC USD sell – (inflow)
USD Sell option
Net USD
LESS THAN
6 MONTHS
6-12
MONTHS
1-5
YEARS
OVER 5
YEARS
TOTAL CONTRACTUAL
CASH FLOWS
CARRYING AMOUNT
(ASSETS) / LIABILITIES
-
64,967
16,818
5,098
-
-
16,947
-
96,330
-
121,987
-
-
-
175,381
-
-
-
-
-
-
173,209
-
1,783
(34,179)
-
(32,396)
-
(37,674)
(15,000)
(52,674)
-
-
-
-
-
42,517
17,633
6,278
-
-
17,065
-
53,609
-
123,217
-
1,954
(20,195)
(7,500)
-
(25,741)
-
(21,000)
(7,000)
(7,000)
(28,000)
-
-
-
-
-
96,330
64,967
331,133
5,098
1,783
(71,853)
(15,000)
(85,070)
53,609
42,517
331,124
6,278
1,954
(41,195)
(14,500)
(7,000)
(53,741)
95,000
64,967
253,155
5,063
78
(2,731)
(896)
(3,549)
52,750
42,517
264,777
6,235
(42)
(3,905)
136
179
(3,811)
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 66
Notes to the Financial Statements
Continued
4. CAPITAL, FINANCING AND RISK MANAGEMENT (CONTINUED)
4.4 Financial Risk Management (CONTINUED)
(d) Fair Value Measurement
The fair value of certain financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
The fair value of financial instruments, such as foreign currency forwards and foreign currency options, are valued using specific valuation techniques
as follows:
• for foreign currency forwards- the present value of future cash flows based on the forward exchange rates at the balance sheet date
• for foreign currency options- option pricing models
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value
of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is
available to the Company for similar instruments.
Disclosures are required 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 30 September 2021 the group’s assets and liabilities measured and recognised at fair value comprised the forward foreign currency contracts and
foreign currency options. These are level 2 measurements under the hierarchy.
5. GROUP STRUCTURE
5.1. Controlled Entities
The financial statements of the Group include the consolidation of Select Harvests Limited and its controlled entities. Controlled entities are the
following entities controlled by the parent entity (Select Harvests Limited).
COUNTRY OF INCORPORATION
PERCENTAGE OWNED (%)
Parent Entity:
Select Harvests Limited (i)
Controlled Entities of Select Harvests Limited:
Kyndalyn Park Pty Ltd (i)
Select Harvests Food Products Pty Ltd (i)
Meriram Pty Ltd (i)
Kibley Pty Ltd (i)
Select Harvests Nominee Pty Ltd (i)
Select Harvests Orchards Nominee Pty Ltd (i)
Select Harvests Water Rights Unit Trust (i)
Select Harvests Water Rights Trust (i)
Select Harvests Land Unit Trust (i)
Select Harvests South Australian Orchards Trust (i)
Select Harvests Victorian Orchards Trust (i)
Select Harvests NSW Orchards Trust (i)
Jubilee Almonds Irrigation Trust Inc
(i) Members of extended closed group
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
2021
100
100
100
100
100
100
100
100
100
100
100
100
100
100
2020
100
100
100
100
100
100
100
100
100
100
100
100
100
100
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 5.2. Parent Entity Financial Information
(a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
($'000)
Current Assets
Total Assets
Current Liabilities
Total Liabilities
Shareholders’ Equity
Issued capital
Reserves
• Cash flow hedge reserve
• Options reserve
Retained profits
Total Shareholders’ Equity
Profit / (loss) for the year
Total comprehensive income / (expense)
67
2021
9,471
532,295
7,313
105,400
2020
7,318
360,704
14,429
72,212
397,344
278,039
(4,122)
4,135
29,538
426,895
31,676
24,316
3,479
4,215
2,759
288,492
32,707
37,090
(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
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' financial statements.
The amounts receivable/payable under the tax funding agreement is due upon receipt of the funding advice from the head entity, which is issued as
soon as practicable after the end of each financial 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.
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.
(c) Guarantees entered into by parent entity
Each entity within the consolidated group has entered into a cross deed of financial 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.
5.3.
