AAC Clyde Space Annual Report 2019

FY2019 Annual Report · AAC Clyde Space

Loading PDF…

Your Directors submit their report for the year ended 31 March 2019.

The names and details of the Company’s Directors in office during the financial period and until the date of this report are set out in the following
section. All of the Directors were in office for the entire period unless otherwise stated.

Mr McGauchie was appointed a Director on 19 May 2010 and subsequently Chairman on 24 August 2010. Mr McGauchie
is the Chairman of the Nomination Committee and a member of the Staff and Remuneration Committee.

Mr McGauchie is currently Chairman of Nufarm Limited and Director of GrainCorp Limited. His previous roles with public
companies include Chairman of Telstra Corporation Limited, Deputy Chairman of Ridley Corporation Limited, Director of
National Foods Limited, Chairman of Woolstock, Chairman of the Victorian Rural Finance Corporation (statutory
corporation), Director of James Hardie Industries plc, and also President of the National Farmers Federation. During 2011
he retired as a member of the Reserve Bank Board. In 2001 Mr McGauchie was named the Rabobank Agribusiness Leader of the Year, was later
awarded the Centenary Medal for services to Australian society through agriculture and business and in 2004 was appointed an Officer of the
Order of Australia.

During the past three years, Mr McGauchie has served as a Director of the following listed companies:

James Hardie Industries plc – resigned August 2016

Nufarm Limited* – appointed December 2003

GrainCorp Limited* – appointed December 2009

*Denotes current Directorship

Mr Killen was appointed Managing Director and Chief Executive Officer in February 2018. Prior to this, he held the
position of Chief Commercial Officer in a consulting capacity assisting AACo’s operations and finance functions.

Mr Killen is a highly experienced senior executive with over 25 years’ experience in global financial markets and has
worked in London, New York and Sydney.

Before joining AACo, Mr Killen spent 15 years at Westpac Institutional Bank. He held several senior executive roles which
included managing Westpac Banking Corporation’s North American business throughout the global financial crisis, and

finally as the Managing Director of Fixed Income, Currency and Commodities.

Mr Killen has also served as a board member of the Association for Financial Markets Global Foreign Exchange Division, sat on the Reserve Bank
of Australia’s (RBA) Australian Foreign Exchange Committee, and has represented Australia internationally as the RBA appointed member of the
BIS Working Group developing the Global Code of Conduct for foreign exchange markets.

Mr Killen is an alumni of the Kings School, Parramatta and Harvard Business School and a Member of the Australian Institute of Company
Directors. Mr Killen has a lifelong association with agriculture having being raised on pastoral properties in northern NSW and south-west
Queensland, and has retained strong personal involvement in the industry through private investments in farming.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Mr Black was appointed a Director on 5 October 2011. Mr Black is Chairman of the Audit and Risk Management
Committee and a member of the Nomination Committee.

Mr Black has extensive experience in agribusiness. He is a current non-executive director of NetComm Wireless Limited
and TPI Enterprises Ltd, a former director of Coffey International Limited and Country Education Foundation of Australia
Limited, and a past President of the Institute of Chartered Accountants of Australia. He was the inaugural Chair and is a
past Board Member of the Australian Accounting Professional and Ethical Standards Board. Mr Black is Chairman of the

Chartered Accountants Benevolent Fund Limited.

In 2012 he was appointed a Member of the Order of Australia for services to the profession of accounting, to ethical standards, as a contributor to
professional organisations and to the community.

During the past three years Mr Black has served as a Director of the following listed companies:

NetComm Wireless Limited* – appointed March 2013

TPI Enterprises Ltd* – appointed June 2016

*Denotes current Directorship

Mr Crombie was appointed a Director on 5 October 2011. Mr Crombie is a member of the Staff and Remuneration
Committee and is a member of the Audit and Risk Management Committee and the Nomination Committee.

Mr Crombie is a Director of Alliance Aviation Services Limited and Barrack Street Investments Limited. He was a founding
Partner and former Non-executive Director of the Palladium Group (formerly GRM International). He is former
Commissioner of the Australian Centre for International Agricultural Research (ACIAR) and a Director of Foodbank (QLD).
Mr Crombie is a former President of the National Farmers Federation, former Chairman of MLA and a former Director of

Grainco Australia, the Meat Industry Council and Export Finance Insurance Corporation.

Mr Crombie operates family properties, breeding cattle and farming in southern Queensland.

During the past three years Mr Crombie has served as a Director of the following listed companies:

Alliance Aviation Services Limited* – appointed October 2011

Barrack Street Investments Limited* – appointed June 2014

*Denotes current Directorship

Mr Keene was appointed a Director on 5 October 2011. Mr Keene is a member of the Audit and Risk Management
Committee, the Nomination Committee and Chair of the Staff and Remuneration Committee.

Mr Keene has had an extensive career in agriculture and is the former Managing Director of GrainCorp Limited, and is
currently a Director of the leading Australian wood fibre exporter, Midway Limited. He is also the former Chairman of Grain
Trade Australia Limited and a former Director of Cotton Seed Distributors Limited.

In 2007, Mr Keene was named the NAB Agribusiness Leader of the Year.

During the past three years Mr Keene has served as a Director of the following listed companies:

> Midway Limited* – appointed August 2008

*Denotes current Directorship

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Dr Shehan Dissanayake was appointed a Director on 27 April 2012 and appointed an Executive Director on 11 April
2017. Dr Dissanayake is a senior Managing Director and member of the Board of Directors of the Tavistock Group, a
privately held investment company. He has responsibility for portfolio strategy across 200 companies in 15 countries, and
is CEO of Tavistock Life Sciences, an operating unit of the Tavistock Group.

Before joining Tavistock Group in 2002, Dr Dissanayake was a Managing Partner of Arthur Andersen with responsibility for
strategy and business planning for the global legal, tax and HR Consulting Divisions of the firm, encompassing 1,600

partners and 15,000 professionals.

Earlier in his career, Dr Dissanayake was involved in the medical research and technology industries. He holds a Ph.D. in Pharmacological and
Physiological Sciences from the University of Chicago.

During the past three years Dr Dissanayake has not served as a Director of any other listed company.

Mr Abraham was appointed a Director on 7 September 2014. Mr Abraham is a member of the Nomination Committee.

Mr Abraham enjoyed 21 years in investment banking with the Macquarie Group gaining extensive experience in the
finance sector. In 2003 Mr Abraham established Macquarie’s agricultural funds management business and led the
business until he departed in 2011, at which time it had grown into a significant operation both in Australia and Brazil.

Mr Abraham holds a range of continuing non-executive directorships with companies within the Macquarie Group, acts as
a consultant to the Clean Energy Finance Corporation and works with ROC Partners, a private equity fund manager where

he focused on food and agricultural investments.

During the past three years Mr Abraham has not served as a Director of any other listed company.

Mr Reisman was appointed a Director on 10 May 2016. Mr Reisman is a member of the Audit and Risk Management
Committee, the Nomination Committee and a Managing Director and member of the Board of Directors of the Tavistock
Group. Since joining the firm in 2004, he has held multiple roles including chairing Tavistock Group’s Investment
Committee and having the General Counsel and Chief Financial Officer report into him.

Mr Reisman spends most of his time working with portfolio companies within the Tavistock Group. He has more than 30
years of business experience with emphasis on operations, legal, tax and finance. Previously, Mr Reisman worked at

various multinational companies, including Arthur Andersen and Amoco Corporation. He received his juris doctor in 1986 from the University of
Pennsylvania Law School and his bachelors of science in Accountancy in 1983 from the University of Illinois.

During the past three years Mr Reisman has served as a Director of the following listed companies:

> Mirati Therapeutics – resigned December 2018

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Ms Rudd was appointed a director on 15 November 2017.

Ms Rudd is founder of Jessica’s Suitcase, an e-commerce retail platform which offers high quality Australian products
direct to Chinese consumers through online cross-border channels. In 2018, Ms Rudd announced the sale of Jessica’s
Suitcase to eCargo Holdings (ASX:ECG), on whose board she serves as non-executive director.

Beginning her career as a media and intellectual property lawyer, Ms Rudd later worked in London as a crisis management
consultant for a global communications firm before moving to Beijing, where she lived and worked for five years.

Ms Rudd serves as Australia and New Zealand Lifestyle Ambassador for the Alibaba Group. Ms Rudd holds a Bachelor of Laws (Hons)/Bachelor of
Commerce from Griffith University and was admitted to the Supreme Court of Queensland as a solicitor in 2007. She was awarded the Griffith
University Arts, Education and Law Alumnus of the Year in 2013.

During the past three years Ms Rudd has served as a Director of the following listed companies:

eCargo Holdings* – appointed January 2018

*Denotes current Directorship

Mr Bennett was appointed Company Secretary and General Counsel in November 2006. Before joining the Company, he had held positions
including partner and special counsel in leading law firms, where he specialised in company and property law, mergers and acquisitions and other
commercial contracts. He has over 25 years’ experience in legal practice, having practised in both Queensland and New South Wales. Mr Bennett
is a Chartered Secretary and a member of the Australian Institute of Company Directors.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

As at the date of this report, the interests of the Directors in the shares, options and performance rights of the Company were:

CURRENT DIRECTORS

D. McGauchie

H. Killen

S. Black

D. Crombie

T. Keene

Dr. S Dissanayake

A. Abraham

N. Reisman

J. Rudd

EARNINGS PER SHARE

Basic loss per share

Diluted loss per share

ORDINARY SHARES

1,120,774

113,800

40,000

60,000

75,000

2,025,000

30,000

45,000

Nil

OPTIONS OVER
ORDINARY SHARES
Nil

Nil

PERFORMANCE
RIGHTS
Nil

2,042,476

Nil

31 MAR 2019
CENTS
(24.9)

(24.9)

31 MAR 2018
CENTS
(17.4)

(17.4)

No final or interim dividends were declared or paid during the current and prior financial periods.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

The Australian Agricultural Company (AACo) is an Australian beef company with a heritage dating back to 1824. AACo is Australia’s largest
integrated cattle and beef producer, and is the oldest continuously operating company in Australia.

AACo owns a strategic balance of properties, feedlots, farms and a processing facility comprising around 6.4 million hectares of land, which
equates to roughly 1% of Australia’s land mass. AACo specialises in grassfed beef and grainfed beef production. AACo employed 424 employees
calculated on a full time equivalent basis as at 31 March 2019 (31 March 2018: 601).

AACo is a fully integrated branded beef business with three principal activities:

Sales and marketing of high quality branded beef into global markets;

Ownership, operation and development of pastoral properties; and

Production of beef including breeding, backgrounding, feedlotting and processing of cattle.

AACo operates an integrated cattle production system across 19 owned cattle stations, 2 leased stations, 5 agisted properties, 2 owned feedlots,
and 2 owned farms located throughout Queensland and the Northern Territory.

AACo distributes branded beef to a range of customers across the world, tailoring its route-to-market model by country to capitalise on regional
opportunities. Despite having one of the largest cattle herds in the world, AACo produces less than 1% of beef consumed globally. The Company is
therefore large enough to obtain production efficiencies but small enough to target key markets and customers.

Meat sales

Cattle sales

Administration and selling costs

Statutory EDITDA loss(1)

Statutory EBIT loss

Net loss after tax

Net cash inflow/(outflow) from operating activities

Underlying Operating Profit/(Loss)(2)

31 MAR 2019
$000

246,244

117,837

(41,200)

(182,709)

(194,083)

(148,396)

12,990

23,720

31 MAR 2018
$000
Restated*
332,658

47,021

(41,413)

(35,325)

(127,967)

(102,559)

(39,864)

(13,481)

MOVEMENTS
$000

(86,414)

70,816

213

(147,384)

(66,116)

(45,837)

52,854

37,201

Operating Profit/(Loss)(1)
(1) The measure of Operating Profit is a key indicator which is used to monitor and manage the Company. It eliminates the potential distraction

(22,922)

(13,481)

(9,441)

caused by unrealised cattle valuation adjustments being recorded in the financial results, and is a better reflection of actual financial
performance under the control of management. Hence the Company believes that external stakeholders benefit from this metric being
reported. Operating Profit is unaudited, non-IFRS financial information.

Whilst Statutory EBITDA was a loss of $182.7 million in FY19 (loss of $35.3 in FY18), Operating Loss was $22.9 million ($13.5 million in FY18).

Operating Profit/Loss does not include unrealised livestock gains or losses, while Statutory EBITDA does include these.

(2) Underlying Operating Profit/(Loss) represents the Operating Profit achieved by the Company, excluding $45.6 million in livestock write-offs and

$1.0 million in emergency operating expenditure due to the Gulf flooding event in February 2019. Refer to note A1 for further details.

* Previously disclosed amounts for administration and selling costs have been restated, to account for meat sales freight previously included in
cost of meat sold. Additionally, to provide greater transparency on operating performance, Operating Profit replaces the previously reported
Operating EBITDA metric. Operating Profit values inventory movement at a cost of production rather than at various standard costs. Refer to
note G3 (c) and note A5 for further details.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

In FY19, Luxury/Prestige revenues and volumes were up on FY19, consistent with the Company’s branded beef strategy.

Luxury/prestige beef revenue – $ mil

Luxury/prestige beef kgs sold – mil kg CW(1)

Luxury/prestige beef sold – $/kg CW

Premium beef revenue – $ mil

Premium beef kgs sold – mil kg CW

Premium beef sold – $/kg CW

Livingstone beef revenue - $ mil

Livingstone beef kgs sold – mil kg CW

Livingstone beef sold - $/kg CW

Cattle sales – mil kg LW(1)

Cattle revenue – $mil

(1) CW – carton weight containing saleable boxed meat, LW – Live animal weight.

31 MAR 2019

187.3
14.0
13.35
20.3
2.3
8.70
28.9
5.2
5.60
46.2
117.8

31 MAR 2018
176.9

12.2

14.45

63.7

6.5

9.75

92.1

21.0

4.39

13.2

47.0

Kilograms produced is a measure of the number of kilograms of live weight of cattle grown throughout the breeding, backgrounding and feedlot
operations of the Company during the year. Historically, kilograms produced included offsets for attrition kilograms occurring during the period.
The prior year has been restated to exclude the offsetting impact of attrition kilograms, which has the effect of increasing kilograms produced.

Cost of production is a measure of the operating costs incurred to produce a kilogram of live weight of cattle throughout the breeding,
backgrounding and feedlot operations of the Company during the year. Restatements to the prior year are a result of removing the offsetting
impact of attrition from the number of kilograms produced. Reducing kilograms produced by attrition kilograms reduces the transparency of
production costs. The Company therefore believes that measuring production costs against kilograms gained, without attrition offsets, is a better
measure of production efficiency. The impact of attrition is disclosed in note A3. The cost of production increased by 46% in FY19 which is a
reflection of drought conditions increasing feeding and transport costs as we moved a significant number of cattle to leverage our diverse property
portfolio.

Kilograms produced – mil Kg LW

Cost of production – $/kg LW

31 MAR 2019

68.9

2.88

31 MAR 2018
Restated
77.0

1.97

Australian Agricultural Company Limited | ANNUAL REPORT 2019

During FY19, the Company has continued to make progress implementing its premium branded beef strategy, which has been unaffected by
extreme seasonal impacts. The Westholme brand was launched in UAE in October 2018 and the Company is well progressed on plans for future
launches in larger scale markets. Further, the Company has driven growth across key markets in Asia.

During the year, the appointment of several key executive roles has completed our world class executive team which is driving cultural and
business transformation across the organisation.

Key decisions have been made by management which have simplified the business and created a more efficient AACo. During FY19:

Operations at the Livingstone Beef processing facility were suspended. Management continues to review strategic options around the facility

The 1824 program was discontinued

FY19 saw unparalleled challenging seasonal conditions, with extreme drought stretching across Queensland and the Northern Territory.

Management actively managed the drought, selling non-wagyu livestock to focus resources on investing heavily in feed and transport costs in
order to protect the Wagyu herd. During this challenging period, the Company was able to increase Wagyu numbers by 3%. This increase is
considered vital to ensuring the future success of the premium branded beef strategy and leaves the Company with a potential strategic supply
advantage over many wagyu producers.

Further, in February of 2019, the Gulf of Carpentaria region of North Queensland experienced a flood event that for some of the Company’s
properties was the worst flood on record. The flood resulted in a tragic loss of livestock life that no amount of preparation could have prevented.
Management has estimated that approximately 43,000 head were lost in this event.

Livestock Movements

Livestock balances have declined from the prior year due to headcount reductions of the non-wagyu animals and reduced market values of both
the wagyu and non-wagyu herd.

As a result of the Livingstone and 1824 decisions, a lower reliance on non-wagyu herd numbers has led to a decline in the non-wagyu headcount.
Further, the drought conditions have resulted in an increase in sales of these non-wagyu animals and the 43,000 cattle lost in the Gulf flood were
almost exclusively non-wagyu cattle.

Due to Management’s strategic investment in the wagyu herd during these tough conditions, this herd has seen a 3% increase in headcount year
on year.

Reflecting the tough season, market values of these animals have however declined over the past year, leading to a significant decline in the
value of cattle held at year end.

The Company’s ability to realise it’s premium branded beef strategy has not been impacted by these movements.

Property

Although it’s been a historically challenging season, property values have increased year on year. This increase is a reflection of Management’s
active investment in improving property infrastructure and carrying capacity, and also due to a market increase seen in comparable property
sales.

The FY19 results include a Statutory EBITDA loss of $182.7 million, driven by market value movements in the value of the closing herd of $89.0
million and Gulf flood write-offs and emergency expenses of $46.6 million.

In summary:

Underlying Operating Profit for FY19 was $23.7 million after adjusting Operating Loss for the $46.6 million impact of the Gulf flood livestock
write-offs and related emergency expenditure

Operating Loss of $22.9 million, compared with a loss of $13.5 million in FY18

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Statutory EBITDA loss of $182.7 million, compared with a loss of $35.3 million for FY18

Total sales revenue of $364.1 million, compared with $379.7 million in FY18, with lower volumes due to the Livingstone and 1824
decisions. Wagyu meat sales revenue was up 4.5% compared to FY18.

Cost of production increased by 46% in FY19, which is a reflection of drought conditions increasing feeding and transport costs for the wagyu
herd

Net tangible assets per share was $1.42 as at 31 March 2019, compared to $1.62 as at 31 March 2018, driven by reductions in the
livestock balance but offset by improvements in the property portfolio

The Company maintains a robust balance sheet, despite livestock declines, with comfortable headroom under existing bank covenants

Positive net operating cash flows of $13.0 million, compared with negative operating cash flows of $39.9 million in FY18

Gulf Flooding Event

In February 2019, a significant flood event swept through the Gulf of Carpentaria Region of North Queensland. At its peak, flood waters extended
400km from the Gulf to Julia Creek, and reached approximately 70km wide in many areas. For much of the region that experienced this event,
flood waters reached unprecedented levels.

The floods, running nearly half the length of the Flinders river, impacted four of AACo’s stations in the gulf region. Canobie, Wondoola, Carrum and
Dalgonally experienced infrastructure and livestock losses.

Approximately 82,000 head of cattle were exposed to this event, with total losses estimated at 43,000 head. Additionally, fencing and water
infrastructure on all four properties, as well as buildings at Wondoola station, were damaged.

Due to the significant nature and materiality of the event, Management have recorded estimates for the losses incurred on these properties.

Determining the extent of livestock losses, across these four stations’ 860,000 hectares of land, is inherently challenging. The losses recorded
were therefore based on the best available information of the event and Management’s best estimates and judgement.

These estimates were performed on a station by station basis, using a combination of observations of surviving animals and damaged
infrastructure, as well as applying expected survival rates by paddock against pre-event paddock records. Estimated survival rates were based on
Management’s understanding of livestock vulnerabilities in these events, knowledge of the land’s topography, as well an in-depth understanding
of how the event unfolded and how individual paddocks were impacted.

Livestock losses were estimated to be 43,000 head for a value of $45.6 million and recorded in the Income Statement as fair value losses on
cattle due to attrition – gulf flood write-off (see note A3).

