Alterra : Annual Report

onlyuse ANNUAL REPORT FOR THE YEAR

personalENDED 30 SEPTEMBER 2021

ABN 20 129 035 221

Alterra Limited and Controlled Entities

Annual Report

for the year ended 30 September 2021 For

CONTENTS
CORPORATE INFORMATION .....................................................................................................	3
CHAIRMAN'S MESSAGE ............................................................................................................	4
REVIEW OF OPERATIONS......................................................................................................	5-8
DIRECTORS' REPORT............................................................................................................	9-21
onlyCORPORATE GOVERNANCE STATEMENT ................................................................................	22
AUDITOR'S INDEPENDENCE DECLARATION ............................................................................	23
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME..................................................	24
useCONSOLIDATED STATEMENT OF FINANCIAL POSITION...........................................................	25
personal
CONSOLIDATED STATEMENT OF CASH FLOWS .......................................................................	26
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ...........................................................	27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS .................................................	28-62
DIRECTORS' DECLARATION.....................................................................................................	63
INDEPENDENT AUDITOR'S REPORT ...................................................................................	64-67
ASX ADDITIONAL INFORMATION............................................................................................	68
TWENTY LARGEST SHAREHOLDERS ........................................................................................	69
For

Alterra Limited Annual Report 2021

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CORPORATE DIRECTORY

ABN 20 129 035 221

Directors

Mr JOHN McGLUE, Interim Executive Chairman onlyMr MARK CLEMENTS, Interim Executive Director

Mr JOHN PALERMO, Non-Executive Director

C mpany Secretary Mr MARK CLEMENTS

usePrincipal & Registered Office

144 NORTHWOOD STREET WEST LEEDERVILLE WA 6007

personalTELEPHONE: [phone]

Auditors

HLB MANN JUDD (WA PARTNERSHIP)

LEVEL 4, 130 STIRLING STREET

PERTH WA 6000

For

Share Registry

AUTOMIC REGISTRY SERVICES LEVEL 2, 267 ST GEORGES TERRACE PERTH WA 6000

TELEPHONE: [phone]

Solicitors

THOMSON GEER

LEVEL 27, EXCHANGE TOWER 2 THE ESPLANADE

PERTH WA 6000

Securities Exchange

AUSTRALIAN SECURITIES EXCHANGE LEVEL 40, CENTRAL PARK

152-158 ST GEORGE'S TERRACE PERTH WA 6000

(ASX: 1AG)

Alterra Limited Annual Report 2021

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CHAIRMAN'S MESSAGE

Dear Fellow Shareholders,

2021 has been a year of significant advancement for Alterra, with a major focus on the development of our flagship Carpenters avocado project and a pivot to a direct ownership approach to its development.

onlyThe Company's Carpenters project is located in Western Australia's south-west, in the premium horticultural corridor between Pemberton and Manjimup. With planned development of up to 300ha on the site, we believe Carpenters has the potential to be the single biggest avocado orchard in Western Australia.

The year has also been noteworthy for the continued disposal of legacy assets within the Company and an exploration of how to best leverage

Alterra's investment in Carbon Conscious Investments Limited (CCIL), which manages properties that generate carbon credit units for major energy groups.

Behind each of these sits a desire by your Board of Directors to protect and enhance shareholders' interests, which has been challenging in the past year given falling avocado prices and rising cost inputs in the COVID economy.

useThis is something Alterra has explored in FY21 in conjunction with agribusiness experts Pendulum Capital, which the Company engaged to advise on the Carpenters project and to project manage Stage 2 development.

However, Carpenters' potential extends beyond growing avocados given the size and quality of the water resource on site and possibility it could play a role in government efforts to drought-proof the region to protect the valuable horticultural sector.

Alterra's entry to the project was a desire to productive repurpose land and water for production of premium food produce but now we are seeing the emergence of the value of the water resource in its own right.

Pendulum is associated with Penagri Capital Pty Ltd led by successful agribusiness investors and operators Peter Fogarty and Greg Harvey, which participated in a $3.7 million capital raising along with the Company's biggest shareholder Sandon Capital.

Pendulum Capital has provided extensive advice to Alterra on all aspects of the project's development and has played a central, hands-on role in preparation for and the roll out of Stage 2 and managing water supply security beyond Stage 2 with landowner, Red Moon Holdings Pty Ltd, which is constructing the major dam on site.