Related Party Disclosures
(a) Key management personnel compensation
CONSOLIDATED ($)
Short term employment benefits
Post-employment benefits
Long service leave
Share based payments
NOTE
2021
3,503,907
185,426
31,925
(52,524)
3,668, 734
2020
3,684,049
191,550
78,195
490,541
4,444,335
Other disclosures relating to key management personnel are set out in the Remuneration Report.
(b) Director related entity transactions
There were no director related entity transactions during the year.
(c) Directors’ interests in contracts
Michael Carroll, who retired during the period, is a director of Rural Funds Management, the responsible entity for Rural Funds Group, which leases
orchards to Select Harvests. These transactions are on normal commercial terms and Mr. Carroll was not involved in meetings where these items
were discussed.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 68
Notes to the Financial Statements
Continued
5. GROUP STRUCTURE (CONTINUED)
5.4. Asset Acquisition
Summary of Acquisition
On 18 December 2020, Select Harvests completed the acquisition of Piangil Almond Orchard (which was previously announced on 1 October 2020)
for $129 million. The acquisition amount comprised of 3,870 acres of almond orchards, 1,584 acres of unplanted land, 2,499ML of permanent water
and farm equipment.
The fair values of assets recognised as a result of the acquisition are as follows
($'000)
Plantation land and irrigation systems
Buildings
Bearer Plants
Plant and equipment
Permanent water rights
Net identifiable assets
Net cash outflow on acquisition
Total purchase consideration
30,641
806
84,267
152
13,134
129,000
129,000
129,000
The above amount excludes stamp duty and transaction costs which amounted to $9.31 million and were capitalised proportionately to the above
asset base. A further operating cost of $11.78 million was paid to the vendor for the 2021 Piangil crop growing costs incurred from 1 July 2020 to 18
December 2020. Piangil’s 2021 crop of 4,592 MT forms part of Select Harvests’ almond yield.
5.5. Discontinued Operations
(a) Description
On 23 February 2021, the Group announced its intention to exit the Consumer Brands and non-almond Industrial related business and initiated an
active program to locate a buyer for the Lucky, Sunsol and Nuvitality brands in addition to the relevant Industrial contracts. On 30 August 2021, the
Group announced the sale of the Lucky and Sunsol brands to Prolife Foods Pty Ltd with the sale completed on 30 September 2021.
(b) Financial performance and cash flow information
The financial performance and cash flow information presented reflects the discontinued operations for the financial year ended 30 September 2021.
($'000)
Revenue
Expenses
Underlying EBIT
Interest expense
Loss on sale of brands
Restructuring expense
(Loss) before income tax
Income tax benefit
(Loss) after income tax of discontinued operations
NOTE
5.5 (c)
(i)
2021
59,622
(65,074)
(5,452)
(92)
(2,184)
(6,805)
(14,533)
4,360
(10,173)
2020
61,154
(66,995)
(5,841)
(136)
-
-
(5,977)
1,793
(4,184)
(4,344)
Net cash (outflow) from ordinary activities
(1,714)
Net cash (outflow) from investing activities
Net decrease in cash generated by the business
(6,058)
(i) Following the sale of the Consumer Food Brands division and the impending closure of the Thomastown factory, a provision has been taken for
the restructuring costs of the business amounting to $4.3m and recognising an impairment for the assets held at Thomastown facility amounting
to $2.5m (refer to note 3.5). The provision for restructuring costs includes employee retention incentives, redundancy costs and other restructuring costs.
(9,748)
(607)
(10,355)
CENTS
Basic (loss) per share from discontinued operations
Diluted (loss) per share from discontinued operations
(c) Details of the Sale of Assets
($'000)
Total disposal consideration
Carrying amount of net assets sold:
Brand Names
Finished Inventory
Sale of business costs
Loss on asset sale
NOTE
2021
(8.6)
(8.5)
NOTE
2020
(4.3)
(4.3)
2021
2,500
2,905
1,000
3,905
(779)
(2,184)
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 69
6. OTHER INFORMATION
6.1. Contingent Liabilities
(i) Guarantees
Cross guarantees are given by the entities comprising the Group. Group entities are set out in Note 5.1.
(ii) Bank Guarantees
As at 30 September 2021, the company had provided $6.16 million (2020: $6.16 million) of bank guarantees as security for the almond orchard leases.