The Company is committed to the identification, measurement and management of material business risks. The Company’s breeding and sales
programs to date have produced a herd with the right genetic and age profile to deal with the current and future geographic, weather and market
conditions. Day-to-day production risks are managed by management at stations and overseen by relevant General Managers. Appropriate
insurance coverage is maintained in respect of the business, properties and assets.

Price risks are managed, where possible, through forward sales of branded beef and over-the-counter foreign exchange derivatives.

The Company’s net tangible assets per share was $1.42 as at 31 March 2019, compared to $1.62 as at 31 March 2018. Net tangible assets of
the Company includes leasehold land assets.

The Board has reiterated its commitment to increasing shareholder value through incremental improvements to Return on Capital Employed
(ROCE) over time. The goal is to improve the quantity and quality of the Company’s earnings by increasing the Company’s exposure to premium
branded beef prices which are underpinned by rising incomes in both the developed and developing world. The medium term strategy will focus on
optimising our supply chains, implementing a differentiated branding strategy and investing in innovation and technology.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

In July 2018, the Company suspended processing operations at Livingstone Beef. Regular upkeep and maintenance of the facility and its
supporting assets continues, whilst the Board and management continue to review various strategic options for Livingstone Beef.

There have been no other significant changes in the state of affairs of the Company during the financial year.

There have been no significant events after the balance date which require disclosure in the financial report.

Some regulated areas of operation are: The operations of Goonoo and Aronui Feedlots are regulated by licences issued under the
Environmental Protection Act 1994 (Qld) and administered by the Queensland Department of Agriculture and Fisheries (DAFF). Each feedlot
is required to report to the National Pollution Inventory each year with respect to water, air and soil quality. DAFF conducts audits of
compliance with licence requirements at regular intervals.

The Company recorded no breaches of licence requirements in the year to 31 March 2019.

The pumping of water from the Comet River for irrigation and feedlot use at Goonoo Station is subject to licensing under the Sustainable
Planning Act 1997 (Qld) and the Water Act 2000 (Qld). Regulations specify minimum water flows and heights in the river to allow sufficient
environmental flows. Goonoo Station and Wylarah Station have licences to harvest water for irrigation purposes.

The pumping of underground water for the prescribed purpose of ‘Livestock Intensive’ requires licensing, and regular reporting and
monitoring.

The Company has several licences allowing this pumping subject to these regulations and conditions being met.

Stock watering facilities which utilise bores, require licensing in Queensland and registration in the Northern Territory.

Stock water facilities shared with Queensland Stock Routes are administered by local governments, guided by legislation and framework
developed by the Queensland Government. Shared water facilities need to comply with registered Stock Route water agreement
requirements. A Permit to Occupy is also required if this facility is unfenced within a station grazing area.

Vegetation Clearing Permits are sought under the Vegetation Management Act 1999 (Qld) for any clearing required for ongoing operations
including but not limited to the development of areas for land use change and the installation of infrastructure such as fence lines and water
development.

The Company continues to be involved in consultation processes; for example, in the areas of Water Resource Planning, Wild Rivers
legislation and the conversion of land titles in relevant areas.

The Company must abide by environmental and other obligations contained in Queensland’s State Rural Leasehold Land Strategy in respect
of the Company’s pastoral leasehold interests in Queensland. The State Rural Leasehold Land Strategy is a framework of legislation, policies
and guidelines supporting the environmentally sustainable, productive use of rural leasehold land for agribusiness.

Northern Australian Beef Limited (NABL), a wholly owned subsidiary of the Company, owns the Livingstone Beef Processing Facility and land
at Livingstone Farm, Noonamah, Stuart Highway, Northern Territory. NABL holds, and must comply with an Environmental Protection Licence
(EPL) under the Waste Management and Pollution Control Act (NT) for the storage, treatment, recycling and disposal of waste in connection
with the facility.

The EPL contains stringent and detailed environmental requirements overseen by the Northern Territory Environment Protection Authority
(NT EPA). NABL and the NT EPA continue to work together constructively to monitor compliance with the EPL.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

As at the date of this report, there were 5,882,736 unissued ordinary shares under performance rights.

An Executive Option Plan previously existed, for which no further grants will be made. The last options under this plan expired on 1 January 2019.

Option holders did not, and performance rights do not, have any right, by virtue of the option or performance right, to participate in any share issue
of the Company or any related body corporate or in the interest issue of any other registered scheme.

During the financial period and since the end of the financial period, there were no options exercised to acquire shares in the Company.

There were no performance rights exercised under the AACo Performance Rights Plan during the year to 31 March 2019.

Under the Company’s Constitution, each of the Company’s Directors, the Company Secretary and every other person who is an officer is
indemnified for any liability to the full extent permitted by law.

The Company’s Constitution also provides for the Company to indemnify each of the Company’s Directors, the Company Secretary and every other
person who is an officer to the maximum extent permitted by law, for legal costs and expenses incurred in defending civil or criminal proceedings.

Each Director has entered into a Deed of Access, Insurance and Indemnity, which provides for indemnity against liability as a Director, except to
the extent of indemnity under an insurance policy or where prohibited by statute. The Deed also entitles the Director to access Company
documents and records, subject to confidentiality undertakings.

The Company maintains Director’s and Officer’s insurance policies, to insure the Company’s Directors, Company Secretary and those Directors
and others of its subsidiaries. The Company has paid or has agreed to pay the premium for these policies.

The terms of the insurance contracts prohibit the Company from disclosing the level of premium paid and the nature of the liabilities insured.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

The Company’s Corporate Governance Statement sets out the corporate governance framework adopted by the Board of Australian Agricultural
Company Limited. This statement is publically available on the Company’s external website: www.aaco.com.au/investors-media/corporate-
governance.

The aim of the Board Skills Matrix is to set out the mix of skills that the Board currently has and is looking to achieve. It is a summary of the
Company’s internal assessments of the Board. Information is obtained from a Director review of skills and competencies completed for each
Director. This information is summarised into the Board Skills Matrix.

The board recognises that each Director will not necessarily possess experience in all areas relevant to the Company’s operations and therefore
seeks to ensure that its membership includes an appropriate mix of directors with skills, knowledge and experience in agriculture, other relevant
industry sectors, general management and finance. A summary of the Board’s skills, knowledge and experience is set out in the table below:

SKILL/KNOWLEDGE/EXPERIENCE
Leadership and Governance
Organisational Governance
Strategy
Government Relations
Previous ASX NED Experience
Previous ASX CEO Experience
Operations
Environment, Health and Safety
Work Health and Safety Committee Experience
Agribusiness
Farmer or Producer
Innovation
Information Technology
Sectoral Experience
Livestock
Beef Manufacturing
Sales
Branding and Marketing
Finance, Capital Management and Risk
Formal Accounting and Finance Qualifications (CPA or CA)
Capital Restructuring
Audit Committee Experience
Legal
People
People and Culture
Remuneration Committee Experience
Geographic Experience
International Markets
Asian Markets
USA Markets

OUT OF 9 DIRECTORS

9
9
8
5
1

7
6
7
3
7
5

6
3
4
5

3
6
8
4

9
5

8
7
6

Australian Agricultural Company Limited | ANNUAL REPORT 2019

This remuneration report for the year ended 31 March 2019 outlines the remuneration arrangements of the Company in accordance with the
requirements of the Corporations Act 2001 (the Act) and its regulations. This information has been audited as required by section 308(3C) of the
Act.

The remuneration report details the remuneration arrangements for key management personnel (KMP) of the Company, who are defined as those
persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or
indirectly, including any Director (whether executive or otherwise) of the Company.

For the purposes of this report, the term ‘executive’ encompasses the Managing Director/Chief Executive Officer (MD/CEO), senior executives and
Company Secretary of the Company and the Group.

The remuneration report is presented under the following sections:

Individual Key Management Personnel (KMP) disclosures

2. Remuneration at a glance

3. Board oversight of remuneration

4. Non-executive Director (NED) remuneration arrangements

Executive remuneration arrangements

Executive contractual arrangements

Link between remuneration and performance

Equity instruments disclosures

Loans to KMP and their related parties

10. Other transactions and balances with KMP and their related parties

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Details of KMP of the Company are set out in the following sections.

(i) Directors

D. McGauchie
H. Killen
Dr S. Dissanayake
N. Reisman
A. Abraham
S. Black
D. Crombie
T. Keene
J. Rudd
(1) Dr S. Dissanayake was appointed an Executive Director on 11 April 2017.
(2) The following Directors of the Company during the period were determined to be non-independent:

Chairman, Non-executive Director
Managing Director and Chief Executive Officer
Executive Director(1)
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director

Independent
Non-Independent(2)
Non-Independent(2)
Non-Independent(2)
Independent
Independent
Independent
Independent
Independent

Appointed 19 May 2010
Appointed 1 February 2018
Appointed 27 April 2012
Appointed 10 May 2016
Appointed 7 September 2014
Appointed 5 October 2011
Appointed 5 October 2011
Appointed 5 October 2011
Appointed 15 November 2017

H. Killen

Dr S. Dissanayake

Mr H. Killen is not considered independent by virtue of his executive office as Managing Director and Chief Executive
Officer.
Dr S. Dissanayake is not considered independent as he is an officer of Tavistock Group which controls the AA Trust which is
a major 44.85% shareholder of the Company and was appointed an Executive Director on 11 April 2017.

N. Reisman

Mr N. Reisman is not considered independent as he is an officer of Tavistock Group which controls the AA Trust which is
a major 44.85% shareholder of the Company and was appointed 10 May 2016

(ii) Directors who resigned or retired during the period

Nil

(iii) Executives

B. Bennett

Company Secretary/General Counsel

Appointed 20 November 2006

S. Grant

A. Speer

N. Simonsz

A. O’Brien

Head of People & Culture

Chief Operating Officer

Chief Financial Officer

Chief Commercial Officer

Appointed 20 September 2017

Appointed 30 July 2018

Appointed 1 August 2018

Appointed 17 December 2018

(iv) Executives who resigned, retired or otherwise ceased employment during the period

T. McCormack
D. FitzGibbon

Chief Operating Officer
Head of Strategy

Ceased employment 2 April 2018
Ceased employment 14 December 2018

There were no other changes to KMP after the reporting date and before the date the financial report was authorised for issue.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

CEO and Key Management Personnel (KMP)

Consistent with contemporary Corporate Governance standards, the Company’s remuneration strategy and policies aim to set employee and
executive remuneration that is fair, competitive and appropriate for the markets in which it operates whilst being mindful of internal relativities. The
Company aims to ensure that the mix and balance of remuneration is appropriate to reward fairly, attract, motivate and retain senior executives and
other key employees.

Appropriate remuneration policy settings will be achieved by consistently applying a clear remuneration strategy directed at supporting the Board
approved business strategy with appropriate and flexible processes, policies and procedures established by the Board from time to time.

Specific objectives of the Company’s remuneration policies include the following:

Provide competitive total rewards to attract and retain high calibre employees and executives

Provide fair and competitive fixed remuneration for all positions, under transparent policies and review procedures

Have a meaningful portion of remuneration “at risk”, dependent upon meeting pre-determined performance benchmarks

Link MD/CEO and senior executive rewards to achieving short, medium and long term key performance criteria

Establish appropriate and demanding performance hurdles for any executive incentive remuneration

Payment of cash bonus short term incentives (STI), which in the case of the MD/CEO are determined at the discretion of the Board after
assessing the performance of the Company and the MD/CEO against agreed performance hurdles

Offer participation in the long term incentives (LTI) plan to the MD/CEO and KMP

Provide Deferred Equity Awards (DEA), in the form of grants of performance rights to the MD/CEO and other senior executives with deferred
vesting of two years (50%) and three years (50%)

The actual DEA awarded to an executive is generally set at 50% of the amount of any STI actually paid to the executive

Australian Agricultural Company Limited | ANNUAL REPORT 2019

The following table illustrates the structure of the Company’s executive remuneration arrangements for the year ended 31 March 2019:

REMUNERATION
COMPONENT
Total fixed
remuneration (TFR)

MECHANISM
Comprises base salary, superannuation
contributions and any ‘packaged’
benefits including FBT grossed-up on a
Total Employment Cost (TEC) basis.

PURPOSE
To reward executives with competitive
remuneration with reference to role,
market and experience and internal
relativities.

Short term incentive
(STI) component

Paid in cash

Other payments

Paid in cash

Deferred Equity Award
(DEA) component

Deferred Equity
(Performance rights)

Long Term Incentive
(LTI) component

Deferred Equity
(Performance rights)

LINK TO PERFORMANCE
No link to Company performance
although it is reviewed annually and
consideration is given to the
performance of the Company and
business unit in the remuneration
review.

STI for executives is generally
calculated based on 80% Company
financial performance metrics and 20%
individual performance metrics.

No link to Company performance
although consideration is given to the
performance of the Company and
business unit prior to awarding this.

Generally 50% of the actual amount of
the STI cash bonus earned and subject
to two-year (50%) and three-year (50%)
service vesting conditions.

Rewards executives for their
contribution to achievement of
Company and business unit outcomes,
as well as individual key performance
indicators (KPIs).

To incentivise the sign-on of new KMP
or reward for successful project
completion.

Rewards executives for their
contribution to achievement of
Company and business unit outcomes,
as well as individual key performance
indicators (KPIs).

To better align remuneration of the
Company’s senior executives with the
long-term strategic goals of the
Company, as well as for retention.

Linked to achievement of the
Company’s targeted market
capitalisation as well as meeting
individual service conditions.

The current executive remuneration strategy can be represented broadly, as follows:

TOTAL FIXED
REMUNERATION
%
51
44-62

MD/CEO
Key Management
(1) 50% of cash bonus actually paid

Board remuneration

SHORT TERM
INCENTIVES
%
25
22-29

DEA
INCENTIVE(1)
%
13
12-15

LONG TERM
INCENTIVE
%
11
0-18

TOTAL TARGETED
REWARD
%
100
100

The Board seeks to set aggregate remuneration at a level for the non-executive directors that provides the Company with the ability to attract and
retain directors of the highest calibre, whilst incurring a cost that is acceptable to the shareholders. Board remuneration is tested on a regular
basis by independent benchmark assessments.

During the year ended 31 March 2019, Crichton & Associates, Rimfire Resources, Willis Towers Watson and Allens Linklaters have provided
assistance to the Company covering a range of remuneration matters, including the following:

Remuneration Strategy Review

Chief Executive Officer, Chairman, and non-Executive Director Remuneration

Senior Executive remuneration

Deferred Equity Award (DEA) benefit recommendations for the CEO and senior executives

Long Term Incentive (LTI) Plan administration

The independent assistance confirmed that Board and Executive remuneration at the Company were within market expectations and were
reasonable at that time. No recommendations have been made by these external parties as a result of the remuneration assistance.

In the year ended 31 March 2019, services provided by third parties totalled $186,992 (excluding GST and out-of-pocket expenses).

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Staff and Remuneration Committee

The Staff and Remuneration Committee currently comprises three independent non-executive Directors (Mr D. Crombie, Mr D. McGauchie and Mr
T. Keene (Committee Chairman)).

The Staff and Remuneration Committee is responsible for making recommendations to the Board on the remuneration arrangements of non-
executive directors (NEDs) and executives. The Staff and Remuneration Committee assesses the appropriateness of the nature and amount of
remuneration of NEDs and executives on a periodic basis by reference to relevant employment market conditions with the overall objective of
ensuring maximum stakeholder benefit from the retention of high performing Directors and an executive team. In determining the level and
composition of executive remuneration, the Staff and Remuneration Committee may also seek external advice as set out above.

Mr H. Killen (MD/CEO) attends certain Staff and Remuneration Committee meetings by invitation but is not present during any discussions
relating to his own remuneration arrangements.

Remuneration approval process

The Board is responsible for and approves the remuneration arrangements for the MD/CEO and executives, and all awards made under any
deferred equity award (DEA) and long term incentive (LTI) plan. The Staff and Remuneration Committee provide recommendations for these
remuneration arrangements and obtain independent remuneration advice as necessary. In the case of the MD/CEO, these arrangements are then
subject to shareholder approval.

The Board also sets the aggregate remuneration of NEDs, which is then subject to shareholder approval.

The Board oversees the MD/CEO’s recommendations for remuneration of senior executives with the assistance of the Staff and Remuneration
Committee and independent remuneration advice, where necessary.

The Board approves, having regard to the recommendations made by the Staff and Remuneration Committee, the level of any Company short-
term incentive (STI) payments to employees, including KMP’s and therefore the amount of any DEA entitlement. The level of STI payments to the
MD/CEO are determined separately by the Board. Any DEA entitlement resulting in an issue of securities for the MD/CEO must be approved by
shareholders.

Voting and comments made at the company’s 31 July 2018 Annual General Meeting (‘AGM’)

The Company received 84% of ‘for’ votes in relation to its remuneration report for the year-ended 31 March 2018.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Remuneration policy

The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain Directors of the highest
calibre, whilst incurring a cost that is acceptable to shareholders.

The amount of aggregate remuneration sought to be approved by shareholders and the fee structure is reviewed annually against fees paid to NEDs
of comparable companies. The Board considers advice from external consultants when undertaking the annual review process.

The Company’s Constitution and the ASX Listing Rules specify that the aggregate remuneration of NEDs shall be determined, from time to time, by
general meeting. An amount not exceeding the amount determined is then divided between the Directors as agreed. The latest determination was
at the AGM held on 23 August 2017, when shareholders approved an aggregate remuneration of $1,250,000 per year.

Structure

The remuneration of NEDs consists of Directors’ fees and committee fees. NED’s do not receive retirement benefits other than superannuation,
nor do they participate in any incentive programs.

Each NED receives a base fee for being a Director of the Company. An additional fee is also paid for each Board committee on which a Director sits,
with a higher fee paid if the Director is a Chairman of a Board committee. The payment of additional fees for serving on a committee recognises the
additional time commitment required by NEDs who serve on one or more committees.

The Board may also establish specialist subcommittees from time to time, comprised of directors, to oversee and report back to the Board on any
identified large or otherwise important projects. Generally, directors are not separately remunerated for membership of such subcommittees.

NED’s are encouraged to hold shares in the Company. Any shares purchased by the Directors are purchased on market, which is in line with the
Company’s overall remuneration philosophy and aligns NEDs with shareholder interests.

The remuneration of NEDs for the years ended 31 March 2019 and 31 March 2018 is detailed in the table on page 27.

Structure

Remuneration is determined as part of an annual performance review process, having regard to market factors, relevant comparative data, a
performance evaluation process and independent remuneration advice, where necessary.

In the year ended 31 March 2019, the executive remuneration framework consisted of the following components:

Fixed remuneration

Variable or ‘at risk’ STI remuneration including a Cash Bonus, the Deferred Equity Award (DEA), and the Long Term Incentive (LTI)

Total Fixed Remuneration (TFR)

Executives may receive their fixed remuneration as cash, or cash with non-monetary benefits such as health insurance, car allowances and tax
advisory services. Total fixed remuneration comprises cash and other benefits and entitlements to provide a base level of remuneration which is
both appropriate to the role and responsibilities, reflects current market conditions, the individual’s seniority and overall performance of the
Company and the relevant business units.

For most executives, superannuation is included in TFR.

Executive contracts of employment do not include any guaranteed base pay increases.

Senior executives are given the opportunity to receive a portion of their fixed remuneration in forms other than cash, such as motor vehicles, under
a framework that ensures the Company does not incur additional cost.

The fixed component of executives’ base fixed remuneration is detailed in the tables on pages 27 to 28.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Short-term incentives

The Company operates an annual STI program that is available to executives and employees and awards a cash bonus subject to the attainment of
Company, business unit and individual measures which are set at the commencement of the performance period.

The aim of the STI is to link the achievement of the Company’s annual and/or immediate financial and broader operational targets with the
remuneration received by the executives and senior employees responsible for achieving those targets.

The total potential STI is set at a level so as to provide sufficient incentive to executives to achieve the operational targets and at a cost to the
Company that is reasonable in the circumstances.

Actual STI payments awarded to each executive depend on the extent to which specific targets prescribed in the performance agreement for a
financial year are met. The targets consist of a number of key performance indicators covering financial and non-financial, corporate and individual
measures of performance.

