More annual reports from Select Harvests Limited:
2023 ReportPeers and competitors of Select Harvests Limited:
Grieg SeafoodA N N U A L R E P OR T 2 0 22
Y E A R E N D E D 3 0 S E P TE M B E R 2 0 22
Select Harvests supplies wholesale and industrial almond
products to the domestic and global markets. Our market
leading brands are Renshaw and Allinga Farms.
Allinga Farms supply
almond kernels and
inshell almonds
worldwide in bulk and
convenient packs.
Products are sold to
local and overseas
food manufacturers,
wholesalers,
distributors and
re-packers.
Renshaw supplies a full
range of premium
value-added almond
products (blanched,
roast, sliced, diced,
meal and paste) in
multiple supplier
categories, including
beverage, bakery,
confectionery, cereal,
snacking, health, dairy
(ice-cream), re-packers
and wholesalers, to
over 600 customers
globally.
Select Harvests Limited
ABN 87 000 721 380
Level 3, Building 7,
Botanicca Corporate Park
570-588 Swan Street,
Richmond VIC 3121
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
Select Harvests Instagram
@select_harvests
A N N U A L R E P OR T 2 0 22
Y E A R E N D E D 3 0 S E P TE M B E R 2 0 22
HEALTHY & SUSTAINABLE
WHETHER SOLD IN INDIA, CHINA OR ELSEWHERE IN THE WORLD, OUR ALMOND KERNELS
CAN BE TRACED TO THE ORCHARD WHERE THEY WERE GROWN.
2
2
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022
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
TONNAGE TOTALS
WEIGHT OF KERNELS PER ANNUM
SOUTHERN
REGION
PARINGA
WAIKERIE
LAKE
CULLULLERAINE
HILLSTON
Adelaide
LOXTON
ROBINVALE
EUSTON
PIANGIL
NORTHERN
REGION
GRIFFITH
Sydney
CENTRAL
REGION
Melbourne
RICHMOND
SELECT HARVESTS PROCESSING
SELECT HARVESTS ORCHARDS
SELECT HARVESTS HEAD OFFICE
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
S T R A T E G I C INVESTMENT IN OUR ORCHARDS
29,000
MT
28,250
MT
23,250
MT
22,690
MT
METRIC
TONNES
03
,000
92
,000
82
,000
72
,000
62
,000
52
,000
42
,000
32
,000
22
,000
12
,000
02
,000
91
,000
81
,000
71
,000
61
,000
51
,000
41
,000
31
,000
21
,000
11
,000
01
,000
9
,000
8
,000
7
,000
6
,000
15,700
MT
14,500
MT
14,200
MT
14,100
MT
10,500
MT
2014
2015
2016
2017
2018
2019
2020
2021
2022
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 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
inshell, 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
S T R A T E G I C INVESTMENT IN OUR ORCHARDS
TONNAGE TOTALS
WEIGHT OF KERNELS PER ANNUM
29,000
MT
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
2022
METRIC
TONNES
03
,000
92
,000
82
,000
72
,000
62
,000
52
,000
42
,000
32
,000
22
,000
12
,000
02
,000
91
,000
81
,000
71
,000
61
,000
51
,000
41
,000
31
,000
21
,000
11
,000
01
,000
9
,000
8
,000
7
,000
6
,000
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 4
Contents
3 Company Profile
5 Business Highlights
6 Chair & Managing Director’s Report
8
In control of our destiny
1 0 2022/23 Triple Bottom Line Focus Areas
1 1 Our Sustainability Focus
1 2 Executive Team
1 3 Board of Directors
1 4 Performance Summary
1 5 Historical Summary
1 7 Financial Report
1 8 Directors' Report
2 8 Remuneration Report
4 0 Auditor's Independence Declaration
4 1 Annual Financial Report
4 2 Statement of Comprehensive Income
4 3 Statement of Financial Position
4 4 Statement of Changes in Equity
4 5 Statement of Cash Flows
4 6 Notes to the Financial Statements
7 5 Directors' Declaration
7 6
Independent Auditor’s Report
8 2 ASX Additional Information
8 3 Corporate Information
Food safety
Our almonds are sold around the
world to buyers who appreciate
the high levels of traceability
Select Harvests can provide.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 Business Highlights
5
Earnings Before Interest Tax Depreciation
and Amortisation (EBITDA):
Net Profit After Tax (NPAT):
Net Bank Debt to Equity:
$37.9m
$4.8m
25.9%
Continuing operations: $40.4m
Continuing operations: $6.2m
(Excluding lease liabilities)
Average SHV Almond Price
Total Almond Production Costs:
Almond crop
$6.80/kg
$5.88/kg
29,000MT
Impacted by adverse end of
season weather conditions
Yields remain better than
industry standard
Operating Cash Flow:
Value-Add Sales
Lost Time Injury Frequency Rate
(LTIFR):
$26.8 million
6,397MT
Down 28.3%
Decrease of $11.3m, 2022 impacted
by delayed harvest and sales program
Circular & Sustainable Almond Production
"The co-generation power station is an integral link, bringing together several sustainability
initiatives through waste recycling, compost generation as well as carbon neutral power.
- Brad Crump
CHIEF FINANCIAL OFFICER
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 6
Chair & Managing Director’s Report
Financial year 2022 was again a challenging
year and a busy year for the Select Harvests
team. The team displayed resilience and
professionalism in a year that has had
several uncontrollable events.
The global almond market continued to recover
from the impacts of COVID 19. The supply chain
remained in oversupply and US growers further
lowered prices to clear
inventory. Market
pricing was stubbornly low across all grades.
Management was able to gain a price premium
for larger sizes and quality inshell into the China
and Middle Eastern markets.
On Boxing Day 2021, there was a significant hull
fire at the Carina West facility. Unfortunately,
the fire destroyed fumigation and warehousing
assets. At this point the repairs are substantively
complete. New fumigation chambers are due for
arrival in 1H 2023. Select Harvests would like to
acknowledge & thank the Country Fire Authority,
our employees, and our local community for
their support in combatting this fire.
The Australian almond pollination was disrupted
by a varroa mite incursion in NSW. Despite hive
movement restrictions set in place by the South
Australian and Victorian State Governments we
were able
to meet our minimum hive
requirements. We would like to acknowledge
the work that our Horticultural teams have
done to meet our requirements. This outcome
is a result of years of relationship building, a
strong understanding of the industry and trust
that has been built over time.
The management team successfully closed the
Thomastown facility and expanded the Carina
West facility’s capability and capacity enabling
the integration of the additional almond volume
previously processed by the Thomastown facility.
Our state of the art value-added facility enables
us to generate a significantly higher return
from some of the lower grade crop.
The Piangil orchard has now been fully integrated,
and the planned operational capex projects
have been commissioned. Importantly the
in place for the orchard,
infrastructure
allowing the orchard to meet its full potential.
The yield and quality were in line with our
acquisition business case.
The 2022 Harvest was extremely challenging
due to the wet conditions with some stock
being written off and 25% of the crop requiring
mechanical drying. Both quality and volume
were impacted by these adverse conditions.
is
A great deal of work has been done to understand
the nutritional and economic value of our co-
waste. Historically this part of our crop has simply
been treated as waste. As a result of in-house
projects, one third of this biomass is being
returned to our orchards as compost, improving
the structure and nutritional value of the soil.
We have two other trials underway looking to
harvest and return the nutritional components
of this co-waste to the orchard as liquid fertilizer.
In February 2023 we will be publishing our
sustainability report. This report will go into
greater detail about our co-waste and pathway
to carbon neutrality at or before 2050.
During the year the business leaders participated
in a leadership development program developed
in conjunction with SuniTafe. This course
instructed managers on how to lead in a variety
of challenging environments.
The 2022 culture survey confirmed that our
employees see safety as our number one priority
and collaboration within the organisation is the
key to success.
FINANCIAL PERFORMANCE
Select Harvests delivered a FY2022 Underlying
Earnings Before Interest and Tax (EBIT) result of
$8.84 million. Another record almond crop
volume of 29,000Mt (2021 crop 28,250Mt)
represented the fifth consecutive year of
increased volumes produced. The result was
offset by weather related increased processing
and harvest costs and almond pricing remaining
at low market levels.
The 2022 crop yields were again higher than
industry average. Following three very high
yielding years the mature orchards’ yields were
slightly down on 2021 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
poor weather conditions leading up to and
during harvest negatively impacted the level of
inshell produced and reduced the overall level
of quality due to high moisture levels.
Crop production costs increased 4.4% due to
weather related increased costs of harvesting,
drying requirements and a higher percentage of
costs are recognised based on the maturity
profile of the immature orchards. This was
partially offset by the benefit of current lower
temporary water entitlement prices.
to
The industrial almond value-adding operating
results were very encouraging. The transfer of
capacity and capability from the Thomastown
facility to the company’s processing centre at
Carina West has been successful with improving
throughputs and yields being achieved. The
financial results of value-add however have
been impacted by the usage of 2020 and 2021
crops as raw material input at prior period
contracted pricing. This has an impact on gross
margins which will rectify early in FY2023 once
the plant moves to the usage of lower priced
2022 crop.
Due to the successful shut down and exit of the
Company’s Thomastown facility in June 2022,
$1.2M of the $9.0 million in provisions raised at
the end of FY2021 were reversed. This related
predominantly
the successful sale of
equipment at a higher price than the estimated
write down of the asset.
The Company’s balance sheet remains in a
strong position. Due to the mix of product and
delayed shipments net bank debt increased to
$134.5 million and bank debt gearing levels are
at 26.1% leaving us well placed to take advantage
of future positive market movements.
Delayed shipping of product in FY2022 and the
full year impact of lower almond prices also
reduced the company’s operating cashflow to
$26.8 million (FY2021 $38.2 million). This, plus a
further drawdown of debt, funded the year’s
investing cashflows which included the increased
capability and capacity of the value-add facility.
As a result of the Company’s solid financial
position, and the expectation of future levels of
profitability, the Directors are pleased to
declare $0.02 fully franked dividend for the
FY2022 year.
training
emphasising
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. Hazard reporting
continues to be the key strategy in ensuring this
target is achieved. Pleasingly hazard reporting
within the company increased by 73.7% in
FY2022. This active approach is important,
helping to reduce the total recordable injury
frequency rate 4.5% in FY2022.
In 2022, all managers undertook leadership
the
development
importance of both empathy and clarity of
goals. Our 2022 Culture Survey provided
feedback that Safety and Food Safety are well
understood. We saw improvement across all
areas, but still recognise we can continue to
improve in areas like collaboration and innovation.
At Select Harvests, sustainability means doing
the right thing today and into the future. This
year we have continued to explore ways to
better utilise our co-waste and how to meet our
commitment to be net zero on or before 2050.
We have remained active in the community as
regional areas recover from the impacts of
COVID 19 and the more recent weather events.
In February 2023 we will be publishing our
Sustainability Report, which provides a more
detailed communication of our activity.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 7
ALMOND MARKET OUTLOOK
The global almond market remains uncertain over
the near term. California’s 2022 crop size is
estimated to be 2.5-2.6 billion pounds as they
continue to manage through difficult drought
conditions and increasing costs of production.
However, given the scale of their bearing acres, the
productive capacity of a future large crop remains.
The global logistics network is returning to
normal operating conditions. Global almond
traders’ purchasing patterns remain short term
focussed and price conscious, particularly with
US based growers looking to reduce holdings of
prior year materials at lower than long term
average prices. This market environment
is
particularly impacting lower grade material.
In this environment Select Harvests has continued
to focus on being as efficient as possible at the
same time as optimising the performance of our
orchard and processing assets. Sales are targeted
at markets where premiums can be achieved,
and lower cost freight alternatives delivered.
Despite the current very wet conditions our
orchards are performing well, with our 2022/23
crop set to begin harvesting in March 2023.
THANK YOU
During the year our Chair Michael Iwaniw retired
from the Board. Michael was appointed to the
board of Select Harvests in 2011 and was Chair for
the majority of his tenure. During his time the
company tripled its net asset base. We would like to
acknowledge and thank Michael for his leadership.
FY2022 has delivered several challenges that
have been dealt with in a professional and
resilient manner. There is no doubt that, while
this has had an impact on the year’s financial
performance, it has also ensured the company is
in a good position to take advantage of an
improving almond market and settled growing
and handling conditions.
Select Harvests’ dedicated employees, our sound
and consistent strategy and our strong financial
position are enabling the company to successfully
navigate through the recent 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 focus in optimising the company’s
almond base and expanding and improving 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,
for all their support and
and employees
commitment during FY2022 and look forward to
continuing to pursue operational improvements
and growth opportunities in 2023.
Global Almond Pricing - USD Per Pound
$4.00
$3.50
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
$-
Dec
Jan
Feb Mar Apr May Jun Jul Aug Sep Oct Nov
2021
CT SUP* 27/30
CT SUP* 23/25
Dec
Jan
Feb Mar Apr May Jun Jul Aug Sep Oct
2022
Nov
NP NX1† 23/25
NP NX1† 27/30
STD5‡
* Carmel Supreme Snacking Grade
† Nonpareil Premium Grade
‡ Blanchables Grade
SHV Theoretical Harvest Volume (MT)§
SOURCE: COMPANY DATA
+2.7%
+9.6%
)
s
e
n
n
o
t
(
e
m
u
o
V
l
0
9
6
,
2
2
0
5
2
,
3
2
0
5
2
,
8
2
0
0
0
9
2
,
FY19
FY20
FY21
FY22
FY23
FY24
FY25
FY26
FY27
FY28
FY29
Yield from
Existing Portfolio§
Yield from Committed
& Immature New Plantings(cid:31)
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) maturity profile for Select Harvests' orchards and immature
yields based on the average of the 2019, 2020 and 2021 crops.
¶ Assumes a 3.5MT per ha (1.40MT per acre) maturity profile for Piangil Almond Orchard.
Travis Dillon,
Chair
Paul Thompson,
Managing Director
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022
8
Select Harvests Strategy: In control of our destiny
VISION
To be a Leader in the Supply of Better for You Plant Based Foods
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: Dan Wilson has been appointed as General Manager, Almond Operations.
Processing normally
begins late April
Around late April
processing of the year's
crop commences. The
first step in processing
almonds is to remove
the hull and shell. Some
almonds are value-add
processed and supplied
as slivered, sliced,
diced, split, left whole
or ground.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022
Value-add almonds
9
Renshaw supplies a full range of premium value-added almond products (blanched, roast, sliced, diced, meal and paste) in multiple
supplier categories, including beverage, bakery, confectionery, cereal, snacking, health, dairy (ice-cream), re-packers and
wholesalers, to over 600 customers globally.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 10
2022/23 Triple Bottom Line Focus Areas
Planet
Water Efficiency
100% of our orchards use
drip irrigation tree and soil
monitoring systems
Sustainability
Our sustainability targets to
be disclosed in our 2022
Sustainability report in
February 2023
Co-Waste Projects
Continue developing
three promising
co-waste projects
People
Securing Labour
Commenced securing
harvest labour
for 2023
HRIS System
Completion of the
implementation in 2023
Investment in Skills
Leadership training and
ongoing skills development
in place
Profit
Water Costs
Lower temporary water
entitlement costs
expected in FY2023
due to full catchments
Carina West Investment
Increase in volume and
efficiency of the value-added
almond product line
Bi Product Compost and
Fertiliser Program
Commercialisation
opportunities being
developed
DRIP IRRIGATION: 1 00% of our orchards use drip irrigation tree and soil monitoring systems.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022
11
11
Our Sustainability Focus
Our Sustainability Focus
ECONOMIC
PERFORMANCE
A circular business model,
strong growth and economic
return to shareholders
WELLBEING
HEALTH & SAFETY
Health and safety preventative
measures and systems
PESTICIDES USE
Safe and efficient management
of pesticides, including strict
bee protection protocols
SOIL HEALTH
Increased health of soils and
carbon storage through our
closed loop compost and
fertiliser program
FOOD SAFETY
Food safety, quality and
traceability measures to prevent
food contamination and
foodborne illness
EMPLOYMENT
PRACTICES & HUMAN
RIGHTS
Remuneration to attract and
retain people, gender diversity
and ethical practices across
our value chain
Soil and tree moisture data is
transmitted to a central software
system for precision irrigation.
EMISSIONS, CLIMATE
ADAPTATION &
RESILIENCE
Carbon neutrality, zero biomass
waste to landfill, and
protecting our natural
environment
LOCAL COMMUNITIES
Support for local communities
through our Community
Investment Program and
Community Service Leave
program
WATER EFFICIENCY
Productive and efficient use of
water through water
monitoring technology
and drip irrigation
systems
“Our approach to sustainability is a core value
underpinning our business strategy and centres
round three pillars: people, planet and profit.”
"Our approach to sustainability is a core value
underpinning our business strategy and centres
around three pillars: people, planet and profit.".
- Nikki Jordan
SUSTAINABILITY AND ENVIRONMENT MANAGER
- Nikki Jordan
SUSTAINABILITY AND ENVIRONMENT MANAGER
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 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 and was recently appointed as a Director of the Almond Board of Australia. 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.
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.