6.2. Expenditure Commitments
Upon adoption of AASB 16 on 1st October 2019, the operating and finance lease commitments have been disclosed as lease liabilities except for
leases on water rights which are classified as intangibles and therefore excluded from AASB16 scope.
(a) Operating lease commitments
Commitments payable in relation to leases contracted for at the reporting date but not recognised as liabilities:
CONSOLIDATED ($'000)
Minimum lease payments
• Within one year
• Later than one year and not later than five years
• Later than five years
Aggregate lease expenditure contracted for at reporting date
Operating leases
NOTE
2021
2020
9,744
9,277
-
19,021
11,022
10,831
-
21,853
The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks and benefits of ownership of the
leased item, are recognised as an expense on a straight line basis over the term of the lease
(b) Capital Commitments
Significant capital expenditure contracted for at the end of the reporting year but not recognised as liabilities is as follows:
CONSOLIDATED ($'000)
Property, plant and equipment
6.3. Share Based Payments
Long Term Incentive Plan
NOTE
2021
17,524
2020
4,366
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
performance period to participating employees on an annual basis. Rights vest each year, with half of the rights vesting upon achievement of
underlying earnings per share (EPS) and the other half vesting upon achievement of total shareholder return (TSR) targets. The underlying EPS
growth targets are based on the Cumulative Annual Growth Rate (CAGR) of the company’s underlying 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
Current Issues
Underlying EPS
Below 5% CAGR
5% CAGR
5.1% - 19.9% CAGR
20% or higher CAGR
TSR
Below the 50th percentile*
50th percentile*
51st – 74th percentile*
At or above 75th percentile*
* Of the peer group of ASX listed companies as outlined in the directors’ report.
RIGHTS TO VEST
Nil
25%
Pro rata vesting
50%
Nil
25%
Pro rata vesting
50%
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 70
Notes to the Financial Statements
Continued
6. OTHER INFORMATION (CONTINUED)
DATE
20/10/2014
29/09/2016
02/12/2016
20/11/2017
29/04/2019
27/03/2020
28/07/2021
31/10/2020
31/10/2020
31/10/2020
31/10/2020
31/10/2021
31/10/2022
31/10/2023
30 September 2020
GRANT DATE VESTING
DATE
20/10/2014
29/09/2016
29/09/2016
20/11/2017
29/04/2019
27/03/2020
31/10/2020
31/10/2020
31/10/2020
31/10/2020
31/10/2021
31/10/2022
6.3. Share Based Payments (CONTINUED)
Summary of performance rights over unissued ordinary shares
Details of performance rights over unissued ordinary shares at the beginning and ending of the reporting date and movements during the year are
set out below:
30 September 2021
GRANT DATE VESTING
EXERCISE
PRICE
BALANCE
AT START OF
THE YEAR
(NUMBER)
75,000
30,000
22,500
18,000
169,557
122,578
-
GRANTED
DURING
THE YEAR
(NUMBER)
-
-
-
-
-
-
175,542
FORFEITED
DURING
THE YEAR
(NUMBER)
(10,125)
(4,050)
(3,037)
(2,430)
(16,571)
(17,098)
-
VESTED
DURING THE
YEAR
(NUMBER)
(64,875)
(25,950)
(19,463)
(15,570)
-
-
-
BALANCE AT END
OF THE YEAR
ON ISSUE
VESTED
-
-
-
-
152,986
105,480
175,542
-
-
-
-
-
-
-
-
-
-
-
-
-
-
PROCEEDS
RECEIVED
($)
SHARES
ISSUED
(NUMBER)
FAIR VALUE
PER SHARE
($)
FAIR VALUE
AGGREGATE
($)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4.21
3.23
3.23
3.65
5.18
4.22
6.29
-
-
-
-
792,467
445,126
1,104,159
EXERCISE
PRICE
-
-
-
-
-
-
BALANCE
AT START OF
THE YEAR
(NUMBER)
150,000
100,000
30,000
18,000
169,557
-
GRANTED
DURING
THE YEAR
(NUMBER)
-
7,500
-
-
122,578
FORFEITED
DURING
THE YEAR
(NUMBER)
(47,625)
(59,050)
(9,524)
-
-
-
VESTED
DURING THE
YEAR
(NUMBER)
(27,375)
(10,950)
(5,476)
-
-
-
BALANCE AT END
OF THE YEAR
ON ISSUE
VESTED
PROCEEDS
RECEIVED
($)
SHARES
ISSUED
(NUMBER)
FAIR VALUE
PER SHARE
($)
FAIR VALUE
AGGREGATE
($)
75,000
30,000
22,500
18,000
169,557
122,578
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4.21
3.23
3.23
3.65
5.18
4.22
315,750
96,900
72,675
65,700
878,305
517,279
Fair value of performance rights granted
The assessed fair value at grant date is determined using a Monte Carlo 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. This assessment was made by an external expert.
