What: Leading Australian almond producer Select Harvests Limited (ASX: SHV) today announced its results for the 12 months ending 30 June 2014. The company revealed an impressive 27% increase in net profit after tax (NPAT) to $29 million (compared to underlying NPAT of $22.9 million in FY13) and an 11% increase in earnings before interest and tax (EBIT) to $41.8 million.
Select Harvests' shares have also entered into a trading halt pending the announcement of an acquisition and capital raising.
So What: It's been a mixed year for shareholders of Select Harvests. After its shares hit a high of $7.24 in March, they have since fallen back down to just $5.97 following the announcement of wet weather affecting crop production. Select Harvests today reported that crop production had fallen by 17%, although this was partially offset by a 33% rise in the price of almonds.
Here are some of the other highlights of the report…
- Earnings per share (EPS) up 25% to 50.2 cents per share (cps), which beat Morningstar's forecast of 47cps
- Final dividend of 9cps (unfranked), taking full-year to 20cps
- Operating cash flow of $23.1 million, compared to $4.1 million in FY13
- Net debt of $94.8 million, with gearing of 52%
Capital Raising: The company hopes to raise $47 million in a fully underwritten placement to institutions and sophisticated investors at a fixed price of $5.35 (10.4% discount to closing price) in order to fund committed acquisitions and enhance Select's capacity to fund further growth. Meanwhile, a share purchase plan (SPP) will also be extended to eligible investors in Australia and NZ, up to a maximum of $15,000 per shareholder.
Now What: Select Harvests is set to continue benefiting from a severe (and intensifying) drought affecting production in the United States as well as changing consumer health trends. Although the company faces a number of risks, including weather conditions, global almond prices and a legal dispute with Almas Almonds (of which the company does not expect it will be found liable), I believe it is posing as a strong prospect for long-term investors.