SUZANNE DOUGLAS
General Manager Consumer
Suzanne joined Select Harvests in 2019, and left the company in June 2022. 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.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 Board of Directors
13
TRAVIS DILLON
Chair and Non-Executive Director
Joined the board on 29 November 2021 and appointed Chair on 27 May 2022. Travis has commercial and strategic expertise in the
agricultural sector and relevant distribution channels. He is currently the Deputy Chair of Lifeline Australia, Chair of Clean Seas Seafood
and Chair of Terragen Holdings Limited. Travis has previously served as CEO and Managing Director of Ruralco Holdings Limited until its
acquisition by Nutrien in September 2019. Prior to becoming Ruralco’s Managing Director in 2015, he was the Executive General Manager
of Ruralco’s operations. Over a career in agri-services, spanning nearly three decades, Travis has held many positions including Branch
Manager, Agronomist and numerous Category Manager roles. He is a current member of the Remuneration and Nomination Committee.
PAUL THOMPSON
Managing Director and Chief Executive Officer
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 and was recently appointed as a Director of the Almond Board of Australia. 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 and XRF Scientific Ltd as well as being a Director of Australian United Investment
Company Ltd. He was formerly Chair of Troy Resources Ltd, 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 current member of the Audit and Risk Committee and the Sustainability 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 and is also Chair of the Victorian Legal Services Board. Ms Bennett has previously served on the board of Hills Limited and
Beach Energy Limited. 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, was Chair of the Sustainability
Committee during the year and is currently a member of the Remuneration and Nomination Committee.
GUY KINGWILL
Non-Executive Director
Appointed to the board on 25 November 2019. Guy has an extensive background in horticulture, international soft commodity
marketing and water investment and trading. He is currently on the Board of Agriculture Capital Management (Australia) Pty Ltd.
Guy has previously served as Managing Director of Tandou Limited, and as a non-executive director of Lower Murray Urban and
Rural Water Corporation and Tasmanian Irrigation Pty Ltd. He is Chair of the Remuneration and Nomination Committee and a
current member the Audit and Risk Committee and the Sustainability Committee.
MARGARET ZABEL
Non-Executive Director
Appointed to the board effective on 3 October 2022. Margaret is a specialist in customer centred business transformation, brand
strategy, innovation, digital communications, customer experience and change leadership. She has 20 years’ experience working
across major companies and brands in FMCG, food, technology and communications industries including multinationals, ASX 100
and not-for-profits. Her previous roles include National Marketing Director Lion Nathan, VP Marketing for McDonald’s’ Australia and
CEO and Board Director of The Communications Council. Margaret has also served as a Non-Executive Director for the mental health
charity RUOK? for 5 years and is currently a Non-Executive Director of G8 Education, The Reject Shop, Collective Wellness Group and
Fairtrade AUNZ. She is Chair of the Sustainability Committee.
MICHAEL IWANIW
Chair
Appointed to the board on 27 June 2011 and as Chair on 3 November 2011 before retiring on 30 June 2022. 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.
NICKI ANDERSON
Non-Executive Director
Appointed to the board on 21 January 2016 and retired on 25 February 2022. Nicki Anderson s 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
has strong links to Australia’s e-commerce, manufacturing and agricultural sectors. She is currently Deputy Chair of Mrs Mac’s Pty Ltd
and The Australian Made Campaign Limited; Non-Executive Director for Graincorp, Craig Mostyn Group, Fred Hollows Foundation
and Prostate Cancer Foundation of Australia. Nicki is a member and former Chair of the Monash University Advisory Board for the
marketing faculty. She is a former Non-executive Director of Toys’R’Us ANZ Limited and Health & Plant Protein Group Limited.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 14
Performance Summary
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)
(28,934)
750
-
(19,258)
(1,306)
(20,564)
2,254
(18,310)
10,196
(8,114)
(1,898)
(10,012)
(345)
(10,357)
(12.7%)
2.7%
-
(32.3%)
(4.8%)
(63.1%)
41.3%
(67.4%)
>100%
(44.7%)
(83.5%)
(63.0%)
(44.4%)
(68.5%)
(8.8)
(69.0%)
(6.0)
(75.0%)
FY2022
199,661
29,000
$6.80
40,384
(28,342)
FY2021
228,595
28,250
$6.80
59,642
(27,036)
12,042
(3,198)
8,844
1,207
10,051
(4,171)
5,880
(1,121)
4,759
3.9
0
2
2
32,606
(5,452)
27,154
(8,989)
18,165
(2,273)
15,892
(776)
15,116
12.7
0
8
8
376,648
72.4%
$5.26
636.2
351,223
66.7%
$8.29
996.7
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.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022
Historical Summary
15
Select Harvests consolidated results for years ended 30 September/June
$'000
(EXCEPT WHERE INDICATED)
2009
2010
2011
2012
2013
2014*
2015
2016
2017
2018
2019
2020
2021
2022
YEAR/PERIOD ENDED
30 JUNE
30 JUNE
30 JUNE
30 JUNE
30 JUNE
30 JUNE
30 JUNE
30 JUNE
30 JUNE
30 JUNE
30 SEPT
30 SEPT
30 SEPT
30 SEPT
Total sales
248,581
238,376
248,316
246,766
190,918 188,088
223,474 285,917
242,142
210,238 298,474
248,262
288,220
231,274
Earnings before interest and tax
26,827
26,032
22,612
(2,495)
5,241
31,288
85,845
49,785
16,979
34,869 80,065
Operating profit before tax
23,047
23,603
18,473
(8,743)
198
26,833
80,514 44,290
11,978
29,464
76,108
Net profit after tax
16,712
17,253
17,674
(4,469)
2,872
21,643
56,766
33,796
9,249
20,371
53,022
38,726
36,662
25,001
18,165
15,892
15,116
10,051
5,880
4,759
Earnings per share (Basic) (cents)
Return on shareholders' equity (%)
Dividend per ordinary share (cents)
Dividend franking (%)
Dividend payout ratio (%)
Financial ratios
Net tangible assets per share ($)
Net interest cover (times)
Net debt/equity ratio (%) †
Current asset ratio (times)
42.6
16.6
12
100
28.2
1.56
7.10
51.9
0.79
43.3
15.2
21
100
48.5
1.87
10.70
39.6
1.44
33.7
10.5
13
100
38.6
2.17
6.70
43.3
1.96
(7.9)
(2.8)
8
100
5.0
1.8
12
100
(101.3)
239.8
2.19
(0.4)
41.7
1.42
2.14
1.0
49.6
1.61
37.5
12.3
20
55
53.5
2.38
6.9
54.0
4.02
82.9
19.8
50
-
62.8
3.35
15.9
38.2
3.36
46.7
11.6
46
54
99.1
3.22
9.0
23.1
1.90
12.6
3.3
10
100
79.4
2.95
3.4
52.5
1.05
23.2
32.9
12
100
51.7
3.34
6.4
18.7
4.49
55.5
12.7
28
100
50.0
3.60
20.0
6.6
2.74
26.0
6.2
13
100
50.0
3.46
18.7
79.6
2.39
12.7
2.9
8
100
74.7
3.68
8.0
66.7
2.22
3.9
0.9
2
100
50.7
3.58
2.4
72.4
2.55
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
162,118 173,667
217,397
257,838
249,341
133,884
145,612
214,352
202,371
180,542 194,080 280,130 294,251
343,081
354,435 379,190
607,497
745,967
752,349
214,959 229,605 305,580 279,307
303,845
330,719 487,912 449,772 479,691
516,553 552,858
824,894 1,003,805 1,001,690
102,348
58,469
46,454
54,369
76,800
33,988
61,893
81,783
130,371
36,104
63,457
91,062
116,050
97,751
Non-current liabilities
11,735
57,515
90,311
64,608
67,540
121,325
138,632
77,088
71,701
101,809
73,398
328,822
360,799
383,655
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
137,913 136,854
419,884
476,849
481,406
100,876
113,621
168,815
160,330
159,505
175,406
287,387 290,901
277,619 378,640 416,003
405,010
526,956
520,284
46,433
47,470
95,066
95,957
97,007
99,750
170,198
178,553
181,164 268,567 271,750
279,096
397,343
401,164
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
10,417
53,354
63,466
104,371
101,180
84,853 100,472 133,836
14,280
111,634
7,657
2,029
121,956
117,091
Total shareholders' equity
100,576
113,621
168,815
160,330
159,505 175,406 287,387 290,901
277,619 378,640 416,003
405,010
526,956
520,284
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
95,737
96,637
120,224
120,951
3,296
3,039
3,227
3,359
3,065
3,779
4,328
8,908
11,461
11,943
10,331
11,258
10,236
10,470
- close ($)
2.16
3.46
1.84
1.30
3.27
5.14
11.00
6.74
4.90
6.90
7.69
5.57
8.29
5.26
Market capitalisation
85,361
137,635
103,458
73,857
187,904
298,115
785,796 491,474
360,674 657,059 736,218
538,268
996,660
636,201
* 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
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 16
Closed loop compost
BELOW: Compost rows at Carina West.
Our carbon-based fertiliser is used at scale in our orchards and has the
potential to recycle most of our hull waste. We have created a closed loop
by using the waste hull ash from the CoGen power plant, which is high in
potassium, as an important ingredient to our fertiliser program.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 17
Financial Report
1 8 Directors' Report
2 8 Remuneration Report
4 0 Auditor’s Independence Declaration
4 1 Annual Financial Report
4 2 Statement of Comprehensive Income
4 3 Statement of Financial Position
4 4 Statement of Changes in Equity
4 5 Statement of Cash Flows
4 6 Notes to the Financial Statements
7 5 Directors' Declaration
7 6
Independent Auditor’s Report
8 2 ASX Additional Information
8 3 Corporate Information
RIGHT:
Piangil farm from a
drone's perspective
shows the large scale of
the 1,566 hectares of
planted almond trees
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 18
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 2022.
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
T Dillon, Adv Dip RBM, MBA, MAICD (Chair and Non-Executive Director)
Joined the board on 29 November 2021 and appointed Chair on 27 May 2022. Travis has commercial and strategic expertise in the agricultural sector
and relevant distribution channels. He is currently the Deputy Chair of Lifeline Australia, Chair of Clean Seas Seafood and Chair of Terragen Holdings
Limited. Travis has previously served as CEO and Managing Director of Ruralco Holdings Limited until its acquisition by Nutrien in September 2019.
Prior to becoming Ruralco’s Managing Director in 2015, he was the Executive General Manager of Ruralco’s operations. Over a career in agri-services,
spanning nearly three decades, Travis has held many positions including Branch Manager, Agronomist and numerous Category Manager roles. He
is a current member of the Remuneration and Nomination Committee.
Interest in shares: 8,850 fully paid shares.
P Thompson, B Bus,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 and was recently appointed as a Director of the Almond Board of Australia. 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: 674,398 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). 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 current member of the Audit and Risk Committee and the
Sustainability 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 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 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, was Chair of the Sustainability Committee during
the year and is currently a member of the Remuneration and Nomination Committee.
Interest in shares: 19,507 fully paid shares.
G Kingwill, B Com, CA, FAICD (Non-Executive Director)
Appointed to the board on 25 November 2019. Guy has an extensive background in horticulture, international soft commodity marketing and water
investment and trading. He is currently on the boards of Agriculture Capital Management (Australia) Pty Ltd. 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 and Tasmanian Irrigation Pty Ltd.
He is Chair of the Remuneration and Nomination Committee and a current member of the Audit and Risk Committee and the Sustainability Committee.
Interest in shares: 16,432 fully paid shares.
M Zabel, B Math, MBA, GAICD (Non-Executive Director)
Appointed to the board effective on 3 October 2022. Margaret is a specialist in customer centred business transformation, brand strategy,
innovation, digital communications, customer experience and change leadership. She has 20 years’ experience working across major companies
and brands in FMCG, food, technology and communications industries including multinationals, ASX 100 and not-for-profits. Her previous roles
include National Marketing Director Lion Nathan, VP Marketing for McDonald’s Australia and CEO and Board Director of The Communications
Council. Margaret has also served as a Non-Executive Director for the mental health charity RUOK? for 5 years and is currently a Non-Executive
Director of G8 Education (ASX: GEM; director since September 2017), The Reject Shop (ASX: TRS; director since June 2021), Collective Wellness
Group and Fairtrade AUNZ. She is Chair of the Sustainability Committee.
Interest in shares: Nil.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 19
NAMES, QUALIFICATIONS, EXPERIENCE AND SPECIAL RESPONSIBILITIES
M Iwaniw, B Sc, Graduate Diploma in Business Management, MAICD (Chair, Non-Executive Director)
Appointed to the board on 27 June 2011 and as Chair on 3 November 2011 before retiring on 30 June 2022. 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 Chairman of Australian Grain Technologies and has extensive non-
executive director experience with several listed and private companies.
N Anderson, B Bus, EMBA, FAICD (Non-Executive Director)
Appointed to the board on 21 January 2016 and retired on 25 February 2022. 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 Deputy Chair of Mrs Mac’s Pty Ltd; Deputy Chair of the Australian Made Campaign Limited;
Non-Executive Director for ASX listed Graincorp (ASX: GNC, director since October 2021), Craig Mostyn Group, Fred Hollows Foundation and
Prostate Cancer Foundation of Australia. Nicki is a member and former Chair of the Monash University Advisory Board for the marketing faculty.
She is a former Non-executive Director of Toys’R’Us ANZ Limited (ASX: TOY from 2018 to 2022) and Health & Plant Protein Group Limited (ASX: HPP from
May to August 2021).
COMPANY SECRETARY
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: 11,333 fully paid shares.
CORPORATE INFORMATION
Nature of operations and principal activities
The principal activities during the year of
entities within the Group were:
• The growing, processing, packaging and sale
of almonds and its by-products 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.
EMPLOYEES
The Company employed 568 full time equivalent
employees as at 30 September 2022 (30 September
2021: 611 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
Overview
This year was unprecedented with local and
global events impacting the Select Harvests’
business. The COVID-19 pandemic continued
into its third year, the Varroa Mite virus entered
Australia
impacting pollination, extreme
weather events in the form of increased rain
and flooding, and Russia invaded Ukraine
input
impacting global supply chains and
commodity pricing.
The focus from the Board, Executive, and key
leaders has been on ensuring all employees
are safe and well and continuing to operate the
business to drive the best possible outcomes
in a challenging social, environmental and
economic landscape.
Regular company communications and
legislative updates are shared with employees
including ongoing support to our Employment
Assistance Program to support staff through
these unprecedented times.
Pleasingly, our safety performance continued
to improve with Lost Time Frequency Rate
lowering to 8.6 vs 12 in FY2021. Again, safety
was ranked the number one conviction (area
of alignment with the Company) in the FY2022
Employee Culture Survey.
Horticulture
Following a good start to the 2022 crop
horticultural year, wet conditions prevailed
towards the end of the 2022 program.
Consistent yields were delivered by our
targeted horticultural management approach.
Wet harvest conditions led to some crop
being exposed to extended periods of high
moisture levels with a portion being unusable
and written-off.
The 2022 mature orchards’ crop yields were
down slightly compared to FY2021 however
remain above their five-year average yield
profile. The
immature orchards’ yields
continue to perform above their business
case assumptions. Despite the operational
challenges the 2022 crop was 29,000MT, 2.7%
larger the 2021 crop of 28,250MT.
The horticultural growing costs remained
relatively flat with higher employee and
power costs offset by lower water costs.
to
Ongoing
technology
levels, remains the key
improve quality
strategic focus to maximise returns from the
company’s almond base.
investment
in
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 20
Directors’ Report
Continued
Processing
Despite these challenging factors processing
was completed on time, because of our recent
investments
in state-of-the-art technology
over the past 2–3 years and the effective use of
on farm conditioners. The FY2022 crop had
been fully hulled and shelled by end of the
FY2022 year.
Due to the wet harvest conditions impacting
the delivered crop, approximately 25% of the
crop had to be mechanically dried prior to the
hulling and shelling process. Higher moisture
levels led to lower levels of inshell produced
and a higher percentage of lower grade product.
The Carina West processing facility achieved
less than 2% downtime for the year, despite a
major hull fire occurring on Boxing Day 2021.
This fire impacted storage and fumigation
capacity at the site, resulting in reduced
operational efficiency. Select Harvests would
like to acknowledge the support from the
Country Fire Authority, the local community,
and our dedicated employees.
Following the sale of the consumer branded
food business (Lucky and Sunsol brands) and
the closure of our Thomastown facility in June
2022, there has been a dedicated project team
in place to transition the remaining almond
value-add volume to our Carina West Production
Facility and to manage the timely exit of the
Thomastown facility. Operationally, the Carina
West value-add facility yields and throughout
levels improved throughout the year.
Initially, levels of production (and production
costs) were impacted by commissioning of new
equipment to improve capacity and capability.
Sales and Marketing
To date 73% of the FY2022 crop is either
shipped or committed for sale.
The 2022 crop almond price remained flat
throughout the year and was in line with the
2021 crop. Despite a reduced and poorer
quality US 2021 crop (which initially lifted
pricing up late in 2021) and deteriorating
drought conditions in California the global
almond market remained relatively subdued.