The model inputs for rights granted in the tables above included:
PERFORMANCE RIGHTS
ISSUE
Share price at grant date
Expected volatility*
Expected dividends
Risk free interest rate
28 JULY
2021
$7.66
40%
0.52%
0.02%
28 MARCH
2020
$7.05
40%
4.95%
0.35%
29 APRIL
2019
$6.49
40%
1.83%
1.33%
20 NOVEMBER
2017
$4.64
45%
2.13%
1.85%
2 DECEMBER
2016
$6.23
45%
7.87%
1.58%
29 SEPTEMBER
2016
$5.62
45%
7.87%
1.58%
20 OCTOBER
2014
$5.95
45%
3.31%
2.84%
* Expected share price volatility was calculated with reference to the annualised standard deviation of daily share price returns on the underlying security over a specified period.
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expense were as follows:
CONSOLIDATED ($)
Performance rights granted under employee long term incentive plan
NOTE
2021
(79,938)
2020
536,897
Share-based payments
Share-based compensation benefits are provided to employees via the Select Harvests Limited Long Term Incentive Plan (LTIP). The fair value of
performance rights granted under the Select Harvests Limited LTIP is recognised as an employee benefit 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 Monte Carlo 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 reflect market vesting
conditions,but excludes the impact of any non-market vesting conditions (for example, profitability 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 benefit 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.
6.4 Auditors' Remuneration
CONSOLIDATED ($)
Audit and other assurance services
Audit and review of financial statements
Other services
Total remuneration of PricewaterhouseCoopers
NOTE
2021
2020
(a)
372,500
250,000
622,500
337,600
-
337,600
(a) Other services relate to corporate transactions undertaken during the year.
Events Occurring After Balance Date
6.5.
On 26 November 2021, the Directors declared a final fully franked dividend of 8 cents per share in relation to the financial year ended 30 September
2021 to be paid on 4 February 2022.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 Directors' Declaration
71
In the directors’ opinion:
(a)
the financial statements and Notes set out on pages 37 to 70 are in accordance with the Corporations Act 2001, including:
(i)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
giving a true and fair view of the consolidated entity’s financial position as at 30 September 2021 and of its performance for the
financial year ended on that date; and
(b)
(c)
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
at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group identified in Note
5.1 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 5.2.
Note 1.1 confirms that the financial 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 Officer required under
section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
M Iwaniw
Chair
Melbourne, 26 November 2021
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021
72
Independent Auditor’s Report
Independent auditor’s report
To the members of Select Harvests Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Select Harvests Limited (the Company) and its controlled
entities (together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 30 September 2021 and of its
financial performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
•
•
•
•
•
•
the statement of financial position as at 30 September 2021
the statement of comprehensive income for the year then ended
the statement of changes in equity for the year then ended
the statement of cash flows for the year then ended
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999
Liability limited by a scheme approved under Professional Standards Legislation.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021
73
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 Our audit approach An audit is designed to provide reasonable assurance about whether the financial report is free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial report as a whole, taking into account the geographic and management structure of the Group, its accounting processes and controls and the industry in which it operates. Materiality Audit scope • For the purpose of our audit we used overall Group materiality of $2.39 million, which represents approximately 5% of the Group’s three year weighted average profit before tax from continuing operations. • We applied this threshold, together with qualitative considerations, to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial report as a whole. • We chose Group profit before tax from continuing operations because, in our view, it is the benchmark against which the performance of the Group is most commonly measured. We chose a three year average to address volatility in the profit before tax from continuing operations calculation caused by fluctuations in the almond price between years. • We utilised a 5% threshold based on our professional judgement, noting it is within the range of commonly acceptable thresholds. • Our audit focused on where the Group made subjective judgements; for example, significant accounting estimates involving assumptions and inherently uncertain future events. 74
Independent Auditor’s Report
Continued
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the
Audit and Risk Committee.
