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Select Harvests Annual Report 2024
1
2024
Annual Report
Company Profile
02
Business Highlights
04
Chairman & Managing Director’s Report
06
Select Harvests Strategy
10
2024/25 Focus Areas
12
Sustainability Focus
15
Executive Team
16
Board of Directors
17
Performance Summary
18
Financial Report
21
Directors’ Report
22
Remuneration Report
35
Auditor’s Independence Declaration
53
2024 Financial Report
55
Consolidated Statement of Comprehensive Income
56
Consolidated Statement of Financial Position
57
Consolidated Statement of Changes in Equity
58
Consolidated Statement of Cash Flows
59
Notes to the Consolidated Financial Statements
60
Consolidated Entity Disclosure Statement
98
Directors’ Declaration
99
Independent Auditor’s Report
100
ASX Additional Information
106
Corporate Information
108
We acknowledge and pay our respect
to the First Nations custodians of our lands,
and to Elders past, present and emerging.
Our almond kernels can be traced to the orchard
where they are grown whether they are sold in
India, China or in other parts of the world.
Select Harvests Annual Report 2024
01
Select Harvests is uniquely
positioned to deliver sustainable
growth through a combination of
disciplined management, market
expansion and innovation.
Select Harvests Annual Report 2024
02
Our Vision
To be a leader in the supply of better for you
plant-based foods.
Our Operations
We supply the Australian and global almond
markets. Our core capabilities include: Horticulture,
Orchard Management, Almond Processing, Sales
and Marketing enabling us to add value across
each of our business activities.
Our geographically diverse almond orchards are
located in Victoria, South Australia and New South
Wales, with a portfolio that includes more than
9,165 hectares (22,643 acres) of company owned
and leased almond orchards. 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 40,000MT 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 strong
relationships in the fast growing markets of India
and China, as well as maintaining established
routes to markets in Asia, Europe and the
Middle East.
Value-Adding Almond Business
Demand for Select Harvests value-added almond
products continues to grow under our Renshaw
and Allinga Farms brands.
Our business supplies a full range of premium
value-added almond products (blanched, roasted,
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.
We are one of the world’s largest almond
growers, with a geographically diverse almond
orchard portfolio supplying our state-of-the-art
primary processing facility.
Company
Profile
Select Harvests Annual Report 2024
03
NORTHERN
REGION
CENTRAL
REGION
SOUTHERN
REGION
Adelaide
Melbourne
Sydney
RICHMOND
PIANGIL
EUSTON
ROBINVALE
LOXTON
WAIKERIE
PARINGA
HILLSTON
GRIFFITH
LAKE
CULLULLERAINE
NORTHERN
REGION
CENTRAL
REGION
SOUTHERN
REGION
Adelaide
Melbourne
Sydney
RICHMOND
PIANGIL
EUSTON
ROBINVALE
LOXTON
WAIKERIE
PARINGA
HILLSTON
GRIFFITH
LAKE
CULLULLERAINE
SELECT HARVESTS ORCHARDS
SELECT HARVESTS PROCESSING
SELECT HARVESTS HEAD OFFICE
9,165 HA
(22,643 acres)
Total Planted Area
2,677 HA
(6,613 Acres)
Southern Region Planted Area
(11,491 Acres)
Central Region Planted Area
4,651 HA
(4,539 Acres)
Northern Region Planted Area
1,837 HA
Company Profile
Select Harvests Annual Report 2024
04
Business
Highlights
Tonnage Totals
Weight of Kernels Per Annum
(Metric Tonnes)
2015
2016
2017
2018
2019
2020
2021
2022
2023
14,500
14,200
14,100
15,700
19,771
22,690
23,250
28,250
28,312
2024
29,527
Select Harvests Annual Report 2024
05
$46.0M
Earnings Before Interest Tax
Depreciation and Amortisation
(EBITDA)
$1.5M
Net Profit After Tax
(NPAT)
34%
Net Bank Debt to Equity
(Excluding lease liabilities)
$7.69/KG
Average Select Harvests
Almond Price
AUD
$6.60/KG
Almond Production Costs
29,527MT
Almond Crop
Yield impacted by favourable
growing/harvesting conditions
$21.3M
Operating Cash Flow
Increase of $18m, impacted by higher
2024 crop sales volumes and prices and
lower input costs
5,226MT
Value-Add Sales
7.1
Total Recordable Injury
Frequency Rate – per million
hours worked
(TRIFR)
Business Highlights
(29% post completion
of capital raise)
Select Harvests Annual Report 2024
06
Chairman & Managing
Director’s Report
Select Harvests Annual Report 2024
07
Select Harvests has made significant strides in FY2024, advancing its
transformation strategy across key areas including crop volume, processing
capacity and efficiency, and sustainability initiatives. While achieving a notable
financial turnaround and solid progress on operational goals, the company
remains focused on delivering sustainable returns to our shareholders by
marketing premium almond products to the world.
Year at a glance
Select Harvest recorded a Net operating profit after tax (NPAT)
of $1.5 million for FY2024. This profit result marks an improvement
of $116 million on the prior year. Whilst this is a substantial year on
year improvement it more reflects a return to more normal
operating conditions. The company is making solid progress
towards our financial goals, although we recognise that we have
further work to do in this area.
Our emphasis on safety performance continues to deliver results,
with the company recording a total recordable injury frequency
rate (TRIFR) of 7.1 per million hours worked. Whilst this is slightly
higher than the FY2023 figure of 6.7, we think the data we have
now is more accurate and is based off working 100,000 less hours
despite a larger crop. The 2024 year was another important step in
our journey towards world-class safety performance.
Overall, FY2024 has been largely positive – we saw a reduction
in production costs and an increase in processing capacity,
flowing through to a substantiative increase in sales.
In 2024, Select Harvests delivered a crop of 29,527MT, which
marked a return to more normal crop levels, with the quality being
excellent. The company introduced an innovative approach to
harvesting this year at selected farms by changing the oscillation
frequency and duration of tree shaking to maximise the number
of nuts collected off each tree. The success of this new approach
means it will be repeated in 2025. Another innovation for the 2024
bloom was to increase the bee drop frequency for specific farms
to reduce the distance bees needed to fly to pollinate trees.
The NSW crop was disappointing and reflects four years of
extremely wet weather, with the average rainfall for this period
approximately double that of the prior period. We have this year
taken a write down on the Yilgah farm lease to reflect the yield
challenge.
The company replanted 69 hectares of trees at our Jubilee orchard
as part of a continuous approach to managing its orchards.
As at the end of FY2024, 92% of Select Harvests’ orchards are
considered to be in the maturity ‘sweet spot’ for production.
The year also saw a step change increase in external grower
volumes to 10,520MT, for which Select Harvests provides
processing and sales and distribution services.
The Carina West processing facility (CWPF) increased total
productive capacity by approximately 30% to 40,000MT, and
processed a record 40,047MT of product in FY2024, while
simultaneously reducing processing costs by 8.1%.
2024 saw the company accelerate its sales velocity with contracted
sales volume of 36,624MT, which was well above the average of the
past 3 years of 27,793MT. This consisted of 31,326MT of the 2024
crop and 5,298MT of the 2023 crop. The total volume invoiced was
37,484MT an increase of 19% on the prior year.
The year commenced with low almond prices, largely driven by a
substantial carryover from the previous California crop. During the
year, sellers sold through their inventories, resulting in over a 5%
increase in global shipments, this reduced carryover to levels not
seen since 2019. In July, California released its objective crop
estimate of 2.8 billion pounds, a 7% decrease from the subjective
estimate in May. The combination of a lower carryover, the revised
crop forecast, and rising demand as seen by increased global
shipments, has brought supply and demand fundamentals into
balance. As a result, almond prices have firmed across all grades.
This has increased market confidence for both buyers and sellers,
leading to strong sales in key markets as they secure supply.
This is the first year we are consolidating external supply with our
own volumes, the impact is an increase in our revenue from $206
million to $337.3m and gives a better sense of the scale of Select
Harvests. Strategically the growth in external supply and
processing capacity reflects a shift in the company profile with the
increased importance of our mid-stream operations and supports
more consistent earnings.
Transformation strategy
The company made substantial progress on each of its four
strategic pillars in FY2024 as we work to ensure that the business is
more robust throughout all stages of the production cycle.
Highlights of our progress against the strategy were:
x
a record crop and reduced horticulture costs.
x
a reduction in the total cost of production (growing, harvesting
and processing) to $6.60 per kilogram, and by way of
comparison to $6.73 per kilogram versus 2023 of $6.94 per
kilogram on a 29,000MT equivalent basis.
x
a one-third increase in processing capacity (from 30,000 to
40,000MT).
x
a 36% increase in sales contracting (3 year average of 27,793 to
36,624MT).
The company increased direct sales by 14% as we get closer to
manufacturing customers.
In 2024 there were 27 Project Management Office (PMO) projects
completed that delivered a value of approximately $32m to the
company. This value should be netted off against the inflationary
pressures all businesses face, which for Select Harvests is
$11 million.
Chairman & Managing Director’s Report
Select Harvests Annual Report 2024
08
One of our PMO projects this year was to deliver savings of $3.6
million from a change to our logistics model. The project was
unsuccessful and did not deliver the planned outcomes. Our
logistics position has since been recovered. The financial impact
of this was a $1m provision in our accounts and a delay in cash of
$56m (not at risk) due to document and shipping delays. As at 26
November, 91% of this cash has been collected and the balance is
coming on normal terms and remains expected to be received
prior to end December. Going forward, the company is
implementing plans to derisk the logistics component of its
operations by adding a new service provider while also reducing
dependence on external suppliers by increasing its internal
logistics capability
The net result is that the project management office (net of
inflation and logistics costs) has been significantly positive for
Select Harvests and generated $20 million in 2024.
Financial performance
Select Harvests recorded an underlying EBIT result of $17.1 million
for FY2024, with the following one-off considerations:
x
$6.7 million profit on the sale of water as the company
rebalances its water portfolio to align more evenly with its farm
locations (this process is ongoing);
x
($6.6 million) impairment of the Yilgah Right-of-Use asset;
x
($1.0 million) of costs incurred (customer claims for demurrage,
etc) due to the issues experienced with the change in logistics
provider.
Equity Raise
During the second half of the year, the Company undertook a fully
underwritten capital raising worth $80 million. At 27 September,
the institutional offer (worth $61.7 million less transactional costs
of $2.8 million) was successfully completed with the cash received
of $58.9 million netted off against the Company’s debt facilities at
year end. The company also completed a retail offer post balance
date on 15 October 2024 with cash received of $17.4 million
($18.3 million less transaction costs of $0.9 million). The purpose of
the capital raise was to reset the balance sheet and fund a further
expansion of our CWPF processing capacity in line with our
transformation strategy and will further grow our mid-stream
position. The proceeds from the equity raising have been applied
towards the repayment of debt of $71.3 million, capital investment
to increase processing capacity of $5 million and associated
transaction costs of $3.7 million.
The net debt balance at the end of the financial year decreased to
$162.3 million (2023 - $190.2 million) as a result. Excluding the
capital raise amount of $59.7 million, the Company’s net debt of
$222 million was due to a delay in cash timings following some
issues with the change in logistics provider during the second half
of the financial year.
Sale of water rights
In the second half of the year the Company commenced the
rebalancing of its water portfolio by selling and purchasing
permanent water rights so to align the water rights more closely to
its farm locations. At the end of the year there were signed
contracts for water sales of $11.7 million (representing 4,566ML of
water) that were settled after year-end, which will deliver a one-off
gain of $5.8 million gain in the 2025 accounts. As the company has
been selling water it has been using the cash generated to buy
additional water in locations aligned to our farming activities.
People and safety
The board renewal process that began several years ago is now
complete with the appointment of Paul van Heerwaarden as a
non-executive director in November 2023. Paul brings significant
agribusiness experience to the company, including management
of integrated supply chains from farm through to processing and
distribution.
In addition, we are taking the opportunity for a sensible refresh of
leadership talent, which has led to the addition of some new
capabilities, including General Manager of Strategy and Corporate
Development, and Chief Financial Officer. These changes mean
the company is now better placed to improve systems and work
on critical risks to the business. Beyond the leadership team we
Chairman & Managing Director’s Report
Global Almond Pricing
USD Per Pound
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
JAN 22
MAR 22
MAY 22
JUL 22
SEP 22
NOV 22
JAN 23
MAR 23
MAY 23
JUL 23
SEP 23
FEB 22
APR 22
JUN 22
AUG 22
OCT 22
DEC 22
FEB 23
APR 23
JUN 23
AUG 23
OCT 23
NOV 23
DEC 23
APR 24
OCT 24
JAN 24
MAY 24
FEB 24
JUN 24
AUG 24
MAR 24
JUL 24
SEPT 24
HIGH-GRADE KERNEL
IN-SHELL
LOW-GRADE KERNEL
Source: Strata markets almond price table
Select Harvests Annual Report 2024
09
Almond market outlook
The future of the macro environment for almonds is looking bright.
At the global level, the trend for consuming healthy foods
continues.
In the US, bearing acres appears to have peaked and we are
witnessing a reduction in orchards across California. The US
objective forecast is for 2.8 billion pounds, and the initial feedback
suggests the actual crop is more likely to be smaller. Carry forward
inventories are also low, and history suggests that this is likely to
remain the case for at least the next few years. These factors will
help support prices here in Australia.
In terms of the forward outlook the very wet weather in NSW from
the previous four years remains a watch factor for the 2025 crop.
As we look back on these last 12 months, we would like to end by
thanking our employees, our customers and our shareholders for
their continued support. We remain committed to producing a
world-class product in a sustainable manner that benefits
everyone.
are increasing talent through the organisation and looking to
invest more in the development of our talent. In FY2024, the
company conducted an alignment and engagement survey to
provide further insight on how we can continue to foster and build
our desired culture.
In FY2024, we reviewed our remuneration approach by engaging
an independent external provider. This work confirmed that the
company’s pay practices for key management personnel (KMP)
and senior leaders is contemporary, and remuneration levels are
comparable to similar companies.
The company recorded a TRIFR score of 7.1 compared to 6.7 in
FY2023. We believe it reflects improvements to the reporting and
recording processes to provide greater accuracy. Safety remains
our primary consideration, and we are concentrating our efforts to
addressing the common industry issue of under-reporting, which
will remain a focus in the current financial year and beyond. We
have this year also commenced work on the critical risks of
machine guarding and have a program underway to improve this
across the business.
Sustainability performance
We are proud of the fact that Select Harvests products are not
only good for consumers, but they are also good for the planet.
Our company reports its sustainability performance in line with
Australian Sustainability Reporting Standard AASB S1 General
Requirements for Disclosure of Sustainability-related Financial
Information on a voluntary basis in preparation for mandatory
reporting under AASB S2 in 2025.
This year has seen Select Harvests consolidate its sustainability
practices and progress its sustainability goals. This approach to
sustainability is also aligned to the United Nations Sustainable
Development Goals.
The company produces 90% of its own compost through a closed
loop economy which involves composting of nut hull and shell
post-processing. The company views sustainability performance
as a journey of continuous improvement.
Volume (tonnes)
FY20
23,250
FY21
28,250
FY22
28,312
29.527
FY23
19,771
FY24
FY25
FY26
FY27
FY28
FY29
FY30
49.3%
55.7%
YIELD FROM EXISTING PORTFOLIO1
THEORETICAL
VOLUME
YIELD FROM COMMITTED & IMMATURE
NEW PLANTINGS2
PANGIL ORCHARD2
1. The almond crop is biennial in nature
with expected +/- 10% per annum
variation in tonnage
2. Assuming 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
3. Assuming a 3.5MT per ha (1.4MT per
acre) maturity profile for Piangil
Almond Orchard.
David Surveyor
Managing Director & CEO
Travis Dillon
Chairman
Chairman & Managing Director’s Report
Select Harvests Theoretical
Harvest Volume
(MT)
Select Harvests Annual Report 2024
10
Select Harvests
Strategy
Select Harvests Annual Report 2024
11
Select Harvests Strategy: In control of our destiny
Substantially
greater almond
volume
Leadership
in processing
scale and
efficiency
Maximise return
from the crop
Innovate
to drive
step-out growth
OUR FOUR STRATEGIC PILLARS
THREE HORIZONS
HORIZON 1
Strong Foundation
HORIZON 2
Sustainably Profitable
HORIZON 3
Transformation
PROCESSING
EXCELLENCE
SUPPLY CHAIN
INTEGRATION
CUSTOMER
VALUE
HIGH PERFORMANCE
& CULTURE
ZERO HARM
SUSTAINABLE
GROWTH
FINANCIAL
PERFORMANCE
HORTICULTURAL
EXCELLENCE
DELIVERY PILLARS
VISION
To be a leader in the supply of ‘better for you’ and
‘better for the planet’, plant-based foods
MISSION
Our mission is to deliver sustainable returns to our shareholders
by marketing premium almond products to the world
PLANET
WATER EFFICIENCY
100% of our orchards use drip
irrigation, tree and soil monitoring
systems
EMISSIONS, CLIMATE
ADAPTATION & RESILIENCE
21% reduction in greenhouse
gas emissions
(compared to our 2020-21 baseline)
PEOPLE
Select Harvests Annual Report 2024
12
CARINA WEST PROCESSING
CAPABILITY
Increased to 40,000MT
PROJECT MANAGEMENT
DELIVERY
86 Projects identified
with 39 completed
PROFIT
PRODUCT
FOOD SAFETY
& QUALITY
52 complaints
(114 in 2022–23)
CIRCULAR FOOD PRODUCTION
10,077 tonnes harvest biomass
returned to orchards in our
compost mix
(7,792 tonnes in 2022–23)
58,273 tonnes to external feed
WORKPLACE HEALTH & SAFETY
7.1
Total recordable work-related
injury frequency rate
(6.7 in 2022–23)*
LOCAL COMMUNITIES
$10,000
Community grants**
($19,400 in 2022–23)
* Total recordable work-related injuries include
‘treatment injuries’ and ‘lost time injuries’.
Frequency rates are calculated by multiplying
the total number of injuries by one million, then
dividing by the total hours worked (for all direct
and labour hire staff).
** Our focus was on consolidating our approach
and reviewing how we can deliver meaningful,
long-term benefits to our communities. While
this review is underway, we maintained smaller
grants programs this year.
2024/25
Focus Areas
Our attention is on the product we produce,
minimising the impact on the planet and
ensuring the safety of our people, whilst
delivering sustainable profits.
Select Harvests Annual Report 2024
13
Select Harvests Annual Report 2024
14
Select Harvests Annual Report 2024
15
Our sustainability strategy centres around
three pillars: product, planet and people,
with two priorities for each to achieve our
renewed strategy, metrics and targets.
Sustainability
Focus
PE
O
PL
E
P
R
O
DU
C
T
PL
AN
ET
Workplace
health & safety
Food
Security
Supply chain
traceability
Circular food
production
Water efficiency
Soil health &
pesticide use
Emissions, climate
adaption &
resilience
Biodiversity &
natural ecosystem
conversion
Employment practices
& human rights
Non-discrimination
& equal opportunity
Local
communities
Food Safety
& quality
Select Harvests Annual Report 2024
16
David Surveyor
Managing Director and CEO
Appointed as the Managing Director and Chief Executive Officer of
Select Harvests Limited on 20th February 2023. David has experience
across a variety of industries and expertise in the food sector. David was
previously Chief Executive of Alliance Group Limited, Chairman of
Alliance Group (NZ) Ltd, the UK subsidiary, a director of The Lamb
Company (North America), Director Meateor Pet Foods, Director Beef
and Lamb New Zealand and a member of the Meat Industry Association
Council. David was also previously Executive General Manager of
Laminex, a subsidiary of Fletcher Building and has held roles with BHP
in Australia and as President of Bluescope Lysaght in Malaysia.
Tim Bradfield
(Interim Chief Financial Officer and Company Secretary)
Joined Select Harvests as Interim Chief Financial Officer on 9 July 2024
and appointed Company Secretary on 24 July 2024. Tim is a seasoned
CFO with extensive experience in ASX and NYSE listed organisations,
including MaxiTrans and General Motors, where he managed significant
financial operations and led major transformation initiatives. With broad
operational leadership experience across various sectors he has worked
closely with listed company CEOs and executive teams, driving business
optimisation and growth.
Sumana Islam
General Manager, Strategy and Corporate Development
Sumana joined Select Harvests in January 2024, bringing over 14 years
of experience in strategy development, revenue management, marketing
and sales, and operations. She has a proven track record in driving
business growth and operational excellence across various industries,
combining a strategic mindset with a practical approach to delivering
results. Prior to joining Select Harvests, Sumana was a management
consultant at the Boston Consulting Group, where she worked across
the retail and consumer sectors. She also held senior strategy and
commercial management roles at Melbourne Airport and Treasury Wine
Estates.
Liam Nolan
Chief Financial Officer
As per the ASX Announcement issued on 28 November 2024, Liam
commenced with Select Harvests on 2 December 2024.
Photo left to right: Ekrem Omer, Tim Bradfield, Sumana Islam, Ben Brown,
David Surveyor, Trisha Crichton and Dan Wilson
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.
Trisha Crichton
General Manager People, Safety & Sustainability
Trisha joined Select Harvests in July 2023. Trisha is a highly
accomplished and results driven HR executive with a proven track
record in driving organisational change, leadership, and optimising HR
initiatives. With extensive experience in centralised HR services, safety
culture and fostering employee engagement, she is adept in aligning HR
strategies with business objectives to achieve exceptional outcomes.
Throughout her career, Trisha has successfully led large-scale
transformational initiatives, implemented change management
strategies, and driving a culture of continuous improvement. Trisha has
held key leadership roles, including General Manager Human Resources
at McConnell Dowell, where she oversaw the development and
execution of HR strategies for the Australian Business Unit, and HR
Shared Services Director at Serco, where she led the implementation of
global HR centralised solutions.
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.
Ekrem Omer
General Manager, Sales
Ekrem joined Select Harvests in August 2021 where he assumed the role
of International Sales Manager, before being appointed as the General
Manager of Sales in July 2023. Ekrem holds an international business
degree, and has over 15 years’ experience in the industry. Before joining
Select Harvests he was involved in an Ingredients business in Australia.
His career has spanned multiple business areas with extensive
knowledge in sales, procurement and shipping operations, whilst adding
value to stakeholder partnerships, making him a driving force in the
organisation.
Executive Team
Select Harvests Annual Report 2024
17
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 and also a non-executive
director of Australian Grain Technologies. 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 Agriservices, 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
Nominations Committee.
Travis Dillon
Chair and Non-
Executive Director
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 McDonalds’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), Australian Vintage (ASX: AVG),
The Reject Shop (ASX: TRS), Collective Wellness Group. She is Chair of the Sustainability
Committee and 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 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.
Michelle Somerville
Non-Executive Director
Appointed to the board effective on 13 December 2022. Michelle was previously a partner
of KPMG for nearly 14 years specialising in external audit and advising Australian and
international clients both listed and unlisted primarily in the financial services market in
relation to business, finance risk and governance issues. Michelle holds a Bachelor of
Business and a Masters of Applied Finance. She is a Graduate member of the Australian
Institute of Company Directors and a Fellow Chartered Accountant. Michelle is currently
a director of Insignia Financial Limited (ASX: IFL), Epworth Foundation and Summer
Foundation. She was previously a director of GPT Group (ASX: GPT). She is Chair of the
Audit and Risk Committee and a current member of the Sustainability Committee.