US growers continued to liquidate their prior
year carry-over inventory. Traders and end
user customers have reduced their buying
cycles to shorter time periods and ordered
smaller volumes, taking advantage of the US
growers looking to meet rising production
costs and cashflow requirements.
The disruption to global supply chains
and deteriorating consumer confidence
had an impact on market confidence and
ultimately demand.
The value-add activity’s contribution was
impacted due to the use of prior period raw
material at contracted fair value rates. As
finished goods sales prices reduced (in line
with the lower almond market) gross margins
were negatively impacted. The use of 2021
crop through value-add is scheduled to be
completed by November 2022 with lower
priced 2022 crop being utilised thereafter.
Costs, Capital and Cashflow
2022 crop costs of production per kg increased
by 4.4% due predominantly to costs related to
the wet crop. This impacted harvest costs
including operational delays and additional
handling. Processing costs were impacted
including additional handling, mechanical
drying, lower inshell and slower throughput.
Additionally, immature orchards cost recognition
increased in line with their age profile with
increased yield benefits having been recognised
in prior years.
levels of
lower
impacting
Operational cashflows reduced in FY2022 as a
result of a flat revenue base (price) and
increased operating costs. As previously
inshell were
mentioned,
produced,
Inshell
generates early cashflows and was lower than
prior years. Additionally, in FY2021 and early in
FY2022, there were ongoing shipping delays
again impacting cashflows for the later part of
the FY2021 sales program and the early part of
the FY2022 sales program.
cashflow.
Given the low pricing environment in FY2022,
costs and capital expenditure were tightly
controlled. Other than the upgrades to the value-
add facility, no other major capital expenditure
was undertaken, and no permanent water was
acquired. This low pricing environment, recent
input price increases (insurance, fertilisers and
agri. chemicals) and the extension of the 2022
crop sales program, the company’s debt
increased to $134.5M (FY2021 $98.1m) resulting
in a bank debt to equity ratio of 25.9%.
No greenfield activity or acquisitions were
undertaken during FY2022. The company’s focus
was on organic improvement through efficiency
gains including getting the value-add facility
to a level where it can be fully optimised and a
managed closure of the Thomastown facility.
People, Planet and Profit
Our approach to sustainability is a core value
underpinning our business strategy and
centres around three pillars: people, planet,
and profit. When making decisions at Select
Harvests, we seek to ensure a balance between
creating value for our shareholders, our
broader
as
stakeholder groups,
employees, customers, suppliers, government,
and our environment.
such
The cornerstone for balancing our three pillars
is understanding what our material impacts
are. Our approach to determining our impacts
is guided by the Global Reporting Initiative
(GRI) Standards for sustainability reporting. In
2021 there were significant revisions to the GRI
Standards, including new guidance to help
organisations determine their material topics
and a requirement for organisations to use
applicable GRI Sector Standards.
This year we built on our 2020 materiality
assessment, utilised the GRI Sector Standard
and followed the GRI Standards 2021 four step
process for determining material topics for
sustainability reporting. We have continued to
align our reporting with the United Nations
Sustainable Development Goals.
this
The material topics and impacts determined
through
our
process
understanding of value creation and financial
reporting. They provide crucial input for
identifying financial risks and opportunities
related to Select Harvests.
inform
Our material impacts remain unchanged with
minor adjustments
in priority and topic
classification, to align with the new GRI 13
Sector Standard. However, compared to 2020
soil health, biodiversity and waste have
become more prominent.
Reporting what matters - our priority
topics in 2022
PROFIT
• Economic Performance
PEOPLE
• Work health and safety
• Food safety
• Employment practices
• Supply chain traceability
• Living income and living wage
• Non-discrimination and equal opportunity
• Food security
• Anti-corruption
• Freedom of association and collective
bargaining
• Local communities
PLANET
• Water and effluents
• Emissions
• Climate adaptation and resilience
• Soil health
• Pesticides use
• Biodiversity
• Natural ecosystem conversion
• Energy
• Waste
Our Environment and Sustainability Policy
guides our approach to managing our
impacts. We are committed
to social,
environmental, and economic best practices,
providing continual improvement by setting
objectives, measuring
and
communicating our results. We will report our
performance in our Sustainability Report 2022,
due for release in February 2023.
progress,
This year, and for the first time, we will seek
external assurance over key data sets to
ensure the integrity of our reporting.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 21
PROFIT
FINANCIAL PERFORMANCE REVIEW
Profitability
Reported Net Profit After Tax (NPAT) is $4.8 million. Reported Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) is $37.9
million and Reported Earnings Before Interest and Taxes (EBIT) is $10.1 million.
Results Summary and Reconciliation
($‘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 $199.7 million was generated for FY2022.
This was 12.7% lower than last year due to the
delayed sales and shipping program to export
markets as a result of less inshell produced
(first product to market) due to wetter than
normal conditions leading up to and during
the harvest period. This has also delayed the
processing and shipping cycle for other kernel
categories. Additionally, due to the exit of the
consumer branded business the
level of
internal sales has reduced.
The FY2022 continuing operations EBIT of
$12.0 million was $20.6 million lower than
FY2021. This excludes the operating results of
the sold consumer branded business and
related activities that were finalised during the
FY2022 financial year and the reported
significant items relating to the costs of the
Thomastown facility closure and re-structure.
The lower result was predominantly due to the
reduced fair value profit of the 2022 crop. This
was a result of increased harvesting costs (wet
conditions), processing costs (high moisture
product
increased mechanical
drying and increased insurance charges) and
higher export freight charges.
Additionally, given the maturity profile of the
immature trees, an increased percentage of
costs were recognised for the 2022 crop (not
offset by an equal production volume uplift).
The 2022 crop almond price remained flat at
$6.80/kg. This result was partially offset by
FY2022 almond volumes produced increasing
by 2.7% to 29,000 MT (FY2021 volume was
28,250 MT) and the lower cost of temporary
water entitlements. Value-add
industrial
product contribution was lower due to the
usage of higher priced prior year material as
inputs and lower finished goods sales prices
leading to lower gross margins.
The FY2022 underlying EBIT of $8.8 million was
$18.3 million lower than FY2021. Underlying
EBIT includes the operating results of the sold
consumer branded business and related activities
that were finalised during the year but excludes
related reported significant items.
requiring
FY2022 operating EBIT of $10.1 million was $8.1
million lower than FY2021. In addition to the
factors detailed above, $1.2 million of non-
recurring costs relating to asset impairments
were written back during the year (refer to note
5.4). These costs were recognised in FY2021
relating to the sale and closure of the discontinued
operations and are non-recurring and relate
specifically to discontinued operations.
Interest Expense
Interest expense of $4.2 million reflects the
higher average interest rates applicable to
current finance facilities and higher debt levels
due to the delay of executing the company’s
sales program which was the result of a later
harvest following wetter seasonal weather
conditions and related product mix produced.
Statement of Financial Position
Net assets as at 30 September 2022 are $520.3
million, compared to $527.0 million as at 30
September 2021. The net working capital has
increased by 8.4% mainly due to the delay in
the Company’s export sales program following
a later than normal harvest and lower internal
sales resulted in higher inventory (including
biological assets) holdings which was offset by
lower trade debtors.
Trade payables were lower than previous years
due to the delay in growing costs caused by
wetter than usual spring weather conditions.
Offsetting this increase in net working capital
is the increase in the fair value of the company’s
financial instruments (foreign exchange contracts
hedging foreign exchange sales) due to the
weaker AUD/USD exchange rate as at 30
September 2022.
$’000
Trade & other receivables
Inventories
Biological assets
Trade & other payables
Net working capital
FY2022
57,094
128,462
61,198
(45,685)
201,069
FY2021
84,842
114,316
51,321
(64,967)
185,512
REPORTED RESULT (AIFRS)
FY2022
12,042
(3,198)
8,844
1,207
10,051
(4,171)
5,880
(1,121)
4,759
3.9
FY2021
32,606
(5,452)
27,154
(8,989)
18,165
(2,273)
15,892
(776)
15,116
12.7
Cash flow and Net Bank Debt
Total net debt as at 30 September 2022 was
$134.5 million (30 September 2021 was $98.1
million), with a gearing ratio (total net debt
excluding lease liabilities)/equity) of 25.9%
(30 September 2021: 18.6%). The increase in
borrowings is a result of the delay of the
Company’s export sales program and the
continuing low point in the global almond
price (leading to 12 months of sales receipts at
$6.80/kg).
Operating cash inflows generated for FY2022
amounted to $26.8 million (2021: $38.2 million).
This adverse result was due to the delayed
sales and shipping program to export markets
compared to FY2021 as a result of the delayed
FY2022 harvest caused by unfavourable weather
conditions and 12 months of receipts based on
a lower almond price. Offsetting this decrease
are lower taxes paid due to the lower profits
generated in FY2021 (compared with FY2020).
Investing cash outflows of $35.6 million were
$134.2 million lower than FY2021 due to the
acquisition of the Piangil orchard and related
water assets in FY2021. Other capital items and
development costs were lower than FY2021.
Dividend payments for the year were higher as
the final dividend payment relating to the
FY2021 result (paid in FY2022) was higher than
the FY2020 final dividend paid. Net cash
outflow (operating cash, less investing cash,
less dividends, less lease principal payments)
for FY2022 was $36.5 million which was funded
through an increase in bank debt.
Dividends
A final dividend of 2 cents per share has been
declared, resulting in a total dividend of 2
cents per share for the financial year. This
compares to a total dividend of 8 cents per
share declared for the previous financial year.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 22
Directors’ Report
Continued
PEOPLE
Health, Safety and Wellbeing
Focus continues towards achieving Zero Harm,
with annual targets to improve year on year
performance by driving a 10% reduction in the
number of incidents and injuries and reducing
the level of injury severity. To prevent harm, a
10% 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 and 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
included:
implemented
• Activating and continually updating the
COVID-19 Management and Response Plan
Work Health and Safety (WH&S)
• A major focus for the year was to identify
Hazards to eradicate unsafe environments to
avoid accidents.
technology
• Continued education to increase utilisation of
to support compliance
our
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 Work
Health and Safety (WH&S) policies and
all
expected behaviours delivered
managers and
the
business, visible safety leadership, including
safety walks and frequent toolbox training
sessions and discussions
to
supervisors across
Overall, total number of recorded incidents in
FY2022 increased from 180 to 198 incidents
primarily due to continued strong reporting of
all
Incident
incidents
Management system.
the ManGo
via
The total number of Hazards reported
in
FY2022 increased by 73.7% from 1582 hazards in
FY2021 to 2748 reported in FY2022.
The number of Medical Treatment Injuries
increased by 11.1% during FY2022 (from 9 to 10),
with the Medical Treatment Injury Frequency
Rate decreased by 14% from 10 Medical
Treatment Injuries per million hours worked in
FY2021 to finish at 8.6 per million hours worked
in FY2022.
The number of Lost Time Injuries sustained in
FY2022 reduced by 33.3% from 6 LTIs in FY2021
to 4 recorded in FY2022. The Lost Time Injury
Frequency Rate reduced by 28.3% in FY2022
from 12 Lost Time Injuries per million hours
worked in FY2021 to 8.6 Lost Time Injuries per
million hours worked in FY2022.
• 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
Due to injuries sustained in FY2022, the number
of Days Lost in FY2022 increased slightly by 5%
from 381 days lost in FY2021 to 400 total days
lost in FY2022.
Total Recordable Incidents
Hazards
Medical Treatment Injuries
Lost Time Injuries Severity
Lost Time Injuries
Number Reported
Frequency Rate
Number Reported
Number Reported
Frequency Rate
Days Lost
Severity Rate
Number Reported
Frequency Rate
Community
The Company 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 a significant
processing facility at Robinvale in Northwest
Victoria. The Company is actively involved in all
our
local communities. Many employees
contribute to local community organisations
on a regular basis.
The Company supports the local communities
with both financial and non-financial support
and through product donations.
This year the company donated $35,313.49 to
25 charitable organisations across Victoria,
New South Wales and South Australia. In
addition, the Company 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.
labour
laws and
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
legislative
with Australian
obligations. We undertake regular reviews to
ensure compliance, with a focus on the
payment of wages and eligibility to work in
Australia.
During the 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.
FY2022
FY2021
VARIANCE
FY2022 VS FY2021
198
41
2748
10
8.6
400
9.3
4
8.6
180
58
1582
9
10
381
11
6
12
+10.0%
-29.3%
+73.7%
+11.1%
-14.0%
+5.0%
-15.5%
-33.3%
-28.3%
The Company 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.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 23
PLANET
We aim to reduce our environmental impact
across all aspects of our business. Our
Environmental Statement outlines our focus on
water stewardship, air and land stewardship,
reducing waste and recycling, and carbon
neutrality. These focus areas contribute to our
Select Harvests’ overall approach to climate
change adaptation and resilience.
Our targets:
• 100% of our orchards using drip irrigation
• 100% of our orchards using soil moisture
monitoring probes
• 100% of our orchards using plant-based
water stress technology
• 100% of our orchards using high resolution
remote sensing imagery
• Zero biomass waste to landfill
• 100% packaging recycled and recyclable
• Carbon neutral by 2050, or earlier
• No damage to and protect and nurture
native vegetation
Climate-related risks and opportunities
Progress on our targets will be reported in our
2022 Sustainability Report, due for release in
February 2023.
We recognise that greenhouse gas emissions
represent a significant part of our environmental
footprint. This year we are undertaking a
comprehensive carbon footprint (Scope 1, 2
and 3) to understand the emissions from our
activities and set targets. The findings will be
reported in our 2022 Sustainability Report and
verified via an external assurance process.
Climate change adaptation and resilience
We continue to recognise the risks, challenges
and opportunities that climate change is likely
to present for our business. Operating in the
agriculture sector, we are both a contributor to,
and affected by, the physical and transitional
impacts of climate change. We accept the
science of climate change and the Paris
Agreement which commits to hold the increase
in global average temperature to well below
2°C, relative to the pre-industrial period.
While the issue of climate change is worldwide,
the impact is felt by people in the communities
where we live and work in the form of severe
weather (e.g. flood, frost, or drought), rising
temperatures, water supply shortages, water
demand increases and cost of water - all of
which affect our operations, employees,
communities, and human health.
This year, the Company has taken steps towards
aligning the disclosure of our climate-related
risks and opportunities with the Taskforce on
Climate Related Financial Disclosures (TFCD).
We also acknowledge the emerging Taskforce
on Nature-related Financial Disclosures and will
consider alignment to their recommendations
in future reports. The Company is the custodian
of a significant area of land and air, including large
tracts of native vegetation. Our goal is to create
no damage and protect native flora and fauna.
Climate-related risks and opportunities for the agricultural sector largely emanate from greenhouse gas emissions, water and waste management
driven by land use, production practices, and changing land-use patterns. We recognise the increasing likelihood the Company may be impacted
financially by greenhouse gas emissions and water risks (including extreme weather events and shifts in precipitation patterns).
Key risks are identified below, together with mitigation strategies under the control of management.
TRANSITIONAL RISKS
Market and reputational
• Societal pressure for increased regulation or
taxation of key business activities.
• Inability to meet business customers’ qualifying
thresholds for environmental matters.
• Consumer preference shifting to ‘carbon neutral’ products.
• Perceived exposure or poor climate response may reduce
supply of capital or availability of insurance cover.
• Prolonged reputational damage resulting
in significant loss of customers.
MITIGATION STRATEGY
The Company supports the Paris Agreement which commits to
limiting global average temperature to well below 2°C, relative to the
pre-industrial period.
The core elements of our environmental strategy seek to address
greenhouse gas (GHG) emissions, water stewardship and waste.
For further information, please refer to our 2022 Sustainability Report
due for release in February 2023.
• Competitors may move to decarbonise.
Potential financial impacts include loss of revenue and reduced market share.
Policy, legal and technology
• Policies and regulations around land use and
conservation requirements may constrain water
resources and impact water license terms.
• Additional carbon costs or taxes may be
imposed on business activities.
• Additional carbon costs or taxes may be
imposed on supplier activities
• Refer ‘Market and reputational’ risk above.
• Continue diversifying our water portfolio to increase
exposure to a greater portion of Murray-Darling
Basin inflows and associated allocations.
• Continue to work towards aligning our climate related
disclosures with the Taskforce on Climate Related Financial
Disclosures (TFCD) and mitigating our emissions.
• Continue monitoring regulatory and compliance developments
• Increased risk of climate-related litigation.
Potential financial impacts include increased operating costs and reduced revenue.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 24
Directors’ Report
Continued
PLANET
PHYSICAL RISKS AND IMPACTS
MITIGATION STRATEGY
Water availability
• Long-term shifts in climate pattern may reduce the
availability of water in the Murray Darling Basin
• Refer ‘Market and reputational’ and ‘Policy, legal and technology’ risk
mitigation strategies under the ‘Transition risks’ section above.
• Continue to invest in water efficient technology and explore deficit
strategies to optimise water and / or reduce water use.
• Continue exploring geographic diversification of orchards to reduce exposure
to climate events, issues around water availability and water deliverability.