Unfortunately, unseasonably high rainfall in winter and spring meant that our Stage 2 planting program was heavily curtailed, with the major c mponent deferred. While this was disappointing and beyond our control, it did afford us the opportunity to work on optimising property infrastructure including planned development of dams, clearing of land, acquisition of machinery, and plant and buildings in preparation for later tages of the project.

In line with advice from Pendulum, the revised development strategy for Carpenters focuses on

-	Higher density plantings
-	Overall reduction in Capex per tree in the ground
-	High performance micro sprinklers including retro fitting to existing infrastructure
-	Additional water storage capacity to capture off stream water on site
-	Reduced Spring 2021 planting to approximately 7Ha
personal	Balance of Stage 2 planting in Spring 2022
-
-	Enhanced drainage and infrastructure on site
-	Commencing preparations to plant up to 60,000 trees across 85Ha in Spring 2022

ForDespite the unusual climatic challenges this year, we consider the Pemberton region to be relatively climate resilient. We believe sustainable, environmentally responsible agriculture ventures are capable of delivering a strong bottom line operationally and attracting a premium from investors with an appetite for ethical investing. In doing this, we will maintain an unswerving commitment to growing value for Alterra shareholders.

At all times, Alterra's approach is to optimise value for our investors, hence the cautious, incremental approach to the build-out of Carpenters. We are fiercely protective of our shareholders' interests, and this will be reflected on how we approach and manage our investment in the project.

Alterra is also actively assessing options for our 15% shareholding in CCIL, which operates in a sector of growing investor interest. CCIL's Board has informed shareholders it is negotiating on a potential takeover offer, though at the time of this report no further details have been released. Aside from the shareholding in CCIL, Alterra continues to receive management fees, an annual fee in relation to a performance guarantee and an annual dividend.

As we move through FY22, Alterra's Board is especially focused on growing value for our investors, which is our primary objective. We greatly appreciate the loyalty and support of our fellow shareholders and we're dedicated to delivering value.

John McGlue

Interim Executive Chairman

Alterra Limited Annual Report 2021

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REVIEW OF OPERATIONS

Dear Fellow Shareholders,

It is with pleasure that I outline our major achievements throughout this past year.

Operational Highlights
only	Leading investment management and corporate advisory firm Pendulum Capital Pty Limited engaged to project manage the planting program
(a)
	for Stage 2 of the Company's flagship Carpenters avocado project in Western Australia's south-west;
(b)	A company associated with Pendulum Capital Pty Limited, led by successful agribusiness investors and operators Peter Fogarty and Greg
	Harvey, acquired a 17.42% stake in the Company;
(c)	Field preparation of the Stage 2 development block progressed with planting commenced in mid-December 2021;
(d)	Advanced progress towards future development at Carpenters, including equipment procurement, drainage, irrigation and site works;

use( )

(f)

(g)

(h)

R&D five-hectare trial site planted in October 2020 and tree growth monitored throughout the year;

Construction commenced of a large-scale water asset by the landowner at Carpenters;

Subsequent to year end, the Company announced the appointment of highly credentialled avocado grower Ben Norrish as Head of Horticulture and to oversee the development of the Company's Carpenters Project.

Subsequent to year end, the Board was notified by Carbon Conscious Investment Limited ('CCIL') of an unsolicited partial offer for 19.9% of CCIL and negotiations for a full takeover bid.

personalC rpenters Project - Stage 2

Alterra's focus has been on development of the Carpenters Project.

As part of this strategy, in July 2021, the Company announced that leading investment management and corporate advisory firm Pendulum Capital Pty Limited ('Pendulum') had been engaged to project manage the coming planting program for Stage 2 of the Company's flagship Carpenters av cado project in Western Australia's south-west (Carpenters Project).

Pendulum is led by successful agribusiness investors and operators Peter Fogarty and Greg Harvey and is associated with Penagri Holdings Pty Ltd

- a 17.42% shareholder in Alterra. The Pendulum team has decades of experience in developing and managing large-scale, highly profitable agriculture projects, including rehabilitation and planting programs.

The engagement of Pendulum was made following a request by the Alterra Board for Pendulum to assume a project management role and reflects the outcome of a strategic and operational review conducted by Pendulum and instituted by Alterra's Board of Directors to ensure the Carpenters Project is optimally developed.

For

Stage 2 ground preparation

In August 2021, the Company announced an update on the approach to the planting program for Stage 2. It was noted that whilst field preparations had progressed to the extent possible, due to the unseasonably heavy rain in WA's south-west, a substantial portion of the site preparation had

Alterra Limited Annual Report 2021

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