Paul van Heerwaarden
Non-Executive Director
Appointed to the Board on 1 November 2023. Paul has over 30 years’ experience in
agribusiness including soft commodity cycle risk management and managing integrated
supply chains from farm through to processing and distribution into industrial and consumer
channels, both domestically and internationally. He has previously held roles with Cargill
and Ridley AgriProducts and Bega Group. Paul is a Director of Dairy Australia Ltd. He is
a current member of the Audit and Risk Committee and the Remuneration and Nomination
Committee.
David Surveyor
Managing Director and
CEO
Appointed as the Managing Director and Chief Executive Officer of Select Harvests Limited
on 20th February 2023. David has experience across a variety of industries and expertise in
the food sector. David was previously Chief Executive of Alliance Group Limited, Chairman
of Alliance Group (NZ) Ltd, the UK subsidiary, a director of The Lamb Company (North
America), Director Meateor Pet Foods, Director Beef and Lamb New Zealand and a
member of the Meat Industry Association Council. David was also previously Executive
General Manager of Laminex and has held roles with BHP in Australia and as President of
Bluescope Lysaght in Malaysia.
Board of Directors
Select Harvests Annual Report 2024
18
Performance Summary
Results – Key Financial Data
$’000 (except where indicated)
FY2024
FY2023
Variance
Variance %
Revenue from Continuing Operations
337,285
205,987
131,298
63.7%
Almond Crop Volume (MT)
29,527
19,771
9,756
49.3%
Almond Price (A$/kg)
$7.69
$6.42
$1.27
19.8%
Underlying EBITDA from Continuing Operations
46,879
(86,987)
133,866
153.9%
Depreciation and Amortisation
(29,788)
(32,247)
2,460
7.6%
Underlying EBIT from Continuing Operations
17,091
(119,234)
136,325
114.3%
One off items
(834)
(30,080)
29,246
97.2%
Reported EBIT
16,257
(149,314)
165,571
110.9%
Interest expense
(14,982)
(10,212)
(4,770)
(46.7%)
Profit before tax
1,275
(159,526)
160,801
100.8%
Tax benefit
225
44,799
(44,574)
(99.5%)
Net Profit After Tax (NPAT)
1,500
(114,727)
116,227
101.3%
Earnings Per Share (EPS) (cents)
1.24
(94.80)
96.04
101.3%
Dividend Per Share (DPS) - Interim (cents)
–
–
Dividend Per Share (DPS) - Final (cents)
–
–
DPS - Total (cents)
–
–
Net Debt
162,330
190,188
Gearing (%)
33.8%
46.2%
Share Price (A$/Share as at 30 Sep)
$3.68
$4.01
Market Capitalisation (A$M)
505.3
485.4
Market Capitalisation – post completion of equity
raise (A$M)*
523.0
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.
* Market capitalisation calculation based on number of shares issued after completion of the Retail Entitlement Offer on 15 October 2024.
Definitions:
1. EBITDA and 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 2024
19
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.
Closed loop compost
Select Harvests Annual Report 2024
20
Select Harvests Annual Report 2024
21
Directors' Report
22
Remuneration Report
35
Auditor’s Independence
Declaration
53
2024 Financial Report
55
Consolidated Statement
of Comprehensive Income
56
Consolidated Statement
of Financial Position
57
Consolidated Statement
of Changes in Equity
58
Consolidated Statement
of Cash Flows
59
Notes to the Consolidated Financial
Statements
60
Directors' Declaration
99
Independent Auditor’s Report
100
ASX Additional Information
106
Corporate Information
108
Financial
Report
Select Harvests Annual Report 2024
22
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 2024.
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
Travis Dillon
Adv Dip RBM, MBA, MAICD (Chair, 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 and also a non-executive
director of Australian Grain Technologies. 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 Agriservices, 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: 35,025 fully paid shares.
David Surveyor
B Economics, Grad Dip Applied Finance and Investment
(Managing Director and CEO)
Appointed as the Managing Director and Chief Executive Officer of
Select Harvests Limited on 20th February 2023. David has experience
across a variety of industries and expertise in the food sector. David
was previously Chief Executive of Alliance Group Limited, Chairman of
Alliance Group (NZ) Ltd, the UK subsidiary, a director of The Lamb
Company (North America), Director Meateor Pet Foods, Director Beef
and Lamb New Zealand and a member of the Meat Industry
Association Council. David was also previously Executive General
Manager of Laminex and has held roles with BHP in Australia and as
President of Bluescope Lysaght in Malaysia.
Interest in shares: 15,500 fully paid shares.
Guy 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 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 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.
Interest in shares: 23,511 fully paid shares.
Margaret 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 McDonalds’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), Australian Vintage
(ASX: AVG), The Reject Shop (ASX: TRS), Collective Wellness
Group. She is Chair of the Sustainability Committee and a
current member of the Remuneration and Nomination
Committee.
Interest in shares: 15,000 fully paid shares.
Select Harvests Annual Report 2024
23
Directors’ Report
(continued)
Michelle Somerville
B Bus (Accounting), MAF, FCA, FAICD (Non-Executive Director)
Appointed to the board effective on 13 December 2022. Michelle
was previously a partner of KPMG for nearly 14 years specialising
in external audit and advising Australian and international clients
both listed and unlisted primarily in the financial services market in
relation to business, finance risk and governance issues. Michelle
holds a Bachelor of Business and a Masters of Applied Finance.
She is a Graduate member of the Australian Institute of Company
Directors and a Fellow Chartered Accountant. Michelle is currently
a director of Insignia Financial Limited (ASX: IFL), Epworth
Foundation and Summer Foundation. She was previously a
director of GPT Group (ASX: GPT). She is Chair of the Audit and
Risk Committee and a current member of the Sustainability
Committee.
Interest in shares: 6,426 fully paid shares.
Paul van Heerwaarden
B Bus, MBA, MAICD (Non-Executive Director)
Appointed to the Board on 1 November 2023. Paul has over 30
years’ experience in agribusiness including soft commodity cycle
risk management and managing integrated supply chains from
farm through to processing and distribution into industrial and
consumer channels, both domestically and internationally. He has
previously held roles with Cargill and Ridley AgriProducts and
Bega Group. Paul is a Director of Dairy Australia Ltd. He is a
current member of the Audit and Risk Committee and the
Remuneration and Nomination Committee.
Interest in shares: 10,000 fully paid shares.
Company Secretary
Tim Bradfield
(Interim Chief Financial Officer and Company Secretary)
Joined Select Harvests as Interim Chief Financial Officer on 9 July
2024 and appointed Company Secretary on 24 July 2024. Tim is a
seasoned CFO with extensive experience in ASX and NYSE listed
organisations, including MaxiTrans and General Motors, where he
managed significant financial operations and led major
transformation initiatives. With broad operational leadership
experience across various sectors he has worked closely with
listed company CEOs and executive teams, driving business
optimisation and growth.
Interest in shares: Nil.
Select Harvests Annual Report 2024
24
Directors’ Report
(continued)
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, leased and externally grown almond orchards.
Employees
The Company employed 471 full time employees as at 30 September 2024 (30 September 2023: 476 full time equivalent employees).
Our casual employee and labour hire numbers vary according to the needs of our horticultural and processing divisions throughout the
horticultural season and can fluctuate to over 850 people during our peak period. Over 90% of our workforce is employed in regional
Australia.
Full time equivalent employees include: executive, permanent, contractor and seasonal (casual and labour agency hire) employment
types.
Operating and Financial Review
Overview
Select Harvests is one of the world’s largest fully integrated almond companies and the second largest almond producer in Australia.
With its core world class assets, the Company is well placed to continue benefiting from the global almond macro environment and
growth in the wider better for you plant based foods.
The Company strategy is delivered through four strategic pillars
1. Substantially greater almond supply
2. Leadership in processing scale and efficiency
3. Maximising the return from the crop
4. Step out growth
With the Company focus primarily directed towards the first three pillars.
FY2024 has been a year of financial consolidation and strategic transition for the Company, which saw good progress on the Company’s
transformation program.
The 2024 year has seen the Company deliver both a fivefold increase in external grower volumes and a step change in processing
capacity to 40,000MT. The impact is an increase in our revenue from $206 million to $337.3 million and for the reader this gives a better
sense of the scale of Select Harvests. Strategically the growth in external supply and processing capacity reflects a shift in the Company
profile with the increased importance of our mid-stream operations and supports more earnings certainty.
FY2024 has been a mostly positive year, which saw the Company recording a net profit after tax of $1.5 million based on an increased
crop size of 29,527MT, a higher almond pool price of $7.69/kg, a reduction in production costs and an increase in processing capacity.
We continue our focus on safety improvement with Total Recordable Incident Frequency Rate (TRIFR) for the full year at 7.1. We consider
our data is increasingly accurate and our performance has stabilised at a much lower rate than any point in our history. We still have
much to do to achieve our sustainability goal of zero harm.
The Board, Executive, and key leaders remain committed to ensuring all employees remain engaged with driving the Company to
maximise returns for its owners.
Growing and Harvesting – 2024 Crop
The 2024 crop growing and harvesting conditions were favourable leading to an increased crop volume of 29,527MT (49% higher than
the 2023 crop) and a better-quality crop profile. Whilst the 2024 crop delivered a significant increase, it was slightly lower than forecast
of approximately 30,000MT. Strong yields were achieved across the Company’s South Australian and Victorian orchards. Our NSW
orchards yields were lower than forecast. They have for the last 4 years received over 550mm of rain per year, nearly double the yearly
average, which has been one factor contributing to the reduced yields.
Higher than average levels of inshell were produced with improved quality specifications achieved. Kernel quality improved with lower
levels of manufacturing grade product and increased volumes of higher-grade, well sized material. Levels of recorded insect damage
were well below last year as trees were harvested as early as possible in line with our strategy to improve product quality.
Total 2024 crop growing and harvesting costs were lower than forecast. PMO initiatives delivered favourable results particularly through
lower labour requirements. Market pricing for fertiliser and chemical inputs reduced from prior years while water costs were lower with
increased volume applied (drier year) offset by lower pricing (high volume of water in catchments).
Select Harvests Annual Report 2024
25
Processing - 2024 Crop
The Company’s Carina West processing facility (CWPF) processed a record 40,047MT of product in FY2024, due to the successful
strategy delivery to substantially increase capacity and processing speed. The 2024 crop had been fully hulled and shelled by the end of
the FY2024 year. The remaining sorting and packing continue and will be completed in the first quarter of FY2025.
During the year the Company increased the volume of third-party processing to 10,520MT which made up 26% of the total processing
volumes with the ability to do this being enabled by our capacity increase to 40,000MT. As a result of the increased processing capacity
and increased third party processing tonnes, the processing costs per kg reduced substantially compared to 2023.
The Company’s value adding facility continues to deliver positive outcomes by producing higher valued product (e.g. paste and sliced
material). Our Sales & Operations Planning process has led to improved scheduling of production to increase margins.
Sales and Marketing
2024 saw the Company accelerate its sales velocity with contracted sales volume of 36,624MT, which was well above the average of the
past 3 years of 27,793MT. This consisted of 31,326MT of the 2024 crop and 5,298MT of the 2023 crop. The total volume invoiced was
37,484MT an increase of 19% on prior year.
The year commenced with low almond prices, largely driven by a substantial carryover from the previous California crop. During the
year, almond prices remained relatively stable as sellers sold through their inventories, resulting in an approximate 5% increase in global
shipments, which reduced carryover to levels not seen since 2019. In July, California released its objective crop estimate of 2.8 billion
pounds, a 7% decrease from the subjective estimate in May. The combination of a lower carryover, the revised crop forecast, and rising
demand as seen by increased global shipments, has brought supply and demand fundamentals into balance. As a result, almond prices
have firmed across all grades. This has increased market confidence for both buyers and sellers, leading to strong sales in key markets
as they secure supply.
Select Harvests price optimisation initiatives have generated an additional $4.1 million in margin. The Company successfully increased
margins through:
1. Tariff maximisation – aligning our sales efforts to focus on key markets China and India, where we have leveraged tariff advantages
over California. As a result, Select Harvests increased sales to China by nearly 30% for the 2024 season.
2. Increase direct supply – Sales to direct manufacturers and retailers for the financial year have increased by 14%, leading to reduced
broker fees and improved margins and allowed a deeper understanding of customer requirements and needs, enabling partnerships
with our customers.
3. Inshell/Kernel Optimisation – By gaining a deeper understanding of our customer requirements, we were able to optimise price by
supplying grades to customers that met their applications and capabilities, which supports both buyer and seller.
Project Management Office (PMO)
The Company has a PMO which it uses to capture and drive its improvement projects. In FY2024 there were 27 projects completed that
delivered a profit of approximately $32 million to the Company. This value should be netted off against the inflationary pressures all
businesses face, which for Select Harvests is $11 million.
One of our PMO projects this year was to deliver savings of $3.6 million from a change to our logistics model. The project was
unsuccessful and did not deliver the planned outcomes. Our logistics position has since been recovered. The financial impact of this was
a $1 million provision in our accounts and a delay in cash collections of $56 million (not at risk) due to document and shipping delays.
The specific contract delays have now been completed. As at 26 November, 91% of this cash has been collected and the balance is
coming on normal terms and is expected to be received prior to the end of December 2024.
The net result is that the PMO has been significantly positive for Select Harvests and generated $20 million in FY2024.
Costs, Capital and Cashflow
The total cost of production comprising growing, harvest and processing costs was $6.60kg on 29,527MT crop versus prior year $10.18/
kg on a 19,771MT crop. To allow a more meaningful comparison we have normalised the data for price per kilo based on a 29,000MT
which shows a 2024 crop cost $6.73 vs 2023 at $6.94/kg.
The improvement in our cost base is a function of initiatives that saw costs such as labour, harvest and processing reduce supported by
lower input material costs for fertiliser, water and chemicals offset by higher bee and electricity costs due to increased water pumping.
The year also saw increased lease costs due to several orchards reaching full maturity. Additionally, immature orchards cost recognition
increased in line with their age profile with increased yield.
Operational cashflows improved in FY2024 because of a higher 2024 crop volume, improved quality, increasing almond prices and
increased external grower volumes.
Select Harvests’s 2024 inshell levels (which attract premium pricing and generate early cashflows) were higher than average due to
favourable growing and harvesting conditions. The Company produced $50.9 million operating cashflows in the second half.
Directors’ Report
(continued)
Select Harvests Annual Report 2024
26
Directors’ Report
(continued)
During the second half of the year, the Company undertook a fully underwritten capital raising worth $80 million. At 27 September 2024,
the institutional offer (worth $61.7 million less transactional costs of $2.8 million) was successfully completed with the cash received of
$58.9 million netted off against the Company’s debt facilities at year end. The Company also completed a retail offer on 15 October 2024
with cash received of $17.4 million ($18.3 million less transaction costs of $0.9 million). The purpose of the capital raise was to reset the
balance sheet and fund a further expansion of our CWPF processing capacity in line with our transformation strategy. The proceeds
from the equity raising have been applied towards the repayment of debt of $71.3 million, capital investment to increase processing
capacity of $5 million and associated transaction costs of $3.7 million.
The net debt balance at the end of the financial year decreased to $162.3 million (2023 - $190.2 million) as a result. Excluding the capital
raise amount of $58.9 million, the Company’s net debt of $222 million increased from the prior year due to a delay in cash collections
following some issues with the change in logistics provider during the second half of the financial year.
Also, in the second half of the year the Company commenced the rebalancing of its water portfolio by selling and purchasing permanent
water rights so to align the water rights more closely to its farm locations. At the end of the year there were signed contracts for water
sales of $23 million that delivered a one-off gain of $6.7 million in the FY2024 accounts and will deliver a $5.8 million gain in the 2025
accounts.
The Company’s focus is on direct improvement through gains in horticulture, processing and sales with activity captured and driven
through the Project Management Office to deliver our Plan 1 transformation program.
Profit
Financial Performance Review
Profitability
Reported Net Profit After Tax (NPAT) is $1.5 million. Reported Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) is
$46.0 million and Reported Earnings Before Interest and Taxes (EBIT) is $16.3 million.
Results Summary and Reconciliation
Reported Result (AIFRS)
FY2024
$000’s
FY2023
$000’s
Underlying EBIT
17,091
(119,234)
One off items
(834)
(30,080)
Reported EBIT
16,257
(149,314)
Interest expense
(14,982)
(10,212)
Net Profit/(Loss) Before Tax
1,275
(159,526)
Tax (expense)/benefit
225
44,799
Net Profit/(Loss) After Tax
1,500
(114,727)
Earnings/(Loss) Per Share (cents)
1.24
(94.80)
Underlying EBIT
The Company recorded an underlying EBIT result of $17.1 million for FY2024, with the following items considered one-off and outside of
normal operations:
• $6.7 million profit on the sale of water as the Company rebalances its water portfolio to align more evenly with its farm locations;
• ($6.6 million) impairment of the Yilgah Right-of Use asset;
• ($1.0 million) of costs incurred (customer claims for demurrage, etc) due to the issues experienced with the change in logistics
provider.
Select Harvests Annual Report 2024
27
Company Profitability
The FY2024 reported earnings before interest and taxes (EBIT) of $16.3 million was $165.6 million better than FY2023. The improved
result was mainly due to:
• The 2024 crop volume increasing by 49.3% compared to the 2023 crop volume. The 2024 crop volume marked a return to more
normal crop levels.
• Global almond prices increased over the period due to lower 2023 US crop carry over inventory levels and a lower-than-expected
Subjective estimate of the 2024 US crop. Select’s 2024 crop almond price was at $7.69/kg.
• External grower tonnes increasing during 2024 to 10,520MT resulting in increased processing profitability and sales and distribution
margin.
• In 2024, a write-off of 2023 stock value was recognised due to a quality downgrade of only $2.4 million.
Interest Expense
Interest expense of $15 million reflects the higher interest rates applicable to current finance facilities and the higher average debt levels
due to the lower 2023 crop volume, continued lower than average global almond prices and a delay in cash inflow following some issues
experienced after the change in logistics provider during the period.
Consolidated Statement of Financial Position
Net assets as at 30 September 2024 are $480.8 million, compared to $411.5 million as at 30 September 2023. This improvement is mainly
due to the Company’s equity raise of $80 million of which $58.9 million ($61.7 million less transaction costs of $2.8 million) settled on
27 September 2024.
Net working capital has increased by 36.9% with the 49.3% increase of the 2024 crop volume compared to 2023. Additionally, the
impact of the delayed cash collections because of issues with the change in logistics provider was valued at approximately $56 million.
Trade and other payables increased primarily due to an increase in the external grower volumes contracted during the year. We continue
to increase payment cycles across several suppliers and due to an increase in the external grower volumes contracted during the year.
FY2024
$000’s
FY2023
$000’s
Trade and other receivables
106,342
47,489
Inventories
124,992
85,317
Biological assets
73,815
70,557
Trade and other payables
(122,193)
(69,674)
Net working capital
182,956
133,689
Cash flow and Net Bank Debt
Total net debt as at 30 September 2024 was $162.3 million (30 September 2023 was $190.2 million), with a gearing ratio (total net debt
excluding lease liabilities)/equity) of 33.8% (30 September 2023: 46.2%). The decrease in borrowings is a result of the Company’s capital
raise of $80 million announced to the ASX on 20 September 2024, of which $58.9 million ($61.7 million institutional offer less $2.8 million
transactional costs) was settled and applied to its debt facilities on 27 September 2024. This position will improve as the $56 million of
delayed cash is collected.
Operating cash inflows for FY2024 amounted to $21.8 million (2023: $3.3 million). This improved result was due to higher sales receipts
for the year due to the higher 2024 crop volume and price as well as the increased external grower volumes contracted compared to last
year. The Company delivered a positive operating cashflow of $45.0 million in the second half of the 2024 financial year.
Investing cash outflows of $18.8 million were $7.3 million lower than FY2023. The Company consciously reduced its capital spend in the
financial year following the lower 2023 crop.
Dividends
No dividend has been declared for the financial year.
Directors’ Report
(continued)
Select Harvests Annual Report 2024
28
Directors’ Report
(continued)
Sustainability
Sustainability is embedded within our business strategy. Select Harvests recognises the United Nations Brundtland Commission
definition of sustainability, which is defined as ‘meeting the needs of the present without compromising the ability of future generations
to meet their own needs’.
This year, we've made progress in aligning our Sustainability Report with the upcoming AASB Sustainability Disclosures. We also
upheld our commitment to the Global Reporting Initiative (GRI) 2021 and the United Nations Sustainable Development Goals (SDGs).
Consequently, we are well-equipped for the emergent obligatory sustainability-related disclosures set forth by the Australian
Government. We've also pursued independent assurance over our greenhouse gas emissions while managing the National Greenhouse
and Energy Reporting scheme (NGERs) for our second consecutive year.
To deliver on our vision and goal, we have framed our approach to sustainability around three pillars.
x
Our product: we are committed to supplying high quality, safe, traceable plant-based food that is better for you, while contributing to
a circular economy.
x
Our planet: we are committed to responsible stewardship of natural resources, reducing our emissions, and building a business that
is adapted to climate change and resilient to climate related shocks and stresses.
x
Our people: we are committed to providing a safe workplace, with a ‘zero harm’ goal, promoting a culture of wellbeing, diversity and
inclusion, attracting high performing talent and contributing to the communities in which we operate.
We are committed to the continual improvement of sustainability performance, and report progress in our accompanying Sustainability
Report 2024.
Environmental regulation
Select Harvests is subject to environmental regulations under various federal, state and local laws relating predominantly to the use of
water and air and noise emission levels. We are also subject to conditions of licences and permits related to our operations (such as
those for our biomass generation plant and manufacturing compost). Select Harvests was not in breach of any environmental
regulations during the reporting period.
Governance
The Board of Select Harvests Limited is responsible for the overall corporate governance of the Company, including the consideration
of climate-related risks and opportunities.
The Audit and Risk Committee is responsible for the oversight of Company’s overall risk management framework and risk appetite,
including internal compliance and control systems.
The Remuneration and Nomination Committee is responsible for setting and approving compensation framework for the Company’s
Directors, Executives and staff.
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.
Business Risks
There are various risks that could have an impact on the achievement of the Company’s strategies and future performance.
Set out in the table opposite are the risks that the Company considers having the greatest possible impact to the business and an
outline of what the Company is doing to mitigate these risks.
With the impact of geopolitical tensions and uncertainty, global inflation is continuously monitored and where possible managed for
its resulting impact on key supply inputs (i.e. fertiliser, etc) across the Company.
Select Harvests Annual Report 2024
29
Business Risks
There are various risks that could have an impact on the achievement of the Company’s strategies and future performance.
Set out in the table below are the risks that the Company considers having the greatest possible impact to the business and an
outline of what the Company is doing to mitigate these risks.
With the impact of geopolitical tensions and uncertainty, global inflation is continuously monitored and where possible managed for
its resulting impact on key supply inputs (i.e. fertiliser, etc) across the Company.
Risk
Description
Mitigation
People Safety
The majority of the Company’s employees
work within farm or processing related
environments.
The Carina West Processing Facility is a
major operating plant that handles the
end-to-end process for all of the
Company’s almond and bio-mass
inventory.
In addition to the potential harm to any
worker, the occurrence of a workplace
incident has the potential to harm both
the reputation and financial performance
of the Company.
Policies and procedures are designed and
are in place in order to minimise the risks
of injuries occurring.
Key operating procedures, incident
investigation and corrective actions,
training, ongoing capital maintenance,
engineering reviews and proactive
maintenance are mitigating actions in
place to minimise the risk of a safety event
(e.g. fire).