• Continue to engage with relevant water authorities to promotes sustainable
use of water in the Murray Darling Basin and monitor the water market.
• Consider whole orchard recycling and newer varieties for future
orchard redevelopment to improve water efficiency.
• Continue active engagement with Government, departments, and
water agencies to improve trading regulations and water deliverability
constraints. Keep up to date on short/long term market projections
and constantly monitor water market trading activity
• Continue to monitor climatic conditions in California and
the subsequent impact on almond pricing.
• Long-term shifts in climate pattern may also impact
California’s almond industry and subsequently the
demand and market value of our product. This has
the potential to positively and negatively impact
almond prices depending on the climate cycle.
Potential financial impacts include reduced revenue and increased operating costs (increase in temporary or long-term water costs).
Crop yield
• Long-term shifts in climate pattern may impact the
almond growing cycle. Wetter seasons will increase
the prevalence of pests and diseases, impacting
almond yield and quality. Dryer seasons or drought
will reduce water availability and increase frost risk.
• Refer ‘Water availability’ risk mitigation strategies.
• Continue investing in frost fans to mitigate frost impacts.
• Continue investing in drying capability to minimise crop
downgrades during wetter seasonal conditions.
• Continue utilising hybrid vigour rootstock genetics in suitable growing
regions that are more productive, efficient and resilient.
• Continue post harvest pest management reviews to determine
areas for improvement, while reducing the use of chemicals
Potential financial impacts include reduced revenue and increased operating costs.
Extreme weather or water events
• An increase in the frequency and severity of
extreme weather events could damage our physical
assets (e.g. processing and packaging facilities,
our orchards), disrupt our supply chain (e.g.
transport an logistics routes) and key markets.
• Refer ‘Crop yield’ risk mitigation strategies.
• Continue to supply to varied markets.
• Enter into reciprical arrangements with industry to
process our crop should a disruption occur.
• Diversification of orchard assets across key growing regions.
• Increased equipment matrix to ensure timely application
of orchard and harvest programs.
• Increased product cleaning and drying equipment.
Potential financial impacts include reduced revenue and increased operating costs.
Food safety and quality
• An increase in the frequency and severity
of extreme weather events and long-term
shifts in climate patterns, can lead to food
safety and quality risks, including increased
prevalence of pests and diseases.
• Continue implementing a food safety plan developed using HACCP principles.
• Continue ongoing certification through the Safe Quality Food (SQF) program.
• Increase surveillance for mycotoxins and microbiological bacteria.
• Continue investment in our online control management
and compliance system ManGO
Potential financial impacts include reduced revenue and increased operating costs, along with potential harm to customers’ health and
wellbeing, customer dissatisfaction and reputational damage.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 25
PLANET
CLIMATE CHANGE OPPORTUNITIES
ACTIONS
Pollination
• Beehive availability may be impacted by the
increased frequency and severity of extreme
weather events and long-term shifts in climate
patterns, including increased prevalence of
pests and diseases such as Varroa Mite.
• Continue active engagement with the bee industry and retain a remuneration
structure that incentivises quality bee hives to enable a lower hive stocking rate.
• Continue to protect bees with a strict protocol of not spraying
herbicides or insecticides whilst bees are foraging.
• Continue to provide high quality feeding locations
Potential financial impacts include increased operating costs and reduced revenue.
Work health and safety
• Long-term shifts in climate pattern
may impact the working conditions for
employees, in particular heat issues.
• Continue to implement our zero harm WH&S and wellbeing strategy.
• Embrace technology solutions that reduce repetitive
manual tasks and improve employee wellbeing.
• Continually assess and report hazards to ensure evolving risks are assessed.
Potential financial impacts include reduced productivity and increased operating costs.
• Increase water efficiency to lower the level of
• Refer ‘Water availability’ risk mitigation strategies.
water intensity per unit of output (e.g., through
drought-resistant / nutrient-efficient hybrids).
Waste reduction
• Expand circular economy efforts by continuing
to reduce inputs and residual waste (e.g.,
H2E, nutrient management practices,
compost and fertiliser products).
Carbon sequestration
• Increase levels of carbon in the soil through
compost and liquid bio stimulant applications, while
achieving greater soil and nutrient efficiency.
• Continue investing heavily in all aspects of water management.
• Quantify water consumption across entire value-adding biomass
e.g. kernel, hull, shell, woody and organic mass.
• Continue to explore hybrid vigour rootstock genetics that are
more efficient, productive and resilient to climate change
• Continue the regeneration of orchards through compost and liquid fertiliser
production from almond crop residues and energy production (bio-ash or
fly-ash), to minimise reliance on external fertilizer production and supply.
• Continue increasing levels of carbon in the soil through compost
applications, improving nutrient levels, irrigation and energy efficiency.
• Explore opportunities to market excess compost and fertiliser
• Continue to explore soil carbon sequestration and market opportunities.
• Revegetation and regeneration
for carbon sequestration
• Explore revegetation and regeneration carbon
sequestration and market opportunities
Increased food production
• Continue to contribute to food security (e.g.,
maintaining production sufficient to meet
the rising demand for nutritious food).
Consumer demand for low emission products
• Respond to shifts in business and consumer
trends toward food products that produce lower
emissions and are less water-/waste-intensive
while maintaining adequate food security
• Refer ‘Water efficiency’ opportunity and action.
• Explore consumer trends and identify potential opportunities.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 26
Directors’ Report
Continued
Governance
Outlook FY2023
The Board of Select Harvests Limited is
the overall corporate
responsible
for
governance of the Company,
including
the consideration of climate-related risks
and opportunities.
The Board Sustainability Committee, comprising
members of the Board of Directors,
is
responsible for providing oversight of our
sustainability strategy, considering climate-
related risks and opportunities, and ensuring
accountability for targets and timelines set,
including reporting.
The Audit and Risk Committee is responsible
for the oversight of the Company’s overall risk
management framework and risk appetite,
including internal compliance and control
systems. Further information can be found
under ‘Risk Management’.
The Remuneration and Nomination Committee
is responsible for setting and approving
compensation framework for the Company’s
Directors, Executives and staff. The Committee
meets at least four times a year and consists of
at least 3 independent directors.
Risk Management
The Company has a Risk Management Policy
with a framework and process to identify,
analyse, assess, manage, and monitor risks
throughout all parts of the business. The
governance of risk is overseen by the Audit and
Risk Committee. The Executive Management
Team are responsible for ensuring compliance
with the Company’s Risk Management Policy,
led by the Chief Financial Officer. Managers
are responsible for contributing to all aspects
of risk management across 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 and major equipment failure);
• Financial Risks (including currency, customer
concentration, market pricing); and
•
Cybersecurity Risks.
Risk and impacts of climate change on the
business are considered regularly throughout
the year.
This year we undertook a deeper assessment
of our climate related risks and opportunities.
Details can be found under ‘Climate-related
risks and opportunities’ .
The horticultural program for the 2023 crop is
underway, albeit behind schedule due to ongoing
wetter than average conditions
impacting
access to orchards and the ability to apply
fertiliser and fungicides. Our analysis shows
there has been little impact on tree health. The
trees received their sufficient chill hours
through the dormancy period and an average
blossom cycle which was shortened due to rain.
Pollination was disrupted by the NSW varroa
mite outbreak, preventing the movement of
hives into Victoria. While bee numbers were
limited and lower than Select Harvests’ goal,
the outcome was assessed as being unlikely to
impact
volumes. The
Horticultural team are to be congratulated on
managing an extremely challenging situation.
forecasted
crop
To date there have been isolated areas where
inundated orchards or
flood waters have
irrigation infrastructure, and the consistent
rains has led to some wet areas within orchards.
This has required proactive management to
avoid significant tree losses.
Based on industry standard yields and the age
profile of the orchards, and assuming normal
growing conditions for the remainder of the
season, the Select Harvests 2023 theoretical
crop would be approximately 31,000MT.
Ongoing rainfall has led to temporary water
prices continuing to decrease and remain at well
below average levels. This will lead to further
modest benefits in water cost savings in FY2023.
This will be more than offset by the current cost
of fertiliser and crop chemical inputs. To ensure
supply security much of the supply of these
inputs have been secured. These prices are
significantly higher than FY2022.
We are forecasting the USD almond price to
increase in FY2023 with supply declining and
demand being restored to close to pre-COVID
levels.
The USDA 2022 Almond Crop Objective
Estimate, released in July 2022, forecasted a
2022 US crop of 2.6B pounds, 11% lower than the
2021 crop. Ongoing severe Californian drought
conditions and lack of water are materially
impacting the US crop size and quality.
The Californian 2022 harvest will be completed
by December 2022. Current indications are
that the volume will be potentially less than
the Objective Estimate with smaller sizes and
lower quality.
Pricing to date remains at lower-than-average
levels and is yet to respond to the above
macro trends.
The Select Harvests’ team continues to focus
on improving efficiency, managing costs and
optimising the 2023 crop volume and quality. In
early 2023, an additional roasting oven will be
commissioned,
increasing our value-added
capacity and capability.
Other key projects currently being progressed
are:
• Expansion of compost production – the
company currently produces in excess of
40,000 tonnes of compost (from orchard
waste, ash produced from
its biomass
energy plant and some external additives).
This option reduces the requirement for
fertilizer, improves soil structure and health
and promotes the transfer of carbon from
the atmosphere in soil.
trials
assessing
underway
• Development of a liquid fertiliser option
from almond hull. The company currently
the
has
opportunity of turning hull, through a
digestion process, into a rich natural liquid
fertiliser option. The Victorian Government
has provided a grant for the company to
acquire and install (completed) a pilot plant
to produce enough volume of the product
for internal trials to commence.
• Capital will be invested to expand our
Carina West Processing warehousing
capacity. The majority of the capital will be
invested in late FY2023 and early FY2024.
• The Sustainability Report will be published
in February 2023
• The company continues to
investigate
organic and strategic growth opportunities
such as:
• Continued
expansion
orchards, both greenfield and mature
almond
in
• Diversification into other nuts
• Increased capability and capacity
in
almond value-add processes.
‘better
for you’ plant-based
In summary, FY2022 has been challenging.
The global outlook for the almond industry
and
foods
remains very strong. Select Harvests has high
quality assets, a sustainable and increasingly
efficient production profile supported by
world class technology. We remain well
placed to deliver on the opportunities that
will arise from the continued demand growth
globally for almonds.
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.
Non
includes
IFRS financial
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.
information
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 27
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 40.
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 Directors are satisfied that no non-audit
services were provided during the period.
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.
the ASX principles of
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
corporate
to
governance. The Company has previously
adopted Listing Rule 4.10.3 which allows
companies
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
to publish
This report is made in accordance with a
resolution of the Directors.
T Dillon
Chair
Melbourne, 22 November 2022
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 October 2022, the Company had
announced to the ASX that it had appointed
real estate agency and advisory firm, LAWD to
market the Mountview almond orchard. The
strategic decision to market the Mountview
orchards is based on its relatively small scale,
as it is the smallest almond orchard in the
Company’s portfolio. As at the date of this
report, there has been a number of interested
parties that have viewed the property
however an agreement has yet to be signed.
On the 8th of November the company
announced the transition to a new CEO and
following agreement
Managing Director,
between the Board and the current CEO &
Managing Director Paul Thompson, that he
will step down. Paul Thompson will remain
with the company to ensure an orderly
transition to the newly appointed CEO &
Managing Director David Surveyor who will
join the company after he completes his
notice period with his current employer.
On 22 November 2022, the Directors of the
Company declared a final fully franked dividend
of 2 cents per share payable on 3 February
2023 to shareholders on the register on 9
December 2022.
DIRECTORS’ INTERESTS IN CONTRACTS
Directors’ held no interest in contracts during
the year ending 30 September 2022.
DIRECTORS’ MEETINGS
DIVIDENDS
Final fully franked
dividend declared for
30 September 2022*
* On ordinary shares
CENTS
2
2022
($’000)
2,419
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.
Officers
include the company
secretary, all directors, and executive officers
participating
in the management of the
Company and its controlled entities.
indemnified
COMMITTEE MEMBERSHIP
During or since the end of the financial year, the
Company had the following committees that
comprise members of the Board of Directors as
follows:
AUDIT AND RISK COMMITTEE
F Bennett (Chair)
F Grimwade
G Kingwill
SUSTAINABILITY COMMITTEE
M Zabel (Chair)
F Grimwade
G Kingwill
F Bennett (Former Chair)
REMUNERATION & NOMINATION COMMITTEE
G Kingwill (Chair)
T Dillon
F Bennett
M Iwaniw (Retired)
N Anderson (Retired)
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
MEETINGS OF COMMITTEES
Sustainability
Remuneration &
Nomination
Number
Eligible
to Attend
10
13
13
13
13
-
9
6
Number
Attended
10
13
13
13
13
-
9
6
Number
Eligible
to Attend
-
4
4
4
4
-
-
-
Number
Attended
-
4
4
4
4
-
-
-
Number
Eligible
to Attend
-
4
4
4
4
-
-
-
Number
Attended
-
4
4
4
4
-
-
-
Number
Eligible
to Attend
2
3
1
3
-
-
2
1
Number
Attended
2
3
1
3
-
-
2
1
T Dillon*
P Thompson
F Bennett
G Kingwill
F Grimwade
M Zabel†
M Iwaniw‡
N Anderson‡
1 Reflects the number of meetings held during the time the Director held office,
or was a member of the Committee during the year
* Appointed 29 November 2021
† Appointed 3 October 2022
‡ Retired during the financial year
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 28
Remuneration Report
Introduction from the Chair of the Remuneration and Nomination Committee
Dear Shareholder,
On behalf of the Board, I am pleased to
present the 2022 Remuneration Report and
my first as Chair of the Board Remuneration
and Nomination Committee.
Despite the tough operating environment
over the past twelve months the resilience of
our staff and the communities in which they
operate has shone through. The continued
focus in FY2022 has been on ensuring the
safety and well-being of our staff and ensuring
that we are a respected member of the local
communities in which we operate in.
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
include a balance of fixed
packages
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.
(KPIs).
The short-term incentive program is based on
annual performance and assessed against key
financial, operational, safety and culture
performance
The
indicators
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 6% to 7% of the maximum
opportunity.
Following a review last year by the Godfrey
Remuneration Group the FY2022 long-term
incentive plan has been adjusted to focus on
three key areas that relate to the delivery of
strategic sustainable growth in shareholder
value over the medium and longer terms.
These are:
• 40% weighting to Absolute TSR (CAGR)
the performance measurement
over
period (range between 5% and 20%)
• 40% weighting to Select Harvests’ Pre-Tax
Average ROCE over the measurement
period (range between 7.7% and 14.4%)
• 20% weighting to Delivery of Board
initiatives
strategic growth
specified
(various targeted measures).
For prior period vesting purposes (using prior
period metrics) TSR over the three-year
performance period was (28.4%) which came
out at the 30th percentile of the peer group
and resulted in Nil rights vested. EPS growth
target was not met. No adjustments were made
to the reported statutory EPS in determining
this outcome. Overall, no LTI was vested.
The remuneration outcomes resulting from
the FY2022 performance are set out in this
Remuneration Report.
Guy Kingwill
Chair – Remuneration and
Nomination 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 2022 How is our remuneration structured?
The table below provides an overview of the different remuneration components within the framework.
29
PURPOSE
DELIVERY
FY22 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 (40%-50%)
• Culture/ Executive Development (10%-15%)
• Safety Performance (5%)
• Personal & Operational performance (15%-25%)
• Board discretion (20%)
With safety behaviours and values tollgate
LTI Performance Measures
• Absolute TSR (40%)
• ROCE (40%)
• Strategy (20%)
• Holding Lock
The participant’s holding is equal to 50%
of their fixed annual remuneration
• Clawback conditions
For fraud or dishonest conduct and
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 2022, Key Management Personnel (KMP) comprised the Non-Executive Directors, 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
Dan Wilson
GM Almond Operations
Nicole Feder
GM People, Safety & Culture
Suzanne Douglas
GM Consumer
Full Year
Full Year
Full Year
Full Year
Full Year
Full Year
Redundancy
30 June 2022
TOTAL FIXED
REMUNERATION
741,890
436,284
363,108
356,752
268,986
336,085
257,339
STI ACHIEVED1
124,938
44,417
38,285
34,327
43,070
34,901
19,609
VESTED PERFORMANCE
RIGHTS2
217,806
58,112
43,584
43,584
-
-
-
TOTAL
1,084,634
538,813
444,977
434,663
312,056
370,986
276,948
1 Cash STI will be paid after the FY2022 financial statements have been approved.
2 The vested performance rights value in this table has been determined using the closing share price on the last trading day of FY2022. Vesting occurs after the finalisation and
approval of the FY2022 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 50% of their annual TFR.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022
30
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 FY2022 remuneration was received and when the awards were granted and vested.
TFR
STI
LTI
AGM
Monthly
FY19
FY20
FY21
FY22
FY23
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: 62% of remuneration is performance-based pay and 31% of remuneration is delivered as performance rights to shares.
• Other KMP: 41% of their remuneration is performance-based pay and 12% of their remuneration is delivered as performance rights to shares.