Key audit matter
How our audit addressed the key audit matter
Inventory valuation – current year
almond crop
(Refer to note 3.2 and 3.3)
The Group held inventory of $114.3 million
at 30 September 2021. The inventory
balance includes almonds that have been
fully harvested at the year end. Australian
Accounting Standards require agricultural
produce (such as almonds) from an entity’s
biological assets to be included in inventory
and measured at fair value less costs to sell,
at the point of harvest.
The inputs used by the Group in the
valuation of inventory include the harvest
volumes, growing costs and the key
assumptions for the fair value of almonds.
We consider the valuation of the current
year almond crop to be a key audit matter
because of the financial significance of the
inventory balance relating to the current
year almond crop for the year ended 30
September 2021 and the judgement
involved in the key assumptions.
We performed the following procedures, amongst others:
• Developed an understanding of the Group’s processes
and controls over determining the harvest volumes of
almonds produced and testing the operating
effectiveness of a sample of related controls.
• Attended the Group’s stocktakes in September 2021,
where we observed the Group’s count procedures and
tested the existence of a sample of almond crop
inventory on hand.
• Obtained external confirmations for a sample of third
party inventory storage locations and agreed quantities
per the confirmations to the Group’s inventory listing.
• Reconciled opening to closing inventory and tested a
sample of almonds inflows from harvest, almonds
processed, and sales outflows during the year.
• Evaluated the net realisable value of almond crop
inventory by comparing the value held at 30 September
2021, to actual selling prices achieved since harvest for
a sample of items, agreed a sample of committed sales
to contracts and considered external spot price
information.
• Agreed a sample of costs of harvesting and processing
the almond crop during the year to supporting
documentation and agreed the allocation of these costs
to inventory at 30 September 2021.
•
Tested the mathematical accuracy of the Group’s
almond crop valuation.
• Evaluated the reasonableness of the disclosures made
in notes 3.2 and 3.3 in light of the requirements of
Australian Accounting Standards.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021
75
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 Key audit matter How our audit addressed the key audit matter Carrying value of intangible assets (Refer to note 3.7) The Group has goodwill of $26.0 million and permanent water rights of $55.1 million and is required to assess intangible assets for impairment at least annually, under Australian Accounting Standards. For the year ended 30 September 2021, the Group identified one Cash Generating Unit (CGU), for growing, processing and selling almonds. The Group performed an impairment assessment for the CGU, by preparing a financial model to determine if the carrying value of the assets is supported by forecast future cash flows, discounts to present value (the “model”). We consider the carrying value of intangible assets to be a key audit matter because of the financial significance of the carrying value of the CGU (including intangible assets, plant and equipment and right of use assets) and the significant judgements and assumptions applied by the Group in estimating future cash flows. We performed the following procedures, amongst others: • Assessed whether the Group’s determination of Cash Generating Units (CGUs) was consistent with our knowledge of the Group’s operations and its internal group reporting. • Tested the mathematical accuracy of the calculations in the model. • Compared the forecast future cash flows used in the model with the forecasts formally approved by the Board. • Assessed whether the forecast growth rate assumptions used in the model were appropriate with reference to our understanding of the key drivers, such as forecast harvest volumes, water prices and almond pricing. • Evaluated the Group's ability to forecast future cash flows by comparing historical budgets with reported actual results for the past 3 years. • With the assistance of PwC valuation experts, assessed whether the discount rate applied in the model is reasonable by comparing it to market data and comparable companies. • Evaluated the reasonableness of the disclosures made in note 3.7, including key assumptions and sensitivities to changes in such assumptions, in light of the requirements of the Australian Accounting Standards. Acquisition accounting - Piangil almond orchard acquisition (Refer to note 5.4) In December 2020, the Group acquired the assets of the Piangil Almond Orchard, which included land and irrigation systems, bearer plants, permanent water rights, buildings and other plant and equipment, for cash consideration of $129 million, plus stamp duty and transaction costs of $9.3 million. We performed the following procedures, amongst others: • Agreed the purchase price to the sale and purchase agreement and agreed the cash paid to relevant banking and accounting records. • Read the key terms of the Sale and Purchase agreement, and determined the reasonableness of the identified assets and liabilities associated with the acquisition. • Agreed the recognised fair value of the land and irrigation systems, bearer plants, permanent water rights, buildings and other plant and equipment to 76
Independent Auditor’s Report
Continued
Key audit matter
How our audit addressed the key audit matter
third party valuation reports, and assessed the
appropriateness of the valuation methodology used in
the reports with reference to external market
information from comparable asset sales and
Australian Accounting Standards.