Food Safety
(including product quality, utilities supply
and major equipment failure).
The Company’s almond products move to
the end consumer through various
channels. Quality issues, product
contamination or public health issues
could damage the Company’s reputation
which could adversely impact the
Company’s financial performance.
Quality testing procedures are in place at
each of the Company’s processing stages.
Additionally, the Company’s facilities are
subject to numerous independent and
customer audits to ensure required
standards are met.
Foreign Currency Fluctuations
The global almond price is transacted in
US dollars. Given most of the Company’s
sales are transacted in US dollars, the
Company’s profitability could be
negatively impacted by movements in the
USD/AUD foreign exchange rate.
A Treasury and Risk Management policy
is in place that ensures the Company’s
foreign exchange exposure is managed in
accordance with the crop growing and
sales cycle. Additionally, a Treasury
Committee meets to monitor and assess
the Company’s foreign exchange
exposures. The board has visibility of
adherence to policy and levels of
exposure.
Almond Price Decrease
A key sensitivity to the Company’s
earnings is its exposure to the almond
price which is greatly determined by the
US supply and levels of global demand.
The Company aims to manage this risk
by maintaining contact with key industry
bodies in the US and major traders and
customer in key export markets. Crop
sales plans are developed each year
considering pricing factors that impact
industry supply and demand. In addition,
extensive global marketing and consumer
demand drivers get monitored and
considered along with global food
consumption trends.
Cyber security
The Company has numerous IT
infrastructure, systems and processes to
support the operation and growth of the
business. Should such infrastructure,
systems and processes fail or become
compromised then there is a risk that
sensitive or personally identifiable data is
accessed or stolen, data is lost, or data
and systems are unable to be accessed
which may result in reputational damage,
legal penalties and ongoing disruptions to
operations.
The Company implements various
strategies to mitigate cyber risk across
its applications, networks and websites.
The Company focusses on employee
education, network defence, enterprise-
wide testing, disaster recovery and
segregation of sensitive data. These
strategies are internally and externally
periodically reviewed, audited and
updated.
Directors’ Report
(continued)
Select Harvests Annual Report 2024
30
Risk
Description
Mitigation
Adequate water supply and cost
Inadequate supply of good quality water,
whether due to drought or otherwise, and
fluctuating temporary and permanent
water prices could impact the Company’s
profitability and operations. Additionally,
given increased demand and decreased
supply together with Government water
buy back strategies the cost of water could
continue to increase and affect the
Company’s profitability.
The Company has a balance of owned,
leased and spot market temporary water.
When commercially viable, the Company
also invests in permanent water rights in
order to manage price and deliverability.
The Company has developed a pricing
and supply financial model to guide
purchase timings and price.
The Company further proactively
forecasts water usage and availability and
maintains a focus on efficient water usage
in growing its crops through continuous
investment in water efficient technology.
Following a detailed strategic review the
Company, when practical will increase
the percentage of water it owns. The
Company is currently rebalancing its
water portfolio to more closely align the
locations of water and farm ownership.
The Company is aware of the potential
impact of government water buybacks
and is continuously monitoring this so that
it can respond to any material changes.
Major Facility catastrophe
A major catastrophic event at the
Company’s Carina West Processing
facility including fire/flood or critical
equipment failure, resulting in an
extended shut down or loss in product
could have a significant impact on the
Company’s financial performance.
To minimise the impacts from a major
disruption event, the Company has a
Crisis Management Plan which includes a
strategy to be followed in the event of a
crisis, as well as establishing roles,
responsibilities and key activities to be
undertaken to effectively manage any
type of crisis at the Carina West
Processing facility.
The Company also reviews and
continually assesses the adequacy of its
insurance cover in place and as part of
this process the Company is improving its
risk profile over time.
Security of Bee Supply
The inability of the Company to secure an
adequate quality and quantity of bees for
pollination of its almond trees could have
a significant impact on its crop yield and
financial performance.
The Company continuously engages with
the bee keeping industry, the Almond
Board and state governments in order to
monitor and assess potential risks of
supply of bees (i.e. bee disease, etc.).
The Company also completes post season
analysis of beekeeper performance to
ensure adequate bee supply numbers are
contracted for future crop seasons. During
season monitoring of movement of bee
keepers within the industry is also carried
out in order to ensure adequate supply
volumes in future seasons.
Business Risks (continued)
Directors’ Report
(continued)
Select Harvests Annual Report 2024
31
Risk
Description
Mitigation
Climate and Environment
Changes in climate (both in Australia and
in the United States) present an operating
risk to the Company’s business in the
form of weather volatility, water security
and crop quality which could have an
impact on the Company’s production
assets (farm orchards) and financial
performance.
Risks associated with transitioning to a
low-carbon- economy, such as
government actions to reduce the impacts
of climate change, may also impact the
Company’s operational costs and
performance.
The Company’s operations are subject to
various environmental laws and
regulations, and a range of licences and
permits are required for its farming and
processing operations. If the Company
becomes responsible for any breach of
any of its licences or permits, the
Company may incur substantial costs, its
operations may be interrupted, and it may
suffer reputational damage.
The Company’s diversification of assets
across Australia is a key strategy in
minimising the impact of physical risk of
climate change. This is in addition to
continually improving water security and
management practices, investing in new
water and farming technologies,
prioritising the use of integrated pest
management and adopting the use of
renewable energy sources.
The Company’s Board Sustainability
Committee oversees strategies on climate
with one of its areas of focus being the
Company’s adaptation to the impacts of
climate change. The Company utilises the
TCFD framework as a tool to aid the
analysis of the impacts of climate change
and is continually developing and
implementing strategies to manage the
risk.
The Company continues to assess
additional ways to reduce its
environmental impact, including measures
across its business to improve water
usage efficiency and chemical usage.
The Company also reviews its operations
to identify ways in which it can minimise
the environmental impact of its
operations.
Disruption Event
Broader disruption events such as a
global Pandemic, global conflicts in key
strategic regions, geopolitical changes or
general prolonged supply chain
disruptions could have the potential to
have a significant impact on the
Company’s operations.
The Company maintains a diverse
supplier base both domestically and
internationally. Additionally, sales and
distribution channels are varied to ensure
there is not a reliance on any one
customer.
The Company is in the process of further
refining its approach to risk management
and mitigation using external experts.
This is planned to be completed in the
2025 financial year.
Business Risks (continued)
Directors’ Report
(continued)
Select Harvests Annual Report 2024
32
Directors’ Report
(continued)
Outlook FY2025
The Company will continue with its strategy of improving crop yield through horticultural excellence through increased fertiliser inputs,
water application and bee drops. Whilst the Company expects to see horticultural gains from 2026, the impact will be influenced by
climatic factors. The Bureau of Meteorology continues its forecast for Australia to be in a “neutral” position over the forecast period to
February 2025. The 2025 growing program commenced in May 2024, continues and is on track with minimal weather-related
disruptions to date except for some minor frost damage outside of the frost fans areas across some of the Company’s orchard portfolio.
With the Commonwealth Government’s water buyback tender process and the forecast “neutral” weather position over the remainder
of the Company’s growing period, water costs for the 2025 crop are expected to increase slightly versus the 2024 year. Water allocations
remain favorable, dam storage levels are high but temporary market water pricing is expected to increase with drier and hotter
conditions being experienced than the previous three years. The exposure to water price variability continues to be managed through
the Company’s diversified water policy of owning, leasing and acquiring water on the annual allocation market. The Company’s water
rebalancing strategy adjusted for 2024/2025 water usage, maintains the trajectory towards increasing the total percentage of
entitlement coverage across the Company’s water portfolio. Following the execution of the proposed changes, Select Harvests
permanent entitlement weighting will increase from 16.34% to 18.12%.
The 2025 total cost of production (growing, harvesting and processing) is forecast to slightly increase mainly due to the strategic
investment in fertiliser, water and bees to improve almond yields, and increased farm leasing costs. These cost increases will be partly
offset by cost savings due to labour efficiencies, increased consolidation of repair and maintenance activities across the business and
lower processing costs due to increased processing tonnages achieved through the Company’s cost initiatives. The Company is
directionally trying to keep its costs as flat as possible.
We are forecasting almond prices to increase in FY2025. Total US acreage is declining, the US Objective Estimate was released in July
2024 at 2.8 billion pounds, and the industry is expecting the actual volume to be lower. In addition to this, the prior season carry-over has
been fully contracted leading to less stock in the market. This, coinciding with strong Global demand has seen market pricing continue
to strengthen over recent months. Select Harvests expects to capitalise on higher priced inshell and quality kernel products.
The Select Harvests’ team continues to focus on improving efficiency, managing costs and optimising the 2025 crop volume and quality.
In the second half of FY2024 the Company commenced the installation of a pre-cleaner and drier. This will allow for the processing of
almonds efficiently and deliver an improved quality profile during wetter than average seasons.
The Company’s cashflow forecasts indicate it will operate within its current lending limits and meet its required covenant measures for
at least the next 12 months.
The Company is in the process of delivering on its strategy with execution managed through its Project Management Office.
The immediate focus of the Company is on:
• Delivering our 2025 crop horticultural program
• Increasing external 3rd party almond supply
• Increased capacity of the Company’s Carina West processing facility by a further 25%, which is to be funded by $5 million of the
capital raise as previously disclosed. This increase in processing capacity will be operational in the FY2026 financial year onwards.
• Continuing our drive for operational efficiency
• Ensuring our sales are maximizing achievable price and increasing cash velocity
The global outlook for the almond industry and ‘better for you’ plant-based foods remain 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 demand growth globally for almonds.
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
Equity Raise Completion
On 20 September 2024 the Company announced to the ASX an equity raising of $80 million less estimated transaction costs of $3.4
million at an offer price of $3.80 per share which included institutional and retail investors. The equity raising for institutional investors
offer was fully settled within the 2024 financial statements and the retail offer in the 2025 financial statements subsequent to year end.
The institutional offer was successfully completed on 27 September 2024 and raised $61.7 million less transaction costs of $2.8 million.
The retail entitlement offer was competed on 15 October 2024 and raised $18.3 million less transaction costs of $0.9 million.
The proceeds from the equity raising have been applied towards the repayment of debt and provision of facility headroom ($71.3 million),
capital investment to increase processing capacity ($5.0 million) and associated transaction costs ($3.7 million).
The combined share raising was successfully completed by 15 October with a total of 21,048,975 million shares issued.
For further details, please refer to the relevant announcements made to the ASX.
Select Harvests Annual Report 2024
33
Sale of water rights
In the second half of the year the Company commenced the rebalancing of its water portfolio by selling and purchasing permanent
water rights so to align the water rights more closely to its farm locations. At the end of the year there were signed contracts for water
sales of $11.7 million (representing 4,566ML of water) that were settled after year-end, which will deliver a one-off gain of $5.8 million in
the 2025 financial statements.
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. Where Non IFRS financial information has been used it better reflects the Company’s underlying
performance.
Non IFRS financial information includes underlying EBIT, underlying result, underlying NPAT, underlying earnings per share, net interest
expense and adjustments to reconcile from reported results to underlying results.
Dividends
Cents
2024
$’000
Final fully franked dividend declared for 30 September 2024
x
on ordinary shares
Nil
Nil
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 indemnified include the Company secretary, all directors, and executive officers participating in the management of the
Company and its controlled entities.
Committee membership
During or since the end of the financial year, the Company had the following committees that comprise members of the Board of
Directors as follows:
Audit and Risk Committee
Remuneration & Nomination Committee
Sustainability Committee
Michelle Somerville (Chair)
Guy Kingwill (Chair)
Margaret Zabel (Chair)
Guy Kingwill
Travis Dillon
Michelle Somerville
Paul van Heerwaarden
Margaret Zabel
Paul van Heerwaarden
Directors’ Report
(continued)
Directors’ meetings
The number of meetings of directors (including meetings of committees of directors) held during the financial year and the number of
meetings attended by each director was as follows:
Directors’ Meetings
Meetings of Committees
Audit & Risk
Sustainability
Remuneration &
Nominations
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Travis Dillon
11
11
2
2
1
1
3
3
David Surveyor
11
11
2
2
1
1
3
3
Guy Kingwill
11
11
2
2
–
–
3
3
Margaret Zabel
11
11
–
–
1
1
3
3
Michelle Somerville
11
11
2
2
1
1
-
-
Paul van Heerwaarden
10
10
2
2
–
–
2
2
Reflects the number of meetings held during the time the Director held office, or was a member of the Committee during the year.
Directors’ interests in contracts
Directors held no interests in contracts during the year ending 30 September 2024.
Non-audit services
Non-audit services provided by the external auditor are approved by the Audit and Risk Committee. During the period PwC delivered
other audit services worth $60,000 in relation to the capital raise transaction completed on 15 October 2024. Amounts paid to PwC are
included in Note 6.4 to the financial report.
Rounding
The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable)
under the option available to the Company under ASIC Corporations (Rounding in Financial/ Directors’ Reports) Instrument 2016/191.
The Company is an entity to which the Class Order applies.
Proceedings on behalf of the Company
There are no material legal proceedings in place on behalf of the Company as at the date of this report.
Corporate Governance
In recognising the need for the highest standards of corporate behaviour and accountability, the directors of Select Harvests Limited
support and have adhered to the ASX principles of corporate governance. The Company has previously adopted Listing Rule 4.10.3
which allows companies to publish their corporate governance statement on their website rather than in their annual report. A copy of
the statement along with any related disclosures is available at: http://www.selectharvests.com.au/governance.
This report is made in accordance with a resolution of the Directors.
T Dillon
Chairman
Melbourne, 27 November 2024
Select Harvests Annual Report 2024
34
Directors’ Report
(continued)
Select Harvests Annual Report 2024
35
Remuneration
Report
Remuneration
governance
39
Remuneration framework
40
FY2024 executive
remuneration outcomes
44
Total executive
remuneration and
benefits
49
Non-executive director
remuneration
50
Executive key
management personnel
shareholdings
52
Select Harvests Annual Report 2024
36
The following table identifies the non-executive directors and executives who were the company’s KMP in FY2024.
Key management personnel
Position
Term as KMP
Independent non-executive directors
Travis Dillon
Non-Executive Director and
Chair of Board of Directors
Full year
Guy Kingwill
Non-Executive Director
Full year
Michelle Somerville
Non-Executive Director
Full year
Margaret Zabel
Non-Executive Director
Full year
Paul van Heerwaarden
Non-Executive Director
Effective 1 November 2023
Executive KMP
David Surveyor
Managing Director and
Chief Executive Officer
Full year
Bradley Crump
Chief Financial Officer
Resigned 31 July 2024
Ben Brown
General Manager, Horticulture
Full year
Daniel Wilson
General Manager, Almond Operations
Full year
Tim Bradfield
Interim Chief Financial Officer
Effective 9 July 2024
Remuneration Report for FY2024
The directors present the Select Harvests Remuneration Report for key management personnel (KMP) for the financial year ended
30 September 2024 (FY2024). This report details key elements of our FY2024 remuneration policy and framework, the remuneration
awarded, and the alignment between executive remuneration practices and performance outcomes.
This report is part of the Directors’ Report and outlines the company’s remuneration arrangements for FY2024, prepared in accordance
with Section 300A of the Corporations Act 2001 (Cth). The information has been audited as required by Section 308(3C) of the
Corporations Act.
Who is covered by this report
This report outlines the FY2024 remuneration arrangements in place for the company’s KMP, which comprises all non-executive
directors and executives who have authority and responsibility for planning, directing and controlling Select Harvests’ activities.
Remuneration Report
(continued)
Select Harvests Annual Report 2024
37
As we look ahead, we remain focused on
refining our culture and driving value for our
shareholders while capitalising on the positive
trends in the almond market. These initiatives
reflect our commitment to delivering sustainable
growth and improving operational efficiency,
in order to best position Select Harvests for
future success.
Culture
We are currently growing and developing our
culture, underpinned by our redefined values.
These values are a cornerstone of our business
turnaround strategy and business plan. In
FY2024, we successfully completed an
organisational redesign within the horticulture
sector that directly supports our strategic goals
and enhances operational efficiency. To better
understand and measure our workplace culture,
we engaged Insync to run an engagement and
alignment survey. The results were 64%
alignment (placing us in the top quartile) and
72% engagement (falling within the 2nd and
3rd quartiles). We are now building on these
insights with an action plan and focus groups.
This is a key step in aligning our culture with
our strategic objectives and desired behaviours,
driving continuous improvement and fostering
a high-performance environment across the
organisation.
Talent attraction and development
In FY2024, we successfully enhanced our
executive capability through strategic
recruitment to secure talent that aligns with
our long-term goals. We have refined our
recruitment processes to ensure we attract
people with the capabilities we require and
introduced initiatives to strengthen our
leadership pipeline. We have also engaged
external consultants to provide coaching that
supports our desired culture and reinforces
our commitment to safety behaviours. These
efforts address immediate needs and also
position us for sustained success.
We experienced a transition within our executive
team with the departure of Chief Financial
Officer (CFO) Bradley Crump, effective 31 July
2024. We are grateful for his contribution and
wish him all the best in his future endeavours.
To ensure continuity during this transition, we
appointed Tim Bradfield as interim CFO. Tim
brings a wealth of experience to the role and
will oversee the finance function until we
Dear shareholders,
On behalf of the Remuneration and Nomination
Committee (RNC), I am pleased to present the
Remuneration Report for FY2024. This report
provides a comprehensive overview of our
executive remuneration framework and its
alignment with our business strategy.
FY2024 performance
In FY2024, Select Harvests achieved a
significant turnaround, recording an operating
profit of $1.5 million. This marks a significant
improvement on the $114 million loss incurred
the previous financial year. This positive
momentum reflects our ongoing commitment
to strengthening our business and enhancing
shareholder value.
Our strategy focuses on increasing almond
volume, improving processing scale and
efficiency, maximising crop value, and pursuing
growth opportunities. We have made substantial
progress in this regard, including a fivefold
increase in external almond supply and
expanding processing capacity from 30,000
to 40,000 tonnes. Additionally, sales grew
impressively from 27,700 to 36,600 tonnes.
Our project management office has been
instrumental in delivering gains in profit and
cash flow, positioning us for sustained success.
To further support the business, we undertook
an $80 million capital raise, aimed at bolstering
our balance sheet and funding the expansion
of our Carina West processing facility (CWPF).
This strategic investment is designed to
enhance midstream profitability and reduce our
own agriculture risk within the business model.
In FY2024, the Managing Director and Chief
Executive Officer (CEO) achieved 71.7% of the
stretch target for the short-term incentive (STI).
While the formal performance metrics reflected
strong outcomes, the Board has taken into
account the challenges associated with the
logistics strategy. As a result, the total STI
payment has been reduced by 30%, leading to
an adjusted award of 50.2% of the stretch target.
Furthermore, no increase in non-executive
director remuneration was requested or
implemented this year. This decision
underscores our commitment to a balanced
approach to remuneration, taking into account
alignment with shareholder interests and the
long-term sustainability of Select Harvests.
Message from the Chair of the Remuneration and
Nomination Committee
Guy Kingwill
Chair of Remuneration
Nomination Committee
Remuneration Report
(continued)
Conclusion
At the 2023 annual general meeting (AGM),
88.83% of shareholders voted in favour of the
FY2023 Remuneration Report, reflecting strong
support for our approach. This Remuneration
Report for FY2024 highlights our commitment
to building a strong organisational culture and
aligning our pay practices with our strategic
goals. This year, we made significant strides
in improving operational efficiency, boosting
profitability and advancing our diversity and
inclusion efforts - all aimed at creating value
for our shareholders.
Looking ahead, we will continue to refine our
culture, invest in talent development and ensure
that our executive pay reflects performance
outcomes. The progress that we have made
to date positions Select Harvests well for future
growth. We are confident that the strategies
we are putting in place today will drive ongoing
success.
Thank you for your continued support as we
navigate this transformative time for our
company. Together, we are committed to
delivering value and excellence in all that
we do.
Guy Kingwill
Chair of the Remuneration
Nomination Committee
Select Harvests Annual Report 2024
38
appoint a permanent replacement for Bradley.
This approach allows us to maintain operational
stability and continue to focus on our strategic
objectives.
We are also pleased to welcome Sumana Islam
as the General Manager of Strategy and
Corporate Development. Her expertise will be
instrumental as we pursue our corporate goals
and enhance shareholder value.
Diversity, equity and inclusion
Our commitment to diversity, equity and
inclusion remains central to our operations.
In recent months, we ran comprehensive
discrimination, harassment and bullying
prevention training to further strengthen the
inclusivity of our workplace. We are also pleased
to report significant progress in gender pay
equity, with the gap at the senior management
level reduced to 2.73% and a base salary
difference of less than 1% among general
management staff.
Remuneration framework
Select Harvests completed a review of its
executive remuneration framework in 2024
to ensure that our compensation remains
competitive and aligned with our strategic goals.
This process involved benchmarking against
ASX-listed companies in agriculture and related
sectors, aligned by financial metrics and
relevance.
The review showed that total fixed remuneration
(TFR) is appropriately positioned within the
market.
Remuneration Report
(continued)
1. Remuneration governance
The executive remuneration framework is managed by the RNC on behalf of the board of Select Harvests, chaired by Travis Dillon. The
board established the RNC to develop a fair and responsible company-wide remuneration policy that promotes the creation of value in a
sustainable manner.
1.1 Remuneration and Nomination Committee
The RNC oversees the remuneration and governance framework to ensure practices align with strategic objectives, remuneration
principles and shareholder expectations. The committee consists of four non-executive directors and is chaired by Guy Kingwill.
Meetings are also attended by the Managing Director and CEO; the General Manager for People, Safety and Sustainability; and the
CFO and Company Secretary.
The objectives of the committee are:
x
to make recommendations to the board on setting and evaluating key performance areas for directors and executives
x
to review and make recommendations in relation to board composition, competencies and diversity
x
to develop and review board succession plans and director induction programs
x
to ensure a robust and effective process for evaluating the performance of the board, its committees and individual directors
x
to review and make recommendations in relation to board appointments, re-elections and terminations.
For further details of the RNC’s composition and responsibilities, including a copy of its charter, please refer to our website’s Corporate
Governance section.
1.2 Remuneration benchmarking
Executive remuneration is set according to each executive’s knowledge, experience and skills, the responsibilities and complexities
associated with their role, and peer benchmarks. The peer group was selected from ASX-listed companies in agriculture and related
sectors, refined based on financial metrics and business relevance to ensure alignment. This peer group is periodically reviewed in
consultation with an independent external remuneration consultant. The RNC conducts a comparative analysis of the executive
compensation within the peer group.
1.3 External and independent advice
In FY2024, the RNC engaged an independent remuneration advisor to provide information about market dynamics, trends and
regulatory changes impacting Select Harvests. No remuneration recommendations as defined in section 9B of the Corporations Act
2001 were obtained in FY2024.
1.4. Executive key management personnel service agreements
Remuneration and other terms of employment for the KMP are formalised in service agreements that detail the TFR and review
processes. Each agreement provides for participation in an STI plan and an LTI plan.
Executive key management personnel
Notice period1
Restraint of trade2
David Surveyor
6 months
12 months
Bradley Crump3
6 months
12 months
Ben Brown
6 months
12 months
Daniel Wilson
6 months
12 months
Tim Bradfield4 (contractor)
1 month
6 months
1 Any termination payment (notice and severance) will be subject to compliance with all relevant legislation and will not exceed 12 months of fixed remuneration.