Non-Executive
Director
MD
Other
KMP
100%
7%
(Max 32%)
40%
63%
14%
(Max 28%)
6%
(Target 27%)
5%
(Max 10%)
Total Fixed
Remuneration
Peformance
Dependent STI
Peformance
Dependent LTI
STI payments are based on a maximum of 80% for the MD and 50% for other Executive KMP 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 2022. Other KMP have minimum shareholding requirements.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 31
What equity was granted for year ended 30 September 2022?
Equity was granted to the MD and other KMP in FY2022, 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 25 February 2022
Annual General Meeting.
MD
Paul Thompson
Managing Director & CEO
Other KMP
Brad Crump
CFO & Company Secretary
Peter Ross
GM Performance Improvement & Sustainability
Ben Brown
GM Horticulture
Dan Wilson
GM Almond Operations
Nicole Feder
GM People, Safety & Culture
Suzanne Douglas*
GM Consumer
* Redundancy 30 June 2022
NUMBER OF PERFORMANCE
RIGHTS GRANTED
205,097
38,280
31,292
31,576
23,605
27,058
-
FACE VALUE
$1,148,543
$214,368
$175,235
$176,826
$132,188
$151,525
-
Is there alignment between management and shareholder interests?
The following chart shows the alignment between shareholder interests as measured by reported profit and earnings per share and management’s
interests as measured by the proportion of STI that pays out and the number of performance rights vesting. The Board believes these outcomes
show “at risk” remuneration has varied appropriately.
100
80
60
40
20
0
FY18
FY19
FY20
FY21
FY22
STI Vesting % of
maximum dollars RHS (%)
Basic Earnings
per Share (cents) LHS
Reported NPAT ($’m) LHS
Note:
This report excludes the FY18 transition period (3 months period ending 30 September 2018) as no STI were vested.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 32
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 actual performance against
these KPIs based on full year final financial and operating results and metrics. Actual performance against reported results and related metrics
determines the STI reward.
The FY2022 financial and operating results and related metrics resulted in KMP STI rewards as a percentage of TFR of 6%. This level of performance
is reflective of the delivery of a solid result through a challenging year.
2.2 Overview of FY2022 remuneration framework
FIXED REMUNERATION
Base salary
Short Term Incentive (STI)
Opportunity
Purpose
Term
Instrument
Performance and
measures
Why these were chosen
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 20%
Target – up to 40%
Maximum - up to 80%
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
Safety Performance
Personal & Operational performance / Project delivery
Board discretion
With a safety behaviour 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 well-being of our people remains paramount and no incentive is paid if the foundations for
a safe work environment were not maintained.
Other KMP
40%-45%
10%-15%
5%
15%-25%
20%
MD
50%
10%
5%
15%
20%
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 33
% of Fixed Remuneration
MD
Face Value – up to 160%
Other KMP
Face Value – up to 50%
Nil
Pro rata vesting
20%
Pro rata vesting
40%
Reward achievement of long term business objectives and sustainable value creation for shareholders.
3 years, vesting at the end of the period.
Performance rights
1. Continuing service
2. Positive absolute shareholder return
3. 40% based on Absolute Total Shareholder Return compound average growth rate (CAGR) over the performance
measurement period. The performance targets and vesting proportions are as follows:
• Below 5%
• >5% and <10%
• Target of 10%
• >10% and <20%
• At or above 20%
4. 40% based on Pre Tax Return on Capital Employed over the performance measurement period.
The performance targets and vesting proportions are as follows:
• Below 7.7%
• Between 7.8% and 10.1%
• Target of 10.1%
• Between 10.2% and 14.3%
• At or above 14.4%
5. 20% based on successful delivery of Strategic Growth initiatives set by the Select Harvests Board.
The performance targets and vesting proportions are as follows:
• Piangil Orchard EBIT Performance vs Business Case
• Value-add Pre-Tax ROCE Over Measurement Period
• Metrics Relating to Implementation of Sustainability Plan
• TSR provides a shareholder perspective of the Company’s relative performance against comparable companies
• ROCE focusses management on the effective allocation and efficient use of the company’s capital assets
• Strategic Growth initiatives ensure management are focused on key projects to increase shareholder returns
Nil
Pro rata vesting
20%
Pro rata vesting
40%
50% weighting
25% weighting
25% weighting
FIXED REMUNERATION
Long Term Incentive (LTI)
Opportunity
Purpose
Term
Instrument
Performance conditions*
Why these were chosen
* The Remuneration Committee is responsible for assessing whether the targets are met and in doing so obtains the advice of an independent expert.
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 2022 34
Remuneration Report
Continued
2. EXECUTIVE KMP REMUNERATION (CONTINUED)
2.3 What we paid to the MD and other KMP in FY2022 – Further detail
The following pages compare the maximum potential and actual remuneration for the financial year ended 30 September 2022 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
2022
2022
2022
2022
2022
2022
2022
2022
2022
2022
2022
2022
2022
2022
TOTAL FIXED
REMUNERATION
742
742
436
436
363
363
357
357
SHORT TERM
INCENTIVE
125
594
44
218
38
182
34
179
PERFORMANCE
RIGHTS
253
507
68
135
51
101
51
101
269
269
336
336
257
257
43
135
35
168
20
129
-
-
-
-
-
-
TOTAL
1,120
1,843
548
789
452
646
442
637
312
404
371
504
277
386
$’000
Paul Thompson
Managing Director & CEO
Brad Crump
CFO & Company Secretary
Ben Brown
GM Horticulture
Peter Ross
GM Performance Improvement
& Sustainability
Dan Wilson
GM Almond Operations
Nicole Feder
GM People, Safety & Culture
Suzanne Douglas*
GM Consumer
* Redundancy on 30 June 2022
2.4 FY2023 Outlook
The Committee and Board continue to review our remuneration strategy:
• The 2023 STIP KPIs focus on priorities and outcomes budgeted for as part of annual business plans, maintaining the focus on safety, financial
metrics, cost of production and culture.
• Our LTIP performance rights are allocated annually, ensuring closer alignment to current strategic plans and financial targets.
• The focus of LTIP moves to delivery of strategic sustainable growth in shareholder value over the medium and longer terms. Performance metrics:
Absolute TSR (40% weighting), ROCE (40% weighting) and strategy delivery (20% weighting).
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 35
2.5 Long Term Performance Perspective
The following table provides the performance outcomes over a five year period which align to the STI and LTI outcomes for Executive KMP.
Net profit / (loss) after tax ($'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.†
2022
YEAR ENDED
30 SEPT
4,759
3.9
(69%)
2.0
8.29
(3.03)
5.26
(36%)
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%)
* 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
2022
YEAR ENDED
30 SEPT
3.9
3.2*
(61.4%)
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
0%
0%
100%
73%
N/A
‡ Underlying EPS is adjusted for the loss on sale of the Consumer Brands and restructuring costs for the Thomastown site. Please refer to note 5.4 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
2022
YEAR ENDED
30 SEPT
2021
YEAR ENDED
30 SEPT
2020
YEAR ENDED
30 SEPT
2019
YEAR ENDED
30 SEPT
2018
3 MONTH PERIOD
ENDED 30 SEPT
(28.42%)
30th percentile
(8.4%)
41st out of 58
0%
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
� 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 2022 36
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 $973,750 was approved by shareholders at the 25 February 2022 Annual General Meeting. For the FY2022 year, the
total amount paid to Non-Executive Directors was $701,342.
The remuneration is a base fee with the Chair of each of the Committees 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 Nomination Committee
$251,931
$109,243
$14,567
$14,567
4. GOVERNANCE
4.1 Role of the Remuneration and Nomination Committee
The Remuneration and Nomination Committee operates under its own Charter and reports to the Board. The Charter was approved on 4 October
2022 by the Board. A copy of the Charter is available on the Company’s website:
www.selectharvests.com.au
4.2 Use of Remuneration Advisors
No remuneration advisors were used during the financial year ended 30 September 2022.
4.3 Share Trading Policy
The Share Trading Policy was last reviewed by the Board in May 2022. 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 2022 37
5. KMP STATUTORY DISCLOSURES
5.1 Details of FY2022 and FY2021 Remuneration
Remuneration of Directors and other key management personnel of Select Harvests Limited and the consolidated entity.
ANNUAL REMUNERATION
Short Term
Incentives
Non Cash
Benefits
Superannuation
Contributions1
LONG TERM
Long Service Leave
Accrued & Paid
Performance
Rights Granted
OTHER
Other2
Total
$
F Bennett
Financial
Year
Non Executive Directors
2022
T Dillon*
2022
F Grimwade
2021
2022
2021
2022
2021
2022
2021
2022
2021
2021
N Anderson‡
M Iwaniw†
M Carroll§
G Kingwill
Base Fee
114,668
99,494
97,578
121,236
121,168
1 0 7, 1 8 4
97,578
170,994
223,821
47,401
105,205
45,770
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Executive Director
P Thompson◊
2022
2021
713,763
631,699
124,938
93,335
-
5,216
Other key management personnel
B Crump
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2021
2021
412,246
388,491
329,149
321,901
335,374
316,595
242,604
53,409
309,168
60,696
276,445
315,499
278,185
112,730
44,417
64,242
34,327
43,383
38,285
43,567
43,070
9,358
34,901
10,526
19,609
45,676
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
P Ross
B Brown
D Wilson�
N Feder�
S Douglas¶
L Van Driel#
U Di CeccoΔ
11,752
10,073
9,329
2 ,9 4 1
-
10,858
9,329
-
-
4,740
10,061
4,348
28,127
22,336
24,038
22,336
27,603
26,229
27,733
25,286
26,382
5,341
26,918
7,460
17,804
22,336
28,418
10,896
-
-
-
-
-
-
-
-
-
-
-
-
24,707
14,312
-
-
8,515
7,351
14,181
10,262
30,371
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
374,667
(4,253)
50,487
(3,289)
41,708
(926)
41,589
(1,253)
26,256
2,263
19,787
-
32,114
17,478
(58,999)
(3,545)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,000
-
-
-
-
-
-
-
-
-
341,019
-
-
-
126,420
109,567
106,907
124,177
121,168
118,042
106,907
170,994
223,821
52,141
115,266
50,118
1,266,202
762,645
581,188
471,780
441,302
397,938
457,162
394,457
368,683
70,371
390,774
78,682
686,991
400,989
247,604
120,081
* Appointed 29 November 2021
� Commenced as KMP on 1 July 2021
† Retired 30 June 2022
¶ Redundancy 30 June 2022
‡ Resigned 25 February 2022
# Resigned 30 July 2021
§ Retired 26 February 2021
Δ Vale 9 March 2021
◊ On the 8th of November the company announced the transition to a new CEO and Managing Director, following agreement between the Board and the current CEO & Managing
Director Paul Thompson, that he will step down. Paul Thompson will remain with the company to ensure an orderly transition to the newly appointed CEO & Managing Director
David Surveyor who will join the company after he completes his notice period with his current employer.
1
2
Includes salary sacrifice contribution
For S Douglas, this relates to payment of redundancy benefit. For B Crump, on 7 June 2022, Mr Crump was awarded a cash bonus in the amount of $100,000 payable in December
2023, subject to continuous employment.
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 2022
38
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 2021
Granted during the
year
NUMBER
Vested during the
year
Forfeited during
the year
Closing balance
30 Sept 2022
Executive Director
P Thompson
Other key management personnel
B Crump
P Ross
B Brown
D Wilson
N Feder
S Douglas*
* Resigned 30 June 2022
207,563
205,097
51,960
41,682
41,301
12,566
-
24,706
38,280
31,292
31,576
23,605
27,058
-
41,408
11,048
8,286
8,286
-
-
-
41,407
11,047
8,285
8,285
-
-
-
329,845
68,145
56,403
56,306
36,171
27,058
24,706
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 KMPs under the LTI Plans that are relevant to FY2022 and beyond.
GRANT
DATE
27 March
2020
28 July
2021
27 March
2020
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
• Absolute total shareholder
return
• Return on capital
employed
• Strategy implementation
• Continuous service
• Holding Lock
PERFORMANCE
PERIOD
1 October 2019 to
30 September 2022
PARTICIPATING
EXECUTIVES
P Thompson
B Crump
P Ross
B Brown
D Wilson
PERFORMANCE
ACHIEVED
30 September 2022
rights achieved 0%
of EPS condition
rights and 0% of TSR
condition rights
VESTED %
EXPIRY DATE
0%
31 October
2022
1 October 2020 to
30 September 2023
1 October 2021 to
30 September 2024
P Thompson
B Crump
P Ross
B Brown
D Wilson
P Thompson
B Crump
P Ross
B Brown
D Wilson
2023 period to be
determined
N/A
31 October
2023
2024 period to be
determined
N/A
31 October
2024
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 2022 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
D Wilson
N Feder
S Douglas
2019
2020
2021
2022
2019
2020
2021
2022
2019
2020
2021
2022
2019
2020
2021
2022
2020
2021
2022
2022
2020
2021
82,815
46,845
77,903
205,097
22,095
11,243
18,622
38,280
16,571
9,369
15,742
31,292
16,571
9,369
15,361
31,576
4,500
8,066
23,605
27,058
9,369
15,337
$5.18
$4.22
$6.29
$3.91
$5.18
$4.22
$6.29
$3.91
$5.18
$4.22
$6.29
$3.91
$5.18
$4.22
$6.29
$3.91
$4.22
$6.29
$3.91
$3.91
$4.22
$6.29
50%
-
-
-
50%
-
-
50%
-
-
50%
-
-
-
-
-
-
-
-
-
41,408
-
-
-
11,048
-
-
8,286
-
-
8,286
-
-
-
-
-
-
-
-
-
41,407
-
-
-
11,047
-
-
8,285
-
-
8,285
-
-
-
-
-
-
-
-
-
39
FINANCIAL YEARS IN WHICH
RIGHTS MAY VEST
MAX. VALUE YET
TO VEST
30-Sep-22
30-Sep-23
30-Sep-24
30-Sep-25
30-Sep-22
30-Sep-23
30-Sep-24
30-Sep-25
30-Sep-22
30-Sep-23
30-Sep-24
30-Sep-25
30-Sep-22
30-Sep-23
30-Sep-24
30-Sep-25
30-Sep-23
30-Sep-24
30-Sep-25
30-Sep-25
30-Sep-23
30-Sep-24
-
$197,686
$490,010
$801,929
-
$47,445
$117,132
$149,674
-
$39,537
$99,017
$122,352
-
$39,537
$96,621
$123,462
$18,990
$50,735
$92,296
$105,797
$39,537
$96,470
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 2021
RECEIVED ON EXERCISE OF
PERFORMANCE RIGHTS
OTHER –DRP, SALES
AND PURCHASES
HELD AT
30 SEPTEMBER 2022
Non-executive directors
T Dillon
F Grimwade
F Bennett
G Kingwill
M Zabel
M Iwaniw
N Anderson
Executive director
P Thompson
Other key management personnel
B Crump
P Ross
B Brown
N Feder
D Wilson
S Douglas
-
92,699
19,245
16,212
-
220,588
11,585
624,379
2,785
160,212
20,196
-
-
4,000
-
-
-
-
-
-
-
41,408
11,048
8,286
8,286
-
-
-
8,850
-
262
220
-
(220,588)*
(11,585)*
8,611
(2,500)
-
387
-
-
(4,000)
8,850
92,699
19,507
16,432
-
-
-
674,398
11,333
168,498
28,869
-
-
-
* As M Iwaniw and N Anderson are no longer Directors of the Company, the number of shares held by them are no longer reported and therefore removed from the table
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 40
Auditor’s Independence Declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Select Harvests Limited for the year ended 30 September
2022, 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 Milner
Partner
PricewaterhouseCoopers
Melbourne
22 November 2022
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 2022
Annual Financial Report
41
ABOVE: From early July to early September our orchards are in bloom.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 42
Statement of Comprehensive Income
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2022
Continuing Operations Revenue
Total revenue
Other income
Fair value adjustment of biological assets
Gain on sale of assets
Insurance claims proceeds
Total other income
Expenses
Cost of sales
Distribution expenses
Marketing expenses
Occupancy expenses
Administrative expenses
Finance costs
Other
PROFIT BEFORE INCOME TAX
Income tax (expense)
PROFIT FROM CONTINUING OPERATIONS
(Loss) from discontinued operations
PROFIT 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
2022
2021
2.2
3.3
2.3
2.3
2.3
2.3
2.3
2.4
5.4
2.5
2.5
2.5
2.5
199,661
228,595
(3,048)
321
8,795
6,068
(172,241)
(330)
(44)
(184)
(19,149)
(4,145)
(1,738)
7,898
(1,726)
6,172
(1,413)
4,759
(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
(6,119)
(6,119)
(6,543)
(6,543)
(1,360)
8,573
53
(1,413)
(1,360)
18,746
(10,173)
8,573
5.1
5.1
3.9
3.9
21.3
21.2
12.7
12.7
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 Statement of Financial Position
AS AT 30 SEPTEMBER 2022
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
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.