• Assessed on a per acre basis, the appropriateness of the
acquisition value allocated to bearer plants in
comparison to comparable properties held by the
Group.
•
•
Tested, on a sample basis, transaction costs incurred to
supporting documentation and determined the
appropriateness of the allocation of these costs across
the asset base acquired.
Tested the mathematical accuracy of the allocation of
transaction costs across the fair values of assets
acquired.
• Evaluated the reasonableness of the disclosures in notes
5.4 in light of the requirements of Australian
Accounting Standards.
We performed the following procedures, amongst others:
• Read the key terms of the Sale Agreements.
• Agreed the proceeds on sale to the relevant bank
statement.
• Recalculated the gain on sale by comparing the carrying
value of the assets for the business to the consideration
received less the cost to sell.
• Evaluated by reference to Australian Accounting
Standards, the reasonableness of the disclosure in note
5.5 including the discontinued portion of revenue, and
expenses, and associated restructuring expenses.
Under Australian Accounting Standards,
the Group is required to identify all assets
and liabilities acquired and estimate the
fair value of each item. Transaction costs
were capitalised by the Group
proportionately to the asset base acquired.
We consider the accounting for the
acquisition of the Piangil Almond Orchard
to be a key audit matter because of the
magnitude of the asset acquisition
transaction, and the significant judgement
required by the Group in identifying the
assets and liabilities acquired and
determining their fair value.
Accounting for the Food Division
restructure
(Refer to note 5.5)
On 30 September 2021, the Group sold the
Consumer Brands portion of the Food
Division. The sale included the Lucky and
Sunsol brand names and associated
finished goods inventory. The financial
performance of the Consumer Brands
portion of the Food Division has been
disclosed as a discontinued operation in the
Statement of Comprehensive Income.
We consider the accounting for the sale of
the Consumer Brands portion of the Food
Division to be a key audit matter because of
the non-routine nature of the transaction,
and the significant judgements required by
the Group in estimating recoverable
amounts of the assets, and the costs
associated.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021
77
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 Other information The directors are responsible for the other information. The other information comprises the information included in the annual report for the year ended 30 September 2021, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the financial report The directors of the Company are responsible for the preparation of the financial 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 financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our auditor's report. 78
Independent Auditor’s Report
Continued
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 24 to 35 of the directors’ report for the
year ended 30 September 2021.
In our opinion, the remuneration report of Select Harvests Limited for the year ended 30 September
2021 complies with section 300A of the Corporations Act 2001.
Responsibilities
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.
PricewaterhouseCoopers
Alison Tait
Partner
Melbourne
26 November 2021
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021
ASX Additional Information
79
Additional information required by the Australian Stock Exchange Limited and not shown elsewhere in this report is as follows.