2 The executive is restricted from engaging in similar roles with a competitor or similar company in each Australian state or territory where they conducted business on behalf
of the company during the last 12 months of their Select Harvests employment.
3 Resigned 31 July 2024.
4 Commenced 9 July 2024.
1.5 Related party transactions
There were no related party transactions in FY2024. In accordance with the Corporations Act, we confirm that no loans were made,
guaranteed, or secured, directly or indirectly, to KMPs or their related parties, fulfilling all disclosure requirements.
Select Harvests Annual Report 2024
39
2. Remuneration framework
Our objective is to deliver sustainable returns as a leader in plant-based foods that are ‘better for you and better for the planet’.
To achieve this, we design our remuneration practices to align to management and shareholder interests, while also reflecting our core
values: zero harm, trust and respect, be one team, sustainability, performance, and innovation. We encourage a diverse workforce by
delivering a competitive advantage in attracting, motivating and retaining talent. Our remuneration structure is simple and easy to
understand. It rewards performance and fosters a culture that consistently delivers shareholder value.
Figure 1. Strategic imperatives
Figure 2. Remuneration principles
Deliver
substantially
greater almond
volume
Provide
leadership
in processing
scale and
efficiency
Maximise
returns
from the crop
Innovate
to drive
step-out growth
OUR FOUR STRATEGIC PILLARS
Attract, motivate
and retain
competent
executives
Demonstrate
balanced
compensation
structure
Reward
differentiation
to drive
performance
values and
behaviours
Create
shareholder
value through
equity incentives
Remuneration Report
(continued)
Select Harvests Annual Report 2024
40
2.1 Framework overview
The executive remuneration framework aligns our strategic priorities with short-term and long-term business objectives through a blend
of fixed remuneration and performance-based STIs and LTIs. These are linked to key performance areas that impact our financial results
and company goals. The following table outlines the structure of these remuneration components and how they apply to our executive
KMP to align with our overall strategy.
Component
Alignment to FY24 performance
Alignment to strategy
Total aggregate reward (TAR)
Comprising TFR, STI and LTI
x
Positioned between the 50th and 75th
percentile of the relevant benchmark
comparisons
Designed to equitably reward, attract,
inspire and retain top talent, contributing to
the achievement of our strategic goals
TFR
Base salary and statutory superannuation
x
Assessed in each executive’s total
remuneration package for fairness and
competitiveness
x
Reviewed annually, with remuneration
changes effective from 1 October
Based on each executive’s expertise,
experience, skills and responsibilities to
ensure competitive remuneration aligned
with industry benchmarks
STI plan
At-risk component set as a percentage of
TFR granted in cash
x
Performance targets:
-
financial objectives
-
operational objectives
-
awarded as 100% cash
Performance incentives are aimed at
achieving targets approved by the board,
tailored to both market conditions and
shareholder expectations
LTI plan
At-risk component is set as a percentage
of TFR and is granted in the form of
performance rights over a three-year
period
x
Performance targets (set annually):
-
absolute total shareholder returns
(ATSR) (50%)
-
return on capital employed (ROCE)
(50%)
-
Awarded as 100% performance
rights at the end of the performance
period, subject to vesting conditions
Executive rewards are aligned with
enhancement of shareholder value through
the provision of suitable equity incentives.
2.2 Executive remuneration
Select Harvests has completed a comprehensive review of its executive remuneration framework to ensure competitive and equitable
compensation aligned with the company’s strategic objectives. This review included a job evaluation exercise for executives and
remuneration benchmarking for four key roles, providing valuable insights into market competitiveness.
The benchmarking process used executive remuneration data from a group of ASX-listed companies in agriculture and related sectors,
refined by financial metrics and business relevance, ensuring alignment with Select Harvests' aspirations. The review indicated that TFR
is appropriately positioned within the market. Performance conditions continue to be based on financial metrics to align with
shareholder interests.
The table below provides a year-on-year comparison of TFR and at-risk components (STI and LTI) for KMP in FY2023 and FY2024.
This graphic demonstrates the balance between fixed remuneration and performance-based incentives, with STI and LTI linked to the
achievement of specific performance outcomes. The figures reflect the total remuneration for each year, with the 3.0%-4.0% increase
in fixed remuneration applied for FY2024 in line with the company's remuneration review process.
The table provides insight into the structure of executive pay, illustrating how at-risk components are designed to align the interests
of KMP with those of shareholders, incentivising performance that drives long-term value. The increase in fixed remuneration for FY2024
ensures that the remuneration structure remains competitive and aligned with market conditions.
Name
Year
TFR
STI
LTI
TAR
David Surveyor
Managing Director/CEO
FY2023
$1,055,250
$844,200
$1,688,400
$3,587,850
FY2024
$1,097,644
$878,115
$1,756,230
$3,731,990
Ben Brown
GM Horticulture
FY2023
$368,985
$184,493
$184,493
$763,970
FY2024
$381,164
$190,582
$190,582
$762,328
Daniel Wilson
GM Almond Processing
FY2023
$314,563
$157,282
$157,282
$629,126
FY2024
$345,713
$172,857
$172,857
$691,426
Remuneration Report
(continued)
Fixed pay
At risk component at stretch
Select Harvests Annual Report 2024
41
Remuneration Report
(continued)
2.3 FY2024 performance metrics
The STI and LTI scorecard ensures alignment between the group’s strategic goals and executive KMP remuneration.
Short-term incentive
Metric
Target
Weighting
Financial
(60% Managing
Director)
(50% KMP)
Net profit after tax
(NPAT)
Achieve a range of ($8 million) to $10 million
40%
Managing
Director &
KMP
Project Management
Office (PMO)
Achieve a profit contribution range of $20.4 to $30.6 million
before tax
20%
Managing
Director
10% KMP
Non-financial
(40% Managing
Director)
(50% KMP)
Strategic objectives
Make decisions regarding processing capability, evaluate the
H2E strategy, enhance profitability reporting for business units,
implement the horticulture and sales strategies, and foster a
culture of innovation and collaboration to drive performance
20% MD
Total recordable injury
frequency rate (TRIFR)
(safety)
Threshold: 16.8
Target: 14
Stretch: At or below target
Machine guarding review and implementation
10% Managing
Director &
KMP
Operational
Yield performance reported at farm level
Manufacturing performance and increase in tonnage
10% Managing
Director
40% KMP
Long-term incentive
Metric
Target
Weighting
ATSR
Compound average growth rate over a three-year period
50%
ROCE
ROCE over a three-year period
50%
2.4 Short-term incentives
The RNC assesses performance against the STI scorecard based on the company’s annual audited results, financial statements and
other data and makes a recommendation to the board.
The STI is determined for each employee based on their individual scorecard and the company’s achievement of its targets. It is not
restricted by a predefined STI pool.
The board has the discretion to adjust or cancel awards if it finds that they are not appropriate in the measurement period.
Select Harvests Annual Report 2024
42
Remuneration Report
(continued)
2.5 Long-term incentives
Vesting of performance rights is based on the achievement of specified hurdles in the three previous years.
Absolute total shareholder return (50%)
ATSR is calculated as the compound annual growth rate (CAGR) based on the 6-month volume weighted average price (VWAP)
leading up to the end of the financial year. This serves as a benchmark for assessing performance. ATSR reflects the growth in
shareholder value by comparing the VWAP at the end of the period to prior VWAP values, illustrating the overall return generated for
shareholders over the specified timeframe.
ATSR compound average growth rate (CAGR) over the performance measurement. The performance targets and vesting proportions
over the performance period are as follows:
Performance targets
Vesting proportions
• below 5%
• threshold of 5%
• 5% to 10%
• target of 10%
• 10% to 20%
• 20% and above
nil
25%
pro rata vesting
50%
pro rata vesting
100%
Return on capital employed (50%)
The ROCE performance targets and vesting proportions average over the performance period are as follows:
Performance targets
Vesting proportions
• below 5%
• threshold of 5%
• 5% to 7.5%
• target of 7.5%
• 7.5% to 10%
• 10% and above
nil
25%
pro rata vesting
50%
pro rata vesting
100%
2.6 Forfeiture and termination
An executive KMP who resigns, is dismissed for cause or demonstrates significant underperformance prior to payment of the STI is not
eligible for any STI award. Similarly, any unvested LTI award will be forfeited.
An executive KMP is not eligible for STI or LTI if they resign prior to 30 September in the measurement period year. On cessation of
employment due to redundancy or retirement from permanent full-time employment with the consent of the board, an executive KMP is
entitled to a pro-rata STI plan award based on the proportion of the measurement period served as an employee. The board determines
entitlement to awards, if any, at the end of the measurement period, unless otherwise determined.
Select Harvests Annual Report 2024
43
3. FY2024 executive remuneration outcomes
3.1 Statutory key performance indicators of the group over the last five years
We strive to align our executive remuneration with our strategic goals and the creation of shareholder value. The chart below presents
the company’s financial performance over the past five years, in line with best practice in corporate governance. These measures may
differ from those used to determine the variable remuneration awarded to KMP, so statutory performance measures may not directly
correlate with the variable compensation awarded.
Remuneration Report
(continued)
Net profit/(loss) after tax
($’000)
25,001
15,116
4,759
(114,727)
1,500
FY20 FY21 FY22 FY23 FY24
Earnings per share
(CPS)
26.01
12.71
3.94
1.24
(94.80)
FY20 FY21 FY22 FY23 FY24
Share price at year end
($)
5.57
8.29
5.26
4.01
3.68
FY20 FY21 FY22 FY23 FY24
Return on capital employed
(%)
5.3
2.0
1.9
1.1
(18.6)
FY20 FY21 FY22 FY23 FY24
Dividends paid per share
(CPS)
13
8
2
–
–
FY20 FY21 FY22 FY23 FY24
Market capitalisation
($'000)
538,268
636,201
485,445
505,267
996,660
FY20 FY21 FY22 FY23 FY24
Total shareholder return
(%)
(26.0)
50.0
(36.0)
(8.5)
(24.0)
FY20 FY21 FY22 FY23 FY24
Figure 3. Financial performance over the past five years
Select Harvests Annual Report 2024
44
3.2 Fixed Remuneration
The fixed remuneration of executive KMP consists of base salary and statutory superannuation contributions.
Name
Duration of service agreement
Fixed remuneration as at end of FY20241
David Surveyor
No fixed duration
$1,097,644
Ben Brown
No fixed duration
$381,164
Daniel Wilson
No fixed duration
$345,713
Bradley Crump2
No fixed duration
$386,932
Tim Bradfield3 (contractor)
Interim arrangement
$152,460
1 Fixed remuneration includes base salary plus superannuation at 11.5%.
2 Included in KMP to 31 July 2024.
3 Included in KMP from 9 July 2024. Only entitled to the fixed remuneration and not entitled to any variable remuneration which follows below.
3.3 Short-term incentive outcomes
The group’s performance for the fiscal year was influenced by factors such as NPAT, PMO achievements, and strategic objectives, which
were compared against defined thresholds and targets. Safety performance, as well as improvements in operational metrics like yield
reporting and manufacturing, also played a role in determining the incentives for the Managing Director and KMP. The table below
outlines how these measures impacted remuneration.
Short-term incentive (STI)
Metric
Target
Weighting
Performance
Achievement
of target
Financial
(Managing Director
60%)
(KMP 50%)
NPAT
PMO
Achieve a range of ($8 million) to
$10 million
40%
$1.5 million
52.78%
A profit range of $20.4 to
$30.6 million before tax
20% Managing
Director
10% KMP
$32.1 million
100%
Non- financial
(Managing Director
40%)
(KMP 50%)
Strategic
objectives
Make decisions regarding
processing capability, evaluate the
H2E strategy, enhance profitability
reporting for business units,
implement the horticulture and
sales strategies, and foster a
culture of innovation and
collaboration to drive performance.
20% Managing
Director
Completed
83.33%
TRIFR (safety)
Threshold: 16.8
Target: 14
Stretch: At or below target
Machine guarding review and
implementation
10%
7.1 TRIFR and
machine
guarding review
implemented
and in progress
100%
Operational
Yield performance reported at
farm level
Manufacturing performance and
increase in tonnage
10% Managing
Director
40% KMP
Not achieved
9.57 tonnes per
hour
0%
78.50%
In FY2024, the Managing Director achieved 71.7% of the stretch target for the STI plan.
While the formal performance metrics reflected strong outcomes, the board has taken into account the challenges associated with the
logistics strategy. As a result, the total STI payment has been reduced by 30%, leading to an adjusted award of 50.2% of the stretch
target. This decision underscores our commitment to a balanced approach to remuneration, aligning with shareholder interests and the
long-term sustainability of Select Harvests.
Remuneration Report
(continued)
Select Harvests Annual Report 2024
45
STI outcomes
FY2024
FY2023
FY2022
FY2021
FY2020
STI (% of stretch)
52.4
36.0
20.2
32.0
32.4
Awards granted and forfeited in FY2024
The table below shows how much STI each executive KMP was awarded as cash payment and the percentage forfeited.
Name
Total opportunity $
Awarded %
Forfeited %
David Surveyor
878,116
50.2
49.8
Ben Brown
190,582
46.1
53.9
Daniel Wilson
172,856
60.8
39.2
3.4 Long-term incentive outcomes
The table below shows the value of rights each executive KMP was granted in FY2024 as part of their total remuneration. These rights
are contingent upon achieving specified performance targets, ensuring that the granted value aligns with the company’s overall
performance and strategic objectives.
2024
Total granted $
David Surveyor
1,747,494
Ben Brown
190,582
Daniel Wilson
172,856
Executive KMP receive an annual grant of rights to a dollar value equivalent to 160% for the Managing Director and 50% for other KMP
of their TFR, with the number of rights based on the 10-day VWAP period up to the AGM each year. For FY2024, the VWAP used for
calculating the number of rights was $4.01. The rights are exercisable into shares three years after grant and achievement of the price
performance hurdle and provided the executive remains employed by the company at the vesting date, unless otherwise determined by
the board.
Performance rights granted, vested and exercised
The following table shows the performance rights granted to the Managing Director and other KMP in FY2024.
Number of performance rights granted
Opening balance
1 October 2023
Granted during
the year
Vested during the
year
Forfeited during the
year
Closing balance
30 September 2024
Managing
Director
David Surveyor
261,191
435,784
Nil
–
696,975
Other KMP
Bradley Crump
113,413
–
Nil
113,413
–
Ben Brown
93,326
47,290
Nil
15,361
125,255
Daniel Wilson
70,016
42,894
Nil
8,066
104,844
Remuneration Report
(continued)
Select Harvests Annual Report 2024
46
Active plan performance rights granted
The following table shows the performance rights granted to executive KMPs under the LTI plans that are relevant to FY2024 and
beyond.
Grant date
Vesting conditions
Performance
period
Participating
KMPs
Performance
achieved
Vested %
Expiry date
31 May 2022
• ATSR
• ROCE
• Strategy implementation
• Continuous service
• Holding lock
1 October 2021
– 30 September
2024
Ben Brown
Daniel Wilson
ATSR (40%)
Target 10% – Not Met
CAGR. ROCE (40%)
Target 10.1% – Not Met
Strategy
Implementation (20%)
Piangil EBIT, Value add
ROCE and
Sustainability Plan
– Not Met
0%
31 October
2024
9 March 2023
• ATSR
• ROCE
• Continuous service
• Holding lock
1 October 2022
– 30 September
2025
Ben Brown
Daniel Wilson
2025 period to be
determined.
N/A
31 October
2025
7 April 2023
• ATSR
• ROCE
• Continuous service
• Holding lock
1 October 2022
– 30 September
2025
David Surveyor
2025 period to be
determined.
N/A
31 October
2025
3 May 2024
• ATSR
• ROCE
• Continuous service
• Holding lock
1 October 2023
– 30 September
2026
David Surveyor
Ben Brown
Daniel Wilson
2026 period to be
determined.
N/A
31 October
2026
The LTI plan provides participating employees with the offer of a parcel of performance rights with a three-year performance period.
The rights vest at the end of the period on achievement of the performance hurdles. Performance rights are granted under the plan at no
cost to participants.
The plan rules protect the at-risk aspect of the instruments granted to executives, meaning they only vest if the performance targets are
met. Participants in the plan are prohibited from entering into any transaction that would remove the at-risk nature of the instruments
before they vest.
Remuneration Report
(continued)
Select Harvests Annual Report 2024
47
Grants of performance rights
The following table details the grants of performance rights to the Managing Director and executive KMPs.
Rights to deferred shares
Name
Year granted
Number
granted
Value
per right
Vested
%
Vested
number
Forfeited
%
Forfeited
number
Financial years
in which rights
may vest
Maximum
value
yet to vest1
David Surveyor
2023
261,191
$2.96
–
–
–
–
30-Sep-26
$91,839
2024
435,784
$2.34
–
–
–
–
30-Sept 27
$450,506
Bradley Crump
2021
18,622
$6.29
–
–
100
18,622
30-Sep-24
–
2022
38,280
$3.91
–
–
100
38,280
30-Sep-25
–
2023
56,511
$2.47
–
–
100
56,511
30-Sep-26
–
Ben Brown
2021
15,361
$6.29
–
–
100
15,361
30-Sep-24
–
2022
31,576
$3.91
–
–
–
–
30-Sep-25
$508
2023
46,389
$2.47
–
–
–
–
30-Sep-26
$8,310
2024
47,290
$2.34
–
–
–
–
30-Sept 27
$48,884
Daniel Wilson
2021
8,066
$6.29
–
–
100
8,066
30-Sep-24
–
2022
23,605
$3.91
–
–
–
–
30-Sep-25
$380
2023
38,345
$2.47
–
–
–
–
30-Sep-26
$6,869
2024
42,894
$2.34
–
–
–
–
30-Sep-27
$44,340
1 Maximum value yet to vest refers to the total potential value of performance rights or options granted to an executive that are not yet vested, contingent upon meeting specific
performance targets or conditions.
Options
No options were granted to executive KMP during the reporting period.
Remuneration Report
(continued)
Select Harvests Annual Report 2024
48
4. Total executive remuneration and benefits
The following table sets out the remuneration received by executive KMP for the year ended 30 September 2024. The share-based
payments shown below are not amounts actually received by executive KMP during the year, as in accordance with accounting
standards, they include accounting values for unvested share awards.
2024 executive
KMP
Short-term employee benefits
Post-
employment
benefits
Long-term benefits
Name
Base salary
$
STI cash
bonus
$
Non-
monetary
benefits
$
Super-
annuation
$
Leave
entitlement6
$
Other
$
Perfor-
mance
rights
granted3
$
Total
$
Proportion of
remuneration
that is
performance
based
%
David Surveyor
1,004,513
440,740
–
28,229
20,977
102,8094
239,148
1,836,416
37.0
Ben Brown
324,953
87,880
13,500
28,219
14,821
–
12,267
481,640
20.8
Daniel Wilson
284,551
105,029
–
28,310
981
–
12,108
430,979
27.2
Bradley Crump1
325,514
Nil
13,234
23,194
(58,755)
–
(54,500)5
248,687
Nil
Tim Bradfield2
152,460
Nil
–
Nil
Nil
–
Nil
152,460
Nil
Total executive
KMP
remuneration
2,091,991
633,649
26,734
107,952
(21,976)
102,809
209,023
3,150,182
26.75
1 Resigned 31 July 2024.
2 Included in KMP from 9 July 2024 under interim CFO contract arrangements. The contractor rate paid encompasses all required on-costs.
3 Performance rights granted in FY2024 that are not yet vested and remain subject to meeting specified performance conditions.
4 For David Surveyor, the amount relates to the accrual of a retention incentive, payable of 25 October 2025, based on his continued employment.
5 Reversal of Bradley Crump expense previously recognised for awards forfeited on cessation.
6 Amounts disclosed reflect long-service leave and annual leave accrued less long-service leave and annual leave taken.
2023 executive
KMP
Short-term employee benefits
Post-
employment
benefits
Long-term benefits
Name
Base salary
$
Cash bonus
$
Non-
monetary
benefits
$
Super-
annuation
$
Leave
entitlement
$
Other
$
Options and
rights1
$
Total
$
Proportion of
remuneration
that is
performance
based
%
David Surveyor
636,937
193,366
2,208
34,298
52,888
62,6402
113,798
1,096,135
28.0
Ben Brown
343,012
46,084
12,730
25,973
23,579
–
36,413
487,791
16.9
Daniel Wilson
289,590
68,233
–
24,973
13,768
–
25,959
422,523
22.3
Bradley Crump
423,486
78,459
–
25,981
53,203
50,0003
44,272
675,401
18.7
Total executive
KMP
remuneration
1,693,025
386,142
14,938
111,225
143,438 112,640
220,442 2,681,850
22.6
1 Performance rights granted in FY2022 and FY2023 that are not yet vested and remain subject to meeting specified performance conditions.
2 For David Surveyor, the amount relates to accrual of retention incentive payable on 25 October 2025 based on his continued employment to this date. The remuneration
reflects a pro rata payment for his commencement on 20 February 2023.
3 On 7 June 2022 Bradley Crump was awarded a cash bonus of $100,000, payable in December 2023, subject to continuous employment.
Notes
It should be noted that Performance rights granted, as referred to in this Remuneration Report, comprise a proportion of rights that 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 for market hurdle rights and Black–Scholes–Merton model
for the non–market hurdle. These models take 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.
Remuneration Report
(continued)
Select Harvests Annual Report 2024
49
5. Non-executive director remuneration
Select Harvests is committed to ensuring that the board is composed of directors who bring a balanced blend of skills, experience,
expertise and diversity. This enables the board to effectively support the company in achieving outcomes aligned with our strategic
priorities. Our corporate governance framework underpins the board’s strategic objectives and its commitment to shareholders and the
broader community.
The size and composition of the board are determined in accordance with Select Harvests constitution and relevant laws and
regulations. The board is composed of six members, including the CEO, chairperson and independent non-executive directors. The
board also has regular access to executives, who attend board meetings, provide presentations, engage in discussions with directors,
and offer insights on their areas of responsibility. The CFO also attends all board meetings.
The employment conditions of non-executive directors are formalised by letters of appointment. Non-executive director KMP
employment conditions are formalised in contracts of employment with no fixed term. These contracts outline terms and conditions, but
do not set fixed annual remuneration increases. Instead, the RNC reviews remuneration levels each year.
5.1 Non-executive director fees
Non-executive drectors receive fees, inclusive of statutory superannuation, but do not receive any performance related remuneration,
nor are they granted options or performance rights on securities. This approach reflects the responsibilities and demands placed on
directors by the company. The board periodically reviews non-executive directors' fees to ensure they remain appropriate and aligned
with market standards.
The board periodically reviews non-executive directors’ fees to ensure they remain appropriate and aligned with market standards,
though no increase in non-executive director remuneration was requested or implemented this year. The company supports and funds
non-executive directors’ professional development through its training budget. While there is no mandatory equity ownership
requirement, directors are encouraged to acquire and hold shares equivalent to the value of their annual fees.
The current aggregate fee limit of $973,750 was approved by shareholders at the AGM on 25 February 2022. In FY2024, the total amount
paid to non-executive directors was $726,678.
The remuneration structure includes a base fee and additional fees for the chair of each committee, reflecting the level of responsibility
involved. The following table shows the current directors’ fees.
Position
FY2024
FY2023
Chair of the board
$253,038
$253,038
Non-executive directors
$109,737
$109,737
Committee chair (Audit and Risk)
$14,633
$14,633
Committee chair (Remuneration and Nomination)
$14,633
$14,633
Committee chair (Sustainability)
$14,633
$14,633
In addition to receiving board and committee fees, non-executive directors are reimbursed for travel and other expenses reasonably
incurred when attending board meetings or conducting Select Harvests business.