43
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
CONSOLIDATED ($'000)
NOTE
4.2
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
4.3
3.9
3.4
3.10
3.12
3.8
4.3
3.9
3.11
3.10
3.12
4.1
4.1
2022
1,135
57,094
128,462
61,198
1,452
-
249,341
1,825
455,294
208,200
87,030
752,349
1,001,690
45,685
2,663
30,465
14,629
175
4,134
97,751
1,298
133,000
211,655
35,164
2,101
437
383,655
481,406
520,284
401,164
2,029
117,091
520,284
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 44
Statement of Changes in Equity
FOR THE FINANCIAL YEAR
ENDED 30 SEPTEMBER 2022
Balance at 1 October 2020
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with equity holders in their capacity
as equity holders:
Contributions of equity, net of transaction costs and deferred tax
Placement and Share Purchase Plan - net of transaction cost
Deferred tax credit on transaction costs
Dividends paid or provided
Employee performance rights
Balance at 30 September 2021
Profit for the year
Other comprehensive loss
Total comprehensive income for the year
Transactions with equity holders in their capacity
as equity holders:
Contributions of equity - net of transaction costs and deferred tax
Dividends paid or provided
Employee performance rights
Balance at 30 September 2022
NOTE
CONTRIBUTED
EQUITY
279,096
3.4
4.1
4.1
4.1
2.6
6.3
4.1
2.6
6.3
-
-
-
1,962
115,382
903
-
-
397,343
-
-
-
3,821
-
-
401,164
CONSOLIDATED ($'000)
RESERVES
14,280
-
(6,543)
(6,543)
-
-
-
-
(80)
7,657
-
(6,119)
(6,119)
-
-
491
2,029
RETAINED
EARNINGS
111,634
15,116
-
15,116
-
-
-
(4,794)
-
121,956
4,759
-
4,759
-
(9,624)
-
117,091
TOTAL
405,010
15,116
(6,543)
8,573
1,962
115,382
903
(4,794)
(80)
526,956
4,759
(6,119)
(1,360)
3,821
(9,624)
491
520,284
The above Statement of Changes in Equity should be read in conjunction with the accompanying Notes.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 Statement of Cash Flows
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income tax received / (paid)
Net cash inflow 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 software
Payment for license
Payment for bearer plants and plantation land
Payment for tree development costs
Net cash (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 from financing activities
Net increase 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
45
CONSOLIDATED ($'000)
NOTE
2022
2021
268,983
(229,855)
39,128
10
(16,282)
3,987
26,843
73
3,941
-
369
(3,962)
(28,140)
(105)
(49)
-
(7,696)
(35,569)
-
145,050
(107,050)
(21,931)
(5,803)
10,266
1,540
(3,068)
(1,528)
1,135
(2,663)
(1,528)
4.2
4.2
4.2
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)
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 5.4
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 46
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
L3, Building 7, Botanicca Corporate Park
570-588 Swan Street
Richmond VIC 3121
This financial report covers the Group consisting of Select Harvests Limited and its subsidiaries. The financial report is presented in Australian dollars.
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 22 November 2022. 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
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 2022 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 2020-3 Amendments to Australian Accounting Standards- Annual improvements 2018-2020 and Other Amendments
(effective 1 January 2022)
• AASB 2022-1 Amendments to Australian Accounting Standards- Initial Application of AASB17 and AASB 9 (effective 1 January 2023)
• AASB 2020-1 Amendments to Australian Accounting Standards- Classification of Liabilities as Current or Non-Current (effective 1 January 2023)
• AASB 2020-6 Amendments to Australian Accounting Standards- Classification of Liabilities as Current or Non-Current – Deferral of effective date
(effective 1 January 2023)
• AASB 2021-2 Amendments to Australian Accounting Standards- Disclosure of Accounting Policies and Definition of Accounting Estimates
(effective 1 January 2023)
• AASB 2021-5 Amendments to Australian Accounting Standards- Deferred Tax related to Assets and Liabilities arising from a Single Transaction
(effective 1 January 2023)
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 2022 47
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 about uncertain external factors such as: discount rates, the effects of
inflation, the outlook for global and local almond market supply and demand conditions, foreign exchange rates, asset useful lives and climate-
related risks such as heat waves, droughts and floods.
Climate risks most likely to affect the company financially include floods and droughts, given the dependency on the use of water on its orchards.
The financial impact of increasing / decreasing water costs as a result of droughts / floods, will most likely be offset by changes in almond prices
given drier conditions usually increase almond quality and quantities and vice versa.
The actual outcomes of estimates and judgements used may differ because of changes in these estimates and judgements.
The estimates and judgements 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 2022 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 29,000MT and 73% of this crop had been sold or
committed to be sold.
Discontinued Operations
The Company disposed of the Consumer Brands section of the business on 30 September 2021. As part of the sale agreement, the Company entered
into a 6 month co-packing agreement to produce Lucky and Sunsol products on behalf of Prolife Foods Pty Ltd. As the co-packing agreement is a result
of the sale of the Consumer brands business, the associated revenue and expenses have been disclosed as discontinued operations in note 5.4.
The Company had fully exited the Thomastown facility by 30 June 2022. All costs incurred from the closure have been adjusted against provisions
with any under/ over provisions reflected within restructuring expenses.
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 2022 48
Notes to the Financial Statements
Continued
1. BASIS OF PREPARATION (CONTINUED)
1.2. Critical Accounting Estimates and Judgements (CONTINUED)
Tax losses
The Company had incurred tax losses in the current financial year. The tax losses arise from the temporary full expensing of fixed assets in the current
year and are recognised as part of deferred tax assets in the financial statements. The Company has concluded that the tax losses will be recoverable
using the estimated future taxable income based on the FY2023 budget. The losses can be carried forward indefinitely and have no expiry date.
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 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
2022
2021
(a)
(b)
193,402
5,564
695
199,661
218,079
10,183
333
228,595
(a) Revenue from the Sale of goods includes sales of value-added almond products of $55.8m (2021: $89.0m) and non value-added products of
$137.6m (2021: $129.0m).
(b) A government grant of $73,000 was received during the year for hull digestion plant purposes (2021: $50,000 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 Harvests 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 2022 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 2022 2.3 Other Income and Expenses
CONSOLIDATED ($'000)
Profit before tax from continuing operations includes the following specific expenses:
Depreciation of non-current assets:
• Buildings
• Plant and equipment
• Bearer plants
Total depreciation of non-current assets
Depreciation charge of right-of-use assets:
• Property
• Plant and equipment
• Orchard - citrus
Total depreciation of right-of-use assets
Interest on leases
Amortisation of software
Amortisation of license
Employee benefits
Short term and low-value lease rental payments
Impairment losses on:
• Property, Plant and Equipment
• Inventory
Insurance gains proceeds
Net (gain)/ loss on disposal of property, plant and equipment
Net (gain)/ loss on disposal of permanent water
49
NOTE
2022
2021
(a)
(b)
(c)
(d)
(e)
(e)
193
9,218
-
9,411
576
331
1,145
2,052
720
825
3
44,464
1,337
2,082
703
2,785
8,795
48
(369)
166
8,626
-
8,792
769
631
1,125
2,525
838
820
-
41,204
527
-
-
-
-
(986)
(959)
(a) Depreciation amounting to $19.46 million (2021: $18.60 million) was capitalised as part of the growing crop which will then unwind as part of cost
of sales when the almonds are sold.
(b) Right-of-Use asset depreciation amounting to $15.44 million (2021: $14.93 million) and $5.43 million (2021: $6.18 million) was capitalised as part of
the growing crop and leasehold improvement respectively.
(c) Lease interest amounting to $7.44 million (2021: $7.33 million) and $3.94 million (2021: $4.69 million) was capitalised as part of the growing crop
and leasehold improvement respectively.
(d) 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.
(e) On 26 December 2021, the company experienced a fire event in its co-waste handling area at its Carina West processing facility. The damage
impacted some site buildings, materials handling equipment and work in progress inventory. As the inventory and equipment were destroyed
beyond repair, their fair value less cost of disposal was nil and written off to profit and loss. The impairment loss is included in other expenses in
the statement of profit or loss. An insurance recovery of $8.79 million has been recognised as other income.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 50
Notes to the Financial Statements
Continued
2. RESULTS FOR THE YEAR (CONTINUED)
2.4 Income Tax Expense
CONSOLIDATED ($'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
2022
2021
3.11
3.11
5.4
-
(1,930)
809
(1,121)
8,089
(4,401)
3,688
(1,726)
605
(1,121)
7,898
(2,369)
(166)
-
809
(1,726)
(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)
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the notional 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 2022 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 attributable to the ordinary equity holders of the company used in calculating basic earnings per
share
From continuing operations
From discontinued operations
51
2021
21.3
(8.6)
12.7
21.2
(8.5)
12.7
NOTE
2022
5.1
(1.2)
3.9
5.1
(1.2)
3.9
6,172
(1,413)
4,759
25,289
(10,173)
15,116
The following reflects the share data used in the calculations of basic and diluted earnings per share:
NUMBER OF SHARES
NOTE
2022
2021
(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
120,710,209
118,919,084
121,151,094
119,261,156
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 potential dilutive ordinary shares.
2.6 Dividends
CONSOLIDATED ($'000)
(a) Dividends paid during the year
(i) FY2022 Interim Dividend
No interim dividend declared (FY2021: Nil)
(ii) FY2021 Final Dividend – paid 4 February 2022
Fully franked dividend 8c per share (FY2020 final dividend: 4c paid on 5 February 2021)
(b) Dividends proposed and not recognised as a liability.
A final fully franked dividend of 2 cents per share (2021: 8 cents per share) has been declared by the
directors $2,419,016 (2021: $9,617,950).
NOTE
2022
2021
-
-
9,624
9,624
4,794
4,794
(c) Franking credit balance
Franking credits available for subsequent reporting periods based on a tax rate of 30% (2021: 30%)
21,086
29,048
The above amounts represent the balance of the franking account (presented as the gross dividend value) as at the end of the period, adjusted for:
(i) Franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date
(ii) Franking debits that will arise from the payment of dividends recognised as a liability at the reporting date.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 52
Notes to the Financial Statements
Continued
3. ASSETS AND LIABILITIES
3.1 Trade And Other Receivables
CONSOLIDATED ($'000)
Trade receivables
Loss allowance
Other receivables
Prepayments
NOTE
2022
33,864
-
33,864
5,254
17,976
57,094
2021
60,082
-
60,082
3,279
21,481
84,842
Trade Receivables
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 2022 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 FY2022 was determined as follows:
GROSS CARRYING AMOUNT ($'000)
Current
Up to 3 months past due
More than 3 months past due
NOTE
2022
34,177
(313)
-
33,864
2021
59,404
678
-
60,082
Note:
Expected credit loss on aged receivables is immaterial and not disclosed above.
(b) Effective interest rates and credit risk
All receivables are non-interest bearing.
The Company minimises concentrations of credit risk in relation to trade receivables by undertaking transactions with a large number of customers
from across the range of business segments in which the Company operates. Refer to Note 4.4 for more information on the risk management policy
of the Company as well as the effective interest rate and credit risk of current receivables.
(c) Fair value
Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value.
3.2 Inventories
CONSOLIDATED ($'000)
Raw materials
Finished goods and work in progress
Other inventories
NOTE
2022
28,892
91,014
8,556
128,462
2021
34,826
72,986
6,504
114,316
Inventories are valued at the lower of cost and net realisable value. There were no write-downs made for the 2022 almond crop (2021:Nil).
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. Subsequently, changes to the fair value of
uncommitted inventory are recognised to the Statement of Comprehensive Income. The fair value measurements for the uncommitted inventory
balance have been categorised as Level 2 fair values based on the inputs to the valuation techniques used, which are based on observable market
data. It is measured considering the estimated selling price at any given point in time based on:
• Current market prices for similar quality products i.e. inshell / kernel, etc; and
• Executed sales of similar quality product in the market
• The observable data used for measurement of the uncommitted inventory balance are inherently considering the impact of climate change
risks at the time of measurement including any climate related impacts on the size of the Californian almond crop;
• 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.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 3.3 Biological Assets
CONSOLIDATED ($'000)
Growing almond crop
Reconciliation of changes in carrying amount of biological assets
Opening balance
Increases due to purchases / growing costs
Decreases due to harvest
Gain arising from changes in fair value
Closing balance
53
NOTE
(i)
(ii)
2022
61,198
51,321
178,707
(195,553)
26,723
61,198
2021
51,321
42,432
171,298
(195,433)
33,024
51,321
(i)
Includes biological assets reclassified as inventory at the point of harvest
(ii) Includes physical changes as a result of biological transformation such as growth. Net increments in the fair value of the growing assets are
recognised as income in the Statement of Comprehensive Income.
Fair value adjustment of biological assets recognised in the Statement of Comprehensive Income relates to:
• the recognition of 2022 crop fair value margin throughout growth, accrued evenly between harvests and taking into account major cash outflows
• the unwinding of 2021 crop fair value margin previously recognised, at the point of sale
The movement is disclosed as follows:
CONSOLIDATED ($'000)
Fair value margin recognised on 2022 almond crop (FY2021: 2021 almond crop)
Unwinding of fair value margin recognised on 2022 and 2021 crop upon sales
(FY2021: 2021 and 2020 crop)
NOTE
2022
26,723
(29,771)
2021
33,024
(37,227)
(3,048)
(4,203)
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 2022, the biological asset balance relates to the 2023 almond crop, which is recorded at cost and has little or no biological
transformation. The 2022 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.
All the non-observable data used for measurement of the biological assets fair value are inherently considering the impact of climate change risks at the
time of measurement including for example the impact of severe weather conditions on water requirements to grow and harvests the almond crops.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 54
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
2022
-
2021
78
14,629
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)
2021
USD1,783
2022
-
BUY AUSTRALIAN DOLLARS ($'000)
2021
USD34,179
-
2022
USD74,687
-
BUY AUSTRALIAN DOLLARS ($'000)
2021
USD37,674
USD15,000
2022
USD47,500
-
AVERAGE EXCHANGE RATE ($)
2022
-
AVERAGE EXCHANGE RATE ($)
2022
0.72
-
AVERAGE EXCHANGE RATE ($)
2022
0.68
-
2021
0.74
2021
0.75
-
2021
0.74
0.75
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 55
(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 $122,186,522 (2021: USD $85,070,534).
The Company does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by
the Company.
(v) Hedging reserves
The Company’s hedging reserves as presented in Statement of Changes in Equity relate to the following hedging instruments:
CONSOLIDATED ($'000)
Closing balance 30 September 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
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 2022
(vi) Market risk
INTRINSIC VALUE
OF OPTIONS
(158)
(896)
137
228
(689)
-
896
(207)
-
SPOT COMPONENT OF
CURRENCY FORWARDS
2,579
(2,652)
(3,948)
588
(3,433)
(14,629)
2,652
5,169
(10,241)
TOTAL HEDGE
RESERVES
2,421
(3,548)
(3,811)
816
(4,122)
(14,629)
3,548
4,962
(10,241)
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 (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
2022 BUY USD
2021 BUY USD
-
-
-
-
-
-
-
78
1,783
October 2021
1:1
78
(78)
0.7437
2022 SELL USD
2021 SELL USD
(14,629)
122,187
Oct 2022 - Sept 2023
1:1
(14,629)
14,629
USD$0.7036: AUD$1
(2,731)
71,854
Oct 2021 - Sept 2022
1:1
(2,730)
2,730
USD$0.7418: AUD$1
-
-
-
-
-
-
-
(896)
15,000
April - July 2022
1:1
(896)
896
USD$0.7520: AUD$1
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 56
Notes to the Financial Statements
Continued
3. ASSETS AND LIABILITIES (CONTINUED)
3.5 Property, Plant and Equipment
(a) Reconciliations
Reconciliations of the carrying amounts of property, plant and equipment for the current financial year.
($'000)
NOTES
BUILDINGS
LEASEHOLD
IMPROVEMENT
PLANTATION
LAND AND
IRRIGATION
SYSTEMS
PLANT AND
EQUIPMENT
BEARER
PLANTS
TOTAL
CAPITAL
WORK IN
PROGRESS
At 30 September 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
Year ended
30 September 2022
Opening net book amount
Reclassification from ROU*
Additions
Disposals
Depreciation expense
Impairment loss
Transfers
Closing net book amount
At 30 September 2022
Cost
Accumulated depreciation
Net book amount
(i)
(ii)
21,892
(4,101)
17,791
17,791
-
869
(2)
(565)
-
19
18,112
22,777
(4,665)
18,112
18,112
-
1,474
-
(631)
-
1,790
20,745
26,041
(5,296)
20,745
29,098
-
29,098
29,098
10,873
-
-
-
-
-
39,971
39,971
-
39,971
39,971
-
8,496
-
(596)
-
-
47,871
48,467
(596)
47,871
115,570
(39,520)
76,050
146,244
(75,187)
71,057
139,146
(34,998)
104,148
571
-
571
452,521
(153,806)
298,715
76,050
-
33,089
-
(4,035)
-
5,133
110,237
153,791
(43,554)
110,237
110,237
-
-
-
(3,814)
-
2,329
108,752
156,120
(47,368)
108,752
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
152,026
(83,978)
68,048
241,964
(46,045)
195,919
5,320
-
5,320
615,849
(178,242)
437,607
68,048
2,275
3,140
(309)
(13,623)
(2,082)
20,457
77,906
195,919
-
7,696
-
(10,204)
-
-
193,411
5,320
-
25,867
(2)
-
-
(24,576)
6,609
437,607
2,275
46,673
(311)
(28,868)
(2,082)
-
455,294
172,471
(94,565)
77,906
249,660
(56,249)
193,411
6,609
-
6,609
659,368
(204,074)
455,294
* This relates to ROU assets when the lease has expired and ownership remains with the Company.