These measures were chosen as they represent the key drivers for the short term success of the business and provide a framework for delivering
long-term value.

Under the arrangements approved by the Board the general principles that will apply are that the executive will receive a STI in the form of a cash
bonus that is generally set at a maximum of 40 to 50% of the executive’s total fixed remuneration. The STI will be paid within three months of the
financial year end on which the executive’s performance is being measured.

Executives who are paid an STI cash bonus will in addition receive a Deferred Equity Award (DEA) which is generally equal to 50% of the amount of
the STI cash bonus actually earned. The DEA is in the form of a grant of performance rights under the performance rights plan and is subject to two-
year (50%) and three-year (50%) service vesting conditions i.e. vesting of the DEA is subject to the executive still being employed by the Company at
the relevant vesting date.

The Company has a Good Leaver and a Bad Leaver Policy. If an executive ceases employment with the Company, then any unvested DEA will be
automatically forfeited. If the executive was a Good Leaver, then the Board will consider the circumstances of the cessation of employment and may
exercise its discretion to allow some or all of the unvested DEA to vest (and be exercised).

The Board assesses the performance of the MD/CEO against targets and determines actual STI payment based upon the recommendation of the
Staff and Remuneration Committee. The senior executives have a maximum STI set as a percentage of their respective TFR.

The MD/CEO assesses the performance of other senior executives against their targets and determines the actual STI with oversight by the Board
through the Chairman and the Staff and Remuneration Committee.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

The structure of the short-term incentive plan is as follows:

FEATURE
Maximum opportunity

Minimum opportunity

DESCRIPTION
Short-term incentives (STI)
CEO: 50% of fixed remuneration
Other executives: 40-50% of fixed remuneration

Deferred equity award (DEA)
CEO: 50% of short-term incentive cash bonus
Other executives: Generally 50% of short-term incentive cash bonus

Short-term incentives (STI)
CEO: 0% of fixed remuneration
Other executives: 0% of fixed remuneration

Deferred equity award (DEA)
CEO: 0% of short-term incentive cash bonus
Other executives: 0% of short-term incentive cash bonus

Performance metrics

The STI metrics align with the strategic priorities at both a Company and business unit level.
The general performance metrics and weightings for the KMP are as follows:

METRIC
Operating Profit
Operating Cash Flow
Individual performance metrics

WEIGHTING
40%
40%
20%

Delivery of STI

Board discretion

The STI is paid in cash generally in the next financial year.
The DEA is subject to two-year (50%) and three-year (50%) service vesting conditions. This encourages
retention and shareholder alignment.

The Board has discretion to adjust remuneration outcomes up or down to prevent any inappropriate
reward outcomes, including reducing (down to zero, if appropriate) any deferred STI award.

DEAs are provided to the MD/CEO and Senior Executives based on the level of STI earned each year. The last offer under this plan was made on 3
July 2017 and subject to two (50%) and three (50%) year service vesting conditions.

There is also a tax exempt share plan that may be utilised at the discretion of the Board for general employee equity participation. An Executive
Option Plan, for which no further grants were made, had a series of grants outstanding, the last of which expired on 1 January 2019.

The Board reviewed the incentive arrangements for executives and the MD/CEO in the current period.

The STI cash bonus for the MD/CEO or any other executive in respect of performance during the year to 31 March 2019 amounts to $nil (31
March 2018: $nil).

A DEA will not be issued in respect of performance during the year to 31 March 2019 (31 March 2018: $nil).

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Long-term incentives

Following an extensive review of its remuneration practises for employees and executives, the Board approved the Company’s adoption of a Long
Term Incentive (LTI) Plan on 9 May 2017 (LTI Plan Implementation Date). The LTI Plan better aligns remuneration of the Company’s senior
executives with the long-term strategic goals of the Company.

The introduction of an LTI Plan is consistent with the Company’s objectives for remuneration, which include providing competitive total rewards to
attract and retain high calibre senior executives, having a meaningful portion of remuneration “at risk” and, above all, creating value for
shareholders.

Performance rights under the LTI Plan will be granted in a number of rounds. The number of performance rights granted to eligible persons in each
grant round and the performance conditions applying to the vesting of those performance rights will be determined at the discretion of the Board.

It is currently contemplated by the Board that there will be four grant rounds in total. The following summary reflects the key features of the first
and second grant round and what is currently contemplated by the Board with respect to subsequent grant rounds:

FEATURE
Timing of grant

DESCRIPTION
Grants of performance rights in a grant round will not be made unless and until the specific
‘commencing’ market capitalisation of the Company for that grant round is achieved.

Performance condition

The commencing market capitalisation of the Company for the first grant round was the market
capitalisation of the Company on the LTI Plan Implementation Date.

The performance condition which applies to the vesting of performance rights in a grant round is the
achievement of the specific ‘target’ market capitalisation of the Company during the performance period
for that grant round.

The performance condition for the first grant round was satisfied on 5 June 2017.

Performance period

The performance period for each grant round is calculated by reference to the target market
capitalisation of the Company for that grant round and an assumed annualised growth rate of 20%.

Determination of market capitalisation
of the Company for the purposes of the
LTI Plan

For the purposes of calculating the market capitalisation of the Company in order to determine if the
commencing market capitalisation of the Company or the target market capitalisation of the Company for
each grant round has been achieved, the twenty day volume weighted average price (VWAP) of ordinary
shares in the capital of the Company will be used.

Vesting period

Number of available performance
rights

In each grant round, eligible persons may be offered a percentage of the “Total Available Performance
Rights” for that grant round (rounded down to the nearest whole number).

In respect of each grant round, the number of “Baseline Shares” will be the number of ordinary shares in
the Company acquired on market by the AACo Employee Share Trust in respect of that grant round having
an aggregate share acquisition price of $5 million.

In respect of each grant round, the number of “Total Available Performance Rights” will be

(a) the number of Baseline Shares for that grant round; plus

(b) the number of any Total Available Performance Rights for previous grant rounds which, at the time of
completion of acquisition of all of the Baseline Shares for that grant round and all previous grant rounds,
are not notionally allocated to a previous grant round.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

FEATURE
Lapsing conditions

DESCRIPTION
Holders of performance rights will be entitled to exercise those performance rights if they have vested
and have not otherwise lapsed.

If a change of control event for the Company occurs, the treatment of any unvested performance rights
will be within the discretion of the Board to determine.
The requirement to deliver shares in the Company upon the vesting and exercise of performance rights
under the LTI Plan must be satisfied by way of on market acquisition of shares in the Company.

Change of control event

On market acquisition of shares

The applicable commencing market capitalisation of the Company, performance condition and performance period for each contemplated grant
round are as set out in the following table:

FIRST GRANT ROUND

COMMENCING MARKET
CAPITALISATION OF THE
COMPANY
The market capitalisation of the
Company on the LTI Plan
Implementation Date

PERFORMANCE CONDITION
(TARGETED MARKET CAPITALISATION
OF THE COMPANY)
$1 billion

SECOND GRANT ROUND

$1 billion

$1.5 billion

THIRD GRANT ROUND

$1.5 billion

$2 billion

FOURTH GRANT ROUND

$2 billion

$2.5 billion

PERFORMANCE PERIOD
(CALCULATED USING AN ASSUMED
ANNUALISED GROWTH RATE OF 20%)
Within 2 quarters of the LTI Plan
Implementation Date (i.e. performance
period ends 30 September 2017)

Within 9 quarters of the LTI Plan
Implementation Date (i.e. performance
period ends 30 June 2019)

Within 16 quarters of the LTI Plan
Implementation Date (i.e. performance
period ends 31 March 2021)

Within 22 quarters of the LTI Plan
Implementation Date (i.e. performance
period ends 30 September 2022)

During the period the total number of shares purchased for the LTI Plan grant rounds one and two was 6,764,848 at an average price per share of
$1.478.

The performance condition for the first grant round of targeted market capitalisation of $1 billion was achieved on 5 June 2017. The rights
associated to the first grant round have been granted to the relevant senior executives at a fair value per right of $1.07. The second grant round
was granted to relevant senior executives on 11 January 2019 and are subject to a performance condition of target market capitalisation of $1.5
billion by 30 June 2019. The fair value per right of $0.055 was based on the Company’s share price on grant date and the expectation the market
condition would be reached.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Remuneration arrangements for KMP are formalised in employment agreements. Details of these contracts are provided below. Company
employees are employed by the subsidiary company A.A. Company Pty Ltd.

Total fixed remuneration

CEO DESCRIPTION
$600,000 including superannuation (subject to
annual review by Board)

SENIOR EXECUTIVE DESCRIPTION
Range between $303,000 and $550,000

Short Term Incentive (STI) Cash
Bonus
Deferred Equity Award

Maximum opportunity of $300,000 (50% of TFR) Maximum opportunity between 40 – 50% of TFR
Generally 50% of the actual amount of the STI
cash bonus earned

Generally, 50% of the actual amount of the STI cash
bonus earned

Long Term Incentive

Subject to Company performance conditions being
satisfied and the service conditions being met

Contract duration

Ongoing

The MD/CEO’s termination provisions are as follows:

NOTICE
PERIOD

PAYMENT IN
LIEU OF NOTICE

TREATMENT OF STI
ON TERMINATION

TREATMENT OF PERFORMANCE RIGHTS ON
TERMINATION

Employer-initiated termination

6 months

Termination for serious misconduct Nil
Employee-initiated termination

6 months

Part or all of 6
months
Nil
Part or all of 6
months

Not eligible

Not eligible
Not eligible

Unvested performance rights lapse unless Good
Leaver and Board exercises discretion to allow
Unvested performance rights lapse
Unvested performance rights lapse unless Good
Leaver and Board exercises discretion to allow

Upon termination, the MD/CEO is subject to 12 months’ restriction for competition, employee inducement and client solicitation.

Other Key Management Personnel

The executive service agreements for other senior executives generally reflect that of the MD/CEO.

Standard Key Management Personnel termination provisions are as follows:

NOTICE
PERIOD

PAYMENT IN
LIEU OF NOTICE

TREATMENT OF STI
ON TERMINATION

TREATMENT OF PERFORMANCE RIGHTS ON
TERMINATION

Employer-initiated termination

3 to 6 months Part or all of 3 to

Not eligible

Termination for serious misconduct Nil

6 months

Nil

Unvested performance rights lapse unless Good
Leaver and Board exercises discretion to allow

Not eligible

Unvested performance rights lapse

Employee-initiated termination

3 to 6 months Part or all of 3 to

Not eligible

6 months

Unvested performance rights lapse unless Good
Leaver and Board exercises discretion to allow

FY19 performance and impact on remuneration

The Company’s performance for the 12 months to 31 March 2019 in relation to the metrics for the payment of short term incentives for KMP,
being Operating Profit and Operating Cash Flow, were below the Board approved thresholds. As a result, no STI cash bonus payments have been
accrued or DEA issued with respect to the 2019 financial year.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

The following table provides an overview of the STI achievements against actual performance:

METRICS
Operating Profit
Operating Cash Flow

Statutory performance indicators

IMPACT ON INCENTIVE AWARD
Below target
Below target

The table below shows measures of the Company’s financial performance over the last five years. However, these are not necessarily consistent
with the measures used in determining the variable amounts of remuneration to be awarded to KMPs. As a consequence, there may not always
be a direct correlation between the statutory key performance measures and the variable remuneration awarded.

MEASURE
Profit/(loss) for the year attributable to owners ($000)

Basic earnings/(loss) per share (cents)

Dividend payments ($000)

Dividend payout ratio (%)

Increase/(decrease) in share price (%)

Operating cash flow ($000)

Additional statutory information

2019
(148,396)

(24.9)

2018
(102,559)

(17.4)

2017
71,586

13.2

2016
67,807

12.7

2015
9,623

1.8

(14%)

12,990

(31%)

(39,864)

28%

29,260

(19%)

30%

21,789

(75,881)

The table below shows the relative proportions of remuneration that are linked to performance and those that are fixed, based on the amounts
disclosed as statutory remuneration expense (refer to tables on pages 27 to 28).

FIXED REMUNERTATION

AT RISK – STI – CASH

AT RISK – STI – DEA(1)

AT RISK – LTI

2019

2018

2019

2018

2019

2018

2019

2018(2)

Directors
H. Killen

Dr S. Dissanayake

Executives

B. Bennett

S. Grant

N. Simonsz

A. Speer

A. O’Brien

84%

100%

70%

99%

100%

85%

100%

74%

100%

Former Executives

T. McCormack(3)

100%

D. FitzGibbon(4)
(1) Based on the share based payment expense incurred by the Company in relation to a prior year award.
(2) Percentages disclosed are the fair value of rights to be granted under the LTI plan.
(3) T. McCormack ceased employment with the Company on 2 April 2018.
(4) D. FitzGibbon ceased employment with the Company on 14 December 2018.

84%

16%

27%

15%

24%

16%

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Performance based remuneration granted and forfeited during the year

For each STI cash bonus and grant of rights to deferred shares (refer to tables on pages 27 to 28), the percentage of the available bonus or grant
that was paid, or that vested, in the financial year, and the percentage that was forfeited because the person did not meet the service and
performance criteria is set out below. The minimum value of the rights yet to vest is nil, as the rights will be forfeited if the key management
persons fail to satisfy the vesting condition. The maximum value of the rights yet to vest has been determined as the amount of the grant date fair
value of the rights that is yet to be expensed.

CURRENT YEAR STI ENTITLEMENT (CASH BONUS AND DEA)

Total Opportunity ($)

Awarded %

Forfeited %

Directors
H. Killen

Executives

B. Bennett

S. Grant

N. Simonsz(1)

A. Speer(1)

A. O’Brien(1)

Former Executives
T. McCormack(2)

450,000

253,011

197,100

273,493

248,203

105,781

5,513

100%

94%

100%

D. FitzGibbon(3)
(1) The above opportunity has been adjusted for the number of days of employed as KMP during the year, for each of the relevant employees.
(2) T. McCormack ceased employment with the Company on 2 April 2018.
(3) D. FitzGibbon ceased employment with the Company on 14 December 2018.

270,232

100%

Australian Agricultural Company Limited | ANNUAL REPORT 2019

SHORT TERM

POST-
EMPLOYMENT

LONG-TERM
BENEFIT

TERMINATION SHARE BASED PAYMENT

CASH
BONUS

NON-
MONETARY
BENEFITS

SUPER-
ANNUATION

LONG SERVICE
LEAVE(1)

SHORT TERM
INCENTIVE
(DEA)(2)

PERFORMANCE
RIGHTS (LTI)(3)

TOTAL

BENEFITS

23,750

21,474

11,875

10,762

12,350

11,237

9,500

8,387

13,300

12,187

10,149

3,592

12,964

20,089

3,341

12,964

101,013

N/A

273,750

247,519

136,875

124,046

142,350

129,521

109,500

96,671

153,300

140,471

115,000

103,284

109,500

41,400

239,800

224,447

129,919

811,481

18,708

122,961

129,919

2,091,556

SALARY &
FEES

DIRECTORS
Non-executive Directors
D. McGauchie
31/03/2019

250,000

31/03/2018

226,045

S. Black
31/03/2019

125,000

31/03/2018

113,284

D. Crombie
31/03/2019

130,000

31/03/2018

118,284

A. Abraham
31/03/2019

100,000

31/03/2018

88,284

T. Keene
31/03/2019

140,000

31/03/2018

128,284

N. Reisman
31/03/2019

115,000

31/03/2018

103,284

J. Rudd
31/03/2019

31/03/2018

99,351

37,808

Executive Directors
Dr S. Dissanayake
31/03/2019

239,800

31/03/2018

224,447

H. Killen
31/03/2019

648,509

31/03/2018

100,912

Total Remuneration: Directors

31/03/2019

1,847,660

1,140,632

31/03/2018
(1) Long service leave balances are only accrued from 5 years’ service onwards, and this is not applicable to the directors.
(2) The STI expense amounts to the value expensed by the Company for the period.
(3) The LTI expense in 2018 was based on estimates of the expected value of rights to be granted under the LTI plan.

70,980

18,708

1,230,320

Australian Agricultural Company Limited | ANNUAL REPORT 2019

SHORT TERM

SALARY &
FEES

OTHER
PAYMENTS

NON-
MONETARY
BENEFITS

POST-
EMPLOYMENT

LONG-TERM
BENEFIT

SUPER-
ANNUATION

LONG SERVICE
LEAVE(1)

EXECUTIVES
Other KMP
B. Bennett
31/03/2019

310,523

31/03/2018

292,088

S. Grant
31/03/2019

381,225

40,000(4)

31/03/2018

172,705

N. Simonsz(5)
31/03/2019

31/03/2018

A. Speer(6)
31/03/2019

31/03/2018

A. O’Brien(8)
31/03/2019

31/03/2018

397,508

147,585

Former Other KMP
T. McCormack(9)
31/03/2019

31/03/2018

356,519

D. FitzGibbon(10)
31/03/2019

358,034 100,000(4)

31/03/2018

250,249

Total Remuneration: Other KMP

4,200

2,275

20,049

19,940

31,707

15,127

2,800

19,317

4,200

39,818

2,975

3,500

15,278

23,355

362,235 100,000(7)

1,976

13,753

TERMINATION SHARE BASED PAYMENT

SHORT TERM
INCENTIVE
(DEA)(2)

PERFORMANCE
RIGHTS (LTI)(3)

TOTAL

BENEFITS

270,749

15,599

11,625

125,524

471,695

105,411

445,158

1,465

458,597

190,107

2,832

422,457

2,637

480,601

147,585

671,286

62,030

52,705

538,317

329,809

15,599

194,488

2,519,252

16,094

31/03/2019

1,957,110 240,000

11,951

100,104

9,975

16,094

98,240

270,749

1,071,561

31/03/2018
(1) Long service leave balances are only accrued from 5 years’ service onwards.
(2) The STI expense amounts to the value expensed by the Company for the period.
(3) The LTI expense in 2018 was based on estimates of the expected value of rights to be granted under the LTI plan.
(4) Other payments to S. Grant and D. FitzGibbon during FY19 relate to discretionary cash bonuses for successful project completion.
(5) N. Simonsz was appointed Chief Financial Officer on 1 August 2018 and became a member of KMP on the same date.
(6) A. Speer was appointed Chief Operating Officer on 30 July 2018 and became a member of KMP on the same date.
(7) Other payments to A. Speer during FY19 relate to a sign-on bonus.
(8) A. O’Brien was appointed Chief Commercial Officer on 17 December 2018 and became a member of KMP on the same date.
(9) T. McCormack ceased employment with the Company on 2 April 2018.
(10) D. FitzGibbon ceased employment with the Company on 14 December 2018.

158,116

11,625

1,636,360

No STI cash incentives were granted during the 12-month period ended 31 March 2019.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

5,948,897 performance rights under the LTI plan and nil DEA performance rights were granted during the twelve months to 31 March 2019 (31
March 2018: nil).

No shares were issued to key management personnel during the year-ended 31 March 2019 (31 March 2018: nil).

Rights to shares

The fair value of rights is determined based on the market price of the Company’s shares at the grant date, with an adjustment made to take into
account the two and three year vesting period (where applicable, i.e. on the issue of DEA) and expected dividends during that period that will not be
received by the employees.

A summary of the outstanding performance rights relating to key management personnel is provided below, with a full listing provided in note F7
Share-based Payments.

Details on rights over ordinary shares in the Company that were granted as compensation or vested during the reporting period to each key
management person during the reporting period are as follows:

BALANCE AT
BEGINNING OF
PERIOD (1)

GRANTED AS
REMUNERATION

EXERCISED
DURING
THE YEAR

NET CHANGE
OTHER (2)

BALANCE AT
END OF
PERIOD

NOT VESTED
AND NOT
EXERCISABLE

VESTED AND
EXERCISABLE

NUMBER

YEAR
GRANTED

2019
Executives

H. Killen

B. Bennett

S. Grant

N. Simonsz

A. Speer

A. O’Brien

2018, 2019

348,236

367,659

2019

Former Executives

T. McCormack(4)

D. FitzGibbon(5)

2018

174,118

1,704,234

426,059

823,713

766,905

(9,994)

(174,118)

2,042,476 2,042,476

783,724

426,059

823,713

766,905

VALUE YET TO
VEST (3)
$

455,652

420,411

23,433

45,304

42,180

(1) The rights disclosed for 2018 included rights under the LTI plan, which were based on best estimates of the expected number of rights to be

granted.

