Ann: Response to ASX Aware Letter, page-3

My main issue was that the company released the announcement after 4.00: In my opinion, companies should not release any major announcements after the market as closed as a matter of policy. It is just a bad look.

However, it is possible that the company may have been justified in not marking the announcement as 'price sensitive'.

There are two reasons I say this: firstly, I think you could argue that the expected crop for this year (15,750-16,250 tonnes) was not being priced into the company anyway, with the share price hovering below the $6.00 mark so far this year.

Not only that, this years harvest is still probably going to be above that of last year: take the lowest range of the new estimate (15,750) and assume a 5% drop: that equates to just under 15,000, or about a 5% increase on the harvest last year. (Keep in mind the crop last year weighed in at 14,200 MT. )

Interestingly, on page 8 of the 'Investor Day Presentation' in late March, there is a bullet point that states 'First impression- quality and volume exceeding expectations'. Given the subsequent downgrade, that would seem to imply that the issue was confined to one of the almond growing regions: my guess would be that NSW is the problem child here.

The second reason I think that Select may have had some justification in not marking the announcement as price sensitive is because it is possible that the downgrade may not be quite as bad as suggested in the announcement.

Earlier this week, one regional news site, The Weekly Times, put up an article about the company which quoted Paul Jensz from PAC Partners.

Hopefully over the next couple of months as they process more nuts they’ll firm up where that production is,” PAC Partners executive director of research Paul Jensz said.

“If the downgrade is what we expect based on our conversations with other participants in the market, it will only be 2 to 3 per cent, rather than 5 to 10 per cent as Select Harvests has predicted."

Keep in mind that the downgrade to the crop forecast was announced in the PAC Partners conference presentation, so it is possible Jensz knows more than he is letting on.

So assuming the information in the article is accurate, the company may have been being conservative when they announced the 5-10% downgrade, the crop may only be down a few percentage points on the original estimate.

Even so, my feeling is it will still probably be down about 5% on the original estimate, because at this point there is more downside risk than upside risk: it might become apparent that some nuts have been damaged by insects, for example.

Still, hopefully Jensz will be proven correct in this case.