(i) Impairment loss
With the sale of the Consumer Brands division at the end of September 2021 and the closure of the Thomastown processing facility at the end of June
2022, an impairment loss was recognised 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 5.4(b).
(ii) Impairment loss and compensation
The impairment loss relates to assets that were damaged by a fire at the Carina West processing facility during the year – see note 2.3 for details.
The whole amount written off was recognised as other expense in profit or loss, as there was no amount included in the asset revaluation surplus
relating to the relevant assets.
An amount of $8.8 million has been recognised in other income and relates to compensation for overall damages caused by the fire and recognised
as other income.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 57
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 Herron Todd White in September 2022 for specific assets of our Almond Division (ten 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 2022 was $339.3 million against the September 2022 market valuation of $458.4 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. The useful economic life and residual value of PPE is reviewed on an
annual basis considering key assumptions including forecast usage, changes in technology, physical condition, and potential climate change implications.
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 $10.20 million (2021: $11.05 million) was capitalised into the growing crop cost base. Leasehold improvements commence
depreciation when a commercial crop is produced from the seventh year post planting and depreciated over the shorter of either the unexpired period
of the lease or the estimated useful lives of the improvements.
The useful lives for each class of assets are:
Buildings:
25 to 40 years
Plant and equipment:
5 to 20 years
Bearer plants:
Irrigation systems:
10 to 30 years
10 to 40 years
Leasehold improvements
13 to 14 years
Capital works in progress
Capital works in progress are valued at cost and relate to costs incurred for owned orchards and other assets under development.
3.6 Right-Of-Use Assets
($'000)
At 1 October 2020
Additions
Disposal
Depreciation charge for the year
At 30 September 2021
Reclassification to PPE*
Additions
Disposal
Depreciation charge for the year
Impairment loss
At 30 September 2022
NOTE
(b)
(b)
(c)
PROPERTY
1,355
50
-
(806)
599
-
15
(1)
(594)
-
19
PLANT AND EQUIPMENT
12,533
962
(187)
(3,640)
9,668
(2,275)
706
(712)
(2,554)
(157)
4,676
ORCHARD (a)
222,556
8,911
-
(19,184)
212,283
-
10,998
-
(19,776)
-
203,505
TOTAL
236,444
9,923
(187)
(23,630)
222,550
(2,275)
11,719
(713)
(22,924)
(157)
208,200
* This relates to ROU assets when the lease has expired and ownership remains with the Company.
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.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022
58
Notes to the Financial Statements
Continued
3. ASSETS AND LIABILITIES (CONTINUED)
3.6 Right-Of-Use Assets (CONTINUED)
(a) Orchard
The orchards comprise leases with Arrow Funds Management, Rural Funds Management, Lachlan Valley Farms 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.
(c) Impairment loss and compensation
The impairment loss relates to leased forklifts that were damaged by a fire at the company’s Carina West processing facility during the year – see
note 2.3 for details. The whole amount was recognised as other expense in profit or loss, as there was no amount included in the asset revaluation
surplus relating to the relevant assets.
An amount of $260,300 was received by the group from its insurer as compensation for damage caused to the leased forklifts and recognised as
other income.
3.7 Intangibles
CONSOLIDATED ($'000)
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
Closing net book amount
At 30 September 2021
Cost
Accumulated amortisation
Net book amount
Year ended 30 September 2022
Opening net book amount
Acquisition
Disposal
Amortisation
Closing net book amount
At 30 September 2022
Cost
Accumulated amortisation
Net book amount
GOODWILL
BRAND
NAMES
PERMANENT
WATER RIGHTS
SOFTWARE
LICENSE
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)
-
-
-
-
-
-
-
-
-
-
-
-
-
37,859
-
37,859
37,859
5,755
13,437
(1,929)
-
55,122
55,122
-
55,122
55,122
3,962
(243)
-
58,841
58,841
-
58,841
5,586
(1,898)
3,688
3,688
-
-
-
(820)
2,868
5,586
(2,718)
2,868
2,868
105
-
(825)
2,148
5,692
(3,544)
2,148
-
-
-
-
-
-
-
-
-
-
-
-
-
49
-
(3)
46
49
(3)
46
72,345
(1,898)
70,447
70,447
5,755
13,437
(4,834)
(820)
83,985
86,703
(2,718)
83,985
83,985
4,116
(243)
(828)
87,030
90,577
(3,547)
87,030
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. Indicators of
impairment may include changes in our operating and economic assumptions or possible impacts from emerging risks such as climate change. We
apply judgement in determining whether certain trends with an adverse impact on our cash flows are considered impairment indicators.
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.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 59
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 infrastructure
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 $58.8 million (2021: $55.1 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 have been valued internally at $128.6 million (2021: $106.9 million). As the inputs to determine the fair value are
observable, the valuation is considered Level 2 in the fair value hierarchy.
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 FY2021, 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 arrangement. 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.
License
These are costs incurred for the application of an EPA license as part of the manufacturing of the composts program which involves converting hull
and waste into composts material that can be used as fertilisers. These costs are amortised on a straight line basis over a period of 10 years.
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 5.4 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.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 60
Notes to the Financial Statements
Continued
3. ASSETS AND LIABILITIES (CONTINUED)
3.7 Intangibles (CONTINUED)
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 has 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 2022. 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 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 11.9%), long term
growth rate (of 2.75%), 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.
In addition, consideration has been given to potential financial impacts of climate change related risks on the carrying value of goodwill through a
qualitative review of the Group’s climate change risk assessment which forms part of the Group’s overall risk management process. Potential climate
change risk areas that have been identified and which are being monitored and mitigated include water management, global orchard plantings
(impact on almond pricing), bee population and health, energy consumption and production, regeneration of orchards through compost
production and internal liquid fertiliser opportunities to minimise reliance on external fertiliser production and supply.
The forecasted cashflows for FY2023 have been based on the latest assumptions of forecast weather patterns (wetter than normal 2022 spring and summer
conditions), a lower Californian FY22 crop related to drought impacting volume, quality and production cost and increasing almond prices globally.
Post FY2023, cashflows have been based on SHV’s medium to long term averages relating to production yields, production costs including water,
given the difficulty in predicting weather patterns impacting SHV profitability.
Drought and floods remain the key climate risks that would have a significant impact on SHV’s ongoing profitability given SHV’s dependency on
water for almond production and operating conditions for costs and quality levels. The effect of these two extreme weather events on SHV financial
results are summarised below:
FLOODS
DROUGHT
TEMPORARY
WATER PRICE
PRODUCT QUALITY
HARVESTING COST
% Inshell lower & higher
manufacturing grade
Labour, weed, spraying
& chemicals
% Kernel & inshell higher &
manufacturing grade lower
Labour, chemicals
PROCESSING COST
Drying
PRICING
Better or worse growing conditions in Australia due to extreme weather conditions
will not have a significant impact on global almond prices. Extreme weather
conditions in California will dictate global almond prices.
The financial impact of increasing temporary water costs because of drier conditions will be offset by lower harvest and processing costs as well as
a higher % of inshell and kernel production and vice versa.
Based on these assumptions, the recoverable amount of the CGU exceeded the carrying amount of the CGU.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 61
(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 2022. 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 crop yield growth between FY2024 – FY2027 reduces from 0.6% to 0.3%
• Average almond price growth between FY2024 – FY2027 reduces from 8.7% to 8.5%
• Post-tax discount rate increase from 8.3% to 8.4%
As global almond prices are at a low point given current supply chain disruptions, Californian stock levels and inflationary pressures, the recoverable
amount of the CGU is very sensitive to any changes.
3.8 Trade and Other Payables
CONSOLIDATED ($'000)
Current
Trade creditors
Other creditors and accruals
Non-Current
Other creditors and accruals
NOTE
2022
2021
30,216
15,469
45,685
28,754
36,213
64,967
1,298
2,761
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. ASSETS AND LIABILITIES (CONTINUED)
3.9 Lease Liabilities
CONSOLIDATED ($'000)
Current
Non-current
NOTE
2022
30,465
211,655
242,120
The following table sets out the maturity analysis of lease payments, showing the undiscounted lease payments after the reporting date.
CONSOLIDATED ($'000)
Within one year
Later than one year but not later than 5 years
Later than 5 years
NOTE
2022
32,038
124,797
154,645
311,480
2021
31,661
221,494
253,155
2021
33,765
121,987
175,381
331,133
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.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 62
Notes to the Financial Statements
Continued
3.10 Deferred Gain On Sale
CONSOLIDATED ($'000)
Current
Sale and leaseback
Non-Current
Sale and leaseback
NOTE
2022
175
2021
175
2,101
2,277
The deferred gain on sale relates to the sale and leaseback of bearer plants for three orchards that were sold to First State Super on 22 September
2015 and 1 January 2016. The lease is for a 20 year term.
3.11 Deferred Tax
CONSOLIDATED ($'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
Accruals and provisions
Lease liabilities
Tax losses
Unrealised FX
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 / (over) provision
Charged / (Credited) to income statement
Charged / (Credited) to other comprehensive income
Debited / (Credited) to equity
Closing balance at 30 September
NOTE
2022
2021
(a)
(566)
3,762
17,629
41,345
61,351
(1,738)
(72,636)
(8,837)
115
40,425
(668)
4,714
14,855
35,848
64,511
(3,462)
(75,947)
-
-
39,851
(4,389)
327
(872)
35,164
38,851
(2,340)
1,930
(3,277)
-
35,164
(1,327)
38,851
36,312
-
4,258
(816)
(903)
38,851
(a) Tax losses in the current year are recognised as part of the deferred tax computation. They mainly relate to the temporary full expensing of fixed
assets in the current year. The Company has concluded that the tax losses will be recoverable using the estimated future taxable income based on
the FY2023 budget. The losses can be carried forward indefinitely and have no expiry date.
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 2022 3.12 Provisions
CONSOLIDATED ($'000)
Current
Employee benefits
Others
Non-Current
Employee benefits
63
NOTE
(a)
2022
4,134
-
4,134
2021
5,513
5,045
10,558
437
416
(a) A provision was taken for the restructuring costs of the business at Thomastown in FY2021. The amount included employee retention incentives,
redundancy costs and other associated costs. With the exit of Thomastown on 30 June 2022, these costs have now been incurred against these
provisions. Any variance with the provisions were adjusted and reflected as restructuring expense in the current year. Refer to note 5.4 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
4. CAPITAL, FINANCING AND RISK MANAGEMENT
4.1 Equity
CONSOLIDATED ($'000)
(a) Contributed Equity
Ordinary shares issued and fully paid
NOTE
2022
2021
(b)
401,164
397,343
Contributed equity
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*
• Deferred tax credit on transaction costs
End of the year
2022
2021
NUMBER OF SHARES
120,224,370
$'000
397,343
NUMBER OF SHARES
96,637,013
649,953
76,495
-
-
120,950,818
3,821
-
-
-
401,164
379,116
125,858
23,082,383
-
120,224,370
* Capital raising completed in October 2020 as part of the Piangil acquisition.
$'000
279,096
1,962
-
115,382
903
397,343
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 64
Notes to the Financial Statements
Continued
4. CAPITAL, FINANCING AND RISK MANAGEMENT
4.1 Equity (CONTINUED)
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 $5.26 on 30 September 2022 ($8.29 on 30 September 2021).
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and
amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is
entitled to one vote.
Capital risk management
The group’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue to provide returns
for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt.
CONSOLIDATED ($'000)
(c) Reserves
Asset revaluation reserves
Options reserve
Cash flow reserve
NOTE
2022
2021
(i)
(ii)
(iii)
7,644
4,626
(10,241)
2,029
7,644
4,135
(4,122)
7,657
(i) Asset revaluation reserve
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 of financial instruments designated as cash flow hedges.
4.2 Cash and Cash Equivalents
Reconciliation of the net profit after income tax to the net cash flows from operating activities
CONSOLIDATED ($'000)
Net profit after tax
Adjustments
Depreciation and amortisation
Depreciation Right-Of-Use asset (net of capitalised amount)
Capitalised lease interest payments
Impairment (gain) / loss
Net (gain) / loss on sale of assets
Options expense
Deferred gain on sale
Asset written off
Changes in assets and liabilities
(Increase) / Decrease in trade and other receivables
(Increase) / Decrease in inventory
(Increase) / Decrease in biological assets
Increase / (Decrease) in trade payables
Increase / (Decrease) in income tax receivable/payable
Increase / (Decrease) in deferred tax liability
Increase in provisions
Net cash flow from operating activities
NOTE
2022
4,759
28,872
17,496
(3,936)
(1,207)
(321)
491
(175)
4,498
27,748
(14,146)
(9,877)
(21,101)
3,833
(3,687)
(6,404)
26,843
2021
15,116
28,209
17,451
(4,693)
2,507
(539)
(80)
(175)
-
(15,621)
(13,767)
(8,888)
21,581
(10,684)
2,539
5,233
38,189
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 65
Non-cash financing activities
During the current financial year ended 30 September 2022, the company issued 649,953 of new equity (September 2021: 379,116) as part of the
Dividend Reinvestment Plan.
(a) Net debt reconciliation
Net debt movement during the year as follows:
CONSOLIDATED ($'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
2022
1,135
(2,663)
(133,000)
(30,465)
(211,655)
(376,648)
2021
1,995
(5,063)
(95,000)
(31,661)
(221,494)
(351,223)
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.
($'000)
CASH/ BANK
OVERDRAFT
Net debt as at 30 September 2020
Cash flows - Principal
Cash flows - Interest
Additions to leases
Foreign exchange adjustments
Other non-cash movements
Net debt as at 30 September 2021
Cash flows - Principal
Cash flows - Interest
Additions to leases
Foreign exchange adjustments
Other non-cash movements
Net debt as at 30 September 2022
(4,784)
(7,863)
-
-
9,579
-
(3,068)
453
-
-
1,087
-
(1,528)
LIABILITIES FROM FINANCING ACTIVITIES
TOTAL
LEASES DUE
WITHIN 1 YEAR
(31,264)
34,407
(12,858)
(9,927)
-
(12,019)
(31,661)
34,031
(12,100)
(10,896)
-
(9,840)
(30,466)
LEASES DUE
AFTER 1 YEAR
(233,513)
-
-
-
-
12,019
(221,494)
-
-
-
-
9,840
(211,654)
BORROWINGS DUE
WITHIN 1 YEAR
-
-
-
-
-
-
-
-
-
-
-
-
-
BORROWINGS DUE
AFTER 1 YEAR
(52,750)
(42,250)
-
-
-
-
(95,000)
(38,000)
-
-
-
-
(133,000)
(322,311)
(15,706)
(12,858)
(9,927)
9,579
-
(351,223)
(3,516)
(12,100)
(10,896)
1,087
-
(376,648)
4.3 Borrowings
CONSOLIDATED ($'000)
Current - Secured
Bank overdraft
Non-current - Secured
Debt facilities
Borrowings
NOTE
2022
2,663
2021
5,063
133,000
95,000
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 4.4.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 66
Notes to the Financial Statements
Continued
4. CAPITAL, FINANCING AND RISK MANAGEMENT (CONTINUED)
4.3 Borrowings (CONTINUED)
(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
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
2022
2021
1,135
57,094
128,462
61,198
1,452
-
249,341
1,825
455,294
58,840
515,959
765,300
1,995
84,842
114,316
51,321
5,286
78
257,838
1,825
437,607
55,122
494,554
752,392
The Company has current debt facility agreements with NAB and Rabobank amounting to $175.1 million (2021: $210 million) at 30 September 2022.
The established facility limit of $210 million was temporarily reduced to $175.1 million following the Company applying repayments funds to the
Acquisition facility during the year. The full facility limit of $210 million was reinstated on 18 October 2022.
As the maturity date of the borrowings are 18 December 2023, refinancing negotiations will commence in the near term to ensure borrowings will
continue to be classified as non-current liabilities at the Company’s next reporting date.
There was no change made to the Company’s bank overdraft facilities which amounted to USD$5 million (2021: USD$5 million). The current interest
rates at balance date are 4.57% (2021: 1.62%) on the debt facility, and 1.675% (2021: 1.675%) on the United States dollar bank overdraft facility.
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.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 67
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)
2022
(USD $'000)
16,895
(1,732)
2022
(EUR €'000)
-
-
2021
(USD $'000)
30,520
(3,648)
2021
(EUR €'000)
-
-
-
122,187
-
-
-
-
1,783
71,854
15,000
-
-
-
* 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 Nil (2021: USD$15.0 million) or Nil (2021: USD$30 million).