(2) Represents changes to the 2018 estimates of rights to be offered under the first grant round to adjust to the actual number granted during

2019. For former executives, the person’s holding at the date of termination is shown as a reduction in their holding.

(3) The maximum value of the deferred shares yet to vest has been determined based on the share price of the Company at 31 March 2019. The

minimum value of deferred shares yet to vest is nil, as the shares will be forfeited if the vesting conditions are not met.

(4) T. McCormack ceased employment with the Company on 2 April 2018.
(5) D. FitzGibbon ceased employment with the Company on 14 December 2018.

No other Directors or executives held options or performance rights during the period.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Shareholdings

The table below summarises the movements during the period in the shareholdings of key management personnel, including their personally
related parties, in the Company for the period.

2019

Directors

D. McGauchie

H. Killen

S. Black

D. Crombie

T. Keene

A. Abraham

Dr S. Dissanayake

N. Reisman

J. Rudd

Executives

B. Bennett

S. Grant

N. Simonsz

A. Speer

A. O’Brien

Former Executives

T. McCormack

D. FitzGibbon

Total

BALANCE AT
BEGINNING OF
PERIOD
NUMBER

1,120,774

40,000

60,000

75,000

30,000

2,025,000

45,000

97,142

3,492,916

GRANTED AS
REMUNERATION

EXERCISE OF
OPTIONS/RIGHTS

NET CHANGE
OTHER

BALANCE AT END
OF PERIOD

NUMBER

113,800

1,120,774

113,800

40,000

60,000

75,000

30,000

2,025,000

45,000

97,142

113,800

3,606,716

All equity transactions with Directors and executives other than those arising from the exercise of remuneration options have been entered into
under terms and conditions no more favourable than those the entity would have adopted if dealing at arm’s length.

There are no loans outstanding with the key management personnel at 31 March 2019 (31 March 2018: nil), nor have there been any transactions
that would be considered a loan throughout the period.

There have been no other transactions with key management personnel or their related parties during the financial year to 31 March 2019 (31
March 2018: nil).

Australian Agricultural Company Limited | ANNUAL REPORT 2019

The number of Meetings of Directors (including meetings of Committees of Directors) held during the year and the number of meetings attended
by each Director is as follows:

DIRECTORS’
MEETINGS

AUDIT & RISK
MANAGEMENT
COMMITTEE

STAFF &
REMUNERATION
COMMITTEE

NOMINATION
COMMITTEE

D. McGauchie

H. Killen¥

T. Keene

D. Crombie

S. Black

Dr S. Dissanayake

A. Abraham

N. Reisman

J. Rudd

A = Number of meetings held during the time the Director held office or was a member of the committee during the year
B = Number of meetings attended
* Not a member of the relevant committee
¥ Mr. Killen is invited to all Committee meetings but as an executive is not a member of those Committees

As at the date of this report, the Company had an Audit and Risk Management Committee, Staff and Remuneration Committee and a Nomination
Committee.

Amounts contained in this report and in the financial report have been rounded to the nearest thousand dollars for presentation where noted
($000). This has been completed under the option available to the Company under ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191. The Company is an entity to which this legislative instrument applies.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

We have obtained the following independence declaration from our auditors KPMG.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

The following non-audit services were provided by the entity’s lead auditor, KPMG. The Directors are satisfied that the provision of non-audit
services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of
each type of non-audit service provided means that auditor independence was not compromised. The lead auditor received or are due to receive
the following amounts for the provision of non-audit services:

METRICS
Non-audit services

Signed in accordance with a resolution of the Directors

31 MAR 2019
$
23,150
23,150

31 MAR 2018
$
15,840
15,840

Donald McGauchie
Chairman

Brisbane

22 May 2019

Hugh Killen
Managing Director

Brisbane

22 May 2019

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Consolidated Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statement of Cash Flows. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Directors’ Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Independent Audit Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ASX Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Company Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Meat sales

Cattle sales

Cattle fair value adjustments

Cost of meat sold

Cost of live cattle sold

Cattle and feedlot expenses

Gross margin

Other income

Employee expenses

Administration and selling costs

Other operating costs

Property costs

Gain/(loss) on equity investments

Depreciation and amortisation

Impairment

Onerous contract (impairment related to Livingstone)

Loss before finance costs and income tax

Finance costs

Loss before income tax

Income tax benefit

Net loss after tax

LOSS PER SHARE ATTRIBUTABLE TO THE
ORDINARY EQUITY HOLDERS OF THE PARENT
Basic loss per share

Diluted loss per share

31 MAR 2019
$000

31 MAR 2018
$000
Restated*

NOTE

246,244

117,837

364,081

58,389

422,470

(226,549)

(108,858)

(142,082)

(55,019)

332,658

47,021

379,679

162,971

542,650

(304,054)

(45,589)

(102,788)

90,219

1,888

2,822

(51,787)

(41,200)

(29,631)

(6,960)

620

(11,994)

(194,083)

(15,773)

(209,856)

61,460

(148,396)

CENTS
(24.9)

(24.9)

(54,080)

(41,413)

(27,059)

(5,814)

(303)

(17,394)

(69,502)

(5,443)

(127,967)

(17,418)

(145,385)

42,826

(102,559)

CENTS
(17.4)

(17.4)

The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
* Refer to note G3 (c) regarding restated comparative figures.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Loss for the year

Other Comprehensive Income

Items not to be reclassified to profit or loss:

Fair value revaluation of land and buildings, net of tax

Items to be reclassified subsequently to profit or loss:

Changes in the fair value of cash flow hedges, net of tax

Other comprehensive income for the year, net of tax

Total comprehensive loss for the year, net of tax

31 MAR 2019
$000

31 MAR 2018
$000

(148,396)

(102,559)

21,942

18,421

(4,628)

17,314

2,155

20,576

(131,082)

(81,983)

The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Current Assets

Cash

Trade and other receivables

Inventories and consumables

Livestock

Other assets

Total Current Assets

Non-Current Assets

Livestock

Property, plant and equipment

Intangible assets

Investments

Other receivables

Total Non-Current Assets

Total Assets

Current Liabilities

Trade and other payables

Provisions

Borrowings

Derivatives

Total Current Liabilities

Non-Current Liabilities

Provisions

Borrowings

Deferred tax liabilities

Total Non-Current Liabilities

Total Liabilities

Net Assets

Equity

Contributed equity

Reserves

Retained earnings/(losses)

Total Equity

NOTE

31 MAR 2019
$000

31 MAR 2018
$000

7,565

18,661

33,684

171,006

1,099

232,015

252,331

795,341

2,534

3,613

742

1,054,561

1,286,576

29,818

3,397

1,658

8,319

43,192

4,578

364,414

30,732

399,724

442,916

843,660

528,822

435,369

(120,531)

843,660

11,218

20,515

35,068

259,104

696

326,601

369,182

753,777

2,840

2,897

1,128,696

1,455,297

27,525

3,445

3,025

457

34,452

5,215

353,363

84,747

443,325

477,777

977,520

531,937

417,718

27,865

977,520

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

At 1 April 2017

Loss for the year

Other comprehensive income

Total comprehensive loss for the year

Transactions with owners in their capacity as owners:

Issue of share capital, net of transaction costs

Treasury shares acquired

Cost of share-based payment

At 31 March 2018

At 1 April 2018

Loss for the year

Other comprehensive income

Total comprehensive loss for the year

Transactions with owners in their capacity as owners:

Issue of share capital, net of transaction costs

Treasury shares acquired

Revaluation of foreign currency operations

Cost of share-based payment

At 31 March 2019

CONTRIBUTED
EQUITY (NOTE C3)
$000
490,713

RESERVES
(NOTE F4)
$000
396,606

RETAINED
EARNINGS/(LOSSES)
$000
130,424

TOTAL EQUITY
$000
1,017,743

48,109

(6,885)

531,937

(3,115)

20,576

536

417,718

17,314

(10)

347

(102,559)

20,576

(81,983)

48,109

(6,885)

536

27,865

977,520

27,865

(148,396)

977,520

(148,396)

17,314

(131,082)

(3,115)

(10)

347

528,822

435,369

(120,531)

843,660

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

NOTE

31 MAR 2019
$000

31 MAR 2018
$000

Cash Flows from Operating Activities
Receipts from customers
Payments to suppliers, employees and others
Interest received

Net operating cash inflow/(outflow) before interest and finance costs
Payment of interest and finance costs

Net cash inflow/(outflow) from operating activities

Cash Flows from Investing Activities
Payments for property, plant and equipment and other assets
Proceeds from sale of property, plant and equipment
Investments in associates

Net cash outflows from investing activities

Cash Flows from Financing Activities
Proceeds from borrowings, net of transaction costs
Repayment of borrowings
Acquisition of treasury shares

Net cash inflow from financing activities

Net decrease in cash

Cash at the beginning of the year

Cash at the end of the year

378,285
(352,742)
108

25,651
(12,661)

12,990

(25,967)
426
(487)

(26,028)

37,000
(24,500)
(3,115)

9,385

(3,653)

11,218

7,565

376,013
(395,558)
144

(19,401)
(20,463)

(39,864)

(19,720)
380
(2,100)

(21,440)

41,874
(5,000)
(6,885)

29,989

(31,315)

42,533

11,218

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

FINANCIAL PERFORMANCE

A1 Significant Matters

A2 Operating Margin

A3 Livestock

A4 Property

A5 Segment Information

B WORKING CAPITAL

B1 Net Working Capital

B2 Cash

Inventory and Consumables

B4 Trade and Other Receivables

B5 Trade and Other Payables

FUNDING AND CAPITAL MANAGEMENT

C1 Borrowings

C2 Derivatives

C3 Equity

C4 Capital Management

C5 Earnings Per Share

C6 Dividends

FINANCIAL RISK MANAGEMENT

Interest Rate Risk

D2 Foreign Currency Risk

D3 Commodity Price Risk

D4 Credit Risk

D5 Liquidity Risk

UNREGONISED ITEMS

E1 Commitments

E2 Contingencies

OTHER

F1 Property, Plant and Equipment at Cost

F2 Tax

F3 Other Earnings Disclosures

F4 Reserves

Investments

F6 Related Parties

F7 Share-based Payments

F8 Controlled Entities

F9 Parent Entity

F10 Auditor’s Remuneration

F11 Significant Events After Balance Date

POLICY DISCLOSURES

G1 Corporate Information

G2 Basis of Preparation

G3 Accounting Policies

Australian Agricultural Company Limited | ANNUAL REPORT 2019

PAGE

In February 2019, a significant flood event swept through the Gulf of Carpentaria Region of North Queensland. At its peak, flood waters
extended 400km from the Gulf to Julia Creek, and reached approximately 70km wide in many areas. For much of the region that experienced
this event, flood waters reached unprecedented levels.

The floods, running nearly half the length of the Flinders river, impacted four of AACo’s stations in the gulf region. Canobie, Wondoola, Carrum
and Dalgonally experienced infrastructure and livestock losses.

Due to the significant nature and materiality of the event, Management have recorded estimates for the losses incurred on these properties.

These estimates were performed on a station by station basis, using a combination of observations of surviving animals and damaged
infrastructure, as well as applying expected survival rates by paddock against pre-event paddock records. Estimated survival rates were based
on Management’s understanding of livestock vulnerabilities in these events, knowledge of the land’s topography, as well an in-depth
understanding of how the event unfolded and how individual paddocks were impacted.

Costs to replace damaged infrastructure to a state that supports the externally assessed long-term carrying capacity of the properties were
estimated to be $5.0m. This was adjusted against the Asset Revaluation Reserve in the equity section of the Balance Sheet. The estimate of
losses recorded in the FY19 results is materially consistent with those announced to the market on 11 March 19.

In FY19, AACo continues to maintain an ongoing focus on operational leadership, skills training, and the continued development of a strong
safety culture, finishing the year with a Lost Time Injury Frequency Rate (LTIFR) of 23.

The Company recorded a $36.4 million increase in the value of the Company’s pastoral property and improvements, following a directors’
assessment of fair value at 31 March 2019. In assessing fair value, the directors utilised information provided by an independent valuation
performed by CBRE during FY19. The revaluation reflects value increases resulting from capital investments made to actively manage our
properties, and increased activity and prices for recent comparable property sales.

The above increase was offset by a $5.0 million decrement due to damaged infrastructure in the Gulf following the flooding event, as noted
above. The rebuild of damaged infrastructure is underway and the Company is committed to repairing and improving these properties.

See note A4 for further details.

The closing herd numbers are 32.6% lower than prior year, due to increased composite cattle sales following the 1824 and Livingstone
decisions. Dry seasonal conditions have also lead to an increased sell-off of these composite herd animals, as the Company focuses resources
on our core Wagyu herd assets. Wagyu herd numbers have marginally increased by 3% from the prior year.

The Gulf flood event resulted in approximately 43,000 head written off, as well as a reduced accrual for unbranded calves due to the gulf flood
event.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Market value adjustments arising from market price changes to the herd values at the close of the period resulted in an unrealised cattle price
loss of $89.0 million driven by a decrease in cattle market prices.

Livingstone Beef is considered to be a single Cash-generating Unit (CGU). During FY18, the CGU experienced adverse market conditions due to
high cattle procurement costs and a lower than average meat sales demand. As indicators of impairment existed, the Company tested the
CGU for impairment. The recoverable amount of the CGU was calculated to be $40.2 million, which was lower than the carrying value by $69.5
million. The carrying value prior to this assessment was $109.7 million, representing $104.8 million of property, plant and equipment and
$4.9 million of working capital. The Company therefore recognised an impairment loss of $69.5 million with respect to buildings,
improvements, plant and equipment, and decreased the carrying values of these assets in the CGU by this amount. There was an additional
$5.4 million impairment provision recorded for an onerous contract in relation to Livingstone Beef.

During H1FY19 operations were suspended at Livingstone Beef. At 30 September 2018, management recalculated the recoverable amount of
the CGU based on the updated conditions, using Level 3 fair value inputs per AASB 13 Fair Value Measurement. The calculated recoverable
amount was materially consistent with the current carrying value of the CGU and as such no adjustment was made to the carrying value of
Livingstone Beef at 30 September 2018. At 31 March 2019, consideration was given to internal and external factors impacting the CGU,
noting no indications of a material change to the carrying value of Livingstone Beef at year-end.

Regular upkeep and maintenance of the facility and its supporting assets continues, whilst the Board and management continue to review
various strategic options for Livingstone Beef.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Operating margin represents value added through the production chain. Margin is achieved through sales of meat products and cattle, as well
as cattle production (pastoral and feedlot).

Meat Sales
Sales
Cost of meat sold(1)

Operating margin

Cattle Sales
Sales
Cost of cattle sold(2)

Operating margin

Cattle Production
Fair value adjustments
Cattle expenses
Feedlot expenses

Operating margin

Gross Operating Margin

NOTE

31 MAR 2019
$000

246,244
(226,549)

19,695

117,837
(108,858)

8,979

58,389
(69,448)
(72,634)

(83,693)

31 MAR 2018
$000
Restated*

332,658
(304,054)

28,604

47,021
(45,589)

1,432

162,971
(47,897)
(54,891)

60,183

(55,019)

90,219

(1) Includes the transfer of cattle at the applicable fair value at the time they leave the property gate en route to a processing plant.
(2) Represents the fair value of the cattle at the time of live sale. At that time, the cost of cattle sold equates to the recorded fair value less

costs to sell and hence margin apart from selling costs is earned through the cattle production process.

* Refer to note G3 (c) regarding restated comparative figures.

Refer to note A3 for financial information and accounting policies related to Livestock.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

31 MAR 2019
$000
171,006

252,331

423,337

31 MAR 2019
HEAD
148,565

279,340

427,905

CATTLE AT FAIR VALUE
Current

Non-Current

Total livestock

LIVESTOCK MOVEMENT
Opening carrying amount

Changes in fair value

Purchases of livestock

External sale of livestock less selling expenses

Transfers for meat sales

Closing carrying amount

CATTLE FAIR VALUE ADJUSTMENTS
Market value movements(1)

Biological transformation(2)

Natural increase

Attrition

Gulf flood write-off(3)

Other

31 MAR 2018
$000
259,104

369,182

628,286

31 MAR 2019
$000
628,286

58,389

24,564

(108,858)

(179,044)

423,337

31 MAR 2019
$000
(88,994)

157,214

58,262

(22,163)

(45,648)

(282)

31 MAR 2018
HEAD

183,394

379,075

562,469

31 MAR 2018
$000

662,482

162,971

103,254

(45,589)

(254,832)

628,286

31 MAR 2018
$000

(71,145)

157,976

106,072

(29,571)

(361)

Total cattle fair value adjustments
(1) As a biological asset, AASB 141 Agriculture requires the livestock to be valued at fair value at all times prior to sale or harvest. As such,

58,389

162,971

value increases occur through change in fair values rather than sales margin.

(2) Biological transformation in accordance with Australian Accounting Standard AASB 141 Agriculture, includes reclassification of an animal

as it moves from being a branded calf and progresses through the various stages to become a trading animal and then as it ages. All these
changes occur and are measured before the ultimate sale (cash realisation).

(3) Due to the Gulf flooding event in February 2019, the Company recognised an additional attrition reflecting livestock lost in this

unprecedented natural disaster.

Livestock is measured at fair value less costs to sell, with any change recognised in the income statement. Costs to sell include all costs that
would be necessary to sell the assets, including freight and direct selling costs.

The fair value of livestock is based on its present location and condition. If an active or other effective market exists for livestock in its present
location and condition, the quoted price in that market is the appropriate basis for determining the fair value of that asset. Where the
Company has access to different markets, then the most relevant market is used to determine fair value. The relevant market is defined as
the market “that access is available to the entity” to be used at the time the fair value is established.

If an active market does not exist, then one of the following is used in determining fair value in the below order:

the most recent market transaction price, provided that there has not been a significant change in economic circumstances between the
date of that transaction and the end of the reporting period

> market prices, in markets accessible to us, for similar assets with adjustments to reflect differences

sector benchmarks

In the event that market determined prices or values are not available for livestock in its present condition, the present value of the expected
net cash flows from the asset discounted at a current market determined rate may be used in determining fair value.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

At the end of each reporting period, we measure livestock at fair value. The fair value is determined through price movements, natural
increase and the weight of the herd.

The net increments or decrements in the market value of livestock are recognised as either revenue or expense in the income statement,
determined as:

The difference between the total fair value of livestock recognised at the beginning of the financial year and the total fair value of
livestock recognised as at the reporting date; less

Costs expected to be incurred in realising the market value (including freight and selling costs).

Fair Value Inputs are summarised as follows:

Level 1 Price Inputs – are quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the
measurement date.

Level 2 Price Inputs – are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 Price Inputs – are inputs for the asset or liability that are not based on observable market data (unobservable inputs).

FAIR VALUE INPUT

CATTLE TYPE

31 MAR 2019
$000

31 MAR 2019
HEAD

31 MAR 2018
$000

31 MAR 2018
HEAD

Level 1
Level 2
Level 2
Level 2
Level 3

None
Commercial & stud breeding herd
Trading cattle
Unbranded calves
Feedlot cattle

Average value per head

-
235,387
86,406
13,835
87,709

423,337

-
218,918
111,323
58,956
38,708

427,905

$989

-
328,595
146,462
36,021
117,208

628,286

-
290,659
140,235
86,716
44,859

562,469

$1,117

Australian Agricultural Company Limited | ANNUAL REPORT 2019

TYPE

LEVEL VALUATION METHOD

Commercial & Stud
Breeding Herd

Trading Cattle

Unbranded Calves

Feedlot Cattle

The value of these cattle (comprising principally females and breeding bulls) is determined by independent
valuations with reference to prices received from representative sales of breeding cattle similar to the
Company’s herd. Prices for these cattle generally reflect a longer term view of the cattle market.
Independent valuations were undertaken by Elders Limited. In performing the valuation, consideration is
given to the class, age, quality and location of the herd. Direct comparisons are made to recent sales
evidence in relevant cattle markets.