Note: The FY2023 remuneration table shows a slight discrepancy in the TFR for non-executive directors in comparison to the reported
fees. This is due to the superannuation increase which was added in FY2023, which has been absorbed into the TFR in FY2024, with no
change to the non-executive director remuneration this year.
Remuneration Report
(continued)
Select Harvests Annual Report 2024
50
5.2 Total non-executive remuneration and benefits
2024 non-executive KMP
Short-term employee benefits
Post-
employment
benefits
Long-term benefits
Equity-
settled
share-based
payments
Name
Base salary
$
STI cash
bonus
$
Non-monetary
benefits
$
Super-
annuation
$
Long service
leave
$
Other
$
Performance
rights
granted
$
Total
$
Travis Dillon
227,707
–
–
25,331
–
–
–
253,038
Guy Kingwill
111,905
–
–
12,449
–
–
–
124,354
Margaret Zabel
111,905
–
–
12,449
–
–
–
124,354
Michelle Somerville
111,905
–
–
12,449
–
–
–
124,354
Paul van
Heerwaarden1
90,500
–
–
10,078
–
–
–
100,578
Total non-executive
remuneration
653,922
–
–
72,756
–
–
–
726,678
1 Joined the board on 1 November 2023.
2023 non-executive KMP
Short-term employee benefits
Post-
employment
benefits
Long-term benefits
Equity-
settled
share-based
payments
Name
Base salary
$
Cash bonus
$
Non-monetary
benefits
$
Super-
annuation
$
Long service
leave
$
Termination
benefits
$
Options
and
rights
$
Total
$
Travis Dillon
227,992
–
–
24,224
–
–
–
252,216
Guy Kingwill
112,045
–
–
11,905
–
–
–
123,950
Margaret Zabel
112,045
–
–
11,905
–
–
–
123,950
Michelle Somerville
87,152
–
–
9,291
–
–
–
96,443
Total non-executive
remuneration
539,234
–
–
57,325
–
–
–
593,559
Remuneration Report
(continued)
Select Harvests Annual Report 2024
51
5.3 Shares held by directors and other key management personnel
This table shows the movement during the year in the number of ordinary company shares each director and other KMP held directly or
indirectly, including through their personal related entities.
Held at
1 October 2023
Received on
exercise of
performance
rights
Other changes
during the year
Held at
30 September
2024
Held at
27 November
2024
Non-executive directors
Travis Dillon
20,100
–
14,925
35,025
63,982
Guy Kingwill
23,511
–
-
23,511
26,066
Margaret Zabel
9,000
–
6,000
15,000
16,630
Michelle Somerville
–
–
6,426
6,426
7,124
Paul van Heerwaarden1
–
–
10,000
10,000
11,086
Managing Director
David Surveyor
–
–
15,500
15,500
17,185
Other KMP
Bradley Crump2
–
–
–
–
–
Ben Brown
29,007
–
–
29,007
29,007
Daniel Wilson
–
–
1,219
1,219
2,519
Tim Bradfield3
–
–
–
–
–
1 Joined the board on 1 November 2023
2 Resigned 31 July 2024
3 Commenced 9 July 2024
Remuneration Report
(continued)
Select Harvests Annual Report 2024
52
Auditor’s Independence Declaration
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.
Auditor’s Independence Declaration
As lead auditor for the audit of Select Harvests Limited for the year ended 30 September 2024, 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
29 November 2024
Select Harvests Annual Report 2024
53
Select Harvests Annual Report 2024
54
2024 Financial
Report
Consolidated Financial Statements
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
1.
Basis of Preparation
1.1
Basis of preparation
1.2
Critical accounting estimates and judgements
2.
Results for the year
2.1
Segment Information
2.2
Revenue from continuing operations
2.3
Other income and expenses
2.4
Income tax expense
2.5
Earnings per share
2.6
Dividends
3.
Assets and Liabilities
3.1
Trade and other receivables
3.2
Inventories
3.3
Biological assets
3.4
Derivative financial instruments
3.5
Property, plant and equipment
3.6
Right-of-use assets
3.7
Intangible assets
3.8
Trade and other payables
3.9
Leases
3.10 Deferred gain on sale
3.11 Deferred tax
3.12 Provisions
4
Capital, Financing and Risk Management
4.1
Contributed equity
4.2
Cash and cash equivalents
4.3
Borrowings
4.4
Financial risk management
5
Group Structure
5.1
Controlled entities
5.2
Parent entity information
5.3
Related party disclosures
6
Other Information
6.1
Contingent liabilities
6.2
Expenditure commitments
6.3
Share based payments
6.4
Auditors’ remuneration
6.5
Subsequent events
Consolidated Entity Disclosure Statement
Directors’ Declaration
Independent Auditor’s Report
2024 Financial
Report
Consolidated Financial Statements
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
1.
Basis of Preparation
1.1
Basis of preparation
1.2
Critical accounting estimates and judgements
2.
Results for the Year
2.1
Segment Information
2.2
Revenue from continuing operations
2.3
Other income and expenses
2.4
Income tax expense
2.5
Earnings per share
2.6
Dividends
3.
Assets and Liabilities
3.1
Trade and other receivables
3.2
Inventories
3.3
Biological assets
3.4
Derivative financial instruments
3.5
Property, plant and equipment
3.6
Right-of-use assets
3.7
Intangibles
3.8
Trade and other payables
3.9
Lease Liabilities
3.10 Deferred gain on sale
3.11 Deferred tax
3.12 Provisions
4
Capital, Financing and Risk Management
4.1
Equity
4.2
Cash and cash equivalents
4.3
Borrowings
4.4
Financial risk management
5
Group Structure
5.1
Controlled entities
5.2
Parent entity information
5.3
Related party disclosures
6
Other Information
6.1
Contingent liabilities
6.2
Expenditure commitments
6.3
Share based payments
6.4
Auditors’ remuneration
6.5
Events Occurring After Balance Date
Consolidated Entity Disclosure Statement
Directors’ Declaration
Independent Auditor’s Report
Select Harvests Annual Report 2024
55
Consolidated
Note
2024
$’000
2023
$’000
Revenue
Total revenue
2.2
337,285
205,987
Other income/(expenses)
Fair value gain/(loss) of biological assets
3.3
27,068
(74,512)
Gain on sale of assets
2.3
420
1,020
Gain on sale of intangible assets
2.3
6,730
–
Insurance claims proceeds
2.3
-
2,148
Gain/(Loss) on foreign currency transactions
408
(3,102)
Interest income
113
16
Total other income/(expenses)
34,739
(74,430)
Expenses
Cost of sales
2.3
(331,024)
(232,427)
Administrative expenses
2.3
(18,157)
(18,364)
Finance costs
(14,982)
(10,212)
Impairment of non-current assets
2.3
(6,586)
(30,080)
Profit/(Loss) Before Income Tax
1,275
(159,526)
Income tax benefit
2.4
225
44,799
Profit/(Loss) Attributable To Members Of Select Harvests Limited
1,500
(114,727)
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss
Changes in fair value of cash flow hedges, net of tax
7,746
7,495
Other comprehensive income/(loss) for the year
7,746
7,495
Total Comprehensive Income/(Loss) Attributable to Members of Select Harvests Limited
9,246
(107,232)
Earnings/(Loss) per share for profit attributable to the ordinary equity holders of
the company:
Basic earnings per share (cents per share)
2.5
1.24
(94.80)
Diluted earnings per share (cents per share)
2.5
1.23
(94.14)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying Notes.
Consolidated Financial Statements
Consolidated Statement of Comprehensive Income
For the financial year ended 30 September 2024
Select Harvests Annual Report 2024
56
Consolidated
Note
2024
$’000
2023
$’000
Current assets
Cash and cash equivalents
4.2
2,870
1,134
Trade and other receivables
3.1
106,342
47,489
Inventories
3.2
124,992
85,317
Biological assets
3.3
73,815
70,557
Tax receivable
–
21
Derivative financial instruments
3.4
7,203
–
Total current assets
315,222
204,518
Non-current assets
Other receivables
2,143
2,076
Deferred tax assets
3.11
3,789
6,424
Property, plant and equipment
3.5
439,276
449,631
Right-of-use assets
3.6
187,954
190,077
Intangible assets
3.7
61,684
60,524
Total non-current assets
694,846
708,732
Total assets
1,010,068
913,250
Current liabilities
Trade and other payables
3.8
122,193
69,674
Borrowings
4.3
20,000
6,322
Lease liabilities
3.9
32,415
27,119
Derivative financial instruments
3.4
60
3,922
Deferred gain on sale
3.10
175
175
Provisions
3.12
3,898
3,515
Total current liabilities
178,741
110,727
Non-current liabilities
Other payables
3.8
–
527
Borrowings
4.3
145,200
185,000
Lease liabilities
3.9
202,904
202,536
Deferred gain on sale
3.10
1,751
1,926
Provisions
3.12
713
1,009
Total non-current liabilities
350,568
390,998
Total liabilities
529,309
501,725
Net assets
480,759
411,525
Equity
Contributed equity
4.1
461,331
401,615
Reserves
4.1
14,099
6,081
Retained profits
5,329
3,829
Total equity
480,759
411,525
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying Notes.
Consolidated Financial Statements
Consolidated Statement of Financial Position
As at 30 September 2024
Select Harvests Annual Report 2024
57
Consolidated
Note
Contributed
Equity
$’000
Reserves
$’000
Retained
Earnings
$’000
Total
$’000
Balance at 1 October 2022
401,164
2,029
117,091
520,284
Loss for the year
–
–
(114,727)
(114,727)
Other comprehensive income
–
7,495
–
7,495
Total comprehensive income for the year
–
7,495
(114,727)
(107,232)
Transactions with equity holders in their
capacity as equity holders:
Transfers to retained earnings
–
(3,884)
3,884
–
Contributions of equity, net of transaction costs and
deferred tax
4.1
451
–
–
451
Dividends paid or provided
2.6
–
–
(2,419)
(2,419)
Employee performance rights
6.3
–
441
–
441
Balance at 30 September 2023
401,615
6,081
3,829
411,525
Profit for the year
–
–
1,500
1,500
Other comprehensive income
–
7,746
–
7,746
Total comprehensive loss for the year
–
7,746
1,500
9,246
Transactions with equity holders in their
capacity as equity holders:
Contributions of equity, net of transaction costs and
deferred tax
4.1
–
–
–
–
Share placement – net of transaction cost
4.1
59,716
–
–
59,716
Dividends paid or provided for
2.6
–
–
–
–
Employee performance rights
6.3
–
272
–
272
Balance at 30 September 2024
461,331
14,099
5,329
480,759
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying Notes.
Consolidated Financial Statements
Consolidated Statement of Changes in Equity
For the financial year ended 30 September 2024
Select Harvests Annual Report 2024
58
Consolidated
Note
2024
$'000
2023
$’000
Cash flows from operating activities
Receipts from customers
285,600
212,696
Payments to suppliers and employees
(249,658)
(200,609)
35,942
12,087
Interest received
113
16
Interest paid
(15,095)
(10,228)
Income tax received
389
1,431
Net cash inflow from operating activities
4.2
21,349
3,306
Cash flows from investing activities
Proceeds from Government grants
-
120
Proceeds from sale of property, plant and equipment
653
1,419
Proceeds from sale of water rights
8,863
–
Payment for water rights
(5,862)
–
Payment for property, plant and equipment
(20,006)
(22,986)
Payment for tree development costs
(2,033)
(4,704)
Net cash outflow from investing activities
(18,385)
(26,151)
Cash flows from financing activities
Proceeds from issue of shares, net of transaction costs
58,886
–
Proceeds from borrowings
140,300
137,000
Repayments of borrowings
(160,100)
(85,000)
Principal and interest elements of lease payments
(33,992)
(30,846)
Dividends on ordinary shares, net of Dividend Reinvestment Plan
–
(1,969)
Net cash inflow from financing activities
5,094
19,185
Net increase/(decrease) in cash and cash equivalents
8,058
(3,660)
Cash and cash equivalents at the beginning of the year
(5,188)
(1,528)
Cash and cash equivalents at the end of the year
2,870
(5,188)
Reconciliation to cash at the end of the year:
Cash and cash equivalents
4.2
2,870
1,134
Bank overdrafts
4.2
-
(6,322)
2,870
(5,188)
The above Consolidated Statement of Cash Flows includes both continuing and discontinued operations and should be read in conjunction with the accompanying notes.
Consolidated Financial Statements
Consolidated Statement of Cash Flows
For the financial year ended 30 September 2024
Select Harvests Annual Report 2024
59
Notes to the Consolidated 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 consolidated financial statements are for Select
Harvests Limited and its subsidiaries (‘the Group’ or ‘the Company’).
This general purpose financial report has been prepared in accordance with Australian Accounting Standards, other authoritative
pronouncements of the Australian Accounting Standards Board (‘AASB’) 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
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 29 November 2024. The Company has the power to amend and reissue
the financial report.
Compliance with IFRS
The consolidated financial statements of the Group comply with International Financial Reporting Standards (‘IFRS’) as issued by the
International Accounting Standards Board (‘IASB’).
Historical cost convention
These consolidated 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 Consolidated
Statement of Comprehensive Income and biological assets.
Critical accounting estimates
The preparation of consolidated financial statements in conformity with Australian equivalents to IFRS (‘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 consolidated 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 AASB that are mandatory for
the current reporting year. These do not have a material effect on the Group’s consolidated 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 2024 reporting
period and have not been early adopted by the Group. The Group’s assessment of these new standards and interpretations concluded
that they will not have a material impact on the consolidated financial statements of the Group in future periods. The new standards and
interpretations are as follows:
x
AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current OR (effective years beginning
after 1 January 2024)
x
AASB 2022-6 Amendments to Australian Accounting Standards – Non-Current Liabilities with Covenants (effective years beginning
after 1 January 2024)
x
AASB 2022-5 Amendments to Australian Accounting Standards – Lease liability in a Sale and Leaseback (effective years beginning
after 1 January 2024)
x
AASB 2023-1 Amendments to Australian Accounting Standards – Supplier Finance Arrangements (effective years beginning after 1
January 2024)
x
AASB 2023-5 Amendments to Australian Accounting Standards – Lack of Exchangeability (effective years beginning after 1 January
2025)
x
AASB 2024-2 Amendments to Australian Accounting Standards – Classification and Measurement of Financial Instruments (effective
years beginning after 1 January 2026) (to be assessed)
Notes to the Consolidated Financial Statements
Select Harvests Annual Report 2024
60
1.1 Basis of preparation (continued)
New sustainability reporting standards
In June 2023 the International Sustainability Standards Board (ISSB) published two sustainability reporting standards in response to the
demand for better information about sustainability related matters.
The standards issued were:
x
IFRS S1 “General Requirements for Disclosure of Sustainability-related Financial Information”. IFRS S1 sets out overall requirements
with the objective to require an entity to disclose information about its sustainability-related risks and opportunities that is useful to
the primary users of general purpose financial reports in making decisions relating to providing resources to the entity.
x
IFRS S2 “Climate-related Disclosures”. IFRS S2 sets out the requirements for identifying, measuring and disclosing information about
climate-related risks and opportunities that is useful to primary users of general purpose financial reports in making decisions
relating to providing resources to the entity.
The Australian climate related financial disclosure requirements are still being finalised, however disclosures are expected to be closely
aligned with the ISSB Standards, with Australian equivalents to be set by the AASB considering Australian-specific requirements. Based
on the current proposals, the climate related disclosure requirements are expected to apply as a Group 2 for the financial year ending 30
September 2026.
Whilst there are currently no mandatory climate related reporting requirements, the Group recognises the importance of environmental
and social matters to its shareholders, suppliers and customers and discloses a significant amount of information on these topics in its
Annual Sustainability Report.
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. A list of the Group’s subsidiaries is included in note 5.1.
Intercompany transactions, balances and unrealised gains on transactions between the 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.
Foreign currency translation
(i) Functional and presentation currency
Items included in the consolidated 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 the Group.
(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 Consolidated Statement of
Comprehensive Income, 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 thousand dollar (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 consolidated financial statements of the Group.
Notes to the Consolidated Financial Statements
(continued)
Select Harvests Annual Report 2024
61
1.2 Critical Accounting Estimates and Judgements
The Group 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.
Estimates and judgements are continually evaluated and are based on historical experience and other factors. 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.
1.2.1 Climate related risks
Consideration has been given to climate related risks throughout the consolidated financial statements, and in particular in respect of
the short-term impacts of climate conditions impacting forecast future cash flows and the carrying value of biological assets and the
longer-term climate impacts on the carrying value of non-current assets, including orchard valuations (owned and leased) and water
entitlements.
Climate risks most likely to affect the Group 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 effect of these possible extreme weather events on the Group’s Net Profit After Tax (NPAT) are summarised below:
Floods
Drought
Temporary water price
Product quality
% Inshell lower & higher
manufacturing grade
% Kernel & inshell higher &
manufacturing grade lower
Harvesting cost
Labour, weed spraying & chemicals
Labour, chemicals
Processing cost
Drying
Pricing
Better or worse growing conditions in Australia due to extreme weather conditions will have a
significant impact on global almond prices. Extreme weather conditions in California will dictate
global almond commodity prices.
The financial impact of increasing temporary water costs because of drier conditions will be somewhat offset by lower harvest and
processing costs as well as a likely higher % of inshell and kernel production and vice versa.
1.2.2 Going concern
As of 30 September 2024, the Group has non-current bank debt of $145.2 million and $20.0 million current debt. The Group’s debt levels
decreased substantially from the 31 March 2024 reported amounts (non-current bank debt of $236.5 million and current USD overdraft
facility debt of $1.7 million) following a successful capital raise of $80 million as announced to the ASX on 20 September 2024. The
institutional offer was successfully completed on 27 September 2024 and raised $58.9 million ($61.7 million less transaction costs of
$2.8 million). The full amount received from the institutional offer were offset against the Group’s outstanding debt facilities.
At 30 September 2024 the Group is in compliance with all of its banking covenants.
During the financial year the Group also:
a) extended $20 million of its debt facilities which was due to expire on 30 June 2024, for another twelve months to 30 June 2025,
resulting in a $260 million working capital facility limit to 30 June 2025, which will reduce by $40 million on 1st July 2025 to
$220 million; and
b) increased its external debt facility limit by entering into a $10 million overdraft facility for operational purposes and agreed to close
its USD Overdraft facility of USD$5 million on 30 June 2024. This new $10 million overdraft facility will be next reviewed on
28 February 2025 and remain undrawn against at 30 September 2024.
The Group’s debt facilities expire on 31 March 2026.
The Group has reviewed its cash flow forecast and its ability to operate within the net debt limit for the 12 month forecast period. In
undertaking this review, the Group considered the critical assumptions in relation to the forecast and performed a sensitivity analysis on the
forecast cash flows.
The Group’s forecast cash flows include critical assumptions relating to crop quality, crop volume and almond pricing and operating costs.
Notes to the Consolidated Financial Statements
(continued)
Select Harvests Annual Report 2024
62
1.2 Critical Accounting Estimates and Judgement (continued)
Sensitivity of cash flows
The Group has considered the downside scenarios of changes to almond pricing and volumes. Based on downside scenarios, the Group
is satisfied that reasonable changes to key assumptions would not create a liquidity issue.
Compliance with forecast covenants
Across the next 12 months, the Group’s banking covenants will be tested for the period ended 31 March 2025 and 30 September 2025. The
compliance with the Group’s covenants will be based on the estimated profit for the 2025 crop and related cashflow. There is adequate
headroom in the forecast banking covenants for the FY25 testing dates based on the Group’s 12-month forecast. The Group has considered
the downside scenarios of changes to almond pricing and volumes. Based on a 10% reduction on 2024 volumes and pricing from 29,527MT
to 26,574MT and $7.69/kg to $6.92/kg respectively, there would be no covenant breach.
Based on this analysis the Group would continue to trade within the limits of the available funding facilities and comply with financial
covenants throughout the going concern forecast period. It has been concluded that the Group will continue to operate as a going concern
and as a result, the consolidated financial statements have been prepared on this basis.
Other Critical accounting estimates and assumptions include:
Inventory – Valuation of the 2024 Almond Crop: refer note 3.2 Inventories
Carrying value of biological assets: refer note 3.3 Biological Assets
Carrying value of non-current assets: refer note 3.5 Property, Plant and Equipment, note 3.6 Right-Of-Use Assets and 3.7 Intangibles
Recoverability of booked tax losses: refer to note 3.11
Notes to the Consolidated Financial Statements
(continued)
Select Harvests Annual Report 2024
63
Notes to the Consolidated Financial Statements
(continued)
2. Results for the Year
2.1 Segment Information
Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments,
has been identified as the Chief Executive Officer.
Segment products and locations
The Chief Executive Officer and Executive Management assess the performance of the Group on a consolidated basis.
The Group grows, processes and value-adds to almonds from 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.
2.2 Revenue from continuing operations
Consolidated
Note
2024
$’000
2023
$’000
Revenue recognised at point in time
Sale of goods and services
(a)
334,664
203,386
Management services
2,174
2,054
Government grant and other revenue
(b)
447
547
Total revenue
337,285
205,987
a. Revenue from the sale of goods includes sales of value-added almond products of $45.8m (2023: $44.2m) and non value-added products of $288.9m (2023: $159.2m).
b. No government grant was received during the year for hull digestion plant purposes (2023: $0.1 million).
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
Revenue is recognised in respect of the sale of goods at the point in time when control over the corresponding goods is transferred to
the customer (i.e. when the goods are shipped to the customer or when the services have been provided). Revenue from sale of goods
includes revenue where the Group sells almonds purchased from external growers. The Group is considered to be a principal in the sale
of almonds purchased from external growers, given the Group has control over the external grower inventory from the time of delivery to
the Group through to ultimate sale to customers.
Revenue is collected on behalf of shipping and insurance third parties in instances where there are freight and insurance services
incorporated into the sales contract. The promise to arrange shipping and insurance on behalf of the customer is identified as a separate
performance obligation from the promise to sell the associated almonds. The nature of this performance obligation is to provide agency
services, arranging the shipping and insurance on behalf of the customer, and accordingly revenue is recognised on a net basis.
Management services
Management services revenue relates to services provided for the management and development of farms as well as sub leasing of our
non-almond orchard. The services are recognised as revenue when services are provided.
All revenue is stated net of the amount of Goods and Services Tax (GST).
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 Group.
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 Consolidated Statement of Financial Position. The grant is recognised in profit or
loss over the life of the depreciable asset as a reduced depreciation expense.
Select Harvests Annual Report 2024
64
Notes to the Consolidated Financial Statements
(continued)
2.2 Revenue from continuing operations (continued)
Sale of Permanent Water Rights
The profit or loss on the disposal of water rights (which are a non-current intangible asset) is recognised in the Statement of Profit or
Loss on the date in which control of the asset passes to the purchaser, usually when an unconditional contract of sale is achieved. This
gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net
proceeds on disposal (including incidental costs).