Group sensitivity analysis
Based on financial instruments held at 30 September 2022, 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 $6,264,000 lower/$6,923,000 higher (2021: $3,935,000
lower/$4,349,000 higher), mainly as a result of the US dollar denominated financial instruments as detailed in the above table. Equity would have
been $7,041,000 lower/$7,783,000 higher (2021: $5,178,000 lower/$5,723,000 higher), arising mainly from forward foreign currency contracts
designated as cash flow hedges.
(ii) Cash flow interest rate risk
The Group’s interest rate risk arises from borrowings issued at variable rates, which exposes the Group to cash flow interest rate risk. The Group’s
borrowings at variable interest rate are denominated in AUD.
At the reporting date the Group had the following variable rate borrowings:
Debt facilities (AUD)
Overdraft (USD)
2022
2021
INTEREST RATE (%)
BALANCE ($'000)
INTEREST RATE (%)
BALANCE ($'000)
4.02%
1.68%
133,000
2,663
0.90%
1.68%
95,000
3,648
An analysis of maturities is provided in (c) below.
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 2022, 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 $236,000 lower/higher (2021: $173,000 lower/higher).
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
$('000)
(i) Financial assets
Cash
Trade and other receivables
Forward foreign currency
contracts
Total financial assets
(ii) Financial liabilities
Bank overdraft – USD @ AUD
Bank loans
Lease liabilities
Trade creditors
Other creditors
Forward foreign currency
contracts
Total financial liabilities
2022
2021
2022
2021
2022
2021
-
-
-
-
-
-
-
-
1,135
57,094
-
1,995
84,842
78
1,135
57,094
-
1,995
84,842
78
58,229
86,915
58,229
86,915
2,663
133,000
242,120
-
-
-
5,063
95,000
253,155
-
-
-
-
-
-
30,216
15,469
14,629
-
-
-
28,754
36,213
3,626
2,663
133,000
242,120
30,216
15,469
14,629
5,063
95,000
253,155
28,754
36,213
3,626
377,783
353,218
60,314
68,593
438,097
421,811
Weighted average effective
interest rate
2022 (%)
2021 (%)
-
-
-
1.68
1.61
4.99
-
-
-
-
-
-
1.68
1.01
4.99
-
-
-
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 68
Notes to the Financial Statements
Continued
4. CAPITAL, FINANCING AND RISK MANAGEMENT (CONTINUED)
4.4 Financial Risk Management (CONTINUED)
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.
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
28/02/2023
FACILITY LIMIT1
$105,000,000
$42,500,000
$7,600,000
$20,000,000
$175,100,000
USD $5,000,000
AMOUNT DRAWN 30 SEPT 2021
$105,000,000
$22,300,000
$5,700,000
Nil
$133,000,000
USD $1,731,789
* The facility is reviewed annually and available for the period 1 March to 30 June each year
1 The Company has current debt facility agreements with NAB and Rabobank amounting to $175.1 million (2021: $210 million) at 30 September 2022.
† Held with NAB only and reviewed annually.
The established facility limit of $210 million was temporary reduced to $175.1 million following repayments to the Acquisition facility during the year.
The full facility limit of $210 million was reinstated on 18 October 2022
The interest rate paid on these facilities is determined by an incremental margin on the BBSY rate.
The Group had access to the following undrawn borrowing facilities at the reporting date:
FLOATING RATE ($'000)
Term / Seasonal‡
Bank Overdraft Facility USD
‡ Subject to seasonal restrictions as mentioned above
2022
AUD $42,100
USD $3,268
2021
AUD $115,000
USD $1,352
The bank overdraft facility may be drawn at any time and may be terminated by the bank without notice. The debt facilities (term and seasonal) may
be drawn at any time over the term subject to restrictions noted above on the seasonal facility.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022
69
Maturities of financial liabilities
The table below analyses the Group’s financial liabilities, net and gross settled derivative instruments into relevant maturity groupings based on the
remaining period at the reporting date of the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
($'000)
Group at 30 September 2022
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 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
(d) Fair Value Measurement
LESS THAN
6 MONTHS
6-12
MONTHS
1-5
YEARS
OVER 5
YEARS
TOTAL CONTRACTUAL
CASH FLOWS
CARRYING AMOUNT
(ASSETS) / LIABILITIES
-
45,685
16,003
2,682
-
-
16,035
-
139,075
-
124,797
-
-
-
154,645
-
-
(74,687)
-
(74,687)
-
(47,500)
-
(47,500)
-
-
-
-
-
-
-
-
-
64,967
16,818
5,098
-
-
16,947
-
96,330
-
121,987
-
-
-
175,381
-
1,783
(34,179)
-
(32,396)
-
(37,674)
(15,000)
(52,674)
-
-
-
-
-
-
-
-
139,075
45,685
311,480
2,682
-
(122,187)
-
(122,187)
96,330
64,967
331,133
5,098
1,783
(71,853)
(15,000)
(85,070)
133,000
45,685
242,120
2,663
-
(14,629)
-
(14,629)
95,000
64,967
253,155
5,063
78
(2,731)
(896)
(3,549)
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 2022 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.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 70
Notes to the Financial Statements
Continued
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)
Australia
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
5.2. Parent Entity Financial Information
(a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
($'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)
2022
100
100
100
100
100
100
100
100
100
100
100
100
100
100
2021
100
100
100
100
100
100
100
100
100
100
100
100
100
100
2022
3,922
554,587
18,422
147,174
2021
9,471
532,295
7,313
105,400
401,165
397,344
(10,240)
4,627
11,861
407,413
(8,053)
(14,172)
(4,122)
4,135
29,538
426,895
31,676
24,316
(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.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 71
(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
2022
3,669,273
559,988
77,774
586,608
4,893,643
2021
3,503,907
185,426
31,925
(52,524)
3,668,734
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
There were no directors’ interests in contracts during the year.
5.4. Discontinued Operations
(a) Description
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. As part of the sale agreement of the Consumer Brands, the Company entered into a 6 month co-packing agreement to produce Lucky and
Sunsol products on behalf of Prolife Foods Pty Ltd. As the co-packing agreement is a result of the sale of the Consumer brands business, the
associated revenue and expenses have been disclosed as discontinued operations.
(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 2022.
($'000)
Revenue
Expenses
Underlying EBIT
Interest expense
Loss on sale of brands
Restructuring gain / (expense)
(Loss) before income tax
Income tax benefit
(Loss) after income tax of discontinued operations
Net cash inflow / (outflow) from ordinary activities
Net cash (outflow) from investing activities
Net decrease in cash generated by the business
NOTE
5.4 (c)
(i)
2022
30,618
(33,816)
(3,198)
(27)
-
1,207
(2,018)
605
(1,413)
7,350
-
7,350
2021
59,622
(65,074)
(5,452)
(92)
(2,184)
(6,805)
(14,533)
4,360
(10,173)
(9,748)
(607)
(10,355)
(i) The Company had fully exited Thomastown by 30 June 2022. All costs incurred in the closure, such as employee retention incentives, redundancy costs and
other restructuring costs have been adjusted against the provision made last year. Any variance with the provisions were adjusted and reflected as
restructuring gain in the current year.
CENTS
Basic (loss) per share from discontinued operations
Diluted (loss) per share from discontinued operations
(c) Details of the Sale of Assets
($'000)
Total disposal consideration
Carrying amount of net assets sold:
Brand Names
Finished Inventory
Sale of business costs
Loss on asset sale
NOTE
2022
(1.2)
(1.2)
NOTE
2021
(8.6)
(8.5)
2021
2,500
2,905
1,000
3,905
(779)
(2,184)
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 72
Notes to the Financial Statements
Continued
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 2022, the company had provided $6.16 million (2021: $6.16 million) of bank guarantees as security for the almond orchard leases.
6.2. Expenditure Commitments
Upon adoption of AASB 16 Leases “AASB 16” on 1st October 2019, the operating and finance lease commitments have been disclosed as lease liabilities
except for leases on water rights which are classified as intangibles and therefore excluded from the AASB 16 scope.
(a) Operating lease commitments
Commitments payable in relation to leases contracted for at the reporting date but not recognised as liabilities:
CONSOLIDATED ($'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
2022
2021
14,382
19,388
-
33,770
9,744
9,277
-
19,021
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
2022
1,532
2021
17,524
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. Previous performance rights issued had rights vesting 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
Rights issued in previous financial year
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 2022 73
Performance rights issued in the current financial year with vesting date of 31 October 2022 have rights vesting based on absolute TSR (40%
weighting), ROCE (40% weighting) and strategy delivery (20% weighting) over the three years prior to vesting. The performance targets and vesting
proportions are as follows:
PERFORMANCE LEVEL
ABSOLUTE TSR (CAGR) OVER PERFORMANCE PERIOD
VESTING % OF TRANCHE
Absolute TSR (40% weighting)
Stretch
Between Target & Stretch
Target
Between Threshold & Target
Threshold
Below Threshold
>20%
>10% and <20%
10%
>5% and <10%
5%
<5%
100%
Pro rata
50%
Pro rata
25%
0%
PERFORMANCE LEVEL
SHV'S AVERAGE ROCE FOR PERFORMANCE PERIOD
VESTING %
Average ROCE (40% weighting)
Stretch
Between Target & Stretch
Target
Between Threshold & Target
Threshold
Below Threshold
PERFORMANCE LEVEL
Strategy Delivery (20% weighting)
Stretch
Between Target & Stretch
Target
Between Threshold & Target
Threshold
Below Threshold
>200% of SHV's WACC at end of FY21
>140% and <200% of SHV's WACC at end of FY21
140% of SHV's WACC at end of FY21
> 100% and < 140% SHV's WACC at end of FY21
100% SHV's WACC at end of FY21
< 100% SHV's WACC at end of FY21
100%
Pro rata
50%
Pro rata
25%
0%
ASSESSED PERFORMANCE RELATIVE TO GROWTH
IMPLEMENTATION TARGET
VESTING % OF TRANCHE
> Outstanding Achievement
> Fully Met Expectations and < Outstanding Achievement
Fully Met Expectations
> Adequate Performance and < Fully Met Expectations
Adequate Performance
< Adequate Performance
100%
Pro rata
50%
Pro rata
25%
0%
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 2022
GRANT DATE VESTING
BALANCE
AT START OF
THE YEAR
(NUMBER)
152,986
105,480
175,542
-
GRANTED
DURING
THE YEAR
(NUMBER)
-
-
-
382,381
FORFEITED
DURING
THE YEAR
(NUMBER)
(76,491)
-
-
-
VESTED
DURING THE
YEAR
(NUMBER)
(76,495)
-
-
-
BALANCE AT END
OF THE YEAR
ON ISSUE
VESTED
-
105,480
175,542
382,381
-
-
-
-
PROCEEDS
RECEIVED
($)
SHARES
ISSUED
(NUMBER)
FAIR VALUE
PER SHARE
($)
FAIR VALUE
AGGREGATE
($)
-
-
-
-
-
-
-
-
5.18
4.22
6.29
3.91
-
445,126
1,104,159
1,495,110
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
PROCEEDS
RECEIVED
($)
SHARES
ISSUED
(NUMBER)
FAIR VALUE
PER SHARE
($)
FAIR VALUE
AGGREGATE
($)
-
-
-
-
152,986
105,480
175,542
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4.21
3.23
3.23
3.65
5.18
4.22
6.29
-
-
-
-
792,467
445,126
1,104,159
DATE
29/04/2019
27/03/2020
28/07/2021
31/05/2022
31/10/2021
31/10/2022
31/10/2023
31/10/2024
30 September 2021
GRANT DATE VESTING
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
EXERCISE
PRICE
-
-
-
-
EXERCISE
PRICE
-
-
-
-
-
-
-
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 74
Notes to the Financial Statements
Continued
6. OTHER INFORMATION (CONTINUED)
6.3. Share Based Payments (CONTINUED)
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
31 JULY
2022
$5.88
39%
2.51%
2.65%
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
$5.95
45%
3.31%
2.84%
† Expected share price volatility was calculated with reference to the annualised standard deviation of daily share price returns on the underlying security over a specified period.
Expenses arising from share-based payment transactions
Total expenses / (credits) arising from share-based payment transactions recognised during the period as part of employee benefit expense were as follows:
CONSOLIDATED ($)
Performance rights granted under employee long term incentive plan
NOTE
2022
491,092
2021
(79,938)
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
2022
2021
(a)
374,300
-
374,300
372,500
250,000
622,500
(a) Other services relate to corporate transactions undertaken during the year.
Events Occurring After Balance Date
6.5.
On 26 October 2022, the Company announced to the ASX that it had appointed real estate agency and advisory firm, LAWD to market the Mountview
almond orchard. The strategic decision to market the Mountview orchard is based on its relatively small scale, as it is the smallest almond orchard in
the Company’s portfolio. As at the date of this report, there has been a number of interested parties that have viewed the property however an
agreement has yet to be signed.
Given an active program to locate a buyer and complete the sale plan was not initiated by management at 30 September 2022, the asset was not
classified as held for sale on the balance sheet. The carrying amount of the Mountview orchard as at 30 September 2022 was $7.79 million and the
market value as determined by Herron Todd White in September 2022 was substantially above the carrying amount.
On the 8th of November the company announced the transition to a new CEO and Managing Director, following agreement between the Board and
the current CEO & Managing Director Paul Thompson, that he will step down. Paul Thompson will remain with the company to ensure an orderly
transition to the newly appointed CEO & Managing Director David Surveyor who will join the company after he completes his notice period with his
current employer.
On 22 November 2022, the Directors declared a final fully franked dividend of 2 cents per share in relation to the financial year ended 30 September
2022 to be paid on 3 February 2023.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 Directors' Declaration
75
In the directors’ opinion:
(a)
the financial statements and Notes set out on pages 41 to 74 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 2022 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.
T Dillon
Chair
Melbourne, 22 November 2022
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022
76
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 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 2022 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 financial report comprises:
the statement of financial position as at 30 September 2022
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 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 2022
77
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 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 $1.18 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 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. 78
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)
We performed the following procedures, amongst
others:
The Group held inventory of $128.5 million at 30
September 2022. 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
current year inventory at the point of harvest include
committed sales contracts, market values for the
uncommitted inventory, quality and foreign
exchange rates.
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 2022 and the judgement
involved in the key assumptions.
• Considered the valuation methodology used to
determine the fair value of the almond crop at the point
of harvest against the requirements of the relevant
Australian Accounting Standard.
• Assessed whether assumptions used to determine
fair value at the point of harvest were reasonable with
reference to committed sales contracts and foreign
exchange rates.
• Evaluated net realisable value of the current year
almond crop inventory by comparing the value held at
30 September 2022, to actual selling prices achieved
after year-end for a sample of items.
• Developed an understanding of the Group’s
processes and controls over determining the volumes
of almonds harvested and testing the operating
effectiveness of a sample of related controls.
• Attended the Group’s stocktake of finished goods in
September 2022, and observed the Group’s count
procedures.
• Selected a sample of work in progress inventory
items from the stock on hand listings and observed the
inventory on hand.
• Tested the mathematical accuracy of key data
included in the calculation of the fair value of the
almond crop.
• Evaluated the reasonableness of the disclosures
made in notes 3.2 in light of the requirements of
Australian Accounting Standards.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022
79
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 Key audit matter How our audit addressed the key audit matter Carrying value of indefinite lived intangible assets (Refer to note 3.7) The Group has indefinite lived intangible assets including goodwill of $26.0 million, and permanent water rights of $58.8 million as at 30 September 2022. Under Australian Accounting Standards, the Group is required to assess indefinite lived intangible assets for impairment at least annually. For the year ended 30 September 2022, 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, discounted to present value (the “model”). We consider the carrying value of indefinite lived intangible assets to be a key audit matter because of the financial significance of the carrying value of the CGU and the significant judgements and assumptions applied by the Group in estimating forecast future cash flows, discounted to their present value. We performed the following procedures, amongst others: • Assessed whether the Group’s determination of the Cash Generating Unit (CGU) was consistent with our knowledge of the Group’s operations and its internal group reporting. • Tested the mathematical accuracy of key data 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 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 and terminal growth rate applied in the model is reasonable. • 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. 80
Independent Auditor’s Report
Continued
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 2022, 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 Group 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/ar2_2020.pdf. This description forms part of our
auditor's report.
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022
81
SELECT HARVESTS ANNUAL REPORT 30 SEPTEMBER 2022 Report on the remuneration report Our opinion on the remuneration report We have audited the remuneration report included in pages 28 to 39 of the directors’ report for the year ended 30 September 2022. In our opinion, the remuneration report of Select Harvests Limited for the year ended 30 September 2022 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Group 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 Milner MelbournePartner 22 November 2022 82
ASX Additional Information
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 31 October 2022. 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
22,178
NUMBER OF SHAREHOLDERS
4,934
3,813
919
683
41
NUMBER OF SHAREHOLDERS
754
(b) Twenty largest shareholders
The following information is current as at 31 October 2022. The names of the twenty largest registered holders of quoted shares are:
1. CITICORP NOMINEES PTY LIMITED
2. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
3. J P MORGAN NOMINEES AUSTRALIA LIMITED
4. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
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