Relevant market indicators used include Roma store cattle prices, MLA over-the hook market indicators, and
cattle prices received/quoted for the Company’s cattle at the reporting date. Prices for these cattle generally
reflect the shorter term spot prices available in the market place and vary based on the weight and condition
of the animal.

Live export cattle (Victoria River Group, Anthony Lagoon & Darwin Group) are valued based on market quotes
available at each reporting date.

Wagyu trading cattle are valued on the basis of an independent valuation by Elders Limited. In performing
the valuation, consideration is given to class, age, quality, genetics, recent comparable sales evidence and
current market conditions for Crossbred Wagyu cattle.

The value of unbranded calves is determined with reference to Roma store calf prices at the Company’s
reporting date. The number of calves is determined by applying the percentage of branding assessed each
year to the number of productive cows and the results of pregnancy testing.

Feedlot cattle are valued internally by the Company as there is no observable market for them. The value is
based on the estimated entry price per kilogram and the value changes for the weight of each animal as it
progresses through the feedlot program. The key factors affecting the value of each beast are price/kg and
average daily gain of weight. The average daily gain of weight is in the range of 0.7kgs to 1.9kgs. The value is
determined by applying the average weight gain per day by the number of days on feed from induction to exit
at which point the cattle are delivered to market. The value per animal is based on the breed and
specifications of the animal and the market it is destined for. Significant increases (decreases) in any of the
significant unobservable valuation inputs for feedlot cattle in isolation would result in a significantly higher
(lower) fair value measurement.

UNBRANDED CALVES

Calf accrual opening

Movement(1)

Calf accrual closing

Average value per head

31 MAR 2019
$000

31 MAR 2019
HEAD

31 MAR 2018
$000

31 MAR 2018
HEAD

36,021

(22,186)

13,835

86,716

(27,760)

58,956

$235

40,826

(4,805)

36,021

99,898

(13,182)

86,716

$415

(1) Unbranded calves are assessed at each reporting date based on information available at the time. The Company does not track individual

calves until such time as they have been branded and recorded in the livestock management system.

FEEDLOT CATTLE

Opening values

Inductions

Sales

Attrition and rations

Fair value adjustments recognised

Closing values

Average value per head

31 MAR 2019
$000

31 MAR 2019
HEAD

31 MAR 2018
$000

31 MAR 2018
HEAD

117,208

104,227

(134,973)

(831)

2,078

87,709

44,859

50,369

(56,202)

(318)

38,708

$2,266

131,126

152,151

(181,508)

(1,015)

16,454

117,208

47,566

67,136

(69,492)

(351)

44,859

$2,613

Australian Agricultural Company Limited | ANNUAL REPORT 2019

PROPERTY PLANT AND EQUIPMENT

Pastoral property and improvements at fair value

Industrial property and improvements at cost

Plant and equipment at cost

Capital work in progress

Total property, plant and equipment

NOTE

31 MAR 2019
$000

31 MAR 2018
$000

738,462

698,207

31,278

24,380

1,221

31,443

22,602

1,525

795,341

753,777

31 MAR 2019

Opening balance

Additions

Disposals

Net revaluation increment/(decrement) recognised in asset revaluation reserve

Depreciation

Closing balance

31 MAR 2018

Opening balance

Additions

Disposals

Net revaluation increment/(decrement) recognised in asset revaluation reserve
Depreciation

Closing balance

TOTAL
$000

698,207

14,410

(402)

31,346

(5,099)

738,462

TOTAL
$000

667,860

8,899

26,315

(4,867)

698,207

Pastoral property and improvements are carried at a revalued amount, which is the fair value at the date of the revaluation, less any
subsequent accumulated depreciation on buildings and accumulated impairment losses.

Fair value is determined by the Directors with reference to work performed by external independent valuers and performed on an annual basis
with reference to market-based evidence, which is the price that would be received to sell an asset in an orderly transaction between market
participants at the measurement date.

Any revaluation increment is credited to the asset revaluation reserve included in the equity section of the Statement of Financial Position,
unless it reverses a revaluation decrement of the same asset previously recognised in the Income Statement. Any revaluation decrement is
recognised in the Income Statement unless it directly offsets a previous increment of the same asset in the asset revaluation reserve. In
addition, any accumulated depreciation as at revaluation date is eliminated against the gross carrying amount of the asset and the net
amount is restated to the revalued amount of the asset. Upon disposal of property and improvements, any revaluation reserve relating to the
particular asset being sold is transferred to the capital profits reserve.

All initial lump sum payments in respect of pastoral and perpetual property leases have been classified as land. The remaining lease payments
are nominal and are therefore expensed to the Income Statement as incurred.

Refer to note F1 and note G3 for the financial information and accounting policies as they relate to property, plant and equipment at cost
respectively.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

In determining the fair value of pastoral property and improvements, the Directors initiate periodic independent valuations through registered
property valuers. Once these valuations have been considered and reviewed by the Directors they are then adopted as Directors’ valuations.

The following valuation techniques and key inputs are used for the level 3 (there are no level 1 and level 2) property and improvement
valuations:

31 MAR 2019
$000

31 MAR 2018

$000 VALUATION TECHNIQUE

629,162

604,507

Direct Comparison
(Productive Unit Approach)

SIGNIFICANT
UNOBSERVABLE INPUTS

Number of adult equivalents

43,850

33,100

Direct Comparison
(Hectare Rate Approach)

65,450

60,600

Direct Comparison
(Hectare Rate and
Standard Cattle Unit
Approach)

Dollar per adult equivalents

Number of properties

Dollar per hectare

Number of properties

Dollar per hectare

Standard cattle units

31 MAR 2019
RANGE/(AVERAGE)

31 MAR 2018
RANGE/(AVERAGE)

5,350 – 89,200
25,406

$1,000 - $4,500
$1,669

5,350 - 81,500
24,585

$1,000 - $4,500
$1,644

$1,289
$1,289
1

$973
$973
1

$3,521 - $3,528
$3,525

$3,467 - $3,518
$3,493

16,000 – 45,000
30,500

Number of properties

An independent valuation was performed by valuers CBRE to determine the fair value using the market based direct comparison method. One
of three direct comparison method techniques were utilised, being either a Productive Unit Approach, Hectare Rate Approach or a Summation
Approach using Standard Cattle Units and Hectare Rate. Valuation of the assets was determined by analysing comparable sales and allowing
for size, location, rainfall, water supply, seasonal conditions, structural capital works and other relevant factors specific to the property and
improvements being valued. From the sales analysed, an appropriate rate per adult equivalent or hectare has been applied to the subject
property and improvements. The effective date of the valuation is 31 March 2019.

Under the Productive Unit Approach, a dollar per Adult Equivalent is adopted inclusive of all structures. This method takes into consideration
the type and mix of land types, rainfall, extent of water, fencing and structural improvements, current carrying capacity and potential, and
location relative to markets and services. An external expert, Dr Steve Petty of Spektrum, was engaged during FY19 as part of the valuation
process to perform an independent assessment of adult equivalent carrying capacity using a consistent methodology based on scientific
analysis of grazing distribution, land system analysis, station and paddock stocking history and published data for the relevant regions.

Under the Hectare Rate Approach, a range of dollar per hectare rates are applied to land components exclusive of all structures. This method
takes into consideration the land type composition of the property and therefore the proportion of land that lies outside the watered area and
its potential or lack thereof. The basis of assessment is direct comparison with sales evidence on an analysed hectare rate, excluding
structures. The improved market value is determined from the summation of land with the added value of structures, such as residences,
sheds and yards.

The Hectare Rate and Standard Cattle Unit Approach applies the same principles as the Hectare Rate Approach but includes a dollar per
Standard Cattle Unit rate which is applied to feedlot infrastructure. The basis of assessment is direct comparison with sales evidence on an
analysed Standard Cattle Unit rate. The improved market value is determined from the summation of land and feedlot infrastructure with the
added value of structures, such as residences, sheds and yards. The derived valuation amount for the buildings and yards is obtained from
analysis of comparable sales evidence.

Significant increases (decreases) in any of the significant unobservable valuation inputs under the Productive Unit Approach, Hectare Rate
Approach or Hectare Rate and Standard Cattle Units Approach in isolation would result in a significantly higher (lower) fair value measurement.
Changes in seasonal conditions and rainfall would result in a significantly lower or higher carrying capacity, dollar per adult equivalent and
dollar per hectare.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Deemed Cost

If freehold land, pastoral leases, buildings and improvements were measured using the deemed cost model (the fair value of the assets in
2005 plus subsequent acquisitions at cost) the carrying amounts would be as follows:

Deemed cost

Accumulated depreciation

Net carrying amount

Pastoral leases

31 MAR 2019
$000

343,722

(57,510)

286,212

31 MAR 2018
$000

329,312

(52,411)

276,901

Our cattle stations are generally held under a leasehold agreement with the Crown. Leasehold properties in Queensland are mainly pastoral
holdings which are rolling term leases with a maximum period of 50 years. In the Northern Territory, the pastoral leases we hold have been
granted on a perpetual basis by the Northern Territory Government.

AASB 8 Operating Segments requires operating segments to be identified on the basis of internal reports about components of the Company,
that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance.
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Managing Director/Chief
Executive Officer (the chief operating decision maker) in assessing performance and in determining the allocation of resources. The operating
segments are identified by management based on the nature of the product produced and the reporting structure within the Group. Discrete
financial information for each of the operating segments is reported to the Managing Director/Chief Executive Officer (MD/CEO) on at least a
monthly basis.

Under the current internal reporting framework, the financial results of the Livingstone processing plant are disclosed separately in monthly
management reports from the rest of the Company. This results in the following operating segments:

Livingstone Beef processing plant

AACo excluding Livingstone

To get to a final segment result, the above two segments results include a corporate overheads expense allocation.

The accounting policies used in reporting segments are the same as those contained in note G3 to the financial statements and in the prior
period, except as follows:

Inter-entity sales

Inter-entity sales are recognised based on arm’s length market prices.

Operating Profit is the key indicator used to monitor and manage the Company. It eliminates the potential distraction caused by unrealised
livestock and inventory valuation adjustments being recorded in the financial results, and is a better reflection of actual financial performance
under the control of management. Operating Profit assumes all Livestock inventory is valued on a $/kg live-weight (LW) basis and is derived by
adjusting statutory EBITDA to substitute the movement in inventory at market value with the movement in inventory at cost of production.

To provide greater transparency on operating performance, Operating Profit replaces the previously reported Operating EBITDA metric.
Operating Profit values inventory movement at a cost of production rather than at various standard costs.

The following table presents the revenue and profit information regarding operating segments (incorporating a reconciliation of Operating
Profit/(Loss) to Statutory NPAT) for the twelve months to 31 March 2019 and 31 March 2018. Segment assets and liabilities are not reported
to the MD/CEO and therefore segment assets and liabilities are not separately disclosed.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

31 MAR 2019

Segment revenue
Inter-segment revenue

Revenue from external customers

Underlying Operating Profit/(Loss)

Gulf flood livestock attrition
Gulf flood emergency expenses

Operating Loss

Reverse: Movement in inventory at cost of production
Other income/expenses
Change in livestock value

Statutory EBITDA loss

Depreciation and amortisation
Impairment
Onerous contract (impairment related to Livingstone)
Gain on equity investments

Statutory EBIT loss

Net finance costs
Income tax benefit

Net loss after tax

31 MAR 2018

Segment revenue
Inter-segment revenue

Revenue from external customers

Operating Profit/(Loss)

Reverse: Movement in inventory at cost of production
Other income/expenses
Change in livestock value

Statutory EBITDA loss

Depreciation and amortisation
Impairment
Onerous contract (impairment related to Livingstone)
Loss on equity investments

Statutory EBIT loss

Net finance costs
Income tax benefit

Net loss after tax

AACO EX LIVINGSTONE
$000

LIVINGSTONE BEEF
$000

ELIMINATIONS
$000

348,191
(16,342)

331,849

39,644

(45,648)
(994)

(6,998)

(218)
(2,941)
(165,206)

(175,363)

(10,869)
-
-
620

(185,612)

32,232
-

32,232

(15,924)

-
-

(15,924)

2,583
90
5,905

(7,346)

(1,125)
-
-
-

(8,471)

(16,342)
16,342

-
-

-
-
-

-
-
-
-

AACO EX LIVINGSTONE
$000

LIVINGSTONE BEEF
$000

ELIMINATIONS
$000

307,062
(24,724)

282,338

9,779

8,279
2,774
(34,196)

(13,364)

(11,647)
-
-
(303)

(25,314)

97,341
-

97,341

(23,260)

660
639
-

(21,961)

(5,747)
(69,502)
(5,443)
-

(102,653)

(24,724)
24,724

-
-

-
-
-
-

TOTAL
$000

364,081
-

364,081

23,720

(45,648)
(994)

(22,922)

2,365
(2,851)
(159,301)

(182,709)

(11,994)
-
-
620

(194,083)

(15,773)
61,460

(148,396)

TOTAL
$000

379,679
-

379,679

(13,481)

8,939
3,413
(34,196)

(35,325)

(17,394)
(69,502)
(5,443)
(303)

(127,967)

(17,418)
42,826

(102,559)

Australian Agricultural Company Limited | ANNUAL REPORT 2019

MEAT SALES REVENUES

South Korea

Australia

China

USA

Other countries

Total meat sales revenue per Income Statement

31 MAR 2019
$000

31 MAR 2018
$000

65,876

47,592

25,860

19,860

87,056

246,244

71,405

53,559

12,962

71,198

123,534

332,658

Meat sales revenues of $58.9 million were derived from one of the Company’s major external customers (31 March 2018: $101.5 million
from two major external customers). No other customer contributed to more than 10% of the Company’s revenue.

CATTLE SALES REVENUES

Australia

Total cattle sales revenue per Income Statement

31 MAR 2019
$000

117,837

31 MAR 2018
$000

47,021

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Cash

Inventory and consumables

Trade and other receivables

Trade and other payables

Net working capital

RECONCILIATION OF NET LOSS AFTER TAX TO NET CASH FLOWS FROM
OPERATIONS

Net loss after income tax

Adjustments for:

Depreciation and amortisation

Impairment

(Gain)/loss on equity investments

Change in fair value of property

Loss/(gain) on disposal of property, plant and equipment

Amortisation of borrowing costs

Non-cash share based payment expense

(Increment)/decrement in fair value of livestock

Income tax expense reported in equity

Derivative movement reported in equity

Changes in assets and liabilities:

(Increase)/decrease in inventories

(Increase)/decrease in trade and other receivables

(Increase)/decrease in prepayments and other assets

(Decrease)/increase in deferred tax liabilities

(Decrease)/increase in trade and other payables

(Decrease)/increase in derivatives

(Decrease)/increase in provisions

Net cash (outflow)/inflow from operating activities

Non-cash financing and investing activities
Acquisition of assets by means of finance leases

Meat inventory

Feedlot commodities

Bulk stores

Other inventory

NOTE

31 MAR 2019
$000

31 MAR 2018
$000

7,565

33,684

18,661

(29,818)

30,092

11,218

35,068

20,515

(27,525)

39,276

31 MAR 2019
$000

(148,396)

31 MAR 2018
$000

(102,559)

11,994

(620)

453

(315)

347

204,949

(7,445)

(5,525)

1,384

1,112

(403)

(54,015)

2,293

7,862

(685)

12,990

3,132

17,394

69,503

303

(380)

(379)

536

34,196

(9,402)

2,973

(6,494)

(6,424)

710

(33,424)

(3,717)

(5,656)

2,956

(39,864)

3,810

31 MAR 2019
$000
13,917

31 MAR 2018
$000
18,488

10,275

7,964

1,528

33,684

6,732

7,853

1,995

35,068

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Trade receivables from others

Trade receivables from individually not material associates

Total trade receivables

Provision for impairment of receivables

Other receivables

31 MAR 2019
$000
17,143

31 MAR 2018
$000
15,347

17,143

(319)

16,824

1,837

18,661

561

15,908

4,607

20,515

Trade receivables are non-interest bearing. Provision for impairment of receivables is the loss allowance for trade receivables and is measured
at an amount equal to lifetime expected credit losses. The ageing of trade receivables and the provision for impairment of receivables is
outlined below:

Trade receivables aging

Current or past due under 30 days

Past due 31-60 days

Past due 61+ days

Total trade receivables

Provision for impairment of receivables aging

Current or past due under 30 days

Past due 31-60 days

Past due 61+ days

Total trade receivables

31 MAR 2019
$000
16,804

31 MAR 2018
$000
15,865

337

17,143

15,908

31 MAR 2019
$000
(253)

31 MAR 2018
$000
-

(66)

(319)

Our maximum exposure to credit risk is the net carrying value of receivables. We do not hold collateral as security, nor is it our policy to
transfer (on-sell) receivables to special purpose entities. Refer to note D for more information on the risk management policy of the Company.

Trade payables

Other payables

Deferred revenue

31 MAR 2019
$000
22,398

31 MAR 2018
$000
20,738

4,023

3,397

29,818

4,691

2,096

27,525

Trade payables are non-interest bearing and are normally settled on agreed terms which are generally up to 30 days. Other payables are non-
interest bearing. Deferred revenue relates to payments received in advance on sales.

Trade payables includes amounts due to associates, as shown below. Refer to note F6 for further details.

Trade payables

Trade payables to others

Trade payables to associate – Pyxle (Private) Limited

Trade payables to other individually not material associates

31 MAR 2019
$000
21,712

31 MAR 2018
$000
19,782

686

22,398

296

660

20,738

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Current
Obligations under finance leases

Non-Current
Obligations under finance leases
Secured bank loan facility

31 MAR 2019
$000

31 MAR 2018
$000

1,658

3,025

2,782
361,632

364,414

4,547
348,816

353,363

Facility A loans are repayable on 8 September 2022 and Facility B loans are repayable on 8 September 2020. The interest on these facilities
is charged at the applicable BBSY rate + Margin. The facility is currently drawn down by $362.7 million (31 March 2018: $350.2 million) and
is offset in the Statement of Financial Position by a prepaid facility participation fee of $1 million (31 March 2018: $1.4 million).

Financing facilities are provided on a secured basis, with security given over all fixed and floating assets. Financial covenants are in place over
the Company’s Loan to Value Ratio (LVR). We have the following financing facilities available:

Total available under Facility A and Facility B
Guarantee facility
Drawn-down (including bank guarantees - refer note C4)

Unused

Current Liabilities

Interest rate swap contracts
Foreign currency contracts

31 MAR 2019
$000

31 MAR 2018
$000

500,000
3,000
(364,154)

138,846

500,000
3,000
(351,654)

151,346

31 MAR 2019
$000

31 MAR 2018
$000

6,884
1,435

8,319

355
102

457

SELL FX/BUY AUD

NOTIONAL AMOUNTS
(AUD)
31 MAR 2019
$000

NOTIONAL AMOUNTS
(AUD)
31 MAR 2018
$000

AVERAGE
EXCHANGE RATE
31 MAR 2019
$000

AVERAGE
EXCHANGE RATE
31 MAR 2018
$000

Sell USD Maturity 0-12 months

48,391

11,354

0.7339

0.7787

Foreign currency contracts are attributed to forecast meat sales. As these contracts are hedge accounted, the effectiveness was required to
be assessed in terms of AASB 9 Financial Instruments from 1 April 2018 due to the Company’s decision to adopt AASB 9 rather than electing
to continue applying AASB 139 Financial Instruments. The effective portion of the movement has been accounted for in Other Comprehensive
Income and the ineffective portion posted to the income statement. Forward currency contracts can have maturities of up to 36 months.
These contracts are in US dollars. The total notional value of these contracts at 31 March 2019 was AUD $48.4 million (31 March 2018: AUD
$11.4 million). There was no material impact from the implementation of AASB 9, and therefore no prior period adjustments have been
recorded.

The net fair value gain on foreign currency derivatives during the twelve months to 31 March 2019 was $1,435,000 with $1,358,000
effective and $77,000 ineffective (12 months to 31 March 2018: $102,000 gain with $84,000 effective and $18,000 ineffective).