2.3 Other Income and Expenses
Consolidated
Note
2024
$'000
2023
$’000
Profit before tax from continuing operations includes the following specific expenses:
Depreciation of Property, Plant and Equipment:
x
Buildings
228
219
x
Plant and equipment
11,897
11,573
Total depreciation of Property, Plant and Equipment
(a)
12,125
11,792
Depreciation charge of right-of-use (ROU) assets:
x
Property
359
226
x
Plant and equipment
368
309
x
Orchard-citrus
1,272
1,199
Total depreciation of right-of-use assets
(b)
1,999
1,734
Interest on leases
(c)
785
760
Amortisation of software
164
503
Amortisation of license
5
5
Employee benefits
42,099
46,375
Short term and low-value lease rental payments
(d)
318
1,315
Impairment losses on:
x
Bearer plant
(e)
–
4,085
x
Right-of-use assets
3.6
6,586
–
x
Goodwill
3.7
–
25,995
6,586
30,080
Insurance recovery
(f)
–
(2,148)
Net (gain)/loss on disposal of permanent water rights
(g)
(6,730)
–
a. In addition, the following depreciation amounting to $21.2 million (2023: $22.6 million) was capitalised as part of the biological asset which will then unwind as part of cost of
sales when the almonds are sold.
b. In addition, the following right-of-use asset depreciation amounting to $21.7 million (2023: $17.7 million) and $0.7 million (2023: $2.2 million) was capitalised as part of the
biological asset and leasehold improvement respectively. The portion capitalised into the biological asset will then unwind as part of cost of sales when the almonds are sold.
c. Lease interest amounting to $10.5 million (2023: $9.2 million) and $0.5 million (2023: $1.6 million) was capitalised as part of the biological asset and leasehold improvement
respectively. The portion capitalised into the growing crop will then unwind as part of cost of sales when the almonds are sold.
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 Consolidated Statement
of Comprehensive Income.
e. During the previous financial year, the Company experienced floods on selected orchards. Although efforts were made by management to clear the flood waters, some trees
in low lying areas were heavily impacted. This led to management performing an assessment of the trees impacted and recognising an impairment loss.
f. On 26 December 2021, the Group 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 Consolidated Statement of Comprehensive Income. An insurance recovery of nil (2023: $2.15 million) has been
recognised as other income.
g. During the second half of the 2024 financial year, the Group commenced with a water rights rebalancing program, whereby water rights have been sold and bought to
improve the balance of the Group’s permanent water resources across the regions where its water needs are in growing its almonds. To date, 2,100ML of water rights with a
book value of $4.5m have been sold, and 909ML of water rights worth $5.9m have been purchased. A profit of $6.7m has been recognised on sale of water rights.
Select Harvests Annual Report 2024
65
Notes to the Consolidated Financial Statements
(continued)
2.4 Income Tax Expense
Consolidated
Note
2024
$’000
2023
$’000
(a) Income tax (expense)/benefit
Current tax
–
–
Deferred tax
(476)
39,899
Over provided in prior years
701
4,900
Total current tax (expense)/benefit
225
44,799
Deferred income tax (benefit)/expense included in income tax expense comprises:
Increase/(Decrease) in deferred tax assets
3.11
12,031
22,194
(Increase)/Decrease in deferred tax liabilities
3.11
(14,666)
17,705
(2,635)
39,899
Income tax expense is attributable to:
(Profit)/Loss from continuing operations
225
44,799
Aggregate income tax (expense)/benefit
225
44,799
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit/(Loss) from continuing operations before income tax expense
1,275
(159,526)
Tax (expense)/benefit at the Australian tax rate of 30% (2023: 30%)
(383)
47,858
Tax effect of amounts that are not deductible/(taxable) in calculating taxable income:
Other non-assessable income
–
–
Other non-deductible items
(93)
(7,959)
Over provided in prior years
701
4,900
Income tax benefit
225
44,799
The income tax expense or revenue for the year is the tax payable on the current year’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:
x
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
x
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
Consolidated Statement of Financial Position.
Cash flows are included in the Consolidated Statement of Cash Flows 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 Cash Flows from
Operating Activities.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
Select Harvests Annual Report 2024
66
Notes to the Consolidated Financial Statements
(continued)
2.5 Earnings/(Loss) per share
2024
Cents
2023
Cents
(a) Basic earnings/(loss) per share
From continuing operations attributable to the ordinary equity holders of the Company
1.24
(94.80)
Total basic earnings/(loss) per share attributable to the ordinary equity holders of the Company
1.24
(94.80)
(b) Diluted earnings/(loss) per share
From continuing operations attributable to the ordinary equity holders of the Company
1.23
(94.14)
Total basic earnings/(loss) per share attributable to the ordinary equity holders of the Company
1.23
(94.14)
2024
$'000
2023
$'000
(c) Reconciliation of earnings used in calculating earnings per share
Profit/(Loss) attributable to the ordinary equity holders of the Company used in calculating basic
earnings per share:
From continuing operations
1,500
(114,727)
1,500
(114,727)
The following reflects the share data used in the calculations of basic and diluted earnings per share:
2023
Number
2023
Number
(d) Weighted average number of shares
Weighted average number of ordinary shares used in calculating basic earnings per share
121,192,160
121,021,435
Weighted average number of performance rights outstanding
1,149,981
852,743
Adjusted weighted average number of ordinary shares used as the denominator in calculating
diluted earnings per share
122,342,141
121,874,178
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. Diluted earnings per
share include performance rights issued to executives under the Company’s LTI plans.
2.6 Dividends
Consolidated
2024
$’000
2023
$’000
(a) Dividends paid during the year
(i) FY2024 interim dividend
No interim dividend declared (FY2023: Nil)
–
–
(ii) FY2023 final dividend
Nil (FY2022 final dividend: 2c paid on 2 February 2023)
–
2,419
–
2,419
(b) Dividends proposed and not recognised as a liability.
No dividend (2023: Nil) has been declared by the directors $– (2023: Nil).
(c) Franking credit balance
Franking credits available for subsequent reporting periods based on a tax rate of 30% (2023: 30%)
18,075
18,464
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 2024
67
3. Assets and Liabilities
3.1 Trade and Other Receivables
Consolidated
2024
$’000
2023
$’000
Trade receivables
80,643
32,287
Loss allowance
–
–
80,643
32,287
Other receivables
(i)
11,064
3,105
Prepayments
14,635
12,097
106,342
47,489
i. Includes $2.5m of water rights sale proceeds to be used for water right purchases, which is held within a separate Water Trustee account, controlled by the Group’s
Security Trustee. Refer to note 3.7
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 2024 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 the financial year ended 2024 was determined as follows:
Current
$’000
Up to
3 months
past due
$’000
More than
3 months
past due
$’000
Total
$’000
30 September 2024
Gross carrying amount
78,745
1,898
–
80,643
30 September 2023
Gross carrying amount
32,302
(15)
–
32,287
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.
Notes to the Consolidated Financial Statements
(continued)
Select Harvests Annual Report 2024
68
Notes to the Consolidated Financial Statements
(continued)
3.2 Inventories
Consolidated
2024
$’000
2023
$’000
Raw materials and consumables
12,645
10,399
Finished goods and work in progress
102,417
65,511
Other inventories
9,930
9,407
124,992
85,317
A write-down of $2.4m was made for the 2023 crop due to deterioration in stock quality during the financial year (2023: $24.5m).
Almond inventory held at 30 September 2024 that has been purchased from external growers amounting to $24.7m (2023: $7.7m) is
included in the Group’s Inventory balance given the Group has control over the external grower inventory from the time of delivery to
ultimate sale to customers.
Costs incurred in bringing each product to its present location and condition, are accounted for as follows:
x
Raw materials and consumables: purchase cost on a first in first out basis;
x
Biological assets reclassified as inventory (included within raw materials in the table above): the initial cost assigned to agricultural
produce as part of raw materials is the fair value less costs to sell at the point of harvesting in accordance with AASB 141 Agriculture
(‘AASB 141’).
x
Subsequently, the uncommitted inventory are valued at the lower of cost or net realisable value with changes recognised to the
Consolidated 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;
-
executed sales of similar quality product in the market; and
-
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;
x
Finished goods and work in progress: cost of direct material and labour and a proportion of manufacturing overheads based on
normal operating capacity; and
x
Other inventories comprise consumable stocks of chemicals, fertilisers and packaging materials recorded at cost on a first in
first out basis.
Critical Accounting Estimates & Assumptions
Valuation of the 2024 Almond Crop
The 2024 almond crop is classified as inventory once the crop is harvested in accordance with AASB 102 Inventories. At balance
date, the Company had completed hulling and shelling of all almonds (Select Harvests share 29,527MT) and 78% had been sold or
committed to be sold.
The critical accounting estimates and assumptions used in determining the net realisable value of the 2024 uncommitted inventory
on hand includes the quality of the inventory on hand, and its associated market pricing. It also considers any subsequent contracts
entered into after year end.
Select Harvests Annual Report 2024
69
3.3 Biological Assets
Consolidated
2024
$’000
2023
$’000
Growing almond crop
73,815
70,557
Reconciliation of changes in carrying amount of biological assets
Opening balance
70,557
61,198
Increases due to purchases/growing costs (including capitalised depreciation and interest)
195,692
206,831
Decreases due to harvest (i)
(219,502)
(122,960)
Gain/(Loss) arising from changes in fair value (ii)
27,068
(74,512)
Closing balance
73,815
70,557
i.
Includes biological assets reclassified as inventory at the point of harvest
ii.
Net increments/(decrements) in the fair value of the growing assets are recognised as an income/(expense) in the Consolidated Statement of Comprehensive Income.
Recognition and measurement
Almond trees are bearer plants and are therefore presented and accounted for as property, plant and equipment (‘PPE’) (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. 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 2024, the biological asset balance relates to the 2025 almond crop, which is recorded at cost and has little or no
biological transformation. The 2024 almond crop has been transferred to inventory after it was fully harvested during the financial year.
The change in estimated fair value of the biological assets are recognised at the point of harvest in the Consolidated 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:
x
estimated selling price at harvest and estimated cash inflows based on forecasted sales;
x
estimated yields; and
x
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.
Notes to the Consolidated Financial Statements
(continued)
Critical accounting estimates and assumptions
Carrying value of biological assets
The recoverability of the biological assets carrying value is dependent on the estimated 2025 crop volume and price. The Group’s
forecasts include the assumption of the 2025 crop tonnage being somewhat higher than the 2024 crop and with a similar quality
profile than the 2024 crop. The increased 2025 crop price assumed a range of between 5-10% higher than the 2024 almond price.
These estimates incorporate the consideration of short-term climate related risks and assumptions as set out in Note 1.2.1.
The increase in the almond price is mainly based on an upward movement in market pricing due to significantly lower carry-over
volumes from the 2023/24 Californian crop and a lower 2024/25 Californian crop estimate of 2.8B lbs.
Select Harvests Annual Report 2024
70
Notes to the Consolidated Financial Statements
(continued)
3.4 Derivative Financial Instruments
Consolidated
2024
$’000
2023
$’000
Current Assets
Fair value of forward exchange and option contracts – cash flow hedges
7,203
–
Current Liabilities
Fair value of forward exchange and option contracts – cash flow hedges
60
3,922
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) Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the Consolidated Statement of
Comprehensive Income, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
(ii) 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 Consolidated Statement of Comprehensive Income.
(iii) 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.
(iv) Cash flow hedge accounting
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 exchange contracts (‘FEC’s) are used to hedge forecast transactions, the Company designates the full change in fair
value of the forward exchange contract(‘FEC’) as the hedging instrument. The gains or losses relating to the effective portion of the
change in fair value of the entire FEC are recognised in the cash flow hedge reserve within equity.
Amounts accumulated in equity are reclassified in Cost of Sales in the Consolidated 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 Consolidated Statement of Comprehensive Income. 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 Consolidated
Statement of Comprehensive Income.
(v) Outstanding hedge instruments
The Company entered into hedge instruments to buy and sell specified amounts of foreign currency in the future at stipulated exchange
rates. The objective of entering the FEC’s is to protect the Company against unfavourable exchange rate movements for highly probable
contracted and forecasted sales and purchases undertaken in foreign currencies.
Select Harvests Annual Report 2024
71
Notes to the Consolidated Financial Statements
(continued)
3.4 Derivative Financial Instruments (continued)
At balance date, the details of outstanding hedge instruments are:
Buy/Sell Australian Dollars
Average Exchange Rate
Less than 6 months
2024
$’000
2023
$’000
2024
$’000
2023
$’000
FEC Buy USD Settlement
USD1,027
–
0.67
–
FEC Sell USD Settlement
USD61,361
USD66,693
0.67
0.67
Buy/Sell Australian Dollars
Average Exchange Rate
More than 6 months
2024
$’000
2023
$’000
2024
$’000
2023
$’000
FEC Sell USD Settlement
USD53,000
USD30,000
0.66
0.65
Option Sell USD Settlement
–
USD10,000
–
0.67
(vi) 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 FEC’s is the net fair value of these instruments.
The net amount of the foreign currency the Group will be required to pay when settling the brought forward foreign currency contracts
should the counterparty not pay the currency it is committed to deliver to the Group at balance date was USD $113,333,467 (2023: USD
$106,693,000).
The Group does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered
into by the Group.
(vii) Hedging reserves
The Group’s hedging reserves as presented in Consolidated Statement of Changes in Equity relate to the following hedging instruments:
Consolidated
Intrinsic value of
options
$’000
Spot component
of currency
forwards
$’000
Total hedge
reserves
$’000
Closing balance 30 September 2022
–
(10,241)
(10,241)
Add: Change in fair value of hedging instrument recognised in
Other Comprehensive Income (OCI)
(702)
(3,222)
(3,924)
Less: Reclassified from OCI to profit or loss
–
14,629
14,629
Less: Deferred tax
210
(3,421)
(3,211)
Closing balance 30 September 2023
(492)
(2,255)
(2,747)
Add: Change in fair value of hedging instrument recognised in OCI
–
7,142
7,142
Less: Reclassified from OCI to profit or loss
702
3,222
3,924
Less: Deferred tax
(210)
(3,110)
(3,320)
Closing balance 30 September 2024
–
4,999
4,999
Select Harvests Annual Report 2024
72
Notes to the Consolidated Financial Statements
(continued)
3.4 Derivative Financial Instruments (continued)
(viii) Market risk
The effects of the foreign currency related hedging instruments on the Company’s financial position and performance are as follows:
Consolidated
2024
$’000
Sell USD
2023
$’000
Sell USD
FEC’s
Carrying amount asset/(liability)
7,203
(3,220)
Notional amount
114,361
96,693
Maturity date
October 2024 –
September 2025
October 2023 –
August 2025
Hedge ratio
1:1
1:1
Change in discounted spot value of outstanding hedging instruments since
1 October
7,203
(3,220)
Change in value of hedged item used to determine hedge effectiveness
(7,203)
3,220
Weighted average hedged rate for the year (including forward points)
USD$0.6633: AUD$1
USD$0.6652: AUD$1
Foreign currency options
Carrying amount (liability)
–
(702)
Notional amount
–
10,000
Maturity date
–
May-June 2024
Hedge ratio
–
1:1
Change in intrinsic value of outstanding hedging instruments since 1 October
–
(702)
Change in value of hedged item used to determine hedge effectiveness
–
702
Weighted average strike rate for the year
–
USD$0.6732: AUD$1
Consolidated
2024
$’000
Buy USD
2023
$’000
Buy USD
FEC’s
Carrying amount (liability)
(60)
–
Notional amount
1,028
–
Maturity date
October–November
2024
–
Hedge ratio
1:1
–
Change in discounted spot value of outstanding hedging instruments since
1 October
60
–
Change in value of hedged item used to determine hedge effectiveness
(60)
–
Weighted average hedged rate for the year (including forward points)
USD$0.6670: AUD$1
–
Select Harvests Annual Report 2024
73
Notes to the Consolidated Financial Statements
(continued)
3.5 Property, Plant and Equipment
(a) Reconciliations
Reconciliations of the carrying amounts of property, plant and equipment (PPE) for the current financial year.
Buildings
$’000
Leasehold
Improvement
$’000
Plantation
land and
irrigation
systems
$’000
Plant and
equipment
$’000
Bearer
Plants
$’000
Capital work
in progress
$’000
Total
$’000
At 30 September 2022
Cost
26,041
48,467
156,120
172,471
249,660
6,609
659,368
Accumulated depreciation
(5,296)
(596)
(47,368)
(94,565)
(56,249)
-
(204,074)
Net book amount
20,745
47,871
108,752
77,906
193,411
6,609
455,294
Year ended 30 September 2023
Opening net book amount
20,745
47,871
108,752
77,906
193,411
6,609
455,294
Reclassification from ROU*
–
–
–
3,317
–
–
3,317
Additions
–
3,743
–
98
4,704
21,385
29,930
Disposals
–
–
–
(388)
–
(11)
(399)
Depreciation expense
(753)
(2,686)
(4,196)
(14,369)
(12,422)
–
(34,426)
Impairment lossi
–
–
–
–
(4,085)
–
(4,085)
Transfers
445
–
4,911
15,092
–
(20,448)
–
Closing net book amount
20,437
48,928
109,467
81,656
181,608
7,535
449,631
At 30 September 2023
Cost
26,477
52,210
161,031
187,491
248,097
7,535
682,841
Accumulated depreciation
(6,040)
(3,282)
(51,564)
(105,835)
(66,489)
–
(233,210)
Net book amount
20,437
48,928
109,467
81,656
181,608
7,535
449,631
Year ended 30 September 2024
Opening net book amount
20,437
48,928
109,467
81,656
181,608
7,535
449,631
Reclassification from ROU*
–
–
–
–
–
–
–
Additions
–
1,158
–
–
2,033
20,006
23,197
Disposals
–
–
–
(210)
–
(23)
(233)
Depreciation expense
(748)
(3,700)
(4,189)
(14,142)
(10,540)
–
(33,319)
Impairment loss
–
–
–
–
–
–
–
Transfers
273
–
916
12,892
–
(14,081)
–
Closing net book amount
19,962
46,386
106,194
80,196
173,101
13,437
439,276
At 30 September 2024
Cost
26,749
53,368
161,947
196,287
250,130
13,437
701,918
Accumulated depreciation
(6,787)
(6,982)
(55,753)
(116,091)
(77,029)
–
(262,642)
Net book amount
19,962
46,386
106,194
80,196
173,101
13,437
439,276
* This relates to ROU assets when the lease has expired and ownership remains with the Company.
i. The impairment loss relates to bearer plants that were damaged by flood during the previous financial year at the Group’s orchards. In total 523 acres of bearer plants were
written off as a result of the floods.
Select Harvests Annual Report 2024
74
Notes to the Consolidated Financial Statements
(continued)
3.5 Property, Plant And Equipment (continued)
Cost basis
The carrying value of the Company’s non-current assets (including Property, Plant and Equipment) are assessed on a fair value less
costs to sell basis. If the fair value less costs to sell basis is less than the carrying value of an asset (or CGU), the Company proceeds to
use the value-in-use method to test an assets recoverability against its carrying amount.
The Group assesses for indicators of impairment at the asset CGU level, which is considered the smallest identifiable group of assets
generating cash inflows that are largely independent of cash inflows from other assets. The Group determined this to be the orchard
level.
An independent valuation was performed by Herron Todd White (HTW) in September 2022 for all of the Company’s owned assets which
includes 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 Earnings Before
Interest, Tax, Depreciation and Amortisation (EBITDA) and a productive unit basis to determine its market value.
Since the September 2022 valuations, seven owned farms (four in September 2023 and three in September 2024) and the CWPF
processing facility (in September 2024) have been valued by HTW to confirm the valuations against current market conditions.
The most recent valuation of three owned farms in September 2024 indicated an average decrease in the 2022 valuation values of
approximately 13%, which is mainly due to the prolonged lower than average global almond prices over the past two to three years.
All of the Company’s owned orchard valuation values remain above its carrying values except for the Piangil orchard.
The Piangil farm valuation conducted during September 2024, was below its assets carrying amount as at 30 September 2024. To
support the recoverability of Piangil’s assets carrying value at 30 September 2024, a value-in-use calculation was completed, which
indicated that the present value of the future cashflows were in excess of the farm’s assets carrying values.
Key assumptions used in the Piangil value-in-use calculations for impairment included a real post-tax weighted average cost of capital
(of 7.9%), long term growth rate (of 3.06%), an average almond price of $8.69/kg, a MT/acre of 1.43 which represent the average yield the
farm obtained in normal growing conditions (FY2015 to FY2023) adjusted for a strategy uplift per acre of 0.15 and a terminal growth rate
of 2.5%.
The directors and management have considered and assessed reasonably possible changes in key assumptions within the impairment
model of Piangil.
The recoverable amount of Piangil would equal its carrying amount if the key assumptions were to change as follows:
x
tonnage assumption change by 0.03mt/acre or 2.1%; or
x
price assumption change by $0.19c/kg or 2.3%.
The book value of the Piangil assets at 30 September 2024 was $110.4 million against the most recent valuation values performed by
Herron Todd White amounting to $97.5 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. Following the annual review of useful lives, it has been concluded that the useful
lives of the Group’s bearer plants and Co-Gen plant can be extended. This decision is based on the anticipated continued usage of these
assets beyond their current estimated lifespans, as well as the observed wear and tear to date.
The annualised savings in depreciation resulting from the extended useful lives of the Company’s bearer plants and Co-gen plant are
$1.0 million and $0.9 million respectively.
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 $10.54 million (2023: $12.42 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 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 have been adjusted from the previous financial year as follows:
Asset class
Previous
Revised
Buildings
25 to 40 years
No change
Plant and equipment
5 to 20 years
5 to 40 years
Bearer plants
10 to 30 years
10 to 32 years
Irrigation systems
10 to 40 years
No change
Leasehold improvements
13 to 14 years
No change
Select Harvests Annual Report 2024
75
Notes to the Consolidated Financial Statements
(continued)
3.5 Property, Plant And Equipment (continued)
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
Note
Property
$’000
Plant and
equipment
$’000
Orchard(a)
$’000
Total
$’000
At 1 October 2022
19
4,676
203,505
208,200
Reclassification to PPE*
–
(3,317)
–
(3,317)
Additions
1,726
1,293
3,815
6,834
Disposal
(5)
–
–
(5)
Depreciation charge for the year
(b)
(227)
(1,087)
(20,321)
(21,639)
At 30 September 2023
1,513
1,565
186,999
190,077
Reclassification to PPE*
–
–
–
–
Additions
20
733
28,076
28,829
Disposal
–
–
(6)
(6)
Depreciation charge for the year
(b)
(359)
(669)
(23,332)
(24,360)
Impairment loss
–
–
(6,586)
(6,586)
At 30 September 2024
1,174
1,629
185,151
187,954
* This relates to ROU assets when the lease has expired and ownership remains with the Company.
a) Orchard
The orchards comprise leases with Arrow Funds Management, Rural Funds Management, Lachlan Valley Farms and Aware Super.
A total of 11,729 (2023: 11,729) acres of land are leased over an initial 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 Consolidated Statement of Comprehensive Income. Depreciation relating to a small portion of land (sub-leased out by the
Group) used for citrus farming has been expensed.
A ROU asset is recognised at the commencement date of a lease. The ROU 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.
ROU 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 Group expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is
expensed over its estimated useful life. ROU assets are subject to impairment or adjusted for any remeasurement of lease liabilities.
The Group has elected not to recognise a ROU 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.
Critical Accounting Estimates and Assumptions
Carrying value of non-current assets
The recoverable value assessment includes assumptions related to fair value including relevant transactional prices, market
conditions and asset useful lives. The carrying value assessment of bearer plants includes judgement on tree age, yields and
estimates for tree damage. Refer to Note 1.2.1 for assumptions made in relation to climate related risks.
