Ann: Almond Update , page-9

Paoloh : Hi when I produced my model( in September 2013 - really updated it)to see if the company would need cash it projected based upon the ageing of their orchards (owned) and its yields over the past 2 years 2011 and 2012. This model suggested that they were yielding around 85% of a bad years yield in 2012 and around 74% of a bad years production in 2011.

These are factors that have hit not only SHV but others farming in the areas they have orchards in.

WA orchards have not yet got top the maturity to see any impact negative or positive 2013 will be the first. However they noted that the yield and maturity did not have issues its operational costs and that Belvedere diverted capital from WA as the opportunity was compelling.

In my discussions never once have they suggested selling WA plantations - ie the 4000 acres they have planted. sale of the excess land or maybe a partial sale of the entire project but then an increasing planting is what I have heard. They suggested that in their presentations as well.

Personally I dont believe that anyone can tell what the harvest will be now -they can only indicate what they expect based upon an eyeball review. However based upon my continued aged projection they would or should yield 21% higher even at only 85% of a bad years yield. So my view is that they have stated that should yields be similar to last year and the age profile continues to grow the tons yielded, we are looking at a yield that's 20% higher than 2012. If the trend is further improvement back to the norm than it could be a lot higher.

I don't get your need to sell assets or raise capital. I don't have your model so cannot comment on it. That yields are below the bad years expected yield are true but true of those in those areas other than SHV as well.

Personally I have always felt that controlling the brand is as important as controlling the farm. I was very concerned when they were looking to sell their retail and production arms.

I am happy with the fact that they stay in business and ride onwards until full production in WA and then the business should do well. I however would love them to be able to take up opportunities if they hit the market. I don't believe they have that flexibility any more and I think that that is a major constraint. they may well say that that will be done with an acquisition but I would rather a full rights issue to all shareholders and no cheap shares to Soph's.

As regards WBA - I held this share when it had as its major assets a significant hold in Tassal (TGR)- They did not listen to their major shareholders views and they sold their shares. At the heart of this was the intention to sell off Tassal after they had earlier proposed to increase their investment in this area. Really the Tassal shares were sold IMO to shore up a balance sheet constantly being devastated by an ill-timed venture in Carrots. During all these few annual and half year reports I could not understand what was the objectives and each review had more and more IMO snow rather than a frank and real explanation of what and why things were happening. I sold out and did not lose a lot. I then decided to re-enter when they got out of everything except for Walnuts and Onions. In 2008 their share was around $1.75 and it just kept going down. For shareholders it has been a bad investment. I thought that management and the information flow had changed. IMO it has not - A non executive director resigns , you then do a deal selling him 15% of the company at a the discounted price and then let him participate in the rights issue to all shareholders. You invite him back on the board etc etc. The discount may well be normal but IMO the circumstances were not. On the few occasions I have managed to speak to someone I have never got any real information about the yields and profile of the walnut operations , the onions are easier but age of orchard and yields and costs vs other countries are important. Walnuts have had a relatively high world price and that has supported them even in A$ since 2008. 24% of WBA orchards are over 12 years - I asked for breakdown didn't get it. No good telling me that 60% are almost at maturity when how much of 24% needs replacing.

I hold shares only within a JV company that I am an advisor to - I sold all my own because I could not get answers to many questions throughout the years.

I cannot see the reason why you would sell the 15% to a director who resigned when IMO the current shareholders would have taken the shares. They have also built a bit of a war-chest which I don't see the need for. Try and get an answer for any of that behaviour - personally IMO I dont think they really have any aligned interests with minority shareholders.

SHV in contrast are more open but sometimes in the past I have got the feeling they dont tell me everything. I like the new chairman but have no contact as yet with the new MD.