Australian Agricultural Company Limited | ANNUAL REPORT 2019

The Company has entered into interest rate swaps which are economic hedges. The Company fair values these contracts by comparing the
contracted rate to the future market rates for contracts with the same length of maturity. Interest rate swaps are entered in order to manage
the mix of borrowings between fixed and floating rates as per our Treasury Policy. The $235 million of swaps have been designated as
effective interest rate swaps and therefore satisfy the accounting standard requirements for hedge accounting. The swaps expire on 8
September 2022 in line with the expiry date of the bank facility.

As at the reporting date, the notional principal amounts and period of expiry of the interest rate swap contracts were as follows:

0-1 years

1-5 years

31 MAR 2019
$000
-

235,000

31 MAR 2018
$000
-

235,000

The gain or loss from remeasuring the interest rate swaps at fair value is recognised in other comprehensive income and deferred in equity in
the hedging reserve, to the extent that the hedge is effective. It is reclassified into profit or loss when the hedged interest expense is
recognised. In the twelve months to 31 March 2019 the loss recognised for interest rate swaps into profit or loss was $2.1 million (twelve
months to 31 March 2018: $4.1 million). There was no hedge ineffectiveness in the current or prior year.

31 MAR 2019
SHARES

31 MAR 2018
SHARES

31 MAR 2019
$000

31 MAR 2018
$000

598,430,888

558,710,413

531,937

490,713

(3,115)

(6,885)

48,109

531,937

Opening balance

Shares issued on exercise of performance rights

Shares issued on exercise of options

Treasury shares acquired

87,037

(2,428,989)

(4,335,859)

Value of conversion rights – convertible notes

43,969,297

Total contributed equity

596,001,899

598,430,888

528,822

Australian Agricultural Company Limited | ANNUAL REPORT 2019

When managing capital, our objective is to safeguard our ability to continue as a going concern as well as to maintain optimal returns to
shareholders and benefits for other stakeholders. We also aim to maintain a capital structure that ensures the lowest cost of capital.

We monitor capital using the gearing ratio (net debt divided by total capital plus net debt) and our target gearing ratio is between 20.0% to
35.0%. We include within net debt, interest-bearing loans and borrowings. For the Company’s financial risk management objectives and
policies refer to note D.

ASSETS AND CAPITAL STRUCTURE

Debt:
Current interest-bearing loans and borrowings

Non-current interest-bearing loans and borrowings

Obligations under finance leases
Bank loan facility (1)

Bank guarantees
Cash

Net debt
Net equity

Total capital employed

31 MAR 2019
$000

31 MAR 2018
$000

1,658

3,025

2,782
362,700

1,454
(7,565)

361,029
843,660

4,547
350,200

1,454
(11,218)

348,008
977,520

1,204,689

1,325,528

Gearing (net debt/net debt+equity)
(1) The gearing ratio is calculated utilising the drawn-down balance of the bank loan facility. This is not offset for $1 million of prepaid

29.97%

26.25%

borrowing costs.

The following reflects the income used in the basic and diluted earnings per share computations:

Net (loss)/profit attributable to ordinary equity holders of the parent (basic)

Interest expense on convertible notes, net of tax

Net (loss)/profit attributable to ordinary equity holders of the parent (diluted)

31 MAR 2019
$000
(148,396)

(148,396)

31 MAR 2018
$000
(102,559)

388

(102,171)

The following reflects the weighted average number of ordinary shares used in the basic and diluted earnings per share computations:

Weighted average number of ordinary shares (basic)

Adjustments for calculation of diluted earnings per share:

Weighted average options and rights

31 MAR 2019
SHARES
596,690,028

31 MAR 2018
SHARES
589,060,929

Weighted average number of ordinary shares (diluted) as at 31 March

596,690,028

589,060,929

No final or interim dividends were declared and paid during the twelve months to 31 March 2019 (twelve months to 31 March 2018: nil).
There are no franking credits available for the subsequent financial year (31 March 2018: nil).

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Exposure to key financial risks are managed in accordance with our financial risk management policy. The objective of the policy is to support
the delivery of the Company’s financial targets while protecting future financial security. The Audit and Risk Management Committee under the
authority of the Board hold primary responsibility for identification and control of financial risks. The Board reviews and agrees policies for
managing each of the risks identified. Different methods are used to measure and manage the different types of risks to which the Company is
exposed. The main risks arising from financial instruments are interest rate, foreign currency, commodity, credit and liquidity risk.

As at 31 March 2019 and 31 March 2018, the only financial instruments recognised at fair value were interest rate swaps and forward foreign
currency contracts. These are valued using a level 2 method (refer to note C2) which estimates fair value using inputs that are observable
either directly (as prices) or indirectly (derived from prices). The carrying amount of all other financial assets and liabilities approximates the
fair value.

Our policy is to manage our finance costs using a mix of fixed and variable rate debt. In accordance with our Treasury Policy, we maintain at
least 50% of our borrowings at fixed rates which are carried at amortised cost. It is acknowledged that fair value exposure is a by-product of
our attempt to manage our cash flow volatility arising from interest rate changes. To manage this mix in a cost-efficient manner, we enter into
interest rate swaps, in which we agree to exchange, at specified intervals, the difference between fixed and variable rate interest amounts
calculated by reference to an agreed-upon notional principal amount. We regularly analyse our interest rate exposure taking into consideration
potential renewals of existing positions, alternative financing and the mix of fixed and variable interest rates.

In 2018 the Company entered into interest rate swaps totalling $235 million. These swaps expire on 8 September 2022 in line with the expiry
date of the bank facility. The swaps have been designated as effective interest rate swaps and therefore satisfy the accounting standard
requirements for hedge accounting. The net fair value loss on interest rate swaps during the twelve months to 31 March 2019 was
$6.9million (31 March 2018: $0.4 million). The Company fair values these contracts by comparing the contracted rate to the future market
rates for contracts with the same length of maturity. At 31 March 2019, after taking into account the effect of interest rate swaps,
approximately 65% (31 March 2018: 67%) of our borrowings are at a fixed rate of interest.

At the reporting date, we had the following mix of financial assets and liabilities exposed to Australian variable interest rate risk:

Financial assets:
Cash assets

Financial liabilities:
Bank loan
Interest rate swaps

Net exposure

31 MAR 2019
$000

31 MAR 2018
$000

7,565

11,218

(127,700)
(6,884)
(127,019)

(115,200)
(355)

(104,337)

The following sensitivity analysis is based on reasonably possible changes in interest rates applied to the interest rate risk exposures in
existence at the reporting date. Such a reasonably possible change is determined using historical interest rate movements for the preceding
two-year period.

JUDGEMENTS OF REASONABLY POSSIBLE MOVEMENTS:

31 MAR 2019
+1 (100 basis points)
-1 (100 basis points)

31 MAR 2018
+1 (100 basis points)
-1 (100 basis points)
(1) Figures represent an increase/(decrease) in other components of equity.

EFFECTS ON PROFIT
BEFORE TAX
$000

EFFECTS ON OTHER
COMPONENTS OF
EQUITY (1)
$000

(1,277)
1,277

(1,152)
1,152

8,225
(8,225)

9,400
(9,400)

Australian Agricultural Company Limited | ANNUAL REPORT 2019

A significant portion of our revenue is received in US dollars and the prices received are influenced by movements in exchange rates,
particularly that of the US dollar relative to the Australian dollar.

We have transactional currency exposures (refer note C2) arising from sales of meat in currencies other than in Australian dollars. Foreign
exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the
functional currency of the relevant group entity. The risk is measured through a forecast of highly probable US dollar sales. The risk is hedged
with the objective of minimising the volatility of the Australian currency revenue of highly probable forecast US dollar denominated sales.

In compliance with our Treasury Policy we have hedged our foreign exchange exposure arising from forecasted cash flows from sales, through
forward currency contracts or foreign exchange contracts. These foreign exchange contracts have been designated as effective hedges and
therefore satisfy the accounting standard requirements for hedge accounting. This resulted in a $1,435,000 movement in other
comprehensive income and a $77,000 movement in profit and loss in the twelve months to 31 March 2019 (31 March 2018: $102,000
movement in other comprehensive income and a $18,000 movement in profit and loss).

Our Treasury Policy is to hedge between 50% and 90% of forecast US dollar cash flows for sales up to one quarter in advance, and between
25% and 75% of forecast sales for the period three months to 12 months in advance. For the year ended 31 March 2019, approximately 60%
and 50% of highly probable forecast sales were hedged for the periods 0-3 months in advance and 3-12 months in advance, respectively.

At reporting date, we had the following mix of financial assets and liabilities exposed to foreign exchange risk.

Financial assets
Trade receivables
Financial liabilities
Derivatives
Net exposure

31 MAR 2019
USD $000

31 MAR 2018
USD $000

531

(1,435)
(904)

5,944

(102)
5,842

At 31 March 2019, had the Australian Dollar moved and all other variables held constant, profit before tax and equity would have been
affected as illustrated in the table below. The sensitivity analysis is based on a reasonably possible movement using observations of historical
spot rates for the preceding two-year period.

JUDGEMENTS OF REASONABLY POSSIBLE MOVEMENTS:

31 MAR 2019
AUD/USD +10%
AUD/USD -10%

31 MAR 2018
AUD/USD +10%
AUD/USD -10%

EFFECTS ON PROFIT
BEFORE TAX
$000

EFFECTS ON EQUITY
$000

243
(298)

237
(290)

4,286
(5,239)

1,097
(1,341)

We have transactional commodity price risk primarily in the sale of cattle and beef. Other commodity price exposures include feed inputs for
our feedlot operations, and diesel. Purchases of commodities may be for a period of up to 12 months and partial hedging of these inputs may
be for periods of up to 24 months.

Our exposure to derivative commodity price risk is minimal. We do not currently apply hedge accounting to our beef commodity price
exposures as the derivatives do not meet the accounting standard requirements for hedge accounting. However, we have a policy whereby we
will forward sell a significant proportion of our feedlot cattle sales for a period of up to 6 months. These contracts are entered into and
continue to be held for the purpose of delivery of feedlot cattle arising from our expected sale requirements; they are classified as non-
derivative and are not required to be fair valued.

We enter into forward purchase contracts for grain commodities. This practice mitigates the price risk for the Company. As at 31 March 2019,
we had forward purchased approximately 51% (31 March 2018: 58%) of our expected grain usage for the coming 12 months. These contracts
are entered into and continue to be held for the purpose of grain purchase requirements; they are classified as non-derivative and are not
required to be fair valued. At the reporting date we had no commodity price exposures on forward sales and purchase contracts that are not
designated as cash flow hedges.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Credit risk arises from our financial assets, which comprise cash, trade and other receivables and derivative instruments. Our exposure to
credit risk arises from potential default of the counterparty, with a maximum exposure equal to the carrying amount of the financial assets (as
outlined in each applicable note). We do not hold any credit derivatives to offset our credit exposure.

We manage our credit risk by maintaining strong relationships with a limited number of quality customers. The risk is also mitigated by paying
an annual insurance premium in relation to certain sales overseas. In addition, receivable balances are monitored on an ongoing basis with
the result that our experience of bad debts has not been significant. We have no significant concentrations of credit risk. Credit risk and
expected credit loss relating to trade receivables is disclosed in note B4.

Liquidity risk arises from our financial liabilities and our subsequent ability to repay the financial liabilities as and when they fall due. Our
objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans and finance leases.

We manage our liquidity risk by monitoring the total cash inflows and outflows expected on a monthly basis. We have established
comprehensive risk reporting covering our business units that reflect expectations of management of the expected settlement of financial
assets and liabilities.

The Company is exposed to counterparty credit risk from its operating activities (primarily from trade receivables) and from its financing
activities. As at 31 March 2019, the mark-to-market value of derivative asset positions is net of a credit valuation adjustment attributable to
derivative counterparty default risk. The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for
derivatives designated in hedge relationships and other financial instruments recognised at fair value.

The following liquidity risk disclosures reflect all contractually fixed repayments and interest resulting from recognised financial liabilities and
derivatives as of 31 March 2019. The timing of cash flows for liabilities is based on the contractual terms of the underlying contract. However,
where the counterparty has a choice of when the amount is paid, the liability is allocated to the earliest period in which we can be required to
pay. When we are committed to make amounts available in instalments, each instalment is allocated to the earliest period in which we are
required to pay.

The risk implied from the values shown in the table below, reflects a balanced view of cash inflows and outflows of financial instruments.
Leasing obligations, trade payables and other financial liabilities mainly originate from the financing of assets used in our ongoing operations
such as property, plant and equipment and investments in working capital (e.g. inventories and trade receivables). These assets are
considered in the Company’s overall liquidity risk.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

31 MAR 2019

Financial assets
Cash
Trade and other receivables
Derivatives

Financial liabilities
Trade and other payables
Borrowings
Derivatives

Net maturity

31 MAR 2018

Financial assets

Cash
Trade and other receivables
Derivatives

Financial liabilities
Trade and other payables
Borrowings
Derivatives

Net maturity

LESS THAN
6 MONTHS
$000

6-12
MONTHS
$000

1-2
YEARS
$000

2-5
YEARS
$000

TOTAL
$000

CARRYING
AMOUNT
$000

7,565
18,661
-

(31,569)
(7,641)
(607)

(13,591)

11,218
20,515
-

(27,525)
(7,811)
(628)

(4,231)

-
-
-

7,565
18,661
-

-
(7,397)
(607)

(8,004)

-
(129,681)
(1,214)

-
(269,252)
(1,821)

(31,569)
(413,971)
(4,249)

(31,569)
(366,072)
(8,319)

(130,895)

(271,073)

(423,563)

(379,734)

-
-
-

11,218
20,515
-

-
(7,880)
(526)

(8,406)

-
(174,543)
(1,053)

-
(224,691)
(2,632)

(27,525)
(414,925)
(4,839)

(27,525)
(356,388)
(457)

(175,596)

(227,323)

(415,556)

(352,637)

Australian Agricultural Company Limited | ANNUAL REPORT 2019

ASSETS AND CAPITAL STRUCTURE
Future minimum lease payments under non-cancellable operating leases for land and
buildings are as follows:
Not later than one year
Later than one year but not later than five years
Later than five years

Total leased land and buildings

Future minimum lease payments for motor vehicles under finance leases and hire
purchase are as follows:
Within one year
After one year but not more than five years

Total minimum lease payments

Future minimum payments under equipment finance together with the present value
of the net minimum lease payments are as follows:
Within one year
Later than one year but not later than five years

Total equipment finance

31 MAR 2019
$000

31 MAR 2018
$000

1,559
2,800
-

4,359

536
1,581

2,117

1,122
1,201

2,323

1,994
3,075
18

5,087

1,141
1,934

3,075

1,884
2,613

4,497

We have entered into forward purchase contracts for $19.3 million worth of grain commodities as at 31 March 2019 (31 March 2018: $14.6
million) and forward purchase contracts for $15.8 million worth of cattle as at 31 March 2019 (31 March 2018: $21.5 million). The contracts
are expected to be settled within 12 months from balance date.

No capital expenditure has been contracted in respect of property, plant and equipment as at 31 March 2019 (31 March 2018: $0.5 million).

At 31 March 2019 there are a number of long standing native title claims over our pastoral holdings. Settlement negotiations between the
Government, claimants and pastoral interests are ongoing, and we do not expect any material impact on our operations to result from this.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

31 MAR 2019

Opening balance
Additions and transfers
Disposals
Depreciation
Impairment

Closing balance

Cost
Accumulated depreciation and impairment

31 MAR 2018

Opening balance
Additions and transfers
Disposals
Depreciation
Impairment

Closing balance

Cost
Accumulated depreciation and impairment

INDUSTRIAL PROPERTY AND
IMPROVEMENT
$000

PLANT AND
EQUIPMENT
$000

CAPITAL WORK IN
PROGRESS
$000

31,443
243
-
(408)
-

31,278

77,893
(46,615)

22,602
8,066
(325)
(5,963)
-

24,380

151,443
(127,063)

1,525
(304)
-
-
-

1,221

1,221
-

INDUSTRIAL PROPERTY AND
IMPROVEMENT
$000

PLANT AND
EQUIPMENT
$000

CAPITAL WORK IN
PROGRESS
$000

77,516
(7,220)
-
(1,795)
(37,058)

31,443

75,618
(44,175)

40,562
22,760
(71)
(10,237)
(30,412)

22,602

143,702
(121,100)

6,435
(2,878)
-
-
(2,032)

1,525

3,557
(2,032)

TOTAL
$000

55,570
8,005
(325)
(6,371)
-

56,879

230,557
(173,678)

TOTAL
$000

124,513
12,662
(71)
(12,032)
(69,502)

55,570

222,877
(167,307)

Regular upkeep and maintenance of the facility and its supporting assets continues, whilst the Board and management continue to review
various strategic options for Livingstone Beef.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

THE MAJOR COMPONENTS OF TAX ARE:
Income statement
Current income tax
Current income tax charge/(benefit)
Deferred income tax
Relating to origination and reversal of temporary differences
Under/(over) provision in prior years
Research and development claims from prior years

Income tax benefit in the income statement

Statement of changes in equity
Deferred income tax
Net gain on cash flow hedges
Net gain on revaluation of land and buildings

Income tax expense reported in equity

Tax reconciliation
Accounting loss before tax
At the statutory income tax rate of 30%
Research and development offsets
Other items (net)

Income tax (benefit)/expense in the income statement

Deferred income tax in the balance sheet relates to:
Deferred tax liabilities
Adjustments to land, buildings and improvements
Revaluations of trading stock for tax purposes
Other
Offsetting deferred tax asset

Deferred tax assets
Accruals and other
Capitalised expenses accelerated for book purposes
Interest rate swaps
Revaluations of trading stock for tax purposes
Cash flow hedges
Leave entitlements and other provisions
Franking deficit tax
Research and development offsets
Carried forward losses
Deferred income
Individually insignificant balances

Total deferred tax asset (offset against deferred tax liability)

Deferred income tax in the income statement relates to:
Revaluations of trading stock for tax purposes
Accruals and other
Capitalised expenses accelerated for book purposes
Impairment of property, plant and equipment
Other

Total deferred tax (benefit)/expense

Australian Agricultural Company Limited | ANNUAL REPORT 2019

31 MAR 2019
$000

31 MAR 2018
$000

(61,419)
(41)
-

(61,460)

1,928
9,404

11,332

(209,856)
(62,957)
-
1,497

(61,460)

(71,137)
-
(6,948)
47,353

(30,732)

285
66
2,065
8,274
276
2,027
1,012
4,716
27,520
1,019
93

47,353

(68,458)
238
316
-
6,485

(61,419)

(43,166)
340
-

(42,826)

1,508
7,894

9,402

(145,385)
(43,616)
-
790

(42,826)

(61,052)
(30,307)
(3,044)
9,656

(84,747)

523
382
137
-
-
2,190
1,012
4,716
-
629
67

9,656

(23,357)
(1,075)
769
(20,935)
1,432

(43,166)

Other income
Cropping income

Total other income

Interest expense
Other finance costs

Total finance costs

Remuneration and on-costs
Superannuation and post-employment benefits
Other employment benefits
Share-based payments expense

Total employee expenses

Other earnings information:
Minimum lease payments – operating leases
Commodity and foreign currency expense/(benefit)

31 MAR 2019
$000
1,749
139

1,888

31 MAR 2018
$000
2,822
-

2,822

15,456
317

15,773

42,616
3,398
5,426
347

51,787

5,752
960

16,366
1,052

17,418

46,315
3,831
3,398
536

54,080

4,725
241

At 1 April 2017

Revaluation of land and buildings

Tax effect on revaluation of land and buildings

Net movement in cash flow hedges, net of tax

Share based payment

At 31 March 2018

At 1 April 2018

Revaluation of land and buildings

Tax effect on revaluation of land and buildings

Net movement in cash flow hedges, net of tax

Revaluation of foreign currency operations

Share based payment

At 31 March 2019

ASSET
REVALUATION
RESERVE
$000

CAPITAL
PROFITS
RESERVE
$000

CASH FLOW
HEDGE
RESERVE
$000

309,894

84,762

(3,704)

26,315

(7,894)

2,155

328,315

84,762

(1,549)

328,315

84,762

(1,549)

31,346

(9,404)

(4,628)

350,257

84,762

(6,177)

FOREIGN
CURRENCY
TRANSLATION
RESERVE
$000

EMPLOYEE
EQUITY
BENEFITS
RESERVE
$000

TOTAL
$000

(10)

5,654

396,606

536

26,315

(7,894)

2,155

536

6,190

417,718

6,190

417,718

347

31,346

(9,404)

(4,628)

(10)

347

6,537

435,369

The asset revaluation reserve is used to record increments and decrements in the fair value of property and improvements to the extent that
they offset one another. The reserve can only be used to pay dividends in limited circumstances.