Select Harvests Annual Report 2024
76
Notes to the Consolidated Financial Statements
(continued)
3.6 Right-Of-Use Assets (continued)
Assessment of recoverable value
The Group assesses for indicators of impairment at the asset CGU level which is determined to be the orchard level. During the year,
indicators of impairment were identified at two of the leased farms (Yilgah and Mooral) due to a significant reduction in 2024 crop
tonnage produced vs forecast at each farm, and as such impairment testing was completed for these two CGU’s.
The leased assets carrying values were assessed by comparing the net present value (NPV) of future cashflows against the carrying
value of the relevant orchard assets on the Company’s balance sheet to ensure recoverability.
Impairment testing concluded that the recoverable amount of the Yilgah CGU’s assets did not exceed the carrying value resulting in a
$6.6m impairment. Key assumptions used in the value-in-use calculations for impairment included a real post-tax weighted average cost
of capital (of 7.9%), long term growth rate (of 3.06%), an average almond price over the lease period of $8.61/kg and a tonnage/acre in
FY2025 of 1.04mt/acre. The yield per acre for FY2026 onwards increased to 1.2mt/acre given the Company’s strategic initiative for
increased yield across its orchard portfolio.
The impairment assessment also shows that there is limited headroom for the Mooral CGU. Key assumptions used in the Mooral
value-in-use calculations for impairment are the same as used for the Yilgah CGU. The average almond price for Mooral over the lease
period is $8.84/kg and a tonnage/acre over the life of the lease is 1.35mt/acre which represent the average yield the farm obtained in
normal growing conditions (FY2019 to FY2022).
The Directors and management have considered and assessed reasonably possible changes in key assumptions within the impairment
models of both farms.
Any movement in any of Yilgah assumptions could result in a further impairment of its assets carrying value.
The following changes in assumptions could lead to an additional $1m impairment for Yilgah:
x
tonnage assumption in FY2026 to FY2030 reduces by 1.7% to 1.18mt/acre from 1.20mt/acre; or
x
price assumption change by $0.12c/kg or 1.5% across the remaining life of the lease – ending 2030.
Any movement in any of Mooral assumptions could result in an impairment of its assets carrying value.
The following changes in assumptions could lead to a $1m impairment for Mooral:
x
tonnage assumption in each of the FY2026 to FY2030 years reduce by 5.2% to 1.28mt/acre from 1.35mt/acre; or
x
price assumption change by $0.40c/kg or 4.9% across the remaining life of the lease – ending 2030.
Any movement in any of Mooral assumptions could result in an impairment of its assets carrying value.
The Yilgah CGU value after the impairment totals $41.3 million including a ROU asset of $29.8 million, and the Mooral CGU value totals
$10.3 million including a ROU asset of $8.3 million.
Critical accounting estimates and assumptions
Recoverable value of right-of-use assets
Where indicators of impairment are identified and a value in use model is prepared to support the carrying value of the right-of-use
asset, there are estimates in future cash flows assumptions for yield by orchard, quality of almonds and almond price.
Select Harvests Annual Report 2024
77
3.7 Intangibles
Consolidated
Note
Goodwill
$’000
Permanent
Water Rights
$’000
Software
$’000
License
$’000
Total
$’000
At 30 September 2022
Cost
25,995
58,841
5,692
49
90,577
Accumulated amortisation
–
–
(3,544)
(3)
(3,547)
Net book amount
25,995
58,841
2,148
46
87,030
Year ended 30 September 2023
Opening net book amount
25,995
58,841
2,148
46
87,030
Acquisition
–
–
-
–
–
Disposal
–
–
(3)
–
(3)
Impairment charge
(a)
(25,995)
–
–
–
(25,995)
Amortisation
–
–
(503)
(5)
(508)
Closing net book amount
–
58,841
1,642
41
60,524
At 30 September 2023
Cost
–
58,841
5,689
49
64,579
Accumulated amortisation
–
–
(4,047)
(8)
(4,055)
Net book amount
–
58,841
1,642
41
60,524
Year ended 30 September 2024
Opening net book amount
–
58,841
1,642
41
60,524
Acquisition
(b)
–
5,862
–
–
5,862
Disposal
(b)
–
(4,533)
–
–
(4,533)
Amortisation
–
-
(164)
(5)
(169)
Closing net book amount
60,170
1,478
36
61,684
At 30 September 2024
Cost
–
60,170
5,689
49
65,908
Accumulated amortisation
–
-
(4,211)
(13)
(4,224)
Net book amount
–
60,170
1,478
36
61,684
a) Impairment tests for goodwill
Notes to the Consolidated Financial Statements
(continued)
Critical Accounting Estimates and Assumptions
During the previous financial year, following the reduction in the Group’s 2023 operating profit due to the write-off of the 2022 crop
inventory and estimated decrease in yield of the 2023 crop, the Group considered the event as an indicator of impairment, resulting
in the completion of impairment testing as at 31 March 2023 on a Value In Use (VIU) basis. Impairment testing concluded that the
recoverable amounts of the CGU’s assets did not exceed the carrying value resulting in the write off on the Group’s goodwill
balance of $26 million. Key assumptions used in the value-in-use calculations for impairment include a real post-tax weighted
average cost of capital (of 8.5%), 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 Group uses internally to assess strategic opportunities and asset performance.
At that time, the forecasted cashflows for the remainder of FY2023 were based on the latest assumptions of forecast weather
patterns, a lower Californian 2023 crop related to drought impacting volume, quality and production cost and increasing almond
prices globally. The post FY2023 cashflows were based on the Group’s medium to long term averages relating to production yields,
global almond pricing, production costs including water, given the difficulty in predicting weather patterns impacting SHV
profitability.
Select Harvests Annual Report 2024
78
Notes to the Consolidated Financial Statements
(continued)
3.7 Intangibles (continued)
(b) Sale and purchase of Water Rights
During the second half of the 2024 financial year, the Group commenced with a water rights rebalancing program, whereby water rights
have been sold and bought to improve the balance of the Group’s permanent water resources across the regions where its water needs
are in growing its almonds.
Both the Group’s borrowing facility providers have agreed to the water rebalancing program. To ensure the proceeds from the water
rights sales only get used for the purchase of water rights under the rebalancing program, the proceeds from sale are kept in a separate
Water Trust account, controlled by the Group’s Security Trustee, from which withdrawals are made to fund water right purchases. At the
end of the financial year $2.47m of funds are within the Water Trust account and is as such recognised within Other Receivables – refer
note 3.1.
To date, 2,100ML of water rights with a book value of $4.5m have been sold, and 909ML of water rights worth $5.9m have been
purchased. A profit of $6.7m has been recognised on sale of water rights – refer note 2.3.
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 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 Group’s portfolio of water rights is currently recorded at a historical cost value of $60.2 million (2023: $58.8 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 Group’s water portfolio.
As water prices fluctuate due to seasonal factors, current market rates have been valued internally at $113.4million (2023: $119.5 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:
x
it is technically feasible to complete the software so that it will be available for use
x
management intends to complete the software to use it
x
there is an ability to use the software
x
it can be demonstrated how the software will generate probable future economic benefits
x
adequate technical, financial and other resources to complete the development of the software
x
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.
License
These are costs incurred for the application of an EPA license as part of the manufacturing of the compost program which involves
converting hull and waste into compost material that can be used as fertilisers. These costs are amortised on a straight line basis over a
period of 10 years.
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’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.
Select Harvests Annual Report 2024
79
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.
The Group has determined it appropriate to operate as a single segment and operates one CGU, 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.
3.8 Trade and other payables
Consolidated
2024
$’000
2023
$’000
Current
Trade creditors
33,892
32,272
Other creditors and accruals
21,108
15,074
Amount owing to external growers
(a)
67,193
22,328
122,193
69,674
Non-current
Other creditors and accruals
–
527
(a) This relates to external growers portion of sale proceeds $42.5m (2023: $14.6m) and unsold inventory $24.7m (2023: $7.7m).
These amounts represent liabilities for goods and services provided to the Group prior to the end of the year which are unpaid. These
amounts are unsecured and are usually paid within 30 days of recognition.
3.9 Lease Liabilities
Consolidated
2024
$’000
2023
$’000
Current
32,415
27,119
Non-current
202,904
202,536
235,319
229,655
The following table sets out the maturity analysis of lease payments, showing
the undiscounted lease payments after the reporting date.
Within one year
34,177
28,552
Later than one year but not later than five years
141,420
124,888
Later than 5 years
115,741
137,219
291,338
290,659
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 Group’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 ROU asset, or to profit or
loss if the carrying amount of the ROU asset is fully written down.
Notes to the Consolidated Financial Statements
(continued)
Select Harvests Annual Report 2024
80
Notes to the Consolidated Financial Statements
(continued)
3.10 Deferred Gain on Sale
Consolidated
2024
$’000
2023
$’000
Current
Sale and leaseback
175
175
Non-current
Sale and leaseback
1,751
1,926
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 and the gain is amortised over the lease term.
3.11 Deferred Tax (Non Current)
Consolidated
Note
2024
$’000
2023
$’000
The balance comprises temporary differences attributable to:
Amounts recognised in profit and loss
Receivables
3,469
–
Inventory
(2,113)
11,135
Biological assets
(21,415)
(20,198)
Property, plant and equipment (includes bearer plants)
(40,988)
(39,679)
Right-of-use assets
(51,909)
(51,955)
Accruals and provisions
2,069
1,741
Lease liabilities
70,596
68,896
Tax losses
(a)
44,578
34,724
Unrealised FX
685
(1)
4,972
4,663
Amounts recognised directly in other comprehensive income
Cash flow hedges
(2,143)
1,177
Amounts recognised directly in equity
Equity raising costs
960
584
Net deferred tax assets
3,789
6,424
Movements:
Opening balance 1 October
6,424
(35,164)
Prior period (over) provision
331
4,900
Charged/(Credited) to Consolidated Statement of Comprehensive Income
(476)
39,899
Charged/(Credited) to other comprehensive income
(2,490)
(3,211)
Debited/(Credited) to equity
-
–
Closing balance at 30 September
3,789
6,424
Select Harvests Annual Report 2024
81
3.11 Deferred Tax (Non Current) (continued)
(a) 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.
Critical Accounting Estimates and Assumptions
Recoverability of deferred tax assets
Judgement is required to determine whether deferred tax assets are recognised in the Consolidated Statement of Financial Position.
Deferred tax assets, including those arising from unutilised tax losses, require management to assess the likelihood that the Group
will generate sufficient taxable earnings in future periods in order to utilise recognised deferred tax assets. Assumptions about the
generation of future taxable income is based on forecast cash flows from operations, which are impacted by various factors
including almond sales prices, crop volumes, climate change risks, etc. To the extent that the future cash flows and taxable income
differ significantly from estimates, the ability of the Group to realise the net deferred tax assets recorded at the reporting date could
be impacted.
The Group has concluded that the deferred tax assets will be recoverable using the estimated future taxable income based on the
approved FY2025 budget, and future business plans. The Group is expected to generate taxable income from 2025 onwards. The
losses can be carried forward indefinitely and have no expiry date.
Notes to the Consolidated Financial Statements
(continued)
Select Harvests Annual Report 2024
82
Notes to the Consolidated Financial Statements
(continued)
3.12 Provisions
Consolidated
2024
$’000
2023
$’000
Current
Employee benefits
3,731
2,957
Others
167
558
3,898
3,515
Non-Current
Employee benefits
713
1,009
Provisions
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that
an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated.
Employee benefits
This covers the leave obligations for long service leave and annual leave which are classified as either short-term benefits or other
long-term benefits explained below. The current portion of this liability includes all of the accrued annual leave, the unconditional
entitlements to long service leave where employees have completed the required period of service and also for those employees who
are entitled to pro-rata payments in certain circumstances. The entire amount of the provision is presented as current, since the Group
does not have an unconditional right to defer settlement for any of these obligations.
Contributions are made by the Company to employees’ superannuation funds and are charged as expenses when incurred.
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled wholly within 12 months after
the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end
of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
The liability for annual leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are
presented as payables.
(ii) Other long-term benefit obligations
The liability for long service leave and annual leave which is not expected to be settled wholly within 12 months after the end of the
period in which the employees render the related service is recognised in the provision for employee benefits and measured as the
present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting
period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting period on
national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
Select Harvests Annual Report 2024
83
4. Capital, Financing and Risk Management
4.1 Equity
Consolidated
Note
2024
$’000
2023
$’000
(a) Contributed equity
Ordinary shares issued and fully paid
(b)
461,331
401,615
Contributed equity
Ordinary shares are classified as equity. The value of new shares or options issued is shown in equity.
2024
2023
Number of
Shares
$’000
Number of
Shares
$’000
(b) Movements in shares on issue
Beginning of the year
121,058,664
401,615
120,950,818
401,164
Issued during the year:
x
Dividend reinvestment plan
–
–
107,846
451
x
Long term incentive plan – tranche vested
–
–
–
–
x
Share Placement – net of transaction cost
16,242,022
58,886
–
–
x
Deferred tax credit on transaction costs
–
830
–
–
End of the year
137,300,686
461,331
121,058,664
401,615
On 20 September 2024 the Company announced to the ASX an equity raising of $80 million less estimated transaction costs of $3.4
million at an offer price of $3.80 per share including institutional and retail investors.
The proceeds from the Equity Raising have been applied towards the repayment of debt of $71.3m, capital investment to increase
processing capacity $5.0m and associated transaction costs $3.7m.
The institutional offer was successfully completed on 20 September 2024. The proceeds from the completed institutional offer of $61.7m
less associated transaction costs $2.8m, was used towards the repayment of the Group’s debt to provide facility headroom.
The retail entitlement offer was completed on 15 October 2024 and will be reflected in the 2025 results.
Performance Rights
Long Term Incentive Plan
Select Harvests Limited (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 $3.68 on 30 September 2024 ($4.01 on 30 September 2023).
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.
Notes to the Consolidated Financial Statements
(continued)
Select Harvests Annual Report 2024
84
4.1 Equity (continued)
Consolidated
Notes
2024
$’000
2023
$’000
(c) Reserves
Asset revaluation reserves
(i)
7,644
7,644
Share-based payments reserve
(ii)
1,456
1,184
Cash flow reserve
(iii)
4,999
(2,747)
14,099
6,081
(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) Share-based payments reserve
The Share-based payments 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 (net of tax). Refer to note 3.4(a)(iii) for more detail on how the reserve moves to the Consolidated Statement of
Comprehensive Income.
4.2 Cash and Cash Equivalents
Consolidated
2024
$’000
2023
$’000
Reconciliation of the net profit/(loss) after income tax to the net cash flows from operating activities
Net profit/(loss) after tax
1,500
(114,727)
Adjustments for non-cash items:
Depreciation and amortisation
33,488
34,933
Depreciation right-of-use asset (net of capitalised amount)
23,659
19,398
Capitalised lease interest payments
10,375
11,432
Impairment loss
6,586
25,995
Net (gain) on sale of assets
(7,150)
(1,020)
Share-based payments expense
272
441
Deferred gain on sale
(175)
(175)
Asset written off
–
4,085
Water rights sale proceeds to be used for water right purchases
2,402
–
Deferred tax on financial instruments
(2,490)
(3,211)
Changes in assets and liabilities
(Increase)/Decrease in trade and other receivables
(58,919)
9,354
(Increase)/Decrease in inventory
(39,674)
55,739
(Increase)/Decrease in biological assets
(3,258)
(9,359)
Increase in trade payables
51,992
10,624
Decrease in income tax receivable
21
1,431
Increase/(Decrease) in deferred tax
2,635
(41,587)
Increase/(Decrease) in provisions
85
(47)
Net cash flow from operating activities
21,349
3,306
Non-cash financing activities
During the current financial year ended 30 September 2024, no new shares were issued as part of the Dividend Reinvestment Plan
(September 2023: 107,846).
Notes to the Consolidated Financial Statements
(continued)
Select Harvests Annual Report 2024
85
4.2 Cash and Cash Equivalents (continued)
(a) Net debt reconciliation
Net debt at the end of the year is as follows:
Consolidated
2024
$’000
2023
$’000
Cash and cash equivalents
2,870
1,134
Bank overdrafts
–
(6,322)
Borrowings – repayable within one year
(20,000)
–
Borrowings – repayable after one year
(145,200)
(185,000)
Lease liabilities – repayable within one year
(32,415)
(27,119)
Lease liabilities – repayable after one year
(202,904)
(202,536)
Net debt
(397,649)
(419,843)
Cash and cash equivalents
For the purpose of presentation in the Consolidated 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 Consolidated Statement of Financial Position.
Liabilities from financing activities
Cash/bank
overdraft
$’000
Leases
due within
1 year
$’000
Leases
due after
1 year
$’000
Borrowings
due within
1 year
$’000
Borrowings
due after
1 year*
$’000
Total
$’000
Net debt at 30 September 2022
(1,528)
(30,465)
(211,655)
–
(133,000)
(376,648)
Cash flows – Principal
3,845
30,847
–
–
(52,000)
(17,308)
Cash flows – Interest
–
(11,552)
–
–
–
(11,552)
Additions to leases
–
(6,830)
–
–
–
(6,830)
Foreign exchange adjustments
(7,505)
–
–
–
–
(7,505)
Other non-cash movements
–
(9,119)
9,119
–
–
–
Net debt at 30 September 2023
(5,188)
(27,119)
(202,536)
–
(185,000)
(419,843)
Cash flows – Principal
17,419
34,827
–
(20,000)
39,800
72,046
Cash flows – Interest
–
(11,800)
–
–
–
(11,800)
Additions to leases
–
(28,691)
–
–
–
(28,691)
Foreign exchange adjustments
(9,361)
–
–
–
–
(9,361)
Other non-cash movements
–
368
(368)
–
–
–
Net debt at 30 September 2024
2,870
(32,415)
(202,904)
(20,000)
(145,200)
(397,649)
* Debt facilities with our financial providers have an expiry date of 31 March 2026
4.3 Borrowings
Consolidated
2024
$’000
2023
$’000
Current – Secured
Bank overdraft
20,000
6,322
Non-current – Secured
Debt facilities
145,200
185,000
Notes to the Consolidated Financial Statements
(continued)
Select Harvests Annual Report 2024
86
4.3 Borrowings (continued)
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised
cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the Consolidated
Statement of Comprehensive Income 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.
(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 (excluding ROU 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
2024
$’000
2023
$’000
Current
Floating charge
Cash and cash equivalents
2,870
1,134
Receivables
106,342
47,489
Inventories
124,992
85,317
Biological assets
73,815
70,557
Tax receivables
-
21
Derivative financial instruments
7,203
–
Total current assets pledged as security
315,222
204,518
Non-current
Floating charge
Other receivables
2,143
2,076
Deferred tax assets
3,789
6,424
Property, plant and equipment
439,276
449,631
Permanent water rights
60,170
58,841
Intangible assets
1,514
1,683
Total non-current assets pledged as security
506,892
518,655
Total assets pledged as security
822,114
723,173
Financing arrangements
On 24 January 2024, the Group extended $20 million of its debt facilities which was due to expire on 30 June 2024, for another twelve months to
30 June 2025. This resulted in a $260 million working capital facility limit to 30 June 2025 which reduces by $40 million at 1st July 2025.
On 30th April 2024, the Group increased its external debt facility limit by entering into a $10 million overdraft facility for operational purposes.
On 30 June 2024 the Group’s USD Overdraft facility of USD$5 million expired. This new $10 million overdraft facility will be reviewed next on
28 February 2025.
The current interest rates at balance date are 6.15% (2023: 5.81%) on the debt facility, and 9.72% on the Australian dollar bank overdraft
facility.
The Company is in compliance with all required covenants at 30 September 2024.
Notes to the Consolidated Financial Statements
(continued)
Select Harvests Annual Report 2024
87
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, FEC’s, and options.
The exposure to foreign currency risk at the reporting date was as follows:
Group
2024
USD $’000
2023
USD $’000
Trade receivables net of payables
44,419
15,187
Overdraft
–
(4,083)
USD bank balance
70
–
Foreign Exchange Contracts (FEC's)
x
buy foreign currency (cash flow hedges)
(1,028)
–
x
sell foreign currency (cash flow hedges)
114,361
96,693
Sell foreign currency option contracts*
–
10,000
* Foreign currency option contracts relating to 30 September 2023 have a number of possible outcomes depending on the spot rate at maturity. These contracts are shown at
face value. Depending on the spot rate at maturity, the value of the contract can be USD10 million or USD20 million.
Group sensitivity analysis
Based on financial instruments held at 30 September 2024, had the Australian dollar strengthened/ weakened by 5% against the US
dollar, with all other variables held constant, the Group’s results for the period would have been $5.45 million lower/ $6.02 million higher
(2023: $5.51 million lower/ $6.09 million higher), mainly as a result of the US dollar denominated financial instruments as detailed in the
above table. Equity would have been $7.59 million lower/ $8.39 million higher (2023: $6.09 million lower/ $6.73 million higher), arising
mainly from FEC’s 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:
2024
Interest Rate
%
2024
Balance
$’000
2023
Interest rate
%
2023
Balance
$’000
Debt facilities (AUD)
5.61%
165,200
5.28%
185,000
Overdraft (AUD)
9.72%
–
–
–
Overdraft (USD)
–
–
1.68%
6,322
An analysis of debt 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 high interest rate environment and the future expectation that interest rates will decrease to lower levels, management
has not entered into any interest rate swap agreements during the year.
Group sensitivity
At 30 September 2024, 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 $0.3m lower/higher (2023: $0.3m lower/higher).
Notes to the Consolidated Financial Statements
(continued)
Select Harvests Annual Report 2024
88
4.4 Financial Risk Management (continued)
Interest rate risk
The Company’s exposure to interest rate risks and the effective interest rates of financial assets and financial liabilities both recognised
and unrecognised at the balance date, are as follows:
Financial Instruments
Floating interest rate
Non-interest
bearing
Total carrying
amount as per the
balance sheet
Weighted average
effective
interest rate
2024
$’000
2023
$’000
2024
$’000
2023
$’000
2024
$’000
2023
$’000
2024
$’000
2023
%
(i) Financial assets
Cash
–
–
2,769
1,134
2,769
1,134
–
–
Cash – USD @ AUD
–
–
101
–
101
–
–
–
Trade and other receivables
–
–
106,342
47,489
106,342
47,489
–
–
FEC’s
–
–
7,203
–
7,203
–
–
–
Total financial assets
-
-
116,415
48,623
116,415
48,623
–
–
(ii) Financial liabilities
Bank overdraft – USD @ AUD
–
6,322
–
–
–
6,322
–
1.68
Bank loans
165,200
185,000
-
-
165,200
185,000
5.56
5.50
Lease liabilities
235,319
229,655
-
-
235,319
229,655
5.00
5.00
Trade creditors
–
–
33,892
32,272
33,892
32,272
–
–
Other creditors
–
–
21,108
15,074
21,108
15,074
–
–
External growers
–
–
67,193
22,328
67,193
22,328
–
–
FEC’s
–
–
60
3,924
60
3,924
–
–
Total financial liabilities
400,519
420,977
122,193
73,598
522,772
494,575
–
–
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 Consolidated 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 Consolidated
Statement of Financial Position and Notes to the financial statements.
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 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).