(a) Distribution of equity securities
The following information is current as at 29 October 2021. The number of shareholders, by size of holding, in each class of share is:
NUMBER OF ORDINARY SHARES
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
The number of shareholders holding less than a marketable parcel of shares is:
NUMBER OF ORDINARY SHARES
7,408
(b) Twenty largest shareholders
NUMBER OF SHAREHOLDERS
4,746
3,790
888
655
42
NUMBER OF SHAREHOLDERS
550
The following information is current as at 29 October 2021. The names of the twenty largest registered holders of quoted shares are:
1. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
2. CITICORP NOMINEES PTY LIMITED
3. J P MORGAN NOMINEES AUSTRALIA LIMITED
4. NATIONAL NOMINEES LIMITED
5. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
6. UBS NOMINEES PTY LTD
7. BNP PARIBAS NOMS PTY LTD
8. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2
9. CS THIRD NOMINEES PTY LIMITED
10. BNP PARIBAS NOMS PTY LTD
11. SMARTEQUITY EIS PTY LTD
12. MR JOHN PATERSON
13. BNP PARIBAS NOMS PTY LTD SIX SIS LTD
14. RATHVALE PTY LIMITED
15. MIRRABOOKA INVESTMENTS LIMITED
16. BNP PARIBAS NOMINEESS PTY LTD HUB24 CUSTODIAL SERV LTD
17. NEWECONOMY COM AU NOMINEES PTY LIMITED <900 ACCOUNT>
18. REZANN PTY LTD
19. CS FOURTH NOMINEES PTY LIMITED
20. INVIA CUSTODIAN PTY LIMITED
Total securities of Top 20 holdings
Remaining holders balance
Total
NUMBER OF SHARES
20,932,690
19,610,998
18,017,278
7,126,223
5,275,534
4,964,404
2,245,809
1,875,681
877,942
715,002
620,342
480,000
467,451
407,115
375,000
280,352
269,222
269,000
219,120
215,000
85,244,163
34,980,207
120,224,370
PERCENTAGE OF SHARES
17.41%
16.31%
14.99%
5.93%
4.39%
4.13%
1.87%
1.56%
0.73%
0.59%
0.52%
0.40%
0.39%
0.34%
0.31%
0.23%
0.22%
0.22%
0.18%
0.18%
70.90%
29.10%
100%
(c) Substantial shareholders
The substantial shareholders as disclosed by notices received by the Company as at 29 October 2021 are:
Perpetual Limited
Yarra Capital Management Limited
Paradice Investment Management Pty Ltd
(d) Voting rights
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.
NUMBER OF SHARES
12,420,240
9,481,714
9,041,243
% HOLDING
10.33%
7.89%
9.40%
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021
80
NOTES
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 81
Corporate Information
ABN 87 000 721 380
DIRECTORS
M Iwaniw (Chair)
P Thompson (Managing Director)
F S Grimwade (Non-Executive Director)
N Anderson (Non-Executive Director)
F Bennett (Non-Executive Director)
G Kingwill (Non-Executive Director)
M Carroll (Non-Executive Director) - retired 26 February 2021
COMPANY SECRETARY
B Crump
REGISTERED OFFICE - SELECT HARVESTS LIMITED
360 Settlement Road
Thomastown VIC 3074
Postal address
PO Box 5
Thomastown VIC 3074
Telephone (03) 9474 3544
Email info@selectharvests.com.au
SOLICITORS
Minter Ellison Lawyers
BANKERS
National Australia Bank Limited
Rabobank Australia
AUDITOR
PricewaterhouseCoopers
SHARE REGISTER
Computershare Investor Services Pty Limited
Yarra Falls
452 Johnston Street
Abbotsford VIC 3067
Telephone (03) 9415 4000
WEBSITE
www.selectharvests.com.au
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2021 A N N U A L R E P OR T 2 0 21
Y E A R E N D E D 3 0 S E P TE M B E R 2 0 21
Supplies bulk product
to major bakeries,
manufacturers and
wholesalers who
depend on quality
and service
Product range
almonds and other
nuts, dried fruit, seeds,
nut pastes, pralines
and muesli
Bulk and
convenient packs
Products sold to
local and overseas
food manufacturers,
wholesalers,
distributors and
re-packers
Select Harvests Limited
ABN 87 000 721 380
PO Box 5
Thomastown VIC 3074
360 Settlement Road
Thomastown VIC 3074
T (03) 9474 3544
F (03) 9474 3588
E info@selectharvests.com.au
www.selectharvests.com.au
ASX ticker code: SHV
Select Harvests LinkedIn
company/select-havests-pty-ltd
A N N U A L R E P OR T 2 0 21
Y E A R E N D E D 3 0 S E P TE M B E R 2 0 21
DELIVERING ON GROWTH
WHETHER SOLD IN INDIA, CHINA OR ELSEWHERE IN THE WORLD, OUR
ALMONDS CAN BE TRACED TO THE ORCHARD WHERE THEY WERE GROWN.