The capital profits reserve is used to accumulate realised capital profits. The reserve can be used to pay dividends.

The cash flow hedge reserve is used to record the portion of movements in fair value of a hedging instrument in a cash flow hedge that is
recognised in other comprehensive income.

The foreign currency translation reserve is used to accumulate the net impact of translating our US denominated foreign currency balances
and transactions into our functional currency, Australian dollars.

The employee equity benefits reserve is used to record the value of equity benefits provided to employees and Directors as part of their
remuneration. Refer to note F7 for further details of these plans.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Equity accounted investments in associate – Pyxle (Private) Limited

Other equity accounted investments in individually not material associates

Other investments

31 MAR 2019
$000
2,072

31 MAR 2018
$000
1,230

1,175

366

3,613

1,539

128

2,897

The Company has a 31.82% interest in Pyxle (Private) Limited (2018: 31.82%). This entity is considered to be an associate due to the
Company having significant but not controlling influence over the entity. Pyxle (Private) Limited is an IT support services company, which during
the year provided special project and operational IT support services to AACo.

The Company has interests in a number of other individually not material associates. All associates are accounted for using the equity method
in accordance with AASB 128 Investments in Associates and Joint Ventures.

During the year, one entity ceased to be an associate and at 31 March 2019 been recorded as a non-associated investment, held at fair value
in accordance with AASB 9 Financial Instruments.

COMPENSATION FOR KEY MANAGEMENT PERSONNEL
Short-term employee benefits
Post-employment benefits
Share-based payment
Termination benefits
Long-term benefits

Total compensation

31 MAR 2019
$000
4,070
201
340
-
-

4,611

31 MAR 2018
$000
3,007
209
290
271
16

3,793

During the year, the Company transacted with associates and other related parties. Associates are entities considered to be related parties,
due to the Company having significant but not controlling influence over the entity.

Transactions with associates for the year ended 31 March

Purchase of goods or services from associates – Pyxle (Private) Limited

Other transactions with individually not material associates

Transactions with individually not material associates for the year ended 31 March

Sales of goods or services to associates

Purchase of goods or services from other associates

Interest paid on convertible notes

Dividends received from associates

Other transactions with associates

31 MAR 2019
$000
(4,818)

(1,436)

(6,254)

31 MAR 2018
$000
(2,279)

199

(2,080)

31 MAR 2019
$000
470

31 MAR 2018
$000
1,317

(862)

135

(1,179)

(1,436)

(582)

(536)

199

Transactions with other related parties

Purchase of goods or services from other individually not material related parties

31 MAR 2019
$000
(804)

31 MAR 2018
$000
(213)

Australian Agricultural Company Limited | ANNUAL REPORT 2019

The share-based payment plans are described below. During 2019, expenses arising from equity settled share-based payment transactions
were $347,000 (31 March 2018: $536,000).

The Company has one Executive Option Plan (EOP) for the granting of non-transferable options to the Managing Director/ Chief Executive
Officer, senior executives and middle management with more than twelve months’ service at the grant date. There will be no further grants
under this Plan, including none for 2018 and 2019.

The Company’s Performance Rights Plan has been in place since 2011 and has taken the place of the option plan for future incentive awards
comprising performance rights. There will be no further grants of options under the option plan in the future. The performance rights will
remain until such time as they are either exercised or the rights lapse. The performance rights have a nil exercise price. Vesting of the
performance rights is dependent on the satisfaction of a service vesting condition and/or a performance condition. Any performance rights
which fail to meet the service condition on the vesting date will lapse immediately. Performance rights issued are subject to: external
performance conditions (TSR outperformance of S&P/ASX Small Ordinaries Accumulated Index; ASX Code: AXSOA); internal performance
conditions (EPS performance based on compound % growth rates over 3 financial years following issue of the performance rights); and
termination/change of control provisions. Once the performance rights have vested, they are automatically exercised and shares in AACo
issued to either the AACo Employee Share Scheme Trust (EST) or acquired on-market by the EST Trustee on behalf of the participant.

Long-term incentives

Following an extensive review of its remuneration practises for employees and executives, the Board approved the Company’s adoption of a
Long Term Incentive (LTI) Plan on 9 May 2017 (LTI plan implementation date). The LTI Plan better aligns remuneration of the Company’s
senior executives with the long-term strategic goals of the Company.

The introduction of an LTI Plan is consistent with the Company’s objectives for remuneration, which include providing competitive total rewards
to attract and retain high calibre senior executives, having a meaningful portion of remuneration “at risk” and, above all, creating value for
shareholders.

It is anticipated that performance rights under the LTI Plan will be granted in a number of rounds. The number of performance rights (if any)
granted to eligible persons in each grant round and the performance conditions applying to the vesting of those performance rights will be
determined at the discretion of the Board.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

It is currently contemplated by the Board that there will be four grant rounds in total. The following summary reflects the key features of the
first grant round and what is currently contemplated by the Board with respect to subsequent grant rounds:

FEATURE

Timing of grant

Performance condition

DESCRIPTION

Grants of performance rights in a grant round will not be made unless and until the specific
‘commencing’ market capitalisation of the Company for that grant round is achieved.

The commencing market capitalisation of the Company for the first grant round was the market
capitalisation of the Company on the LTI Plan Implementation Date.

The performance condition which applies to the vesting of performance rights in a grant round is
the achievement of the specific ‘target’ market capitalisation of the Company during the
performance period for that grant round.

The performance condition for the first grant round was satisfied on 5 June 2017.

Performance period

The performance period for each grant round is calculated by reference to the target market
capitalisation of the Company for that grant round and an assumed annualised growth rate of 20%.

Determination of market capitalisation of
the Company for the purposes of the LTI
Plan

For the purposes of calculating the market capitalisation of the Company in order to determine if
the commencing market capitalisation of the Company or the target market capitalisation of the
Company for each grant round has been achieved, the twenty day volume weighted average price
(VWAP) of ordinary shares in the capital of the Company will be used.

Vesting period

Number of available performance rights

Lapsing conditions

Change of control event

On market acquisition of shares

In respect of each grant round, there is a four-year staggered vesting period for performance rights
in that grant round which commences on satisfaction of the performance condition for that grant
round.
In each grant round, eligible persons may be offered a percentage of the “Total Available
Performance Rights” for that grant round (rounded down to the nearest whole number).

In respect of each grant round, the number of “Baseline Shares” will be the number of ordinary
shares in the Company acquired on market by the AACo Employee Share Trust in respect of that
grant round having an aggregate share acquisition price of $5 million.

In respect of each grant round, the number of “Total Available Performance Rights” will be

(a)
(b)

the number of Baseline Shares for that grant round; plus
the number of any Total Available Performance Rights for previous grant rounds which,
at the time of completion of acquisition of all of the Baseline Shares for that grant round
and all previous grant rounds, are not notionally allocated to a previous grant round
Holders of performance rights will be entitled to exercise those performance rights if they have
vested and have not otherwise lapsed.

The circumstances in which performance rights may lapse include non-satisfaction of performance
conditions or ceasing employment with the Company group. If the holder of performance rights
ceases to be an employee as a result of an “Uncontrollable Event” (e.g. death, permanent
disablement, retirement, retrenchment, or such other circumstances which the Board determines is
an Uncontrollable Event), any unvested performance rights held by that person are expected to
continue to be subject to the requirements for vesting and exercise applying to those performance
rights, unless the Board determines that the vesting conditions applying to some or all of those
performance rights will be waived or that some or all of those performance rights will lapse.
If a change of control event for the Company occurs, the treatment of any unvested performance
rights will be within the discretion of the Board to determine
The requirement to deliver shares in the Company upon the vesting and exercise of performance
rights under the LTI Plan must be satisfied by way of on market acquisition of shares in the
Company.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

The applicable commencing market capitalisation of the Company, performance condition and performance period for each contemplated
grant round are as set out in the following table:

FIRST GRANT ROUND

COMMENCING MARKET
CAPITALISATION OF THE
COMPANY
The market capitalisation of the
Company on the LTI Plan
Implementation Date

PERFORMANCE CONDITION
(TARGETED MARKET
CAPITALISATION OF THE
COMPANY)
$1 billion

SECOND GRANT ROUND $1 billion

$1.5 billion

THIRD GRANT ROUND

$1.5 billion

$2 billion

FOURTH GRANT ROUND $2 billion

$2.5 billion

PERFORMANCE PERIOD (CALCULATED
USING AN ASSUMED ANNUALISED
GROWTH RATE OF 20%)
Within 2 quarters of the LTI Plan
Implementation Date (i.e. performance
period ends 30 September 2017)

Within 9 quarters of the LTI Plan
Implementation Date (i.e. performance
period ends 30 June 2019)

Within 16 quarters of the LTI Plan
Implementation Date (i.e. performance
period ends 31 March 2021)

Within 22 quarters of the LTI Plan
Implementation Date (i.e. performance
period ends 30 September 2022)

The total number of shares purchased for the LTI Plan grant rounds one and two was 6,764,848 at an average price per share of $1.478.

The performance condition for the first grant round of targeted market capitalisation of $1 billion was achieved on 5 June 2017. The rights
associated to the first grant round have been granted to the relevant senior executives at a fair value per right of $1.07. The second grant
round was granted to relevant senior executives on 11 January 2019 and are subject to a performance condition of target market
capitalisation of $1.5 billion by 30 June 2019. The fair value per right of $0.055 was based on the Company’s share price on grant date and
the expectation the market condition would be reached.

The table below shows the number (No.) and weighted average exercise prices (WAEP) of options and performance rights outstanding. There
have been no cancellations or modifications to any of the plans during the twelve months to 31 March 2019.

31 MAR 2019

Outstanding at the beginning of the period
Granted during the period
Granted during the period LTIP adjust prior year
Forfeited during the period
Exercised during the period
Outstanding at the end of the period
Exercisable at the end of the period
Weighted average remaining contractual life (days)
Weighted average fair value at grant date
Range of exercise prices ($)

31 MAR 2018

Outstanding at the beginning of the period
Granted during the period
Granted during the period LTIP estimate(1)
Forfeited during the period
Exercised during the period
Outstanding at the end of the period
Exercisable at the end of the period
Weighted average remaining contractual life (days)
Weighted average fair value at grant date
Range of exercise prices ($)
(1) Expected number of rights to be granted under the LTIP, calculated based on our best estimates.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

EOP
NO.
300,000
-
-
(300,000)
-
-
-
-
-
3.22

EOP
NO.
590,625
-
-
(290,625)
-
300,000
300,000
282
-
3.22

EOP
WAEP $
3.22
-
-
3.22
-
3.22

EOP
WAEP $
2.64
-
-
2.04
-
3.22

PRP
NO.
1,198,727
4,913,876
(126,345)
(103,522)
-
5,882,736
-
1,147
1.095
-

PRP
NO.
87,037
102,271
2,023,248
(926,792)
(87,037)
1,198,727
-
848
1.2
-

The consolidated financial statements include the following controlled entities:

NAME OF ENTITY

Parent Entity

Australian Agricultural Company Limited

Controlled Entities

A. A. Company Pty Ltd

Austcattle Holdings Pty Ltd

A. A. & P. Joint Holdings Pty Ltd

Shillong Pty Ltd

James McLeish Estates Pty Limited

Wondoola Pty Ltd

Waxahachie Pty Ltd

Naroo Pastoral Company Pty Limited

AACo Nominees Pty Limited

Chefs Partner Pty Ltd

Polkinghornes Stores Pty Limited

Northern Australian Beef Limited

AACo Innovation Pty Ltd

AACo Innovation (US) Pty Ltd

AACo Innovation (US) LLC

AACo Operations (US) LLC

NOTES

COUNTRY OF
INCORPORATION

31 MAR 2019
% OF SHARES HELD

31 MAR 2018
% OF SHARES HELD

(a)

Australia

United States of America

100

(a) These companies have entered into a deed of cross guarantee dated 22 November 2006 (amended 1 April 2015) with Australian

Agricultural Company Limited which provides that all parties to the deed will guarantee to each creditor payment in full of any debt of each
company participating in the deed on winding-up of that company. As a result of a Class Order issued by the Australian Securities and
Investments Commission, these companies are relieved from the requirement to prepare financial statements. The Consolidated Income
Statement and consolidated Statement of Financial Position of all entities included in the class order “closed Group” are set out in (b).

(b)Financial information for class order Closed Group:

Current Assets

Cash

Trade and other receivables

Inventories and consumables

Livestock

Other assets

Total Current Assets

Non-Current Assets

Livestock

Property, plant and equipment

Intangible assets

Investments

Intercompany receivable

Other receivables

Total Non-Current Assets

Total Assets

Australian Agricultural Company Limited | ANNUAL REPORT 2019

31 MAR 2019
$000

31 MAR 2018
$000

7,565

18,661

33,684

171,006

1,099

232,015

252,331

795,341

2,534

3,613

3,342

742

11,218

20,515

35,068

259,104

696

326,601

369,182

753,777

2,840

2,897

3,342

1,057,903

1,132,038

1,289,918

1,458,639

Current Liabilities
Trade and other payables
Provisions
Borrowings
Derivatives

Total Current Liabilities

Non-Current Liabilities
Provisions
Borrowings
Deferred tax liabilities

Total Non-Current Liabilities

Total Liabilities

Net Assets

Equity:
Contributed equity
Reserves
Retained earnings/(losses)

Total Equity

INCOME STATEMENT OF THE CLOSED GROUP

Meat sales
Cattle sales

Cattle fair value adjustments

Cost of meat sold
Deemed cost of cattle sold
Cattle and feedlot expenses

Gross operating margin

Other income

Employee expenses
Administration and selling costs
Other operating costs
Property costs
Gain/(loss) on equity investments
Depreciation and amortisation
Impairment
Onerous contract (impairment related to Livingstone)

Loss before finance costs and income tax expense
Net finance costs

Loss before income tax
Income tax benefit

Net loss after tax

Australian Agricultural Company Limited | ANNUAL REPORT 2019

31 MAR 2019
$000

31 MAR 2018
$000

29,818
3,397
1,658
8,319

43,192

4,578
364,414
30,732

399,724

442,916

847,002

528,822
435,369
(117,189)

847,002

27,525
3,445
3,025
457

34,452

5,215
353,363
84,747

443,325

477,777

980,862

531,937
417,718
31,207

980,862

31 MAR 2019
$000

31 MAR 2018
$000
Restated*

246,244
117,837

364,081
58,389

422,470

(226,549)
(108,858)
(142,082)

(55,019)

1,888

(51,787)
(41,200)
(29,631)
(6,960)
620
(11,994)
-
-

(194,083)
(15,773)

(209,856)
61,460

(148,396)

332,658
47,021

379,679
162,971

542,650

(304,054)
(45,589)
(102,788)

90,219

2,822

(54,080)
(41,413)
(27,059)
(5,814)
(303)
(17,394)
(69,502)
(5,443)

(127,967)
(17,418)

(145,385)
42,826

(102,559)

Current assets

Non-Current assets

Total Assets

Current liabilities

Non-Current liabilities

Total Liabilities

Net Assets

Contributed equity

Reserves

Accumulated losses

Total Equity

Profit/(Loss) of the parent entity

Total comprehensive profit/(loss) of the parent entity

* Refer to note G3 (c) regarding restated comparative figures.

31 MAR 2019
$000

8,566

738,927

747,493

10,198

361,632

371,830

375,663

538,822

23,066

31 MAR 2018
$000
Restated*
1,543

779,988

781,531

915

348,817

349,732

431,799

538,822

29,324

(186,225)

(136,347)

375,663

(49,878)

(52,877)

431,799

(60,467)

(57,403)

Australian Agricultural Company Limited and the wholly owned entities listed in note F8 are parties to a deed of cross guarantee as described
in F8. The nature of the deed of cross guarantee is such that each Company which is party to the deed guarantees, to each creditor, payment
in full of any debt in accordance with the deed of cross guarantee. No deficiency of net assets existed for the Company as at 31 March 2019.
No liability was recognised by Australian Agricultural Company Limited in relation to these guarantees, as the fair value of the guarantees is
immaterial.

The accounting policies of the parent entity, which have been applied in determining the financial information shown above, are the same as
those applied in the consolidated financial statements except for investments in subsidiaries are accounted for at cost in the financial
statements of Australian Agricultural Company Limited.

Remuneration received, or due and receivable, by KPMG for:

An audit or review of the financial report of the entity and any other entity in the consolidated Group

Other non-audit services

Total

31 MAR 2019
$

31 MAR 2018
$

410,000

23,150

433,150

415,300

15,840

431,140

There have been no significant events after the balance date which require disclosure in the financial report.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Australian Agricultural Company Limited is a company limited by shares, incorporated and domiciled in Australia. The Company’s shares are
publicly traded on the Australian Securities Exchange (ASX).

The consolidated financial statements of Australian Agricultural Company Limited (AACo, the Company or parent Company) for the year ended
31 March 2019 were authorised for issue in accordance with a resolution of the Directors on 22 May 2019.

We recommend the financial statements be considered together with any public announcements made by the Company during the year ended
31 March 2019 in accordance with the Company’s continuous disclosure obligations arising under the Corporations Act 2001 and ASX listing
rules.

The nature of the operations and principal activities of Australian Agricultural Company Limited are described in the Directors’ Report.

The financial statements are general purpose financial statements, prepared by a for-profit entity, in accordance with the requirements of the
Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards
Board.

In these financial statements, any references to we, us, our, AACo, the Company and consolidated, all refer to Australian Agricultural Company
Limited and the entities it controlled at the financial year end or from time to time during the financial year. Any references to subsidiaries or
controlled entities in these financial statements refer to those entities that are controlled and consolidated by Australian Agricultural Company
Limited.

The financial statements have been prepared on a historical cost basis, except for land and buildings (with the exception of industrial land),
livestock and derivative financial instruments, which have been measured at fair value. Under the historical cost basis, assets are recorded at
the amount of cash or cash equivalents paid or the fair value of the consideration given to acquire them at the time of their acquisition.
Liabilities are recorded at the amount of proceeds received in exchange for the obligation, or in some circumstances, at the amounts of cash
expected to be paid to satisfy the liability in the normal course of business.

The financial statements also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB).

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its
judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial statements are disclosed in the relevant notes.

This has been completed under the option available to the Company under ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191. The Company is an entity to which this legislative instrument applies.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have
been consistently applied to all the years presented, unless otherwise stated.

(i) New and amended standards adopted

A number of new or amended standards became applicable for the current reporting period and the group had to change its accounting
policies as a result of adopting the following standards:

AASB 9

Financial Instruments

AASB 15

Revenue from Contracts with Customers

The impact of adoption of AASB 9 Financial Instruments has not had a material impact on the recognition of financial assets or liabilities and
therefore no transitional adjustment has been recognised in retained earnings upon adoption. In accordance with the transitional
requirements, the Company has elected not to restate comparatives.

The Company has adopted AASB 15 Revenue from Contracts with Customers from 1 April 2018 which resulted in a changes in accounting
policies. This change in policy is relatively consistent with previous policy and has therefore not had a material impact. The Company has
applied the modified retrospective application approach in which only the initial period of application applies AASB. No adjustments were
made as a result of adopting AASB 15.

(ii) Accounting Standards and Interpretations issued but not yet applied

AASB 16

Leases

The Company is required to adopt AASB 16 Leases from 1 April 2019. The Company has assessed the estimated impact that initial
application of AASB 16 will have on its consolidated financial statements, as described below. The actual impacts of adopting the
standard on 1 April 2019 may change because the new accounting policies are subject to change until the Company presents its first
financial statements that include the date of initial application.