Notes to the Consolidated Financial Statements
(continued)
Select Harvests Annual Report 2024
89
4.4 Financial Risk Management (continued)
(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
Held with
Expiry date
Facility Limit1
Amount drawn
30 September
2024
1. Working Capital
NAB
31/03/2026
$120,000,000
99,979,177*
NAB
30/06/2025
$20,000,000
–
RABO
31/03/2026
$100,000,000
45,500,000
RABO
30/06/2025
$20,000,000
20,000,000
AUD $260,000,000
AUD165,479,177
2. Overdraft+
NAB
28/02/2025
AUD 10,000,000
–
+ Held with NAB only and reviewed annually.
* Included in the amount drawn is a Bank Guarantee amounting to $0.3m which is recorded as a contingent liability. Please refer to note 6.2.
1 During 2023 the Company successfully renewed and increased its current debt facility agreements with NAB and Rabobank. The new facility limit amounted to $260 million
(2022: $210 million) until 30th June 2024, when it will reduce to $220 million from 1st July 2025.
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
2024
$’000
2023
$’000
Term
AUD 94,521
AUD $75,000
Bank overdraft facility AUD
AUD $10,000,000
–
Bank overdraft facility USD
–
USD $917
The bank overdraft facility may be drawn at any time and may be terminated by the bank without notice. The debt facilities may be
drawn at any time over the term.
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.
Group at 30 September 2024
Less than
6 months
$’000
6–12
months
$’000
Between
1–5 years
$’000
Over 5
years
$’000
Total
contractual
cash flows
$’000
Carrying
amount
(assets)/
liabilities
$’000
Non-derivatives
Variable Rate
Debt facilities*
–
21,230
154,129
–
175,359
165,200
Trade and other payables
122,193
–
–
–
122,193
122,193
Lease liabilities
16,706
17,471
141,420
115,741
291,338
235,319
Bank overdraft
–
–
–
–
–
–
Derivatives
FEC USD buy – (outflow)
1,027
–
–
–
1,027
(60)
FEC USD sell – (inflow)
(61,361)
(53,000)
–
–
(114,361)
7,203
Net USD
(30,334)
(53,000)
–
–
(113,334)
7,143
* Debt facilities with our financial providers have an expiry date of 31 March 2026
Notes to the Consolidated Financial Statements
(continued)
Select Harvests Annual Report 2024
90
4.4 Financial Risk Management (continued)
Group at 30 September 2023
Less than
6 months
$’000
6–12
months
$’000
Between
1–5 years
$’000
Over 5
years
$’000
Total
contractual
cash flows
$’000
Carrying
amount
(assets)/
liabilities
$’000
Non-derivatives
Variable Rate
Debt facilities
–
–
193,450
–
193,450
185,000
Trade and other payables
69,674
–
–
–
69,674
69,674
Lease liabilities
14,208
14,344
124,888
137,219
290,659
229,655
Bank Overdraft
6,366
–
–
–
6,366
6,322
Derivatives
FEC USD sell – (inflow)
(66,693)
(15,000)
(15,000)
–
(96,693)
(3,222)
USD sell option
–
(10,000)
–
–
(10,000)
(702)
Net USD
(66,693)
(25,000)
(15,000)
–
(106,693)
(3,924)
(d) Fair Value Measurement
The fair value of certain financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure
purposes.
The fair value of financial instruments, such as FEC’s and foreign currency options, are valued using specific valuation techniques as
follows:
x
for FEC’s – the present value of future cash flows based on the forward exchange rates at the balance sheet date
x
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 2024 the Group’s assets and liabilities measured and recognised at fair value comprised the FEC’s and foreign
currency options. These are level 2 measurements under the hierarchy.
Notes to the Consolidated Financial Statements
(continued)
Select Harvests Annual Report 2024
91
5. Group Structure
5.1 Controlled Entities
The consolidated 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 (%)
2024
2023
Parent Entity:
Select Harvests Limited (i)
Australia
Controlled entities of Select Harvests Limited:
Kyndalyn Park Pty Ltd (i)
Australia
100
100
Select Harvests Food Products Pty Ltd (i)
Australia
100
100
Meriram Pty Ltd (i)
Australia
100
100
Kibley Pty Ltd (i)
Australia
100
100
Select Harvests Nominee Pty Ltd (i)
Australia
100
100
Select Harvests Orchards Nominee Pty Ltd (i)
Australia
100
100
Select Harvests Water Rights Unit Trust (i)
Australia
100
100
Select Harvests Water Rights Trust (i)
Australia
100
100
Select Harvests Land Unit Trust (i)
Australia
100
100
Select Harvests South Australian Orchards Trust (i)
Australia
100
100
Select Harvests Victorian Orchards Trust (i)
Australia
100
100
Select Harvests NSW Orchards Trust (i)
Australia
100
100
Jubilee Almonds Irrigation Trust Inc
Australia
100
100
(i) Members of extended closed group. Refer 5.2(c) for further details.
5.2 Parent Entity Financial Information
(a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Balance Sheet
2024
$’000
2023
$’000
Current Assets
26,907
2,747
Total Assets
561,105
588,154
Current Liabilities
12,889
21,891
Total Liabilities
105,303
176,819
Shareholders’ Equity
Issued capital
461,331
401,615
Reserves
x
Cash flow hedge reserve
4,999
(7,134)
x
Share-based payments reserve
1,456
1,343
Retained profits
(11,984)
15,512
Total Shareholders’ Equity
455,803
411,336
Profit/(Loss) for the year
(27,654)
(9,814)
Total comprehensive income/(loss)
(19,909)
(2,320)
Notes to the Consolidated Financial Statements
(continued)
Select Harvests Annual Report 2024
92
5.2 Parent Entity Financial Information (continued)
(b) Tax consolidation legislation
Select Harvests Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation as of 1
July 2003. The head entity, Select Harvests Limited, and the controlled entities in the tax consolidated group account for their own
current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a
standalone taxpayer in its own right. In addition to its own current and deferred tax amounts, Select Harvests Limited also recognises
the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from
controlled entities in the tax consolidated group.
The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate Select Harvests
Limited for any current tax payable assumed and are compensated by Select Harvests Limited for any current tax receivable and
deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Select Harvests Limited under the tax
consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities'
financial statements.
The amounts receivable/payable under the tax funding agreement is due upon receipt of the funding advice from the head entity, which
is issued as soon as practicable after the end of each financial year.
The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. The funding
amounts are recognised as current intercompany receivables or payables.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current amounts receivable
from or payable to other entities in the Group.
Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a
contribution to (or distribution from) wholly-owned tax consolidated entities.
(c) Guarantees entered into by parent entity
Each entity within the Group has entered into a cross deed of financial guarantee under which each company guarantees the debts of
the others. By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare a financial report
and directors’ report under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785.
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
2024
$’000
2023
$’000
Short term employment benefits
2,118,725
3,141,476
Post-employment benefits
107,953
573,352
Leave entitlement
(21,976)
125,782
Share based payments
209,023
249,170
2,413,725
4,089,780
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.
Notes to the Consolidated Financial Statements
(continued)
Select Harvests Annual Report 2024
93
Notes to the Consolidated 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 2024, the company had provided $6.46 million (2023: $6.16 million) of bank guarantees mainly 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) Commitments
Commitments payable in relation to leases contracted for at the reporting date but not recognised as liabilities:
Consolidated
2024
$’000
2023
$’000
Minimum lease payments
x
Within one year
11,506
9,544
x
Later than one year and not later than five years
13,471
17,364
x
Later than five years
–
–
Aggregate lease expenditure contracted for at reporting date
24,977
26,908
Operating leases
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
Consolidated
2024
$’000
2023
$’000
Significant capital expenditure contracted for at the end of the reporting year but not
recognised as liabilities is as follows:
Property, plant and equipment
6,429
6,070
Select Harvests Annual Report 2024
94
Notes to the Consolidated Financial Statements
(continued)
6.3 Share Based Payments
Long-term Incentive Plan
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.
Performance rights issued in the current financial year with vesting date of 31 October 2026 have rights vesting based on absolute
TSR (50% weighting) and absolute ROCE (50% weighting) over the three years prior to vesting.
The performance targets and vesting proportions are as follows:
Absolute TSR (50% weighting)
Performance Level
Absolute TSR (CAGR) Over Performance Period
Vesting % of Tranche
Stretch
≥ 20%
100%
Between Target & Stretch
> 10% & < 20%
Pro-rata
Target
10%
50%
Between Threshold and Target
> 5% & < 10%
Pro-rata
Threshold
5%
25%
Below Threshold
<5%
0%
Average ROCE (50% weighting)
Performance level
SHV’s Average ROCE for Performance Period
Vesting %
Stretch
> 14% of ROCE Achieved
100%
Between Target & Stretch
> ROCE achieved of 9.8% & < ROCE achieved of 14%
Pro-rata
Target
ROCE achieved of 9.8%
50%
Between Threshold and Target
> ROCE achieved of 7.0% & < ROCE achieved of 9.8%
Pro-rata
Threshold
ROCE achieved of 7.0%
25%
Below Threshold
ROCE achieved less than 7.0%
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 2024
Grant date
Vesting
date
Exercise
price
Balance at
start of
the year
(number)
Granted
during the
year
(number)
Forfeited
during the
year
(number)
Vested
during the
year
(number)
Balance at end of the
year
Proceeds
received
($)
Shares
issued
(number)
Fair value
per share#
($)
Fair value
aggregate
($)
On issue
Vested
28/07/2021
31/10/2023
–
159,800
–
(159,800)
–
–
–
–
–
6.29
–
31/05/2022
31/10/2024
–
351,089
–
(48,131)
–
302,958
–
–
–
3.91
1,184,566
09/03/2023
31/10/2025
–
220,671
–
(56,511)
–
164,160
–
–
–
2.47
405,475
07/04/2023
31/10/2025
–
261,191
–
–
–
261,191
–
–
–
2.96
773,125
03/05/2024
31/10/2026
–
–
702,486
–
–
702,486
–
–
–
2.34
1,643,817
# Based on an external valuation at grant date.
30 September 2023
Grant date
Vesting
date
Exercise
price
Balance at
start of
the year
(number)
Granted
during the
year
(number)
Forfeited
during the
year
(number)
Vested
during the
year
(number)
Balance at end of the
year
Proceeds
received
($)
Shares
issued
(number)
Fair value
per share#
($)
Fair value
aggregate
($)
On issue
Vested
27/03/2020
31/10/2022
–
105,480
–
(105,480)
–
-
–
–
–
4.22
–
28/07/2021
31/10/2023
–
175,542
–
(15,742)
–
159,800
–
–
–
6.29
1,005,142
31/05/2022
31/10/2024
–
382,381
–
(31,292)
–
351,089
–
–
–
3.91
1,372,758
09/03/2023
31/10/2025
–
–
266,642
(45,971)
–
220,671
–
–
–
2.47
545,057
07/04/2023
31/10/2025
–
–
261,191
–
–
261,191
–
–
–
2.96
773,125
# Based on an external valuation at grant date.
Select Harvests Annual Report 2024
95
Notes to the Consolidated Financial Statements
(continued)
6.3 Share Based Payments (continued)
Fair value of performance rights granted
The assessed fair value at grant date is determined using the Black-Scholes-Merton model (ROCE valuation) and the Monte Carlo
option pricing model (ATSR valuation) 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:
Share price at
grant date
Expected
volatility*
Expected
dividends
Risk free
interest rate
03 May 2024 Performance Rights Issue
$3.41
39%
2.00%
4.05%
07 April 2023 Performance Rights Issue
$4.28
36%
1.00%
2.88%
09 March 2023 Performance Rights Issue
$4.02
36%
1.00%
3.43%
31 May 2022 Performance Rights Issue
$5.88
39%
2.51%
2.65%
28 July 2021 Performance Rights Issue
$7.66
40%
0.52%
0.02%
27 March 2020 Performance Rights Issue
$7.05
40%
4.95%
0.35%
29 April 2019 Performance Rights Issue
$6.49
40%
1.83%
1.33%
* 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
2024
$’000
2023
$’000
Performance rights granted under employee long term incentive plan
271,846
441,301
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 Consolidated Statement of Comprehensive Income
with a corresponding adjustment to equity.
Select Harvests Annual Report 2024
96
Notes to the Consolidated Financial Statements
(continued)
6.4 Auditors’ Remuneration
Consolidated
2024
$
2023
$
Audit and other assurance services
Audit and review of financial statements
450,695
443,200
Other services
(a)
60,000
–
Total remuneration of PricewaterhouseCoopers
510,695
443,200
(a) There were no fees paid to PricewaterhouseCoopers for other services performed during the period.
6.5 Events Occurring After Balance Date
Equity Raising
On 20 September 2024 the Company announced to the ASX an equity raising of $80 million less estimated transaction costs of $3.4m
at an offer price of $3.80 per share including institutional and retail investors.
The proceeds from the equity raising have been applied towards the repayment of debt of $71.3m, capital investment to increase
processing capacity $5.0m and associated transaction costs $3.7m.
The institutional offer was successfully completed on 27 September and raised $61.7m less transaction costs of $2.8m. Refer to note 4.1.
The retail entitlement offer was competed on 15 October and raised $18.3m less transaction costs of $0.9m with a total of 4,806,953
million shares issued.
For further details, please refer to the relevant announcements made to the ASX.
Sale of water rights
In the second half of the year the Company commenced the rebalancing of its water portfolio by selling and purchasing permanent
water rights so to align the water rights more closely to its farm locations. At the end of the year there were signed contracts for water
sales of $11.7 million (representing 4,566ML of water) that were settled after year-end, which will deliver a one-off gain of $5.8 million
gain in the 2025 financial statements.
Select Harvests Annual Report 2024
97
Notes to the Consolidated Financial Statements
(continued)
Consolidated Entity Disclosure Statement
Type of entity
Place of
Incorporation
% of share
capital
Australian
resident or
foreign
resident
Parent Entity:
Select Harvests Limited
Body Corporate
Australia
100
Australia
Controlled entities of Select Harvests Limited:
Kyndalyn Park Pty Ltd
Body Corporate
Australia
100
Australia
Select Harvests Food Products Pty Ltd
Body Corporate
Australia
100
Australia
Meriram Pty Ltd
Body Corporate
Australia
100
Australia
Kibley Pty Ltd
Body Corporate
Australia
100
Australia
Select Harvests Nominee Pty Ltd
Body Corporate
Australia
100
Australia
Select Harvests Orchards Nominee Pty Ltd
Body Corporate
Australia
100
Australia
Select Harvests Water Rights Unit Trust
Trust
Australia
100
Australia
Select Harvests Water Rights Trust
Trust
Australia
100
Australia
Select Harvests Land Unit Trust
Trust
Australia
100
Australia
Select Harvests South Australian Orchards Trust
Trust
Australia
100
Australia
Select Harvests Victorian Orchards Trust
Trust
Australia
100
Australia
Select Harvests NSW Orchards Trust
Trust
Australia
100
Australia
Jubilee Almonds Irrigation Trust Inc
Trust
Australia
100
Australia
Basis of preparation
This consolidated entity disclosure statement (CEDS) has been prepared in accordance with the Corporations Act 2001 and includes
information for each entity that was part of the consolidated entity as at the end of the financial year in accordance with AASB 10
Consolidated Financial Statements.
Determination of tax residency
Section 295 (3A)(vi) of the Corporation Act 2001 defines tax residency as having the meaning in the Income Tax Assessment Act 1997.
The determination of tax residency involves judgement as there are different interpretations that could be adopted, and which could give
rise to a different conclusion on residency.
In determining tax residency, the consolidated entity has applied the following interpretations:
x
Australian tax residency
The consolidated entity has applied current legislation and judicial precedent, including having regard to the Tax Commissioner’s public
guidance in Tax Ruling TR 2018/5
x
Foreign tax residency
The Company has no controlled entities registered overseas.
Partnerships and trusts
Australian tax law generally does not contain corresponding residency tests for partnerships and trusts and these entities are typically
taxed on a flow-through basis.
Additional disclosures on the tax status of partnerships and trusts have been provided where relevant.
Select Harvests Annual Report 2024
98
Directors’ Declaration
Directors' Declaration
In the directors’ opinion:
a. the consolidated financial statements and Notes set out on pages xx to xx are in accordance with the Corporations Act 2001,
including:
i. complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
ii. giving a true and fair view of the consolidated entity’s financial position as at 30 September 2024 and of its performance for the
financial year ended on that date; and
b. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable;
c. the consolidated entity disclosure statement set out on page xx required by Section 295(3A) of the Corporations Act 2001 is true
and correct as at 30 September 2024; and
d. 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 consolidated 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
Chairman
Melbourne, 29 November 2024
Select Harvests Annual Report 2024
99
Independent auditor’s report
To the members of Select Harvests Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Select Harvests Limited (the Company) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 30 September 2024 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 consolidated statement of financial position as at 30 September 2024
●
the consolidated statement of comprehensive income for the year then ended
●
the consolidated statement of changes in equity for the year then ended
●
the consolidated statement of cash flows for the year then ended
●
the notes to the consolidated financial statements, including material accounting policy
information and other explanatory information
●
the consolidated entity disclosure statement as at 30 September 2024
●
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, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Independent auditor’s report to the members of Select Harvests Limited
Select Harvests Annual Report 2024
100
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.
Our audit focused on where the Group made subjective judgements; for example, significant
accounting estimates involving assumptions and inherently uncertain future events.
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.
Key audit matter
How our audit addressed the key audit matter
Basis of preparation
(Refer to note 1.2.2)
As described in note 1.2.2, the Consolidated Financial
Statements have been prepared by the Group on a
going concern basis.
The Group’s total borrowings at 30 September 2024 is
$165.2 million, of which $145.2 million is non-current.
The Group prepared a cash flow forecast for the next
12 months from 29 November 2024, which assessed
its liquidity and compliance with forecast covenant
positions.
Assessing the appropriateness of the Group’s basis of
preparation for the financial report was considered a
key audit matter due to its importance to the overall
Consolidated Financial Statements and the level of
judgement involved in forecasting future cash flows for
a period of at least 12 months from the audit report
date and covenant calculations of the Group.
Our procedures included the following, amongst
others:
●
Evaluating the appropriateness of the Group’s
assessment of their ability to continue as a going
concern, including whether the level of analysis is
appropriate given the nature of the Group and the
period covered is at least 12 months from the date
of our auditor’s report.
●
Reading the relevant banking facility agreements
and developing an understanding of the key terms,
including available drawdown amounts, maturity
dates and covenants.
●
Obtaining the Group’s cash flow forecast and
comparing the future cash flows used in the
forecast with the forecasts formally approved by
the Board.
●
Assessing whether the significant assumptions for
harvest volumes, almond price and operating
costs used in the cash flow forecast and covenant
calculation were appropriate, with reference to the
historical performance and external market data
where possible.
Independent auditor’s report to the members of Select Harvests Limited
(continued)
Select Harvests Annual Report 2024 101
Key audit matter
How our audit addressed the key audit matter
●
Checking the mathematical accuracy of key data
inputs for the cash flow forecast.
●
Checking the mathematical accuracy of the
covenant calculations and compared the
calculations to the relevant covenant requirements
in the banking facility agreements.
●
Evaluating the reasonableness of the disclosures
made in note 1.2.2, including significant
assumptions, against the requirements of
Australian Accounting Standards.
Inventory valuation
(Refer to note 3.2)
The Group held inventory of $125.0 million at
30 September 2024. 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 and its quality.
We considered inventory valuation to be a key audit
matter because of the financial significance of the
inventory balance and the judgement required by the
Group involved in the key assumptions.
Our procedures included the following, amongst
others:
●
Assessing the Group’s accounting policies against
the requirements of Australian Accounting
Standards.
●
Assessed whether assumptions used to determine
fair value at the point of harvest were reasonable
with reference to committed sales contracts.
●
Evaluating net realisable value of the current year
almond crop inventory by comparing the value
held at 30 September 2024, to actual selling prices
achieved after year-end for a sample of items sold
or to a sample of committed sales contracts.
●
Tested the mathematical accuracy of key data
included in the calculation of the fair value of the
almond crop.
●
Evaluating the reasonableness of the disclosures
made in note 3.2 in light of the requirements of
Australian Accounting Standards.
Independent auditor’s report to the members of Select Harvests Limited
(continued)
Select Harvests Annual Report 2024
102
Key audit matter
How our audit addressed the key audit matter
Carrying value of right-of-use assets
(Refer to note 3.6)
During the year, the Group held right-of-use assets of
$188.0 million.
The Group assesses for indicators of impairment at the
asset Cash Generating Unit (CGU) level which is
determined to be the orchard level.
At 30 September 2024 the Group identified two leased
farms (Yilgah and Mooral) that had indicators of
impairment present.
The Group performed an impairment assessment for
the CGU’s, 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”). Significant assumptions to the future
cash flows included harvest yields and almond pricing.
The impairment assessment resulted in a $6.6 million
impairment to the Yilgah CGU, with no impairment to
the carrying value of the Mooral CGU.
We considered the carrying value of right-of-use assets
to be a key audit matter because of the financial
significance of the carrying value and the significant
judgements and assumptions applied by the Group in
estimating forecast future cash flows.
Our procedures included the following, amongst
others:
●
Assessing whether the Group’s determination of
the Cash Generating Unit (CGU) was consistent
with our knowledge of the Group’s operations.
●
Testing the mathematical accuracy of key data in
the model.
●
Considering the historical accuracy of the Group’s
forecast to actual performance.
●
Comparing the forecast cash flows used in the
model with the forecasts formally approved by the
Board.
●
Assessing whether the significant assumptions
used in the model, including forecast harvest
volumes and almond pricing, were appropriate
with reference to external market data, where
available.
●
Assessing whether the discount rate applied in the
model was appropriate, based on market
information.
Evaluating the reasonableness of the disclosures
made in note 3.6, including key assumptions, in light of
the requirements of the Australian Accounting
Standards.
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 2024, but does not include
the financial report and our auditor’s report thereon. Prior to the date of this auditor's report, the other
information we obtained included the Directors' Report, the Message from the Chair of the
Remuneration and Nomination Committee, Corporate information and ASX Additional Information. We
expect the remaining other information to be made available to us after the date of this auditor's report.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon through our opinion on the financial report. We
have issued a separate opinion on the remuneration report.
Independent auditor’s report to the members of Select Harvests Limited
(continued)
Select Harvests Annual Report 2024 103
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report in accordance
with Australian Accounting Standards and the Corporations Act 2001, including giving a true and fair
view, and for such internal control as the directors determine is necessary to enable the preparation of
the financial report that is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in the directors’ report for the year ended
30 September 2024.
In our opinion, the remuneration report of Select Harvests Limited for the year ended 30 September
2024 complies with section 300A of the Corporations Act 2001.
Independent auditor’s report to the members of Select Harvests Limited
(continued)
Select Harvests Annual Report 2024
104
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Alison Tait Milner
Melbourne
Partner
29 November 2024
Independent auditor’s report to the members of Select Harvests Limited
(continued)
Select Harvests Annual Report 2024 105
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 2024.
The number of shareholders, by size of holding, in each class of share is:
Number of ordinary shares
Number of shareholders
1 to 1,000
3,985
1,001 to 5,000
3,185
5,001 to 10,000
902
10,001 to 100,000
743
100,001 and over
47
The number of shareholders holding less than a marketable parcel of shares is:
58,472
1,059
(b) Twenty largest shareholders
The following information is current as at 31 October 2024.
The names of the twenty largest registered holders of quoted shares are:
Number of shares Percentage of shares
1
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
27,020,784
19.01
2
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
21,780,827
15.33
3
CITICORP NOMINEES PTY LIMITED
19,979,849
14.06
4
UBS NOMINEES PTY LTD
16,702,802
11.75
5
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
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