CONTINUOUS DISCLOSURE

The Corporation Act 2001 sets out continuous disclosure obligations. These obligations must be observed by both listed and unlisted disclosing entities.

The 2006 Grower Project & Asset Trust and the 2007 Grower Project & Asset Trust are classified as unlisted disclosing entities as they are registered managed investment schemes with 100 or more members who hold interests in the scheme under an offer made under a PDS. AIL as the responsible entity (RE) of the registered schemes is responsible for their compliance with the obligations in section 675 of the Corporations Act.

ASIC Regulatory Guide 198 "Unlisted Disclosing Entities: Continuous disclosure obligations" aims at facilitating continuous disclosure via a company's website. The AIL website will be used as per RG 198 recommendations. At present there are no issues that require disclosure on this website.

In addition, please note that the above referenced managed investment schemes are audited biannually and the audit reports are made available to investors. AIL also holds an annual investor seminar so that investors have the opportunity to meet and ask questions of AIL's senior financial and orchard management teams.

FLOOD UPDATE - NO DIRECT THREAT TO AIL ORCHARDS

The Murray River has already peaked in the areas surrounding Swan Hill and we are pleased to report there is no direct threat to the orchards as they are approximately 4 kilometres from the River and are well above the River (that is, the Murray River would need to vertically rise substantially more than it has to date before the orchards would be affected).  We are also glad to advise that there is no threat to the river pumps or electrical installations on the river bank.  The electrical infrastructure was deliberately constructed 300mm above the peak flood levels recorded in 1956 which has proven to be a very prudent decision.

The orchards have been very wet from the significant amount of rain (250mm) that fell across the Mallee region in four days in January.  The low lying areas of the orchards accumulated substantial water which required the Orchard Manager to drain these areas with pumps.  The orchards received another 50mm of rain over the weekend of 4-6 February.  Fortunately this second rainfall event was steady rain and soaked into the soil rather than accumulated like it did with the January rains.  As a result it did not give rise to any significant issues.  However, some additional drainage pumping was conducted to access the tree rows to prepare them for harvest (i.e. to remove weeds and level rows). The continuous rain is making the harvest preparation more difficult as more weeds grow with more rainfall.  Despite these kinds of difficulties, we are succeeding in preparing the orchards for an efficient harvest. 
          
We estimate that the cost of the flood clean up measures undertaken to date and the steps we are taking to mitigate the impact of any future flood conditions will be approximately $150,000.  We are currently undertaking an orchard survey to determine the number of water logged trees that have been lost and the number of trees that have been affected (but will survive). At this stage, we believe that, across all Projects, tree losses will be less than 10,000.  Of course, any trees losses are of concern, but given that there are over 390,000 trees in the orchards, tree losses of about 3% are not catastrophic. We will be able to provide the results of the survey when they become available. We intend to replant many of the dead trees and only areas that are assessed unplantable will be retired to water removing eucalyptus trees.

We are fortunate that these rain events occurred early-mid February, before the harvest scheduled for late February.  Heavy rainfall does pose a threat to the harvest and if it continues we may lose some almonds due to severe staining or mould.  To minimise any almond losses, we plan to harvest using two eight hour shifts, reducing the length of the harvest and allowing the almonds extra time to dry if needed (whilst still meeting harvest timelines)

DISCLOSABLE EVENT - Industry Biennial Crop Update – December 2010

The entire Australian Almond Industry, from South Australia through Victoria to New South Wales, is experiencing a biennial cropping cycle.  Trees that are in a biennial cropping cycle produce large amounts of growth at the expense of large crops.

The Almond Board of Australia has tried to obtain information as to why this has happened but has been unsuccessful in determining a specific cause. The issues are complex and probably involve the impact of the drought over the last few years and the associated environmental issues since the spring of 2009.  These factors combined to produce significantly lower flower numbers and flower set (i.e. nuts set per 100 flowers) in August/September 2010. Less flowers on the trees for bees to pollinate and the fewer number of flowers being successfully pollinated has led to lower almond production across the industry.   This is an unusual phenomenon, the scale of which has not been seen for a very long time.  We would not expect to see it happen again during the Project term unless the exceptional horticultural conditions of recent times are repeated. In modern almond orchards with no restrictions to inputs (e.g. water) or the occurrence of significant environmental events (e.g. frost), the incidence and the degree of biennial bearing is normally minimal. 

The accelerated tree growth and the better water supply over the medium term should result in larger amounts of flowers on the trees in August 2011 and beyond and a return to historical levels of fruit set.  Clearly, the rapid increase in growth this year is very beneficial to future crops and investors’ future cash flows but the smaller 2011 crop will have a significant impact on short term almond harvest proceeds.