AASB 16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognises a right-of-use asset representing
its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are recognition
exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the current standard – i.e. lessors
continue to classify leases as finance or operating leases.

AASB 16 replaces existing leases guidance, including AASB 117 Leases, AASB Interpretation 4 Determining whether an Arrangement
contains a Lease, AASB Interpretation-115 Operating Leases-Incentives and AASB Interpretation 127 Evaluating the Substance of
Transactions Involving the Legal Form of a Lease.

Leases in which the Company is a lessee

The Company will recognise new assets and liabilities for its operating leases of land, buildings and equipment. The nature of expenses
related to those leases will now change because the Company will recognise a depreciation charge for right-of-use assets and interest
expense on lease liabilities.

Previously, the Company recognised operating lease expense on a straight-line basis over the term of the lease, and recognised assets
and liabilities only to the extent that there was a timing difference between actual lease payments and the expense recognised.

No significant impact is expected for the Company’s finance leases.

Based on the information currently available, the Company estimates that it will recognise additional right of use assets and
corresponding lease liabilities of $12.0m as at 1 April 2019. It is also estimated the application of this standard will improve Operating
Profit and Statutory EBITDA by $3.8m and also improve Operating Cash Flows by $3.5m, due to the change in classification of where the
expenses and cash flows are recorded under AASB 16.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

The consolidated financial statements comprise the financial statements of Australian Agricultural Company Limited, and its subsidiaries (as
outlined in note F8) as at 31 March each year or from time to time during the year. All intra-group balances and transactions, income and
expenses and profit and losses resulting from intra-group transactions have been eliminated in full.

Subsidiaries are all those entities which we control as a result of us being exposed, or have rights, to variable returns from our involvement
with the subsidiary and we have the ability to affect those returns through our power over the subsidiary. Such control generally accompanies
a shareholding of more than one-half of the subsidiaries voting rights. We currently hold 100% of the voting rights of all our subsidiaries. We
consolidate subsidiaries from the date on which control commences and up until the date on which there is a loss of control.

We account for the acquisition of our subsidiaries using the acquisition method of accounting. The acquisition method of accounting involves
recognising at acquisition date, separately from goodwill, the identifiable assets acquired, the liabilities assumed and any non-controlling
interest in the acquiree. The identifiable assets acquired and the liabilities assumed are measured at their acquisition date fair values. Any
excess of the fair value of consideration over our interest in the fair value of the acquiree’s identifiable assets, liabilities and contingent
liabilities is recognised as goodwill.

The consolidated financial statements include restatements to previously disclosed amounts, where indicated, which represent
reclassifications to more accurately align reported amounts with business activities. Previously disclosed amounts for administration and
selling costs have been restated to account for meat sales freight previously included in cost of meat sold. Additionally, to provide greater
transparency on operating performance, Operating Profit replaces the previously reported Operating EBITDA metric. Operating Profit values
inventory movement at a cost of production rather than at various standard costs. The parent entity note disclosures have also been restated,
to account for balances more appropriately as they relate to the parent. Additionally, the Cost of production has changed to remove the
offsetting impact of attrition from the number of kilograms produced

The preparation of the financial statements requires us to make judgements, estimates and assumptions that affect the reported amounts in
the financial statements. We continually evaluate our judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue
and expenses. We base our judgements and estimates on historical experience and on other various factors we believe are reasonable under
the circumstances, the result of which form the basis of the carrying values of assets and liabilities that are not readily apparent from other
sources.

We have identified the following accounting policies for which significant judgements, estimates and assumptions have been made:

Fair value determination of pastoral property and improvements, refer to note A4

Fair value determination of livestock, refer to note A3

Impairment of non-financial and financial assets, refer to note F1

Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the
financial position reported in future periods. Further details of the nature of these assumptions and conditions may be found in the relevant
notes to the financial statements.

(i) Functional and presentation currency

The consolidated financial statements are presented in Australian dollars, which is the functional and presentation currency of Australian
Agricultural Company Limited and all its subsidiaries.

(ii) Transactions and balances

Transactions in foreign currencies are converted into Australian dollars by applying the exchange rates applicable at the date of the
transactions. Amounts payable and receivable in foreign currencies are converted into Australian dollars at the exchange rate ruling at the
reporting date.

All differences arising on settlement or translation of amounts payable and receivable in foreign currencies are taken to the statement of profit
and loss.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Cash in the Statement of Financial Position comprise cash at bank and in hand which are subject to an insignificant risk of changes in value.
For the purposes of the Statement of Cash Flows, cash is as defined above, net of outstanding bank overdrafts. Bank overdrafts are included
within interest-bearing loans and borrowings in current liabilities on the Statement of Financial Position.

Trade and other receivables are considered financial assets. They are recognised initially at the fair value of the amounts to be received and
are subsequently measured at amortised cost using the effective interest method, less an allowance for doubtful debts. These financial assets
are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and we have
transferred substantially all the risks and rewards of ownership.

We review the collectability of trade receivables on an ongoing basis at the Company level. Individual debts that are known to be uncollectible
are written off when identified. An allowance for doubtful debts is recognised to reduce the carrying amount of trade receivables when there is
objective evidence that we will not be able to collect the receivable. Financial difficulties of the debtor, default payments or debts significantly
overdue are considered indicators that the trade receivable may not be recoverable. The amount of the allowance for doubtful debts is the
receivable carrying amount compared to the present value of estimated future cash flows, discounted at the original effective interest rate.
Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

The allowance for doubtful debts is recognised in the income statement within administration costs. When a trade receivable for which an
allowance for doubtful debts had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance
account. Subsequent recoveries of amounts previously written off are credited against administration costs.

Inventories and consumables held for use in our operations are valued at the lower of cost and net realisable value. Cost is determined on the
average cost basis and comprises the cost of purchase including transport cost.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated
costs necessary to make the sale. The quality of inventories is taken into account in the assessment of net realisable value.

We use derivative financial instruments, such as forward currency contracts, interest rate swaps and forward commodity contracts, to hedge
our foreign currency risks, interest rate risks and commodity price risks, respectively. Such derivative financial instruments are initially
recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives
are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

Any gains or losses arising from changes in the fair value of derivatives are taken directly to the income statement, except for the effective
portion of cash flow hedges, which is recognised in other comprehensive income.

For the purpose of hedge accounting, hedges are classified as:

(a) Fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm

commitment.

(b) Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a
recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment.

At the inception of a hedge relationship, we formally designate and document the hedge relationship to which we wish to apply hedge
accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the
hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how we will assess the effectiveness of changes
in the hedging instrument’s fair value in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the
hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on
an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were
designated. Hedges that meet the strict criteria for hedge accounting are accounted for as described below:

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Cash flow hedges

Policy that was in effect until 31 March 2018

The effective portion of the gain or loss on the hedging instrument is recognised directly in other comprehensive income in the cash flow
hedge reserve, while any ineffective portion is recognised immediately in the income statement in other operating expenses.

We utilise interest rate swaps to hedge our exposure to cash flow movements in loan movements. See note C2 for more details.

We use forward currency contracts as hedges of our exposure to foreign currency risk in forecasted transactions and firm commitments. The
ineffective portion relating to foreign currency contracts is recognised in finance costs and the ineffective portion relating to commodity
contracts is recognised in other operating income. Refer to note C2 for more details.

Amounts recognised as other comprehensive income are transferred to the income statement when the hedged transaction affects profit or
loss, such as when the hedged financial income or financial expense is recognised or when a forecast sale occurs. When the hedged item is
the cost of a non-financial asset or non-financial liability, the amounts recognised as other comprehensive income are transferred to the initial
carrying amount of the non-financial asset or liability.

If the forecast transaction or firm commitment is no longer expected to occur, the cumulative gain or loss previously recognised in equity is
transferred to the income statement. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if
its designation as a hedge is revoked, any cumulative gain or loss previously recognised in other comprehensive income remains in other
comprehensive income until the forecast transaction or firm commitment affects profit or loss.

Policy that was in effect from 1 April 2018

Beginning 1 April 2018, the Company adopted AASB 9 Financial Instruments which addresses classification, measurement, and derecognition
of financial assets and financial liabilities, sets out new rules for hedge accounting, and introduces a new expected-loss impairment model.

All derivatives are recognised in the balance sheet at fair value and are classified as FVTPL except where they are designated as part of an
effective hedge relationship and classified as hedging derivatives. The carrying value of a derivative is remeasured at fair value throughout the
life of the contract. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

The method of recognising the resulting fair value gain or loss on a derivative depends on whether the derivative is designated as a hedging
instrument and, if so, the nature of the item being hedged.

The Company designates its derivatives as hedges of highly probable future cash flows attributable to a recognised foreign currency asset or
liability or a highly probably foreign currency forecast transaction (cash flow hedges).

The Company documents at the inception of the transaction the relationship between hedging instruments and hedged items, the risk being
hedged and the Company’s risk management objective and strategy for undertaking these hedge transactions. The effectiveness of the cash
flow hedge is measured throughout the life of the hedging relationship. Ineffectiveness arises in the event of over hedging, whereby the
notional amount of the designated hedge instrument exceeds the notional amount of the hedged item attributable to the hedged risk, or
timing mismatches. Where ineffectiveness is identified, any revaluation gains or loss on the ineffective portion of the hedging instrument are
immediately recognised in the statement of profit or loss in foreign exchange gains or foreign exchange losses.

The effective portion of changes in the fair value of derivatives that are designated as cash flow hedges are recognised in the cash flow hedge
reserve within equity. Upon recognition of the forecast transaction (“hedged item”) the carrying value is not adjusted. Amounts accumulated in
equity are transferred to the statement of profit or loss in the period(s) in which the hedged item affects the statement of profit or loss.

(i) Recognition and measurement

Refer to note A4 for the accounting policy note for Pastoral property and improvements held at fair value. Plant and equipment and industrial
land and buildings are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the
cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection
is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation.
Directly attributable costs for the acquisition and construction of an asset are capitalised if the relevant recognition criteria are met. All other
repairs and maintenance are recognised in the income statement as incurred.

We review and adjust, if appropriate, the residual values, useful lives and amortisation methods of all property, plant and equipment at the
end of each financial year.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

(ii) Depreciation

Depreciation is calculated on a straight line basis over the estimated useful life of the asset as follows:

PROPERTY, PLANT AND EQUIPMENT

Land (freehold lease, pastoral/perpetual lease, industrial)

AVERAGE USEFUL LIFE

Not depreciated

Buildings

Fixed improvements

Owned plant and equipment

Plant and equipment under lease

(i) AACo as a lessee

40 years

30 years

3-10 years

2-5 years

We determine whether an arrangement is or contains a lease based on the substance of the arrangement at inception date, whether
fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even
if that right is not explicitly specified in an arrangement.

(ii) Pastoral and perpetual property leases

Pastoral and perpetual property leases have been included in Property, Plant and Equipment (Refer note A4).

(iii) Agistment agreements

Agistment agreements give us the right to use land under a licence agreement to feed and pasture livestock for a fee. Agistment agreements
are usually up to 12 months’ duration and may be renewed for further periods. Agistment rights are classified as operating leases and the
costs are expensed as incurred.

(iv) Other leases

Finance leases, which transfer to us substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the
inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Lease payments
are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining
balance of the liability. Finance charges are recognised in finance costs in the income statement.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term if there is no reasonable
certainty that we will obtain ownership by the end of the lease term.

Operating lease payments are recognised as an operating expense in the income statement on a straight-line basis over the lease term.
Operating lease incentives are recognised as a liability when received and subsequently reduced by allocating lease payments between rental
expense and reduction of the liability.

Trade and other payables are carried at amortised cost and due to their short-term nature they are not discounted. They represent liabilities
for goods and services provided to us prior to the end of the financial year that are unpaid and arise when we become obliged to make future
payments in respect of the purchase of these goods and services. Trade payables are unsecured and are usually paid within 30 days of
recognition. Other payables are unsecured and are usually paid within 90 days of recognition.

Borrowings are included as non-current liabilities except for those with maturities less than 12 months from the reporting date, which are
classified as current liabilities.

We recognise borrowings initially on the trade date, which is the date we become a party to the contractual provisions of the instrument. We
derecognise borrowings when our contractual obligations are discharged or cancelled or expire.

All borrowings are initially recognised at fair value plus any transaction costs that are directly attributable to the issue of the instruments and
are subsequently measured at amortised cost. Any difference between the final amount paid to discharge the borrowing and the initial
borrowing proceeds (including transaction costs) is recognised in the income statement over the borrowing period using the effective interest
method.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the
effective interest rate. The effective interest rate amortisation is included in finance costs in the income statement. Borrowing costs directly
attributable to the acquisition, construction or production of a qualifying asset (i.e. an asset that necessarily takes a substantial period of time
to get ready for its intended use or sale) are capitalised as part of the cost of that asset. All other borrowing costs are expensed in the period
they occur. Borrowing costs consist of interest and other costs that we incur in connection with the borrowing of funds.

We provide benefits to our employees (including key management personnel) in the form of share based payments, whereby employees
render services in exchange for shares or rights over shares (equity settled transactions).

We recognise an expense for all share based remuneration determined with reference to the fair value at the grant date of the equity
instruments. We calculate the fair value using the Black Scholes model or other applicable models. The fair value is charged to the income
statement over the relevant vesting periods, adjusted to reflect actual and expected levels of vesting. In valuing equity-settled transactions, no
account is taken of any performance conditions, other than conditions linked to the price of the shares of Australian Agricultural Company
Limited (market conditions).

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably
measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable,
taking into account contractually defined terms of payment and excluding taxes or duty.

(i) Livestock and meat sales

Policy that was in effect until 31 March 2018

Revenue from the sale of livestock and meat is recognised when:

there has been a transfer of risks and rewards to the customer (through the execution of a sales agreement at the time of delivery of the
goods to the customer);

no further work or processing is required;

the quantity and quality of the goods has been determined; and

the price is fixed and generally title has passed (for shipped goods this is the bill of lading date).

Policy that was in effect from 1 April 2018

The Company has adopted AASB 15 Revenue from Contracts with Customers from 1 April 2018 which resulted in a changes in accounting
policies.

Revenue is recognised to the extent that the Company has satisfied a performance obligation and the transaction price can be readily
identified. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms
of payment and excluding taxes or duty.

Revenue from the sale of livestock and meat is recognised when:

the performance obligation of passing control of meat or livestock at an agreed upon delivery point to the customer has been satisfied

(ii)

Interest revenue

We record interest revenue on an accruals basis. For financial assets, interest revenue is determined by the effective yield on the instrument.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

The Company and its wholly-owned Australian resident entities are part of a tax-consolidated group. As a consequence, all members of the tax-
consolidated group are taxed as a single entity. The Company is the head entity within the tax-consolidated group. Foreign entities are taxed
individually within their respective tax jurisdictions. Income tax expense represents the sum of current tax and deferred tax.

Current tax

Current tax is calculated on accounting profit after allowing for non-taxable and non-deductible items based on the amount expected to be
paid to taxation authorities on taxable profit for the period. Our current tax is calculated using tax rates that have been enacted or
substantively enacted at the reporting date.

Current income tax relating to items recognised directly in equity is recognised in equity and not in the income statement.

Deferred tax

Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes. Deferred tax is calculated at the tax rates that are expected to apply to the period when the
asset is realised or the liability is settled.

Deferred income tax liabilities are recognised for all taxable temporary differences except:

> When the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a

business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

> When the taxable temporary difference is associated with investments in subsidiaries and the timing of the reversal of the temporary

difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses,
to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of
unused tax credits and unused tax losses can be utilised, except:

> When the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or

liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss.

> When the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in

which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the
foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable
that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable
that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current
tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

(i) Basic earnings per share

Basic earnings per share is calculated as net profit attributable to ordinary shareholders divided by the weighted average number of ordinary
shares outstanding during the period.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

The after tax effect of interest and other financing costs associated with dilutive potential ordinary shares that have been recognised as
expenses

The weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive
potential ordinary shares

Australian Agricultural Company Limited | ANNUAL REPORT 2019

In accordance with a resolution of the Directors of the Australian Agricultural Company Limited, we state that:

In the opinion of the Directors:

The financial statements, notes and remuneration report of Australian Agricultural Company Limited for the year ended 31
March 2019 are in accordance with the Corporations Act 2001, including:

i. Giving a true and fair view of its financial position as at 31 March 2019 and of its performance for the year ended

on that date.

ii. Complying with Accounting Standards and Corporations Regulations 2001.

The financial statements and notes also comply with International Financial Reporting Standards as disclosed in note G2.

There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable.

This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of
the Corporations Act 2001 for the year to 31 March 2019.

In the opinion of the Directors, as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed
Group identified in note F8 will be able to meet any obligations or liabilities to which they are or may become subject, by virtue of the
Deed of Cross Guarantee.

On behalf of the Board

Donald McGauchie

Chairman

Brisbane

22 May 2019

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in the annual report is as follows. The
information is current as at 06 May 2019.

Ordinary share capital

602,766,747 fully paid ordinary shares are held by 9,468 individual Shareholders. All ordinary shares carry one vote per share and carry the
rights to dividends. The number of shareholders, by size of holding is:

NUMBER OF SHARES
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and Over
Total

Unquoted equity securities

NUMBER OF SHAREHOLDERS
2,138
3,514
1,537
2,091
188
9,468

As at 06 May 2019, there were 5,882,736 unlisted performance rights granted over unissued ordinary shares in the Company.

The names of the twenty largest holders of quoted shares as shown in the Company’s Share Register are:

NUMBER PERCENTAGE

J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BBRC INTERNATIONAL PTE LTD
MEDICH PROPERTIES PTY LIMITES
FORTE LAND PTY LTD
BNP PARIBAS NOMS PTY LTD
AACO NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
CUSTODIAL SERVICES LIMITED
QUALITY LIFE PTY LTD
NIZIN HOLDINGS PTY LTD
BELL POTTER NOMINEES LTD
BNP PARIBAS NOMINEES PTY LTD
TASMAN SUPER PTY LIMITED
UBS NOMINEES PTY LTD
MR JOHN QIANE HE
NEASHAM HOLDINGS PTY LTD
MR BARRY MARTIN LAMBERT
MR TROY CHRISTOPHER ANGUS

182,927,463
163,965,655
54,415,164
13.697,000
11,253,416
9,190,311
8,782,461
6,764,848
5,858,850
3,437,455
3,175,000
2,800,000
2,087,945
1,883,203
1,880,000
1,473,422
1,422,113
1,220,735
1,177,660
1,100,000

30.35%
27.20%
9.03%
2.27%
1.87%
1.52%
1.46%
1.12%
0.97%
0.57%
0.53%
0.46%
0.35%
0.31%
0.31%
0.24%
0.24%
0.20%
0.20%
0.18%

The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are:

ORDINARY SHAREHOLDERS

Bryan Glinton as trustee of The AA Trust

NUMBER

270,332,457

The number of security investors holding less than a marketable parcel of 439 securities ($1.140 on 06 May 2019) is 768 and they hold
131,402 securities.

Australian Agricultural Company Limited | ANNUAL REPORT 2019

Australian Agricultural Company Limited

15 010 892 270

Principal Place of Business

Level 1, Tower A
Gasworks Plaza
76 Skyring Terrace
Newstead QLD 4006

Ph: (07) 3368 4400
Fax: (07) 3368 4401
www.aaco.com.au

Link Market Services Limited

Level 21, 10 Eagle Street
Brisbane QLD 4000

Ph: 1300 554 474
www.linkmarketservices.com.au

AACo shares are quoted on the Australian Securities Exchange under listing Code AAC.

Allens Linklaters

Level 26, 480 Queen Street
Brisbane QLD 4000

KPMG

Level 16, 71 Eagle Street
Brisbane QLD 4000

The Annual General Meeting of Shareholders of the Australian Agricultural Company Limited will be held on Tuesday 31st July at 10:00am
(Brisbane time) at Brisbane Convention and Exhibition Centre, Merivale & Glenelg Street, South Brisbane, Queensland 4101.

Australian Agricultural Company Limited | ANNUAL REPORT 2019